EXHIBIT
4.02


GERDAU
S.A.


CNPJ/MF
No 33.611.500/0001-19


NIRE No
33300032266


A
Publicly Listed Company


EXECUTIVE
STOCK OPTION PLAN TO BE DENOMINATED THE ‘LONG-TERM INCENTIVE PROGRAM’ – FOR
APPROVAL BY THE EXTRAORDINARY SHAREHOLDER’S MEETINGS TO BE HELD ON APRIL 30, 2003.


1.
OBJECTIVES OF THE PROGRAM


1.1.
THE LONG-TERM INCENTIVE PROGRAM (hereafter the “PROGRAM”), which grants call
options for the purchase of shares of GERDAU S.A. (hereafter, “GERDAU”), has
the objectives of:


a –
Attracting and retaining strategic executives;


b –
Offering a long-term system of remuneration;


c –
Sharing the growth and success of GERDAU and its directly and indirectly
controlled subsidiaries;


d –
Strengthening the feeling of participation and collaboration in the company’s
business.


2.
ADMINISTRATION


2.1.
The administration of the PROGRAM shall be the responsibility of the
Compensation and Succession Committee (the “COMITTEE”).


2.2.
The COMMITTEE shall have full authority power regarding the organization,
execution and administration of the PROGRAM, in accordance with the terms and
basic conditions of this plan, the directives of the Board of Directors of
GERDAU and legislation.


2.3.
The COMMITTEE’s powers shall include the right to establish the rules relating
to the granting of stock options on a year-to-year basis.


2.4.
The COMMITTEE shall be responsible for the indication of individuals who
fulfill the requirements and are in the position to be selected as participants
of the PROGRAM, who will be receiving call options to purchase shares, as well
as the relevant number of shares forming the object of the options within the
time limits established herein.


2.5.
In exercising its attributions and its authority with regards to the PROGRAM,
the COMMITTEE shall be subject only to the limits established in item 2.2
above, not being obliged by analogy or rule of isonomy to extend to other
directors, officers or employees in similar situations and conditions it
understands are applicable only to one or more specific beneficiaries.


3
– ELIGIBILITY


3.1.
Individuals eligible for the PROGRAM shall include directors, executive
officers and high-level employees of GERDAU and its directly or indirectly
controlled subsidiaries (which are included in the concept of the Company for
the purposes of this plan). The selection of directors, executive officers and
employees (hereafter, “EXECUTIVE” or “EXECUTIVES”) that may be entitled to
stock options shall be made exclusively by the COMMITTEE.











4
– ENTRY TO THE PROGRAM


4.1.
Admission to the PROGRAM by eligible EXECUTIVES, as defined in the preceding
item, shall, in general, take place during the month of December of each year
unless, exceptionally, the COMMITTEE decides otherwise.


4.2.
The COMMITTEE shall establish, in each case, the periods and conditions for the
right to exercise call options on the basis of the terms stated in the “Option
Contract for the Purchase of Shares under the terms of the Long-Term Incentive
Program for Executives of Gerdau” (The “OPTION CONTRACT”), to be signed by the
EXECUTIVE, in which the following points shall be defined:


a)
the number of shares object of each option and the purchase price per share;


b)
the periods and conditions for the exercise of the call options;


c)
other terms and conditions that the COMMITTEE considers to be relevant that
have not been specified herein.


4.3.
The contracts to which this item refers shall be executed under the
specification hereby determined and in accordance with the terms of Art. 118 of
Law No.
6,404/76 and shall be recorded in the Company’s registers.


5
– SHARES INCLUDED IN THE PROGRAM


5.1.
The granting of call options shall only apply to GERDAU preferred shares, in an
amount equivalent from 10% (ten per cent) to 20% (twenty per cent) per annum of
the basic annual salary of each of the EXECUTIVES selected to take part in the
PROGRAM. For this program, the basic annual salary of these EXECUTIVES shall be
defined as equal to 13 (thirteen) times the monthly salary paid by the company
in the month of December. In the case of directors, the strike price of the
call options may be equivalent to up to 100% (one hundred per cent) of their
annual compensation paid by the Company. The underlying shares of the option
shall be valued at the average market price on the date of the granting of the
option.


6
– ACQUISITION OF THE RIGHT TO EXERCISE OPTIONS


6.1.
As a general rule that may be altered by the COMMITTEE, in each case, the
acquisition of the right to exercise options shall take the following form and
refer to the following periods:


a)
After 5 (five) years elapsed from the first day of the month following the date
of granting of the call options, the EXECUTIVE may exercise his call options.
To this end, he/she shall pay, in accordance with the terms of Item 5.1, a
price per share equivalent to the average market price of the same shares on
the date of the granting of the option.


b)
The exercise of the call option must happen within a maximum period of 5 (five)
years, after which the EXECUTIVE shall no longer be entitled to the right to
this specific tranche of the option.


c)
In the event that GERDAU issues stock bonus during the period until the
effective exercise of the right to buy, the number of shares relating to the
right of exercise of the options shall be increased in proportion to the stock
bonus issues, diluting the price of exercise of the option in the same
proportion.


d)
During this first year of the PROGRAM, call options on company’s shares shall
be granted in the month of April, with the starting date for the grace period
set retroactively at January 1, 2003.


7
– EXERCISE OF THE OPTION


7.1.
The Option may be exercised by the EXECUTIVE in full or in part, in accordance
with the terms of Item 7.2. below.











7.2.
In the event of the partial exercise of the option, the exercising EXECUTIVE
may exercise the remaining portion of his/her rights within the period and in
accordance with the conditions specified in the OPTION CONTRACT.


8
– CONDITIONS OF PAYMENT


8.1.
The price of the acquired shares shall be immediately due, in Brazilian
national currency, unless the COMMITTEE establishes provisions to the contrary,
as specified in the OPTION CONTRACT.


9
–  TAXES


9.1.
Operations to be effected as part of the PROGRAM shall be subject to taxation
in the form established in the law.


10
– EXPIRATION OF THE OPTION


10.1.
The option shall be considered to have expired for all intents and purposes:


a)
as a result of its exercise in full, as established in this PROGRAM;


b)
as a result of the expiration of the exercise period;


c)
as a result of the EXECUTIVE’s departure from the Company.


10.2.
In the event of the involuntary departure of the EXECUTIVE from the Company:


a)
when the EXECUTIVE is dismissed by decision of the Company with no due cause,
the EXECUTIVE that has already acquired the right to exercise as a result of
the ending of the grace period, shall retain this right of exercise for the
contractual period;


b)
when the EXECUTIVE is dismissed with due cause, the EXECUTIVE shall lose the
right to receive any amount relating to the PROGRAM, regardless of whether the
grace period has ended or not.


11
– RETIREMENT OF THE EXECUTIVE


11.1.
In the event of retirement of the EXECUTIVE, as part of the Company’s
retirement plan, the same EXECUTIVE shall be granted the right to exercise the
call options attributed to him/her immediately after the end of his/her work
contract.


12
– DECEASE OF THE EXECUTIVE


12.1.
In the event of the decease of the EXECUTIVE, his/her heirs/heiresses shall
immediately be granted the right to exercise the call options assigned to the
deceased individual, which must be exercised within 2 (two) years of the date
of passing away. In the event of option rights the grace period for which has
already ended in full on a date prior to his/her death, the corresponding
period for the exercise of the options shall be maintained.


13
– PERIOD OF VALIDITY


13.1.
The PROGRAM shall take effect after it is approved by Gerdau’s General
Shareholder’s Meeting, becoming retroactive to January 1, 2003. It may be
terminated at any time by decision of the Board of Directors, albeit honoring
the OPTION CONTRACTS that have already been signed.











14
– ALTERATIONS OR TERMINATION OF THE PROGRAM


14.1.
By decision of the Board of Directors, alterations may be made to the PROGRAM,
in the event that the gains proposed under the Compensation Policy diverge
significantly from the objective established for Direct Remuneration.


14.2.
In the event that it is necessary to implement changes or to terminate the
PROGRAM, such events shall be announced to the EXECUTIVES in writing with at least
30 (thirty) days’ prior notice, as of the date of modification or termination.


14.3.
The modifications to or termination of the PROGRAM shall not affect OPTION
CONTRACTS that have already been signed.


14.4
In the event of modifications to or the termination of the PROGRAM:


a)
GERDAU shall not be under any obligation to reestablish the PROGRAM or
compensate the EXECUTIVES for expected future gains or losses;


b)
in the event that the PROGRAM is modified, any subsequent profit opportunity
may be implemented in accordance with terms that differ from those previously
established.


15
– GENERAL CONDITIONS


15.1.
In the event of a change in control of GERDAU, options attributed to EXECUTIVES
more than 12 months prior to the event shall be considered as free for exercise,
regardless of whether their respective grace period has ended.


15.2.
Whenever the EXECUTIVE decides to sell shares of his/her property, the Company
shall have priority in buying these shares at the market price of the day of
the operation. When the EXECUTIVE decides to divest his/her shares, he/she must
give 2 (two) business days prior notice to GERDAU, the Company having a
preferential right to purchase these shares until the immediately preceding
business day, with the Company undertaking to pay the EXECUTIVE the purchase
price within 2 (two) business days of the date of exercise of its preferential
right.


15.3.
EXECUTIVES who are beneficiaries of the PROGRAM shall be subject to restrictive
rules on the use of privileged information applying to publicly listed
companies in general, as well as to rules for the trading of securities of
publicly listed companies within the special segment of the São Paulo Stock
Exchange (“BOVESPA”) that apply to GERDAU.


15.4.
In the event of the granting and subsequent exercise of the call options object
of this PROGRAM, shareholders shall not enjoy preference rights in accordance
with the terms of Art. 171, §3 of Law 6,404/76.