exh10-1_1304274.htm


    Exhibit
10.1

     

    AFFILIATE
VERSION

     

    


    [__________],
2008

     

    Novamerican
Steel Inc.

    1050
University Avenue

    Norwood,
Massachusetts 02062

     

    
      
        	 Attention: 	 Karen G.
      Narwold
	 	 Telephone:  (781)
      762-0123
	 	 Facsimile:
      (781) 486-9120
	 	 Email:
      karen_narwold@novamerican.com


      

                          

    

    Re:           Exchange
of Warrants
for Common Stock

     

    Ladies
and Gentlemen:

     

    Novamerican
Steel Inc., a Delaware corporation (the “Company”), issued
4,166,667 warrants in a private placement that occurred on March 5, 2007,
787,402 warrants in a private placement that occurred on June 21, 2007 and
1,875,000 warrants included in the units issued in a private placement on
November 15, 2007 (collectively referred to as the “Private
Warrants”).  The Company also issued 18,750,000 warrants in its
initial public offering that occurred on March 12, 2007 (the “Public
Warrants”).  Each such warrant entitles the holder to purchase
one share of the Company’s common stock. The Private Warrants and the Public
Warrants are collectively called the “Warrants.”

     

    This
letter confirms the agreement between the Company and the undersigned (the
“Holder”), to
an exchange of [______] Warrants (consisting of [______] Private Warrants and
[______] Public Warrants and, collectively. the “Exchange Warrants”),
for [_____] shares (the “Exchange Shares”) of
the Company’s common stock, $0.001 par value per share, CUSIP 66986M 100 (the
“Common
Stock”), on the terms set forth herein (the “Exchange”).

     

    1.                      Exchange.

     

    (a)           Subject
to Section 3, the settlement of the Exchange will take place on [__________],
2008 or on such earlier or later date as shall be mutually agreed by the Company
and the Holder (the “Settlement
Date”).

     

    (b)           The
Holder will cause delivery of the Exchange Warrants via The Depository Trust
Company (“DTC”)
or, if the Exchange Warrants are represented by certificates registered in the
name of the Holder or its affiliate(s), via physical delivery of such
certificates to be made to the Company, and the Company will cause delivery to
be made to the Holder via DTC or, if reasonably requested by the Holder, via
physical delivery of such certificates, of the Exchange Shares.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (c)           Upon
consummation of the Exchange and without any further action on the part of the
Holder, on the Settlement Date, the Holder will also have hereby transferred and
assigned to the Company any and all claims of any kind or nature whatsoever that
the Holder has or may have arising out of or relating to the Exchange Warrants
and will have hereby
released the Company, its subsidiaries and its and their respective directors,
officers and employees from any and all claims arising out of or relating to the
Exchange Warrants.

     

    2.                      Representations,
Warranties and Agreements.

     

    (a)           Holder. In connection
with the transactions contemplated hereby, the Holder hereby represents,
warrants, acknowledges and agrees as follows:

     

    (1)           The
Holder (i) is (a) an individual or (b) a corporation, limited liability company,
limited or general partnership, trust or other entity duly organized and validly
existing under the laws of the jurisdiction in which it is organized, (ii) in
the case of an entity, has all organizational power and authority necessary to
execute, deliver and perform this Agreement and consummate the transactions
contemplated hereby and (iii) in the case of an entity, has taken all
organizational action necessary to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby.  This Agreement has been duly executed and
delivered by the Holder and is enforceable against the Holder in accordance with
its terms.  Neither the execution, delivery or performance of this
Agreement nor the consummation of the transactions contemplated hereby by the
Holder violates or contravenes or will violate or contravene any applicable
laws, rules or regulations or any of the Holder’s material agreements, or in the
case of an entity, any of  its organizational documents.

     

    (2)           The
Holder is and, on the Settlement Date, will be the sole record owner
(directly or through DTC) of the Exchange
Warrants.  Upon consummation of the Exchange, the Exchange Warrants
will have been delivered hereunder to the Company, and the Holder will
have conveyed hereunder to the Company good title to the Exchange Warrants, in
each case free and clear of any and all liens, charges or encumbrances of any
kind or nature whatsoever.

     

    (3)           There
are and, on the Settlement Date, will be no beneficial owners of the Exchange
Warrants except as described in filings relating to the Holder and made with the
SEC pursuant to Section 13 or Section 16 of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”).

     

    (4)           The
Holder has not acted or been engaged to act as the Company’s finder, broker,
solicitor, agent or other person acting in a comparable capacity in connection
with the transactions contemplated hereby.  Neither the Holder nor
anyone acting on its behalf has engaged or, prior to the Settlement Date, will
engage any finder, broker, solicitor, agent or other person in a comparable
capacity in connection with the transactions contemplated hereby or any similar
transactions.  Neither the Holder nor anyone acting on its behalf has
received or will receive any commission or remuneration directly or indirectly
in connection with or in order to solicit or facilitate the
Exchange.  There are no contracts, agreements or understandings that
would give rise to a valid claim 

    
      
        
        

      

      
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    against the Company or the Holder for a commission, finder’s fee
or other like payment in connection with the transactions contemplated
hereby.

     

    (5)           The
Holder understands that the Exchange Shares have not been registered under the
Securities Act of 1933, as amended (the “Securities Act”), and
acknowledges that the transactions contemplated hereby are intended to be exempt
from registration by virtue of Section 3(a)(9) of the Securities
Act.  The Holder has not taken and will not take any action that might
subject the offering and the issuance of the Exchange Shares to the registration
requirements of Section 5 of the Securities Act.  The Holder, after
due inquiry, knows of no reason why such exemption will not be available for the
Exchange.

     

    (6)           The
Holder has sufficient experience in business, financial and investment matters
to be able to evaluate the risks involved in the acquisition of the Exchange
Shares and to make an informed investment decision with respect to such
acquisition and the Exchange.  The Holder acknowledges that the
Company has not made and will not make any representation regarding the value of
the Exchange
Warrants or the Exchange Shares.

     

    (7)           The
Holder has (i) reviewed copies of the Company’s quarterly report on Form 10-Q
for the quarter ended May 31, 2008, annual report on Form 10-K for the year
ended November 24, 2007, proxy statement on Schedule 14A dated March 23, 2008,
current reports on Form 8-K and registration statement on Form S-1 originally
filed on June 11, 2008, all as amended and as filed with or furnished to the SEC
(including, without limitation, the disclosures regarding risk factors and
forward- looking statements contained therein), (ii) had such opportunity as it
has deemed adequate to obtain from representatives of the Company such
information as is necessary to permit the Holder to evaluate the merits and
risks of the transactions contemplated hereby and (iii) had full opportunity to
consult with legal, tax and other advisors as it has deemed necessary in
connection with the transactions contemplated hereby.  The Holder
acknowledges that it has not been provided by the Company with any material
nonpublic information, including any information updating the Company’s earnings
guidance or business outlook since the Company’s most recent relevant public
disclosure.

     

    (8)           The
Holder acknowledges that it is aware, through the Company’s public disclosure,
that (i) the Company is highly leveraged and (ii) the Company may from time to
time and at any time (A) at prevailing market prices or otherwise, exchange or
purchase Warrants in open market or privately negotiated transactions for cash
(from cash on hand, borrowings under its ABL credit facility or new credit
facilities, or proceeds from sale of debt or equity securities or assets),
shares of Common Stock or other equity or debt securities, or a combination
thereof, on the same or different terms than those set forth herein, and (B)
seek and obtain consent from the lenders under its ABL credit facility with
respect to any restrictions thereunder applicable to such
transactions.

     

    (b)           Company.  In
connection with the transactions contemplated hereby, the Company hereby
represents, warrants, acknowledges and agrees as follows:

     

    
      
        
        

      

      
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    (1)           The
Company (i) is a corporation duly organized and validly existing under the laws
of Delaware, (ii) has all organizational power and authority necessary to
execute, deliver and perform this Agreement and consummate the transactions
contemplated hereby and (iii) has taken all organizational action necessary to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.  This Agreement
has been duly executed and delivered by the Company and is enforceable against
it in accordance with its terms.  Neither the execution, delivery or
performance of this Agreement nor the consummation of the transactions
contemplated hereby by the Company violates or contravenes or will violate or
contravene any applicable laws, rules or regulations, any of its organizational
documents or any of its material agreements.

     

    (2)           The
Company acknowledges that the Exchange Shares have not been registered under the
Securities Act and that the transactions contemplated hereby are intended to be
exempt from registration by virtue of Section 3(a)(9) of the Securities
Act.  The Company knows of no reason why such exemption will not be
available for the Exchange.

     

    (3)           Based
upon the representations set forth in Sections 2(a)(5) and 2(b)(2), the Exchange
Shares issued in exchange for the Public Warrants will not be restricted
securities within the meaning of the Securities Act and, subject to applicable
securities laws, will be freely transferable by the Holder.  The
certificates representing the Exchange Shares issued in exchange for the Public
Warrants will not bear a restrictive legend under the Securities
Act.  Based upon the representations set forth in Sections 2(a)(5) and
2(b)(2), the Exchange Shares issued in exchange for the Private Warrants will be
restricted securities within the meaning of the Securities Act and will be
transferable by the Holder subject to the same restrictions that are applicable
to the Private Warrants.  The certificates representing the Exchange
Shares issued in exchange for the Private Warrants will bear a restrictive
legend under the Securities Act.

     

    (4)           Upon
consummation of the Exchange, the Exchange Shares will be (i) duly authorized,
validly issued, fully paid and nonassessable and (ii) delivered free and clear
of all liens, claims and encumbrances.

     

    (5)           The
Company is current in its reporting obligations under the Exchange
Act.

     

    3.                      Nasdaq
Listing.  If required by Nasdaq, the Company shall file with
Nasdaq a Listing of Additional Shares Form relating to the Exchange Shares
promptly after the date hereof and shall use all reasonable efforts to cause the
Exchange Shares to be listed as soon thereafter as practicable.

     

    4.                      Termination.

     

    (a)           If
(1) at any time prior to the Settlement Date, trading in the Common Stock on
Nasdaq is suspended or otherwise halted for more than 24 hours or (2) a
postponement described in Section 7 shall have continued more than 30
days  beyond the date hereof, then in any such case, the Holder shall
have the unilateral right to terminate this Agreement by giving the Company
written notice to that effect.  In the event of 

    
      
        
        

      

      
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    termination of this Agreement pursuant to this Section 4(a), all
further obligations of the parties under this Agreement shall terminate without
any further liability of either party to the other party, provided that the
obligations of the parties contained in Sections 6 and 8(a) shall survive such
termination.

     

    (b)           In
the event of a material breach of this Agreement by a party, the other party
shall have the unilateral right to terminate this Agreement by giving written
notice to that effect to the breaching party.  In the event of a
termination of this Agreement pursuant to this Section 4(b), such termination
shall not relieve the breaching party of any liability for such breach hereunder
or be deemed to constitute a waiver of any right or remedy for such
breach.

     

    5.                      Governing
Law. The validity, interpretation, performance and enforcement of this
Agreement shall be governed by the laws of the State of Delaware (without giving
effect to the laws, rules or principles of the State of Delaware regarding
conflicts of laws).  Each party agrees that any proceeding arising out
of or relating to this Agreement or the breach or threatened breach hereof shall
be commenced and prosecuted in a court in the State of Delaware.  Each
party consents and submits to the non-exclusive personal jurisdiction of any
court in the State of Delaware in respect of any such
proceeding.  Each party consents to service of process upon it with
respect to any such proceeding by registered mail, return receipt requested, and
by any other means permitted by applicable laws and rules.  Each party
waives any objection that it may now or hereafter have to the laying of venue of
any such proceeding in any court in the State of Delaware and any claim that it
may now or hereafter have that any such proceeding in any court in the State of
Delaware has been brought in an inconvenient forum.  Each party waives
trial by jury in any such proceeding.

     

    6.                      Confidentiality.  Except
as required by law, the Holder agrees to keep this Agreement and its terms
confidential. Except as required by law, neither party shall make or issue a
public statement that specifically names the other party without the other
party’s written consent (such consent not to be unreasonably withheld or
delayed).  The obligations under this Section 6 shall be additive to
and not in lieu of the obligations under any other confidentiality agreement
between the parties.

     

    7.                      Suspension
of Obligations.  If, at any time on or before the Settlement
Date, an event occurs or circumstances arise as a result of which, based on the
written advice of outside counsel, the Company reasonably and in good faith
believes, that it possesses material nonpublic information and, absent
disclosure of such information, consummation of the Exchange would constitute a
violation of the Securities Act or Exchange Act, the Company shall have the
right to postpone the Settlement Date until such time as such information shall
have become public or the Company believes that such information shall have
ceased to be material, but such postponement shall not continue more than 30
days beyond the date hereof.

     

    8.                      Miscellaneous.

     

    (a)           Expenses.  Except
as otherwise provided in this Agreement and regardless of whether the
transactions contemplated hereby are completed, each party 

     

    
      
        
        

      

      
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    agrees to pay all expenses, fees and costs (including legal,
accounting and consulting expenses) incurred by it in connection with the
transactions contemplated hereby.

     

    (b)           Notices.  All
notices or other communications required or permitted to be given pursuant to
this Agreement shall be given by written notice, shall be transmitted by (1)
personal delivery, (2) registered or certified mail, return receipt requested,
postage prepaid, (3) overnight mail by an internationally recognized courier
service or (4) facsimile or other electronic means (including by email with a
confirmatory receipt) and shall be addressed, in the case of the Company and the
Holder, to the addresses set forth in this Agreement and to the attention of the
individual who is the signatory hereto.

     

    (c)           Amendments.  Any
amendment to this Agreement must be set forth in a written instrument which is
executed and delivered by both of the parties.  Such amendment shall
be effective only to the extent specifically set forth in such written
instrument.

     

    (d)           No
Waivers.  No waiver of any provision hereof shall be binding
upon a party unless such waiver is expressly set forth in a written instrument
which is executed and delivered by such party.  Such waiver shall be
effective only to the extent specifically set forth in such written
instrument.  Neither the exercise (from time to time and at any time)
of, nor the delay or failure (at any time or for any period of time) to
exercise, any right or remedy shall constitute a waiver of the right to
exercise, or impair, limit or restrict the exercise of, such right or remedy or
any other right or remedy at any time and from time to time
thereafter.  No waiver of any right or remedy shall be deemed to be a
waiver of any other right or remedy or shall, except to the extent so waived,
impair, limit or restrict the exercise of such right or remedy.

     

    (e)           Entire
Agreement.  This Agreement, together with any confidentiality
agreement described in Section 6, constitutes the entire agreement between the
parties concerning the subject matter hereof and supersedes any and all prior
representations, understandings and agreements between the parties concerning
such subject matter.

     

    (f)           Assignment.  Neither
party shall assign this Agreement without prior written consent of the other
party.

     

    (g)           Headings; Counterparts;
Facsimile Signatures.  The headings set forth herein have been
inserted for convenience of reference only, shall not be considered a part
hereof and shall not limit, modify or affect in any way the meaning or
interpretation hereof.  This Agreement may be signed in any number of
counterparts, each of which (when executed and delivered) shall constitute an
original instrument, but all of which together shall constitute one and the same
instrument.  This Agreement shall become effective and be deemed to
have been executed and delivered by the parties at such time as counterparts
shall have been executed and delivered by all of the parties, regardless of
whether all of the parties have executed the same counterpart.  It
shall not be necessary when making proof of this Agreement to account for any
counterparts other than a sufficient number of counterparts which, when taken
together, contain signatures of all of 

     

    
      
        
        

      

      
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    the
parties.  A facsimile transmission of this Agreement bearing a
signature on behalf of a party shall be legal and binding on such
party.

     

    (h)           Severability.  If
any provision hereof shall hereafter be held to be invalid, unenforceable or
illegal, in whole or in  part, in any jurisdiction under any
circumstances for any reason, (1) such provision shall be reformed to the
minimum extent necessary to cause such provision to be valid, enforceable and
legal while preserving the intent of the parties as expressed in, and the
benefits to the parties provided by such provision, or (2) if such provision
cannot be so reformed, such provision shall be severed from this Agreement and
an equitable adjustment shall be made to this Agreement (including addition of
necessary further provisions to this Agreement) so as to give effect to the
intent as so expressed and the benefits so provided.  Such holding
shall not affect or impair the validity, enforceability or legality of such
provision in any other jurisdiction or under any other
circumstances.  Neither such holding nor such reformation or severance
shall affect or impair the legality, validity or enforceability of any other
provision hereof.

     

    (i)           Definitions.  For
purposes of this Agreement, “beneficial ownership” and correlative terms shall
have the same meaning as under both Sections 13 and 16 of the Exchange Act and
the General Rules and Regulations under the Exchange Act, “related person” shall
mean any director, executive officer or consultant of the Company or any
beneficial owner of greater than 5% of the Company’s securities and “affiliate”
and “controlling person” shall have the same meanings as under the Securities
Act.

     

    (j)           Further
Assurances.  Each party will perform any and all acts and
execute any and all documents as may be necessary and proper under the
circumstances in order to accomplish the intents and purposes of this
Agreements.

     


    
      
         


      

      
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    If this
letter correctly sets forth our agreement, please so confirm by signing this
letter in the space provided below whereupon this letter shall become a binding
and enforceable agreement.

     

    
      
        	
                Very
      truly yours,

              
	 
      
	
                [_____________],
      as Holder

              
	 
      
	 
      
	
                By:

              	 
      
	 
      	
                Name:

              	 
      
	 
      	
                Title:

              	 
      
	 
      	
                Address:

              	 
      
	 
      	 
      
	 
      	
                Facsimile:

              	 
      
	 
      	
                Email:

              	 
      


      



    


    AGREED AND
ACCEPTED:

    


    NOVAMERICAN
STEEL INC.

    


    


    
      	
              By:

            	 
      	 
      


    

            Name:  Karen G.
Narwold

            Title:  Vice
President, Chief Administrative Officer, General Counsel and
Secretary

    
 


    
      
         


      

      
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