1
EXH. 4.1
CREDIT AGREEMENT
OLYMPIC STEEL, INC.
("Borrower")
NATIONAL CITY BANK
AND
THE BANKS SIGNATORY HERETO OR
THAT BECOME PARTIES HERETO
("Banks")
NATIONAL CITY BANK, AGENT
dated as of
October 4, 1996
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TABLE OF CONTENTS
PAGE
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1A. CROSS-REFERENCE................................................................................... 1
1B. SUMMARY........................................................................................... 1
2A. COMMITMENTS....................................................................................... 1
2A.01 SUBJECT REVOLVING CREDIT LOANS AND
LETTERS OF CREDIT AMOUNTS.............................................................. 1
2A.02 TERM................................................................................... 1
2A.03 OPTIONAL REDUCTIONS.................................................................... 2
2A.04 COMMITMENT FEE......................................................................... 2
2A.05 EXTENSION OF SUBJECT COMMITMENTS....................................................... 3
2B. SUBJECT LOANS..................................................................................... 3
2B.01 SUBJECT NOTES.......................................................................... 3
2B.02 LOAN MIX............................................................................... 4
2B.03 AMOUNTS................................................................................ 4
2B.04 CONTRACT PERIODS....................................................................... 4
2B.05 MATURITIES............................................................................. 4
2B.06 ROLLOVER............................................................................... 5
2B.07 INTEREST RATES AND LETTER OF CREDIT COMMISSIONS........................................ 5
2B.08 MARGIN COMPUTATIONS.................................................................... 6
2B.09 PAYMENT OF INTEREST.................................................................... 7
2B.10 DISBURSEMENT........................................................................... 7
2B.11 OPTIONAL PREPAYMENTS................................................................... 7
2C. LETTERS OF CREDIT................................................................................. 8
2C.01 ROUNDING OF AMOUNTS.................................................................... 8
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2C.02 SUBJECT LOAN BACK-UP................................................................... 8
2C.03 EXCULPATION............................................................................ 9
2C.04 AMENDMENTS............................................................................. 9
2C.05 COMMISSION............................................................................. 9
2D. GENERAL TERMS AND CONDITIONS...................................................................... 10
2D.01 CREDIT REQUESTS........................................................................ 10
2D.02 CONDITION: NO DEFAULT................................................................. 10
2D.03 CONDITION: PURPOSE.................................................................... 10
2D.04 PAYMENTS............................................................................... 11
2D.05 NOTICE................................................................................. 11
2D.06 LIBOR LOANS: UNAVAILABILITY........................................................... 11
2D.07 LIBOR LOANS: ILLEGALITY............................................................... 11
2E. SECURITY FOR EXISTING SUBJECT LCs................................................................. 12
2E.01 EXISTING SUBJECT LCs................................................................... 12
2E.02 ENVIRONMENTAL INDEMNITY................................................................ 12
2F. GUARANTY OF SUBSIDIARIES OF SUBJECT LOANS AND
SUBJECT LCs....................................................................................... 12
2F.01 OSLI AND OSMI GUARANTY OF PAYMENT...................................................... 12
3A. INFORMATION....................................................................................... 13
3A.01 FINANCIAL STATEMENTS................................................................... 13
3A.02 NOTICE................................................................................. 14
3B. GENERAL FINANCIAL STANDARDS....................................................................... 14
3B.01 NET WORTH.............................................................................. 15
3B.02 LEVERAGE............................................................................... 15
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3B.03 INTEREST COVERAGE...................................................................... 15
3C. AFFIRMATIVE COVENANTS............................................................................. 15
3C.01 TAXES AND CLAIMS....................................................................... 15
3C.02 FINANCIAL RECORDS AND STATEMENTS...................................................... 16
3C.03 VISITATION............................................................................. 16
3C.04 INSURANCE.............................................................................. 16
3C.05 CORPORATE EXISTENCE.................................................................... 17
3C.06 COMPLIANCE WITH LAW.................................................................... 17
3C.07 PROPERTIES............................................................................. 17
3C.08 ERISA.................................................................................. 17
3C.09 NOTICES/REPORTS TO THIRD PARTIES....................................................... 18
3C.10 ANNUAL AGENT'S FEE..................................................................... 18
3D. NEGATIVE COVENANTS................................................................................ 18
3D.01 EQUITY TRANSACTIONS.................................................................... 18
3D.02 BORROWINGS............................................................................. 19
3D.03 LIENS.................................................................................. 19
3D.04 FIXED ASSETS........................................................................... 20
3D.05 ENVIRONMENTAL COMPLIANCE............................................................... 21
4A. CLOSING........................................................................................... 21
4A.01 SUBJECT NOTES.......................................................................... 21
4A.02 SUBJECT GUARANTIES..................................................................... 21
4A.03 ENVIRONMENTAL INDEMNITY AGREEMENT...................................................... 21
4A.04 BORROWER CORPORATE DOCUMENTS........................................................... 21
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4A.05 OSLI AND OSMI CORPORATE DOCUMENTS...................................................... 21
4A.06 LEGAL OPINION.......................................................................... 22
4B. WARRANTIES........................................................................................ 22
4B.01 EXISTENCE.............................................................................. 22
4B.02 GOVERNMENTAL RESTRICTIONS.............................................................. 22
4B.03 CORPORATE AUTHORITY.................................................................... 22
4B.04 LITIGATION............................................................................. 23
4B.05 TAXES.................................................................................. 23
4B.06 TITLE.................................................................................. 23
4B.07 LAWFUL OPERATIONS...................................................................... 23
4B.08 ERISA COMPLIANCE....................................................................... 23
4B.09 INSURANCE.............................................................................. 23
4B.10 NO MATERIAL ADVERSE CHANGE............................................................. 23
4B.11 FINANCIAL STATEMENTS................................................................... 24
4B.12 DEFAULTS............................................................................... 24
5A. EVENTS OF DEFAULT................................................................................. 24
5A.01 PAYMENTS............................................................................... 24
5A.02 WARRANTIES............................................................................. 24
5A.03 COVENANTS.............................................................................. 24
5A.04 REVOCATION OF SUBJECT GUARANTIES....................................................... 24
5A.05 CROSS-DEFAULT.......................................................................... 24
5A.06 FINAL JUDGMENT......................................................................... 25
5A.07 BORROWER/OSLI/OSMI SOLVENCY............................................................ 25
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5B. EFFECTS OF DEFAULT................................................................................ 25
5B.01 OPTIONAL DEFAULTS...................................................................... 25
5B.02 AUTOMATIC DEFAULTS..................................................................... 26
5B.03 SUBJECT LCs............................................................................ 26
5B.04 OFFSETS................................................................................ 26
5B.05 EQUALIZATION........................................................................... 27
6A. INDEMNITY: STAMP TAXES........................................................................... 27
6B. INDEMNITY: GOVERNMENTAL COSTS/FIXED-RATE LOANS................................................... 27
6C. INDEMNITY: PREPAYMENT/LIBOR LOANS................................................................ 27
6D. CREDIT REQUESTS................................................................................... 28
6E. INDEMNITY: UNFRIENDLY TAKEOVERS.................................................................. 28
6F. INDEMNITY: GOVERNMENTAL COSTS/SUBJECT LCs........................................................ 28
6G. INDEMNITY: MISCELLANEOUS COSTS/SUBJECT LCs....................................................... 28
6H. INDEMNITY: CAPITAL REQUIREMENTS.................................................................. 28
6I. INDEMNITY: COLLECTION COSTS...................................................................... 29
6J. CERTIFICATE FOR INDEMNIFICATION................................................................... 29
7A. BANKS' PURPOSE.................................................................................... 29
7B. NCB-AGENT......................................................................................... 29
7B.01 COMPENSATION........................................................................... 30
7B.02 NO RELIANCE ON NCB-AGENT............................................................... 30
7B.03 NCB-AGENT'S EXCULPATION................................................................ 30
7B.04 DISBURSEMENTS.......................................................................... 30
7B.05 NCB-AGENT'S INDEMNITY.................................................................. 31
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7B.06 ACTIONS AFTER A DEFAULT UNDER THIS AGREEMENT........................................... 31
7B.07 ACTIONS REQUIRING CONSENT OF A MAJORITY OF THE
BANKS.................................................................................. 32
7B.08 ACTIONS REQUIRING CONSENT OF ALL BANKS................................................. 32
7B.09 ACTIONS BY AGENT....................................................................... 32
7B.10 RESIGNATION OF AGENT................................................................... 32
8. INTERPRETATION.................................................................................... 33
8.01 WAIVERS................................................................................ 33
8.02 CUMULATIVE PROVISIONS.................................................................. 33
8.03 BINDING EFFECT......................................................................... 33
8.04 SURVIVAL OF PROVISIONS................................................................. 34
8.05 IMMEDIATE U.S. FUNDS................................................................... 34
8.06 CAPTIONS............................................................................... 34
8.07 SUBSECTIONS............................................................................ 34
8.08 ILLEGALITY............................................................................. 34
8.09 OHIO LAW............................................................................... 34
8.10 INTEREST/FEE COMPUTATIONS.............................................................. 34
8.11 NOTICE................................................................................. 34
8.12 ACCOUNTING TERMS....................................................................... 35
9. DEFINITIONS....................................................................................... 35
10. EXECUTION......................................................................................... 41
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CREDIT AGREEMENT
This Credit Agreement is made as of October 4, 1996, by and among
OLYMPIC STEEL, INC. ("Borrower") and NATIONAL CITY BANK ("NCB") and the other
Banks signatory hereto or that become parties hereto by amendment or supplement
hereto ("Banks"), and NATIONAL CITY Bank, as agent (in that capacity,
"NCB-Agent"), of the Banks for the purposes of this Agreement and the related
writings.
1A. CROSS-REFERENCE -- Certain terms are defined in Section 9.
1B. SUMMARY -- This Agreement (a) sets forth the terms and
conditions upon which Borrower may obtain (i) subject loans ratably from the
Banks that are on a revolving credit basis and (ii) subject LCs issued by NCB in
which the Banks agree to ratably share the obligations in respect thereof, in
each case, until the expiration date, (b) provides for additional subject loans
to be made ratably by the Banks and to be disbursed to NCB for Borrower's
account in the event of a default by Borrower in making payments due under the
subject reimbursement agreement (the Banks' obligations in respect of the
subject loans and subject LCs shall be on the same ratable basis) and (c) sets
forth covenants and warranties made by the parties to induce each other to enter
into this Agreement and contains other material provisions.
2A. COMMITMENTS -- The basic terms of the commitments by the Banks
and the compensation therefor are as follows:
2A.01 SUBJECT REVOLVING CREDIT LOANS AND LETTERS OF CREDIT
AMOUNTS -- The aggregate amount of the commitments by the Banks
for subject revolving credit loans and additional subject LCs
shall be Fifty Million Dollars ($50,000,000). The aggregate amount
of the subject commitments for additional subject LCs shall not
exceed Five Million Dollars ($5,000,000). The aggregate amount of
the subject commitments for the subject revolving credit loans and
additional subject LCs may be reduced from time to time pursuant
to subsection 2A.03 and the subject commitments may be terminated
pursuant to Section 5B. The aggregate amount of the subject
commitments by the Banks for existing subject LCs is Ten Million
Nine Hundred Twenty-Four Thousand Three Hundred Dollars
($10,924,300), but that amount may be reduced from time to time
pursuant to subsection 2A.03 and the subject commitments may be
terminated pursuant to Section 5B. The amount of each Bank's
subject commitment to make subject revolving credit loans to
Borrower and to participate in respect of additional LCs and
existing LCs (subject to such reduction or termination), and the
proportion (expressed as a percentage) that it bears to all of the
subject commitments, is set forth opposite the Bank's name on
SCHEDULE 2A.01 hereto.
2A.02 TERM -- (a) Each subject commitment shall become
effective as of the date of this Agreement and shall remain in
effect until June 30, 1999 (the "expiration date") EXCEPT that (i)
a later expiration date may be established from time to time
pursuant to subsection 2A.05, (ii) the subject commitments shall
end in any event upon any earlier reduction thereof to zero
pursuant to subsection 2A.03 or any earlier termination pursuant
to Section 5B, and (iii) the commitment relating to any existing
LC
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shall remain in effect until the stated expiration date thereof,
even if such date is later than the expiration date.
2A.03 OPTIONAL REDUCTIONS -- Borrower shall have the right,
at all times and without the payment of a premium, to permanently
reduce the subject commitments for the subject revolving credit
loans, in whole or in part, by giving NCB-Agent notice in the form
of EXHIBIT 2A.03 attached hereto (to be given not later than 12:00
noon of the Banking day next preceding the effective date of the
reduction and either to be given in writing or to be promptly
confirmed in writing) of the aggregate amount by which the subject
commitments are to be reduced and the effective date thereof.
(a) No such reduction shall reduce any Bank's
subject commitment to a lesser amount than the difference
of:
(1) that Bank's subject commitment as in
effect at that time less
(2) the aggregate unpaid principal balance of
that Bank's subject loans then outstanding and its
ratable share of any outstanding subject LCs.
(b) Each such reduction of the subject commitments
shall aggregate five hundred thousand dollars ($500,000) or
any multiple thereof.
(c) Each reduction shall be allocated ratably
among the subject commitments.
(d) Concurrently with each reduction Borrower shall
make a principal payment on each Bank's subject loans then
outstanding in a principal amount equal to the excess, if
any, of the then aggregate unpaid principal balance of that
Bank's subject loans over that Bank's subject commitment as
so reduced. Subsection 2B.11 and Section 6C shall apply to
each such prepayment.
2A.04 COMMITMENT FEE -- Each Bank shall, so long as its
subject commitment remains in effect, earn a commitment fee
(a) based on the average daily difference between
the amount of that Bank's subject commitment for revolving
credit loans and additional subject LCs from time to time in
effect and the then aggregate unpaid principal balance of
the subject revolving credit loans then owing to that Bank
and the outstanding amount of additional subject LCs,
(b) computed at the rate of one-fourth of one
percent (1/4%) per annum and
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(c) payable in arrears by Borrower to NCB-Agent for
the account of the Banks quarterannually as of the last
business day of March, June, September and December and at
the end of the subject commitment.
2A.05 EXTENSION OF SUBJECT COMMITMENTS -- Whenever Borrower
furnishes its audited financial statements to the Banks pursuant
to clause (b) of subsection 3A.02, Borrower may request that the
subject commitments be extended to the June 30 next following the
expiration date then in effect.
(a) Each such request shall be executed and
delivered to NCB-Agent and shall be in the form of that set
forth in EXHIBIT 2A.05 with the blanks appropriately filled.
NCB-Agent shall deliver a copy of such request to each Bank
with instructions to consent to or reject such request.
(b) The Banks agree to give consideration to each
such request, but in no event shall any Bank be committed to
extend, or be deemed to have extended, its subject
commitment unless and until every Bank shall have executed
and delivered its consent thereto, as set forth at the
conclusion of EXHIBIT 2A.05 or another Bank or other Banks
shall have assumed the entire commitment of any Bank
refusing to consent thereto and NCB-Agent shall have
confirmed in writing extension of the subject commitments to
the Banks and Borrower.
2B. SUBJECT LOANS -- Each Bank (for itself only and not for the
others) agrees, subject to the conditions of this Agreement, that so long as
that Bank's subject commitment remains in effect, it will grant Borrower the
subject loans, up to the amounts specified to be loaned by it in subsection
2A.01, pursuant to this Agreement as Borrower may from time to time request.
2B.01 SUBJECT NOTES -- Each Bank's subject revolving credit
loan and participation in respect of additional LCs and existing
subject LCs shall be evidenced by a subject note executed and
delivered by Borrower, payable to the order of that Bank in the
principal amount equal to the dollar amount of that Bank's
aggregate subject commitment therefor set forth in Section 2A.01.
Each subject note shall be in the form and substance of EXHIBIT
2B.01 with the blanks appropriately filled.
(a) Whenever Borrower obtains a series of subject
loans pursuant to this Agreement, each Bank shall make an
appropriate entry into a loan account maintained in that
Bank's books and records. Each entry shall be prima facie
evidence of the data so entered; but such entries shall not
be a condition to Borrower's obligation to pay.
(b) No holder of any subject note shall transfer a
subject note, or seek a judgment or file a proof of claim
based on a subject note without in each case first endorsing
the subject note to reflect the true amount owing thereon.
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2B.02 LOAN MIX -- The subject loans at any one time
outstanding shall consist of prime rate loans or LIBOR loans or
any combination thereof as Borrower may from time to time duly
elect.
2B.03 AMOUNTS -- Each borrowing shall be a series of subject
loans, one by each Bank, which shall be divided ratably among the
Banks in accordance with the respective subject commitments of
each Bank and shall be in such aggregate principal amount as
Borrower may request subject, however, to the following:
(a) The aggregate principal amount of prime rate
loans shall be in any whole dollar amount unless the
proceeds thereof are to be used for any draft drawn and paid
in respect of any subject LC, in which case the aggregate
principal amount shall be equal to the amount to be paid to
NCB-Agent, and in the case of LIBOR loans, shall be one
million dollars ($1,000,000) or any greater amount that is a
multiple of one million dollars ($1,000,000).
(b) In no event shall any Bank's subject loans
(other than any made pursuant to subsection 2C.02) exceed an
aggregate principal amount equal to the amount of its
subject commitment as then in effect.
(c) No subject loan (other than any made pursuant
to subsection 2C.02) shall be made if, after giving effect
thereto, the aggregate unpaid principal balance of the
subject loans would exceed the amount of the subject
commitments then in effect.
2B.04 CONTRACT PERIODS -- Each series of LIBOR loans shall
have applicable thereto a contract period to be duly elected by
Borrower in the credit request therefor. Each contract period
shall begin on the date of borrowing and shall end on a date (to
be selected by Borrower) that is one month or two or three or six
months after the date of borrowing, EXCEPT that in no event shall
the date so selected be later than the expiration date; PROVIDED,
that
(a) if any such contract period otherwise would end
on a day that is not a Banking day, it shall end instead on
the next following Banking day unless that day falls in
another calendar month or, if not in the same month, shall
end instead on the next preceding Banking day, and
(b) if the contract period commences on a day for
which there is no numerical equivalent in the calendar month
in which the contract period is to end, it shall end on the
last Banking day of that calendar month.
2B.05 MATURITIES -- The maturity of each prime rate loan
shall be the expiration date. The maturity of each LIBOR loan
shall be the last day of the contract period applicable thereto.
In no event, however, shall the contract period for any LIBOR loan
be later than the expiration date of any subject revolving credit
loan.
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2B.06 ROLLOVER -- If (a) any series of LIBOR loans shall not
be paid in full at the stated maturity thereof, (b) Borrower shall
have failed to duly give NCB-Agent a timely credit request in
respect thereof and (c) no event of default shall then exist,
Borrower shall be deemed to have duly given NCB-Agent a timely
credit request to obtain (and at that maturity the Banks shall
make) a series of prime rate loans in an aggregate principal
amount equal to the aggregate unpaid principal of series of LIBOR
loans then due; PROVIDED, that no such prime rate loan shall of
itself cure any then-existing default under this Agreement. The
proceeds of such series of prime rate loans shall be applied to
the payment in full of the LIBOR loans then due.
2B.07 INTEREST RATES AND LETTER OF CREDIT COMMISSIONS--(a)
Prior to maturity, the principal of subject revolving credit loans
shall bear interest at the per annum rates and the commissions on
the subject letters of credit (in both cases, computed in
accordance with subsection 8.10) as calculated based on the
following:
(i) Prime rate loans shall bear interest at a
fluctuating rate equal to the prime rate from time to time
in effect, with each change in the prime rate automatically
and immediately changing the rate thereafter applicable to
the prime rate loans plus the applicable prime rate margin
as determined in accordance with the following table;
(ii) LIBOR loans shall bear interest at a rate
equal to the LIBOR pre- margin rate in effect at the start
of the applicable contract period (except that any change in
the FRB reserve percentage shall automatically and
immediately change the LIBOR pre-margin rate thereafter
applicable to the LIBOR loans) applicable LIBOR margin as
determined in accordance with the following table;
(iii) Commissions on existing subject LCs have been
paid in advance through the respective dates set forth on
EXHIBIT 2B.07(III). Commencing after such dates commissions
on all subject LCs shall be adjusted quarterly on the last
business day of each March, June, September and December of
each year on the basis of the applicable percentage as
determined in accordance with the following table:
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=============================================================================================================================
then, both the applicable
If the Borrower's and the Borrower's LIBOR margin and the and the applicable
Liabilities to Worth EBIT to Interest Ratio applicable letter of credit prime rate margin
Ratio is: is: commission shall be equal to: equals:
=============================================================================================================================
less than or equal to greater than or equal to 62.5 basis points 0
.75:1 4.50:1
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greater than .75:1 but less than 4.50:1 but 75 basis points 0
less than or equal to greater than or equal to
1.25:1 3.50:1
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greater than 1.25:1 but less than 3.50:1 but 100 basis points 0
less than or equal to greater than or equal to
1.75:1 3.00:1
-----------------------------------------------------------------------------------------------------------------------------
greater than 1.75:1 less than 3.00:1 125 basis points 0
=============================================================================================================================
Both the liabilities-to-worth ratio and EBIT to interest ratio
must be satisfied in order for the corresponding applicable prime
rate margin, applicable LIBOR margin and applicable letter of
credit commission to be effective, and if either the specific
liabilities to worth ratio or EBIT to interest ratio is not
satisfied, then the next highest prime rate margin, LIBOR margin
or applicable letter of credit commission shall be applicable.
(b) After maturity (whether occurring by lapse of
time or by acceleration), the prime rate loans shall bear
interest at a fluctuating rate equal to the prime rate from
time to time in effect plus two percent (2%) per annum;
PROVIDED, that in no event shall the rate applicable to the
prime rate loans after the maturity thereof be less than the
rate applicable thereto immediately before maturity and each
LIBOR loan shall bear interest computed and payable in the
same manner as in the case of prime rate loans EXCEPT that in
no event shall any LIBOR loan bear interest after maturity at
a lesser rate than that applicable thereto immediately before
maturity.
2B.08 MARGIN COMPUTATIONS -- The appropriate prime rate
margin and LIBOR margin applicable to the subject loans and the
appropriate letter of credit commission applicable on and after
the date hereof shall be as stated in the table set forth in
subsection 2B.07 based upon Borrower having a liabilities to worth
ratio greater than .75:1 but less than or equal to 1.25:1 and EBIT
to interest ratio of less than 4.50:1 but greater than or equal to
3.50:1. The appropriate prime rate margin and LIBOR margin
applicable to the subject loans and the appropriate letter of
credit commission shall be adjusted as of the first day of each
March, June, September and December of each year on the basis of
Borrower's financial statements prepared for a period of four (4)
successive quarter-annual fiscal periods and as at the end of a
quarter-annual fiscal period or fiscal year (as the case may be)
ending two months and one day prior to the adjustment date in
question and, as so adjusted, shall remain in effect for, and
apply to, the subject loans during the entire period of three
months then beginning. The Borrower shall submit to NCB-Agent a
schedule in the form of EXHIBIT 3A.01(D) showing the calculations
necessary to make such adjustments. Each adjustment made as of any
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March 1 shall, however, be made tentatively on the basis of
Borrower's then most recent unaudited financial statements and, if
the audited figures are different from the unaudited, the prime
rate margin, the LIBOR margin and letter of credit commission
applicable to the period in question shall be readjusted
retroactively as of March 1 on the basis of the audited financial
statements when they are furnished to the Banks. In the event of
any such retroactive readjustment,
(a) no default under this Agreement shall be deemed
to have occurred by reason of any underpayment of interest
made by Borrower in reliance on the tentative adjustment,
(b) in the case of an underpayment, Borrower shall
pay the difference to the Banks concurrently with furnishing
the audited financial statements to Bank and
(c) in the case of an overpayment each Bank shall,
within ten (10) days after the furnishing of the audited
financial statements, credit the overpayment received by it
to the subject indebtedness.
2B.09 PAYMENT OF INTEREST -- Interest on the prime rate
loans shall be payable in arrears on the first day of each
January, April, July and October and at maturity. Interest on each
LIBOR loan shall be payable in arrears on the last day of the
contract period applicable thereto except in the case of LIBOR
loans having a six month contract period in which case payments
shall also be made at the end of three months. Overdue interest on
any subject loan shall be payable on demand.
2B.10 DISBURSEMENT -- Each subject loan may be disbursed
from any office selected by the Bank making that subject loan and
shall be disbursed, in immediately available funds, to the credit
of any account maintained by Borrower with that Bank or with NCB
in accordance with Borrower's instructions in the applicable
credit request not later than 12:00 noon Cleveland time on the
Banking day specified in the credit request.
2B.11 OPTIONAL PREPAYMENTS -- Borrower may from time to time
prepay the principal of the prime rate loans in whole or in part
and may from time to time prepay the principal of any series of
LIBOR loans in whole or in part, subject to the following:
(a) Borrower shall give NCB-Agent a notice of
prepayment (which may be telephonic, written or by
facsimile, as selected by the Borrower, and which notice
shall be irrevocable) not later than 12:00 noon on the
Banking day next preceding any such prepayment. If any
notice of prepayment is not made in writing, Borrower hereby
assumes the risk of misunderstanding by NCB- Agent.
NCB-Agent shall give each Bank prompt notice of each notice
of prepayment.
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(b) Each prepayment of prime rate loans shall
aggregate not less than the principal amount of one thousand
dollars ($1,000) or an amount equal to the then aggregate
principal outstanding and shall be allocated ratably to the
subject loans. Each prepayment of LIBOR loans shall
aggregate one million dollars ($1,000,000) or any greater
amount that is a multiple of five hundred thousand dollars
($500,000) or an amount equal to the aggregate unpaid
principal balance of that series and shall be applied
ratably to that series and shall be allocated ratably to the
subject loans comprising the series.
(c) Each prepayment of the prime rate loans may be
made without penalty or premium. Any prepayment of any LIBOR
loans (regardless of the reason for the prepayment) shall be
subject to the payment of any indemnity required by Section
6C.
2C. LETTERS OF CREDIT -- NCB-Agent, in NCB's name but only as
agent for the Banks, has issued or may, in the future, issue subject LCs for
Borrower's account and Borrower executed and delivered the subject reimbursement
agreements to NCB-Agent, again in NCB's name but only as agent for the Banks.
Each Bank shall participate in the risk of the subject LCs and the subject
reimbursement agreements to the extent of that Bank's ratable share of each such
risk. With respect to such additional subject LCs issued in the future for
Borrower's account, Borrower shall execute and deliver to NCB-agent, again in
NCB's name but only as agent for the Banks, reimbursement agreements
substantially in the form of the subject reimbursement agreements relating to
the existing subject LCs.
2C.01 ROUNDING OF AMOUNTS -- Inasmuch as the aggregate face
amount of existing subject LCs is Ten Million Nine Hundred
Twenty-Four Thousand Three Hundred Dollars ($10,924,300), it is
conceivable that each Bank's ratable share of any given risk may
be an amount including a fraction of a ▇▇▇▇▇. NCB-Agent is hereby
irrevocably authorized to round each such amount to the nearest
whole dollar. In the event additional subject LCs are issued by
NCB, the dollar amount of each Bank's prorata participation in the
risk of such subject LCs and the subject reimbursement agreements
relating thereto shall be adjusted accordingly.
2C.02 SUBJECT LOAN BACK-UP -- Borrower agrees that in the
event Borrower for any reason fails to make a timely reimbursement
(together with interest, if any, thereon) to NCB in respect of any
draft or other item paid by NCB in respect of the LC, NCB-Agent is
irrevocably authorized and granted power of attorney to act for
Borrower, solely for the purpose in each instance, of preparing,
signing Borrower's name to, and delivering on Borrower's behalf an
appropriate credit request requesting a series of prime rate loans
in an aggregate amount equal to the reimbursement amount plus any
interest thereon. The Banks agree that on the specified date, the
Banks will make the requested prime rate loans even if any default
under this Agreement shall then exist and even if Borrower for any
other reason would, but for this provision,
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then not be entitled to obtain any subject loan. NCB-Agent
shall disburse all such loan proceeds directly to NCB to satisfy
Borrower's aforesaid reimbursement liability.
2C.03 EXCULPATION -- The obligation of the Banks to make,
and of Borrower to pay, each series of prime rate loans made
pursuant to subsection 2C.02 shall be absolute and unconditional
and shall be performed under all circumstances, including (without
limitation) (1) any lack of validity or enforceability of the
subject LC, (2) the existence of any claim, offset, defense or
other right that Borrower may have against the beneficiary of the
subject LC, (3) the existence of any claim, offset, defense or
other right that any Bank may have against Borrower or against the
beneficiary of the subject LC or against any successor in interest
owing to the foregoing, (4) the existence of any fraud or
misrepresentation in the presentment of any draft or other item
drawn and paid under the subject LC or (5) any payment of any
draft or other item by NCB-Agent which does not strictly comply
with the terms of the subject LC provided such payment shall not
have constituted gross negligence or willful misconduct.
2C.04 AMENDMENTS -- NCB agrees not to extend the term of any
subject LC beyond the expiration date (or, if later, the stated
maturity date of such subject LC) to increase the amount of any
subject LC or to assent to any other amendment of the subject LC
or the reimbursement agreement that would increase the obligations
of the Banks to make prime rate loans in respect of reimbursement
of drawings thereon or reduce Borrower's obligation to reimburse
NCB for any drawings on subject LCs without in each case obtaining
the written consent of all of the Banks.
2C.05 COMMISSION -- In lieu of any commissions provided in
any letter of credit application (other than any standard fee for
the issuance, amendment or registration or any similar act
generally charged by NCB in respect of letters of credit issued by
it, which standard fees, if any, may be retained by NCB-Agent as
compensation for its services), Borrower hereby agrees that so
long as the subject LC remains outstanding and subject to having
any draft drawn pursuant thereto, Borrower will, on the last
business days of each March, June, September and December so long
as each subject LC is outstanding, pay, in advance, to NCB-Agent a
commission on the outstanding amount of each subject LC calculated
in accordance with Section 2B.07. NCB shall be entitled to
one-eighth of one percent (1/8 of 1%) of each such commission as
compensation for its services and all of the Banks (including NCB)
shall share ratably in the balance of each such commission.
NCB-Agent shall forward to each Bank that Bank's ratable share of
the balance of each such commission promptly upon NCB- Agent's
receipt thereof. NCB-Agent will also forward to each Bank its
ratable share of any commissions on existing subject LCs that have
been paid in advance prior to the date of this Agreement to the
extent that such commissions relate to a period after the date of
this Agreement.
2D. GENERAL TERMS AND CONDITIONS -- The subject commitments shall
be subject to the following additional terms and conditions:
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17
2D.01 CREDIT REQUESTS -- Whenever Borrower desires to obtain
a series of subject loans, Borrower shall give NCB-Agent a "credit
request" (which may be telephonic, written or by facsimile, as
selected by the Borrower). The credit request shall be
irrevocable, shall be given to NCB-Agent not later than 1:00 p.m.
Cleveland time (a) on the Banking day on which the subject loans
(other than any LIBOR loans and other than any obtained at the
execution and delivery of this Agreement) are to be obtained and
(b) three (3) Banking days prior to the date any LIBOR loans are
to be obtained. Any credit request for subject LC shall identify
the party to which such subject LC is to be issued, the amount
thereof, the terms for a draw thereon and an expiration date for
the subject LC that is not later than the third business day
before the expiration date of the subject commitment in such form
as NCB may require.
If any credit request is not made in writing, Borrower
hereby assumes the risk of misunderstanding by NCB-Agent.
NCB-Agent shall give each Bank prompt notice of each credit
request.
2D.02 CONDITION: NO DEFAULT -- Borrower shall not be
entitled to obtain any subject loan (other than any of the
proceeds of which are applied solely to reimburse NCB-Agent for
any draft or other item drawn and paid in respect of the subject
LC) or have any subject LC issued if
(a) any default under this Agreement shall then
exist or would thereupon begin to exist or
(b) any representation or warranty made in
subsections 4B.01 through 4B.10 (both inclusive) and not
referring to a specific date shall have ceased to be true
and complete in any material respect.
Each credit request by Borrower shall, of itself, constitute
a continuing representation and warranty by Borrower to NCB-Agent
for the benefit of the Banks, both at that delivery and at the
date the subject loans or subject LCs in question are made or
issued, that Borrower's representations and warranties in this
Agreement are true and correct in all material respects and that
Borrower is entitled to obtain the subject loans or have the
subject LCs issued and that the Banks (or NCB in the case of
subject LCs) are obligated to make or issue them. In the case of
any subject LCs being issued, Borrower will have executed and
delivered to NCB-Agent any subject reimbursement agreement. The
provisions of this subsection 2D.02 shall not be applicable to any
subject loan which is made solely as a prime rate loan in
repayment of any LIBOR loan on the last day of the contract period
applicable thereto or as a prime rate loan made pursuant to
Section 2C.02.
2D.03 CONDITION: PURPOSE -- Borrower shall not use the
proceeds of any subject loan or subject LC in any manner that
would violate or be inconsistent with Regulation U or X of the
Board of Governors of the Federal Reserve System; nor will it use
any such proceeds for the purpose of financing the acquisition of
any corporation or other business entity if the acquisition is
opposed by the latter's board of directors and
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18
if any Bank deems that its participation in the financing of
the acquisition would involve it in a conflict of interest.
2D.04 PAYMENTS -- All payments (including prepayments) of
any subject indebtedness shall be made by Borrower to NCB-Agent
for the account of the Banks in immediately available funds. Any
payment received by NCB-Agent after 2:00 p.m. Cleveland time shall
be deemed to have been made and received on the next following
Banking day; provided that if Borrower shall have given one of its
depositories instructions before 12:00 noon to transfer "fed
funds" that day to NCB-Agent and shall have received a Federal
Reserve reference number for the transfer, the payment shall be
deemed to have been timely even if received after 2:00 p.m. that
day. NCB-Agent shall distribute to each Bank its ratable share of
each such payment in immediately available funds forthwith upon
NCB-Agent's receipt thereof.
2D.05 NOTICE -- NCB-Agent shall give Borrower and each of
the other Banks prompt notice of the LIBOR pre-margin rate
initially applicable to each series of LIBOR loans and of each
change in NCB's prime rate. In making interest payments, Borrower
shall be entitled to rely upon the most recent such notice
received by it; PROVIDED, that if any interest payment shall be
made in the wrong amount by reason of Borrower's failure to
receive a timely notice for any reason or by reason of any error
in computation, the difference between the correct amount and the
erroneous amount shall be promptly paid by Borrower or promptly
refunded to Borrower (in either case with interest computed at the
federal funds rate on the amount of the difference), whichever is
applicable.
2D.06 LIBOR LOANS: UNAVAILABILITY -- If at any time
(a) any Bank shall determine that dollar deposits
of the relevant amount for the relevant contract period are
not available in the London interBank eurodollar market for
the purpose of funding the LIBOR loans in question or
(b) NCB-Agent shall determine that circumstances
affecting that market make it impracticable for NCB-Agent to
ascertain the rate or rates applicable to such LIBOR loans,
then and in each such case NCB-Agent shall, by written notice to
Borrower and to all the Banks, suspend Borrower's right thereafter
to obtain LIBOR loans of the kind in question, which suspension
shall remain in effect until such time, if any, as NCB-Agent may
give written notice to Borrower that the condition giving rise to
the suspension no longer prevails.
2D.07 LIBOR LOANS: ILLEGALITY -- If any Bank shall give
NCB-Agent written notice that it is, or any governmental authority
has asserted that it is, unlawful for that Bank to fund, make or
maintain the LIBOR loans in question,
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(a) NCB-Agent shall give Borrower and each of the
other Banks prompt written notice thereof and
(b) Borrower shall promptly pay in full the
principal of and interest on the LIBOR loan in question and
make the reimbursement, if any, required by Section 6C.
2E. SECURITY FOR EXISTING SUBJECT LCs -- The subject LCs shall be
secured in accordance with the following:
2E.01 EXISTING SUBJECT LCs -- Borrower's obligation to
reimburse the Banks and NCB-Agent shall be secured by a first
priority lien and security interest as follows (i) for amounts
drawn on the Cleveland-5092 LC No. 3399 dated December 1, 1989, by
the Open End Mortgage, Security Agreement and Assignment of Rents
and Leases dated as of December 1, 1989, from Mortgagor to
National City Bank, as filed for record in the office of the
Recorder of Cuyahoga County, Ohio, on December 19, 1989, and
thereafter recorded in Volume 89-7058, Page 17, of the Cuyahoga
County, Ohio, records, (ii) for amounts drawn on the Schaumburg,
Illinois, LC No. 3944 dated June 25, 1992, by the Mortgage,
Security Agreement and Assignment of Rents and Leases dated June
1, 1992, from Mortgagor to National City Bank encumbering parcels
1 and 2 of the Premises, as filed for record in the office of the
Recorder of ▇▇▇▇ County, Illinois, on June 25, 1992, and
thereafter recorded in Official Record No. 92463567 of the ▇▇▇▇
County, Illinois, records, and (iii) for amounts drawn on the
Minneapolis, Minnesota, LC No. 4475 dated November 9, 1994, by the
Mortgage, Security Agreement and Assignment of Rents and Leases
dated November 7, 1994, from Mortgagor to National City Bank, as
filed for record in the office of the Recorder of Hennepin County,
Minnesota, on November 15, 1994, as Document No. 6365023 of the
Hennepin County, Minnesota, records. Borrower, the Banks and
NCB-Agent agree to amend and modify any existing security
agreements, mortgages and any other agreement, instrument, or
document relating to security for the existing subject LCs to
accurately reflect the foregoing.
2E.02 ENVIRONMENTAL INDEMNITY -- Borrower agrees to execute
and deliver to NCB-Agent an agreement protecting the Banks and
NCB-Agent from liability for environmental claims relating to the
property subject to mortgages securing the subject LCs. Such
agreement shall be in form and substance reasonably satisfactory
to the Banks and NCB-Agent.
2F. GUARANTY OF SUBSIDIARIES OF SUBJECT LOANS AND SUBJECT LCs.
2F.01 OSLI AND OSMI GUARANTY OF PAYMENT -- Borrower shall
cause its wholly owned subsidiaries, OSLI and OSMI, to
unconditionally guarantee payment of the subject loans and subject
LCs pursuant to a guaranty of payment, in the form attached hereto
as EXHIBIT 2F.01, executed and delivered to the Banks by OSLI and
OSMI (the "subject guaranty"). Borrower acknowledges that the
proceeds of a portion of the subject revolving credit loan will be
used by Borrower for purposes of providing for the working capital
needs of ▇▇▇▇ ▇▇▇ ▇▇▇▇.
-▇▇-
▇▇
▇▇. INFORMATION -- Borrower agrees that so long as the subject
commitments remain in effect and thereafter until the subject indebtedness shall
have been paid in full, Borrower will perform and observe each of the following:
3A.01 FINANCIAL STATEMENTS -- Borrower will furnish to
each Bank
(a) within forty-five (45) days after the end of
each of the first three quarter-annual periods of each of
Borrower's fiscal years, unaudited consolidated balance
sheet of Borrower, OSLI and OSMI as at the end of that
period, the unaudited consolidated statements of income and
reconciliations of consolidated cash flows and statements of
retained earnings of Borrower, OSLI and OSMI for the current
fiscal year to date, all prepared (but unaudited) on a
comparative basis with the prior year, in accordance with
GAAP (except as disclosed therein) and in form and detail
satisfactory to a majority of the Banks; provided, however,
the foregoing reporting requirement shall be satisfied by
the delivery of Borrower's 10-Q reports for so long as
Borrower prepares such report for filing with the Securities
and Exchange Commission,
(b) as soon as available (and in any event within
ninety (90) days after the end of each of Borrower's fiscal
years), a complete copy of the annual audit report
(including without limitation all financial statements
therein and notes thereto) of Borrower, OSLI and OSMI for
that year which shall be
(1) prepared on a comparative basis with the
prior year, on a consolidated basis in accordance with
GAAP (except as disclosed therein) and in form and
detail satisfactory to a majority of the Banks and
(2) certified (without qualification as to
GAAP) by independent public accountants selected by
Borrower and reasonably satisfactory to a majority of
the Banks;
provided, however, the foregoing reporting shall be
satisfied by delivery of Borrower's 10-K report for so long
as Borrower prepares such report for filing with the
Securities and Exchange Commission.
(c) as soon as available, the accountants'
management report, if any, relating to the annual audit,
(d) concurrently with each delivery of consolidated
financial statements pursuant to clause (a), a certificate
in the form of EXHIBIT 3A.01(D) by Borrower's chief
financial officer or chief accounting officer
(1) certifying that (i) the consolidated
financial statements fairly present in all material
respects the financial condition and results of
operations of Borrower, OSLI and OSMI (subject, in the
case of interim financial statements, to routine
year-end audit adjustments) and (ii) no
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default under this Agreement then exists or if any
does, a brief description of the default and
Borrower's intentions in respect thereof, and
(2) setting forth the calculations necessary to
determine whether or not Borrower is in compliance
with the general financial standards set forth in
Section 3B,
(e) forthwith upon any Bank's written request, such
other information about the financial condition, properties
and operations of Borrower, OSLI and OSMI material to this
Agreement as any Bank may from time to time reasonably
request. To the extent that Borrower informs the Banks and
NCB- Agent that any information being provided to them is
confidential and/or has not otherwise been publicly
disclosed, the Banks and NCB-Agent agree to hold in
confidence such information unless such information was
false or materially misleading when supplied and/or
disclosure of such information is required in order to
enforce the rights of any Bank or NCB-Agent in connection
with the subject loans or unless such information is
required to be disclosed by law in which event notice of the
intention to disclose and reasons therefor shall be given to
Borrower to the extent practicable under the circumstances.
Without limiting the foregoing, upon Borrower's request, the
Banks and NCB-Agent agree to execute written agreements
insuring that such information will be held in confidence
except as qualified with the foregoing in the preceding
sentence.
3A.02 NOTICE -- Borrower will cause its chief financial
officer, or in his absence another officer designated by Borrower,
to give each Bank prompt written notice whenever any officer of
Borrower
(a) receives from the Internal Revenue Service or
any other federal, state or local taxing authority any
allegation of any default by Borrower in the payment of any
tax or notice of any assessment in respect thereof if a
determination thereof adverse to Borrower might have a
material adverse effect on Borrower,
(b) learns there has been brought against Borrower
before any court, administrative agency or arbitrator any
litigation or proceeding which, if successful, might have a
material adverse effect on Borrower or
(c) reasonably believes that any representation or
warranty made in subsections 4B.01 through 4B.10 (both
inclusive) shall for any reason have ceased in any material
respect to be true and complete, that there has been a
material adverse change in Borrower's financial condition or
that any default under this Agreement shall have occurred.
3B. GENERAL FINANCIAL STANDARDS -- Borrower agrees that so long as
the subject commitments remain in effect and thereafter until the subject
indebtedness shall have been paid in full, Borrower will observe each of the
following:
-▇▇-
▇▇
▇▇.▇▇ ▇▇▇ ▇▇▇▇▇ -- ▇▇ a consolidated statement basis,
Borrower will not suffer or permit the sum of its net worth at any
time to be less than the then required minimum amount in effect at
the time in question. The required minimum amount shall be One
Hundred Fifteen Million Dollars ($115,000,000) from the date of
this Agreement until December 31, 1996, and shall be One Hundred
Twenty-Two Million Dollars ($122,000,000) on December 31, 1996,
and shall be permanently increased on December 31, 1997 and on
each December 31 thereafter, by an amount equal to seventy-five
percent (75%) of Borrower's net income, if any, for the fiscal
year then ending. In the event Borrower sustains a net loss for
any fiscal year, such increase shall be zero.
3B.02 LEVERAGE -- On a consolidated statement basis,
Borrower will not suffer or permit its liabilities-to-worth ratio
at any time to exceed two and one-half to one (2.5:1).
3B.03 INTEREST COVERAGE -- On a consolidated statement
basis, Borrower will not, as at the end of any fiscal quarter
during any fiscal year of Borrower (commencing with the present
year), suffer or permit its EBIT-to-interest ratio to be less than
two and one-half to one (2.5:1). For purposes of this calculation,
Borrower's interest figure initially will be based on the
Borrower's actual interest expense for the third quarter of 1996
annualized. On December 31, 1996, the interest figure will be
based on such actual expenses for the preceding six (6) months
annualized. On March 31, 1997, the interest figure will be based
on such actual expenses for the preceding nine (9) months
annualized. On June 30, 1997, and for every twelve (12) month
period thereafter, the interest figure will be based on the
preceding twelve (12) months annualized.
3C. AFFIRMATIVE COVENANTS -- Borrower agrees that so long as the
subject commitments remain in effect and thereafter until the subject
indebtedness shall have been paid in full, Borrower will perform and observe
each of the following:
3C.01 TAXES AND CLAIMS -- Borrower will pay and will
cause OSLI and OSMI to pay in full
(a) prior in each case to the date when penalties
for the nonpayment thereof would attach, all taxes,
assessments and governmental charges and levies for which it
may be or become subject and which are in an amount in
excess of Two Hundred Fifty Thousand Dollars ($250,000);
PROVIDED, that no item need be paid so long as and to the
extent that it is contested in good faith and by timely and
appropriate proceedings which are effective to stay
enforcement thereof and
(b) prior in each case to the date the claim would
become delinquent for non-payment, all other lawful claims
(whatever their kind or nature) which, if unpaid, might
become a lien or charge upon its property and which are in
an amount in excess of Two Hundred Fifty Thousand Dollars
($250,000);
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23
PROVIDED, that no item need be paid so long as and to the
extent that it is contested in good faith and by timely and
appropriate proceedings which are effective to stay
enforcement thereof.
3C.02 FINANCIAL RECORDS AND STATEMENTS -- Borrower will
keep, and will cause OSLI and OSMI to keep, at all times, true and
complete financial records and shall prepare financial statements
in accordance with GAAP on a consistent basis and, without
limiting the generality of the foregoing, make appropriate
accruals to reserves for estimated and contingent losses and
liabilities.
3C.03 VISITATION -- Borrower will permit each Bank at
all reasonable times
(a) to examine the properties and financial records
of Borrower, OSLI and OSMI and to make such copies of and
extracts from such records that are relevant to this
Agreement, which examination shall be made at the Bank's
expense and
(b) to consult with Borrower's directors, officers
and accountants in respect of its financial condition,
properties and operations, each of which parties is hereby
authorized to make such information available to each Bank
to the same extent that it would to Borrower and
(c) to the extent that Borrower informs the Banks
and NCB-Agent that any information being provided to them is
confidential and/or has not otherwise been publicly
disclosed, the Banks and NCB-Agent agree to hold in
confidence such information unless such information was
false or materially misleading when supplied and/or
disclosure of such information is required in order to
enforce the rights of any Bank or NCB-Agent in connection
with the subject loans or unless such information is
required to be disclosed by law. Without limiting the
foregoing, upon Borrower's request, the Banks and NCB-Agent
agree to execute written agreements reasonably acceptable to
the Banks insuring that such information will be held in
confidence except as qualified in the preceding sentence.
3C.04 INSURANCE -- Borrower will
(a) keep itself and all of the insurable properties
of Borrower, OSLI and OSMI insured at all times in such
amounts, with such deductibles, by such insurers and against
such hazards and liabilities as is generally and prudently
done by like businesses, except that if a more specific
standard is provided in any related writing, the more
specific standard, shall prevail. NCB-Agent and the Banks
agree that Borrowers insurance policies in effect on the
date hereof are satisfactory as of the date hereof,
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24
(b) forthwith upon any Bank's written request,
cause an appropriate officer to deliver to each of the Banks
a certificate setting forth, in form and detail satisfactory
to the Banks, such information about that insurance, all as
any Bank may from time to time reasonably request and
(c) have each of the insurance policies insuring
such of the properties of Borrower, OSLI and OSMI that is
collateral security for the loans and subject LCs endorsed
to require thirty (30) days notice to NCB-Agent prior to
modification or cancellation and to name NCB-Agent, on
behalf of the Banks, as an additional insured and/or a loss
payable clause as its interests may appear.
3C.05 CORPORATE EXISTENCE -- Borrower will at all times
maintain, and will cause OSLI and OSMI to maintain, its corporate
existence, rights and franchises, the failure of which to maintain
would have a material adverse effect on Borrower and such
subsidiary.
3C.06 COMPLIANCE WITH LAW -- Borrower will comply, and will
cause OSLI and OSMI to comply, with all applicable occupational
safety and health laws and environmental protection laws and every
other law (whether statutory, administrative, judicial or other
and whether federal, state or local) and every lawful governmental
order if non-compliance with such law or order would materially
and adversely affect operation or condition, financial or
otherwise of Borrower, OSLI or OSMI; PROVIDED, that in the event
of any alleged non-compliance, Borrower shall not be in default
under this subsection if and to the extent that
(a) within thirty (30) days after the
non-compliance becomes apparent or is alleged, appropriate
corrective measures are commenced and such measures are
diligently pursued to the satisfaction of the court, agency
or other governmental authority or
(b) the alleged compliance is contested in good
faith by timely and appropriate proceedings which are
effective to stay enforcement thereof.
3C.07 PROPERTIES -- Borrower will maintain, and will cause
OSLI and OSMI to maintain, all fixed assets necessary to the
continuing operations thereof in good working order and condition,
ordinary wear and tear excepted.
3C.08 ERISA -- In the event that Borrower becomes a party to
or adopts any pension plan, it will give NCB-Agent written notice
thereof, accompanied by such additional information regarding the
pension plan as reasonably requested by a majority of the Banks,
and Borrower and a majority of the Banks agree to negotiate in
good faith a modification to this subsection 3C.08 containing
reasonable and appropriate provisions regarding compliance by
Borrower with ERISA and notifications to the Banks in respect of
▇▇▇▇▇.
-▇▇-
▇▇
▇▇.▇▇ ▇▇▇▇▇▇▇/▇▇▇▇▇▇▇ TO THIRD PARTIES -- Borrower shall
promptly furnish to NCB-Agent copies of any material notice,
statement or report furnished to any third party pursuant to any
law, governmental order or regulation, indenture, credit or
similar agreement and not otherwise required to be furnished to
the Banks pursuant to this Agreement.
3C.10 ANNUAL AGENT'S FEE -- Borrower shall pay to NCB-Agent
an annual agent fee in an amount as mutually agreed upon by
Borrower and NCB-Agent and payable on such date as NCB-Agent may
require.
3D. NEGATIVE COVENANTS -- Borrower agrees that so long as the
subject commitments remain in effect and thereafter until the subject
indebtedness shall have been paid in full, Borrower will observe each of the
following:
3D.01 EQUITY TRANSACTIONS -- Borrower will not, nor permit
OSLI or OSMI to,
(a) be a party to any merger, consolidation,
business combination or majority share acquisition
combination if such action is opposed by the board of
directors of the entity with which Borrower proposes to
merge, consolidate or combine or to acquire a majority share
interest;
(b) acquire all or substantially all of the assets
and business of another corporation or business if the
acquisition is opposed by the latter's board of directors,
or its members or managing partner, as the case may be;
(c) create, acquire or have any subsidiary other
than OSLI or OSMI, or be or become a party to any joint
venture or partnership, or make or keep any investment in
any other stocks or other equity securities of any kind or
other than any investment fully disclosed in the
supplemental schedule;
(d) lease as lessor, sell, sell-leaseback or
otherwise transfer (whether in one transaction or a series
of transactions) all or any substantial part of its existing
fixed assets (other than chattels that shall have become
obsolete or no longer useful in its present business);
PROVIDED, that if no event of default under this Agreement shall then exist and
if none would thereupon begin to exist, this subsection 3D.01 shall not apply to
(i) any transaction if (A) after giving effect
thereto, the nature of Borrower's business shall not
be materially different from that at the date of this
Agreement and (B) there shall have been executed and
delivered to Bank an assumption agreement (to be in
form and substance satisfactory to Bank) by the
surviving corporation (if not Borrower) in the case of
any merger, by the resulting corporation in the case
of any consolidation and
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26
by the transferee (if not Borrower) in any transfer of
any kind of assets, and
(ii) any transaction fully disclosed in the
supplemental schedule.
3D.02 BORROWINGS -- Borrower will not, nor permit OSLI or
OSMI to create, assume or have outstanding at any time any
indebtedness for borrowed money (or become a guarantor in respect
any indebtedness for borrowed money) the incurrence of which would
create a default under this Agreement, including, without
limitation, a default under section 3B.01 or 3B.02; PROVIDED, that
this subsection shall not apply to any indebtedness existing on
the date hereof.
3D.03 LIENS -- Borrower will not, nor permit OSLI or OSMI
to,
(a) acquire or hold any property subject to any
land contract, inventory consignment or other title
retention contract,
(b) sell or otherwise transfer any receivables,
whether with or without recourse except for sales of foreign
receivables, or
(c) suffer or permit any property now owned or
hereafter acquired by it to be or become encumbered by any
lien;
PROVIDED, that this subsection shall not apply to
(i) any tax lien, or any lien securing workers'
compensation or unemployment insurance obligations, or
any mechanic's, carrier's or landlord's lien, or any
lien arising under ERISA, or any security interest
arising under article four (Bank deposits and
collections) or article five (letters of credit) of
the UCC, or any similar security interest or other
lien, EXCEPT that this clause (i) shall apply only to
security interests and other liens arising by
operation of law (whether statutory or common law) in
the ordinary course of business and only to the extent
the nonperformance of same would not have a material
adverse effect on Borrower, OSLI or OSMI (other than
any nonperformance contested in good faith by timely
and appropriate proceedings effective to stay
enforcement of the security interest or other lien in
question),
(ii) zoning or deed restrictions, public
utility easements, minor title irregularities and
similar matters having no adverse effect as a
practical matter on the ownership or use of any of the
property in question,
(iii) any lien securing or given in lieu of
surety, stay, appeal or performance bonds, or securing
performance of contracts or bids (other than contracts
for the payment of money borrowed), or deposits
required by law or governmental regulations or by any
court order, decree,
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27
judgment or rule or as a condition to the transaction
of business or the exercise of any right, privilege or
license, EXCEPT that this clause (iii) shall not apply
to any lien or deposit securing an obligation the
nonpayment of which would have a material adverse
effect on Borrower unless such lien or deposit is
being contested in good faith by Borrower,
(iv) any mortgage, security interest or other
lien securing only the subject indebtedness,
(v) any mortgage, security interest or other
lien (each, a "purchase money security interest")
which is created or assumed in purchasing,
constructing or improving any real property or
equipment or to which any such property is subject
when purchased, PROVIDED, that (A) the purchase money
security interest shall be confined to the aforesaid
property, (B) the indebtedness secured thereby does
not exceed the total cost of the purchase,
construction or improvement and (C) any such
indebtedness, if repaid in whole or in part, cannot be
reborrowed, but may be refinanced in an amount not to
exceed the principal amount of the debt being
refinanced plus the costs of obtaining such
refinancing,
(vi) any mortgage, security interest or other
lien which (together with the indebtedness secured
thereby) is fully disclosed in the financial
statements referred to in subsection 4B.11,
(vii) any inventory consignment made in the
ordinary course of business,
(viii) any security interest or lien on real
property or equipment granted to a governmental
authority in connection with obtaining favorable
financing under economic development, job creation or
preservation or similar governmental programs and the
proceeds of such financing are used to purchase real
property or equipment,
(ix) any financing statement perfecting a
security interest that would be permissible under this
subsection, or
(x) any Receivables and Related Rights and
proceeds thereof or contributed by Borrower and/or
OSLI and/or OSMI to Olympic Steel Receivables L.L.C.
pursuant to a Purchase and Sale Agreement dated
December 19, 1995, as amended, among such parties.
3D.04 FIXED ASSETS -- Borrower will not, nor permit OSLI or
OSMI to, invest (net after trade-ins, if any) in any fiscal year
in fixed assets and leasehold improvements during any fiscal year
(commencing with the present year) of more than Fifteen Million
Dollars ($15,000,000).
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3D.05 ENVIRONMENTAL COMPLIANCE -- Borrower will not, nor
permit OSLI to:
(a) treat, store for more than ninety (90) days (or
such longer periods as are unlawful for smaller quantity
generators), recycle or dispose of hazardous waste on any
property owned or leased by Borrower, OSLI or OSMI except in
compliance with applicable permits or as otherwise permitted
by law; or dispose of or release reportable quantities of
hazardous waste on any property owned or leased by Borrower,
OSLI or OSMI except as otherwise permitted by law;
(b) purchase any property where, to the best
knowledge of Borrower after reasonable investigation,
hazardous substances have been disposed or released and with
respect to which Borrower may reasonably be held liable for
remediation under federal, state or local law to any
material extent; or
(c) fail to comply in full with all clean-up or
remediation required under any order of any governmental
authority concerning property owned or leased by Borrower,
OSLI or OSMI except to the extent that compliance is being
contested in good faith by appropriate proceedings and
reserves are established or other appropriate provisions
made therefor in accordance with GAAP.
4A. CLOSING -- Prior to or at the execution and delivery of this
Agreement Borrower shall have complied or caused compliance with each of the
following:
4A.01 SUBJECT NOTES -- Borrower shall have executed and
delivered subject notes to each Bank in accordance with subsection
2B.01.
4A.02 SUBJECT GUARANTIES -- OSLI and OSMI shall have
executed and delivered to NCB-Agent the subject guaranties, in
accordance with subsection 2F.01.
4A.03 ENVIRONMENTAL INDEMNITY AGREEMENT -- Borrower shall
have executed and delivered the environmental indemnity agreement
to be executed and delivered pursuant to subsection 2E.03.
4A.04 BORROWER CORPORATE DOCUMENTS -- Borrower's secretary
shall have certified to each Bank a copy of the articles of
incorporation and regulations of Borrower and resolutions duly
adopted by Borrower's board of directors in respect of this
Agreement and the transactions contemplated hereby and authorizing
(or ratifying) the execution, delivery and performance of this
Agreement, the subject notes and the security and other documents
to be executed and delivered pursuant to subsections 2E.02 and
2E.03.
4A.05 OSLI AND OSMI CORPORATE DOCUMENTS -- The secretary of
OSLI and OSMI shall have certified to each Bank a copy of the
articles of incorporation and regulations of OSLI and OSMI and
resolutions duly adopted by
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OSLI's and OSMI's boards of directors authorizing the execution,
delivery and performance of the subject guaranties.
4A.06 LEGAL OPINION -- Borrower's counsel shall have
rendered to each Bank a written opinion in respect of the matters
referred to in subsections 4B.01, 4B.02, 4B.03 and 4B.04 which
opinion may be subject to such qualifications and exceptions, if
any, as shall be satisfactory to each Bank.
4B. WARRANTIES -- Subject only to such exceptions, if any, as may
be set forth in the supplemental schedule or in Borrower's most recent financial
statements, Borrower represents and warrants as follows:
4B.01 EXISTENCE -- Borrower, OSLI and OSMI are each duly
organized and validly existing Ohio or Minnesota (in the case of
OSMI) corporations in good standing. Borrower, OSLI and OSMI are
each duly qualified to transact business in each state or other
jurisdiction in which it owns or leases any real property or in
which the nature of the business conducted makes such
qualification necessary or, if not so qualified, such failure to
qualify will have no material adverse effect upon its financial
condition and ability to transact business. Borrower has no
subsidiaries other than OSLI and OSMI, and OSLI and OSMI have no
subsidiaries except as set forth on the supplemental schedule.
4B.02 GOVERNMENTAL RESTRICTIONS -- No registration with or
approval of any governmental agency of any kind is required on the
part of Borrower, OSLI or OSMI for the due execution and delivery
or for the enforceability of this Agreement or any related
writing.
4B.03 CORPORATE AUTHORITY -- Borrower, OSLI and OSMI each
have requisite corporate power and authority to enter into this
Agreement and to obtain and secure the subject commitments in
accordance with this Agreement. Each officer executing and
delivering this Agreement or any related writing on behalf of
Borrower, OSLI and OSMI has in each case been duly authorized by
Borrower, OSLI or OSMI, as the case may be, to do so. Neither any
such execution and delivery nor any performance and observance by
Borrower, OSLI or OSMI, as the case may be of this Agreement and
those related writings as are on its part to be complied with will
violate any existing provision in the articles of incorporation or
code of regulations of such corporation or any applicable law or
violate or otherwise constitute a default under any contract or
other obligation now existing and binding upon Borrower, OSLI or
OSMI which violation or default would have a material adverse
effect on Borrower, OSLI or OSMI. Upon the execution and delivery
thereof by Borrower, this Agreement and the aforesaid related
writings will each become a valid and binding obligation
enforceable against Borrower subject, however, to any applicable
insolvency or Bankruptcy law and general principles of equity.
Upon the execution and delivery thereof by OSLI and OSMI, the
subject guaranties and security agreement to be executed and
delivered by OSLI and OSMI pursuant to subsection 2F.02, will each
become a valid and binding obligation
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enforceable against OSLI and OSMI subject, however, to any
applicable insolvency or Bankruptcy law and general principles of
equity.
4B.04 LITIGATION -- No litigation or proceeding is pending
against Borrower, OSLI or OSMI before any court, administrative
agency or arbitrator which might, if successful, have a material
adverse effect on Borrower or OSLI.
4B.05 TAXES -- Borrower, OSLI and OSMI have each filed all
federal, state and local tax returns which are required to be
filed by it and paid all taxes due as shown thereon (except to the
extent, if any, permitted by subsection 3C.01). As of the date
hereof, the Internal Revenue Service has never alleged any
material default by Borrower in the payment of any tax material in
amount or threatened to make any assessment in respect thereof
which has not been reflected in Borrower's financial statements
referred to in subsection 4B.10 or in the supplemental schedule.
4B.06 TITLE -- Borrower has good and marketable title to all
assets reflected in Borrower's most recent financial statements
except for changes resulting from transactions in the ordinary
course of business. All such assets are clear of any mortgage,
security interest or other lien of any kind other than any
permitted by subsection 3D.03. Upon acquisition of the assets of
Lafayette Steel, Inc., OSLI will have good and marketable title to
such assets, free and clear of any mortgage, security interest or
other lien of any kind except as permitted hereby.
4B.07 LAWFUL OPERATIONS -- The operations of Borrower and,
to Borrower's best knowledge, OSLI and OSMI are in substantial
compliance with all requirements imposed by law, whether federal,
state or local, whether statutory, regulatory or other (having the
force of law), including (without limitation) all environmental
protection laws, occupational safety and health laws and zoning
ordinances the violation of which would have a material adverse
effect on Borrower, OSLI or OSMI. Neither Borrower, OSLI nor OSMI
has received any notice from any governmental agency, court or
anyone else that it is a potentially responsible party for the
clean-up of any environmental waste site, is in violation of any
environmental permit or law or has been placed on any registry of
solid or hazardous waste disposal the violation of which would
have a material adverse effect on Borrower, OSLI or OSMI, as the
case may be.
4B.08 ERISA COMPLIANCE -- Neither Borrower, OSLI nor
OSMI has a pension plan.
4B.09 INSURANCE -- Borrower's insurance coverage
complies with the standards set forth in subsection 3C.04.
4B.10 NO MATERIAL ADVERSE CHANGE -- There has been no
material adverse change in the financial condition, properties or
business of Borrower since the date of Borrower's most recent
financial statements furnished to NCB-Agent nor
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any change in its accounting procedures since the end of
Borrower's latest full fiscal year.
4B.11 FINANCIAL STATEMENTS -- Each of the financial
statements for Borrower heretofore submitted to the Banks and
NCB-Agent has been prepared in accordance with generally accepted
accounting principles applied on a basis consistent with those
used by Borrower during its then next preceding full fiscal year
except to the extent, if any, specifically noted therein and
fairly presents in all material respects (subject to routine year
end audit adjustments in the case of the unaudited financial
statements) the financial condition of Borrower as of the date
thereof (including a full disclosure of material contingent
liabilities, if any) and the results of its operations, if any,
for the fiscal period then ending.
4B.12 DEFAULTS -- No default under this Agreement exists,
nor will any exist immediately after the execution and delivery of
this Agreement.
5A. EVENTS OF DEFAULT -- Each of the following shall constitute
an event of default hereunder:
5A.01 PAYMENTS -- If any subject indebtedness or any other
debt of Borrower to the Banks and NCB-Agent or any thereof shall
not be paid in full promptly when the same becomes due and payable
and shall remain unpaid for ten (10) consecutive days thereafter.
5A.02 WARRANTIES -- If any representation, warranty or
statement made in this Agreement or in any related writing
referred to in subsection 4A shall be false or erroneous in any
respect; or if any representation, warranty or statement hereafter
made by or on behalf of Borrower, OSLI or OSMI in any related
writing not referred to in Section 4A shall be false or erroneous
in any material respect.
5A.03 COVENANTS -- If Borrower, OSLI or OSMI, as the case
may be, shall fail or omit to perform and observe any agreement
(other than those referred to in subsection 5A.01) contained in
this Agreement or any related writing that is on its part to be
complied with, and that failure or omission shall not have been
fully corrected within thirty (30) days after the giving of
written notice to Borrower by any Bank that it is to be remedied.
5A.04 REVOCATION OF SUBJECT GUARANTIES -- If OSLI or OSMI
shall revoke the subject guaranties.
5A.05 CROSS-DEFAULT -- If, in respect of any existing or
future indebtedness for borrowed money (regardless of maturity) or
funded indebtedness now owing or hereafter incurred by Borrower,
OSLI or OSMI in an outstanding principal amount in excess of One
Million Dollars ($1,000,000) individually or Two Million Five
Hundred Thousand Dollars ($2,500,000) in the aggregate, there
should occur or exist under its provisions as amended from time to
time a default (not
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waived by the holder of such indebtedness prior to any
acceleration pursuant to Section 5B) which accelerates or permits
the acceleration of the maturity of any such indebtedness; or if
any such indebtedness (other than any payable on demand) shall not
be paid in full at its stated maturity; or if any such
indebtedness payable on demand shall not be paid in full within
ten (10) days after any actual lawful demand for payment.
5A.06 FINAL JUDGMENT -- If there shall be entered against
Borrower, OSLI or OSMI a final judgment (a final judgment being
one from which all available appeals have been exhausted or the
time for taking such appeal has lapsed) for an amount which (after
deducting therefrom any amount fully insured by an insurer
satisfactory to a majority of the Banks) exceeds one million
dollars ($1,000,000) and the same is not discharged or satisfied
within ten (10) days of the date of entry of the judgment.
5A.07 BORROWER/OSLI/OSMI SOLVENCY -- If (a) Borrower, OSLI
or OSMI shall discontinue its operations, or (b) Borrower, OSLI or
OSMI shall commence any insolvency action of any kind or admit (by
answer, default or otherwise) the material allegations of, or
consent to any relief requested in, any insolvency action of any
kind commenced against Borrower, OSLI or OSMI by its creditors or
any thereof, or (c) any creditor or creditors shall commence
against Borrower, OSLI or OSMI any insolvency action of any kind
which shall remain in effect (neither dismissed nor stayed) for
thirty (30) consecutive days.
5B. EFFECTS OF DEFAULT -- Notwithstanding any contrary provision
or inference in this Agreement or in any related writing:
5B.01 OPTIONAL DEFAULTS -- If any event of default referred
to in subsection 5A.01 shall occur and be continuing, any Bank in
its discretion shall, or if any event of default referred to in
subsections 5A.02 through 5A.06 (both inclusive) shall occur and
be continuing a majority of the Banks in their discretion shall,
in either case, have the right, upon giving written notice to
Borrower, to elect to exercise one or more of the following
remedies:
(a) terminate the subject commitments (if not
already expired or reduced to zero pursuant to Section 2A or
terminated pursuant to this Section) and no Bank shall have
any obligation thereafter to grant any subject loan to
Borrower and NCB shall have no obligation to issue any
subject LC, or
(b) accelerate the maturity of all of the subject
indebtedness and all other debt, if any, then owing to the
Banks and NCB-Agent or any thereof (other than debt, if any,
already due and payable), and all such debt shall thereupon
become and thereafter be immediately due and payable in full
without any presentment or demand and without any further or
other notice of any kind, all of which are hereby waived by
Borrower, or
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(c) demand OSLI's and OSMI's prompt payment of the
subject guaranties, or
(d) appoint or cause to be appointed a receiver,
with or without acceleration of the subject indebtedness, to
take possession of, arrange and/or dispose of the security
for the subject loans and subject LCs, or
(e) cause NCB-Agent to foreclose any lien and
security interest securing the subject loans and subject LCs
or the subject guaranty, or
(f) cause NCB-Agent to enforce such rights and
remedies as may be available under the loan documentation
governing the existing subject LCs; or
(g) enforce or cause NCB-Agent to enforce such
other rights as may be available at law or in equity or
other appropriate proceedings.
5B.02 AUTOMATIC DEFAULTS -- If any event of default
referred to in subsection 5A.07 shall occur,
(a) the subject commitments shall automatically and
immediately terminate (if not already expired or reduced to
zero pursuant to Section 2A or terminated pursuant to this
Section) and no Bank shall have any obligation thereafter to
grant any subject loan to Borrower and NCB-Agent shall have
no obligation to issue any subject LC, and
(b) all of the subject indebtedness and all other
debt, if any, then owing to the Banks and NCB-Agent or any
thereof (other than debt, if any, already due and payable)
shall thereupon become and thereafter be immediately due and
payable in full, all without any presentment, demand or
notice of any kind, which are hereby waived by Borrower.
5B.03 SUBJECT LCs -- If the maturity of the subject
indebtedness shall be accelerated pursuant to subsection 5B.01 or
5B.02, Borrower shall immediately deposit with NCB-Agent, as
security for Borrower's obligation to reimburse NCB- Agent and the
Banks for any then outstanding subject LC, cash or acceptable
marketable securities having a fair cash value equal to the sum of
the aggregate undrawn balance of any then outstanding LCs.
5B.04 OFFSETS -- If there shall occur or exist any default
under this Agreement referred to in subsection 5A.06, each Bank
shall, so long as that default under this Agreement exists, have
the right at any time to set off against and to appropriate and
apply toward the payment of the subject indebtedness then owing to
it (and any participation purchased or to be purchased pursuant to
subsection 5B.05) whether or not the same shall then have matured,
any and all deposit balances then owing by that Bank to or for the
credit or account of Borrower, all without notice to
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or demand upon Borrower or any other person, all such notices and
demands being hereby expressly waived.
5B.05 EQUALIZATION -- Each Bank agrees with the other Banks
that if at any time it shall obtain any advantage over the other
Banks or any thereof in respect of the subject indebtedness it
will purchase from such other Bank or Banks, for cash and at par,
such additional participation in the subject indebtedness owing to
the other or others as shall be necessary to nullify the
advantage. If any such advantage resulting in the purchase of an
additional participation as aforesaid shall be recovered in whole
or in part from the Bank receiving the advantage, each such
purchase shall be rescinded, and the purchase price restored (with
interest and other charges if and to the extent actually incurred
by the Bank receiving the advantage) ratably to the extent of the
recovery. During the existence of any default under this
Agreement, any payment (whether made voluntarily or involuntarily,
by offset of any deposit or other indebtedness or otherwise) of
any indebtedness for borrowed money owing by Borrower to any Bank
shall be applied to the subject indebtedness owing to that Bank
until the same shall have been paid in full before any thereof
shall be applied to other indebtedness for borrowed money owing to
that Bank.
6A. INDEMNITY: STAMP TAXES -- Borrower will pay all stamp taxes
and similar taxes, if any, including interest and penalties, if any, payable in
respect of the issuance of the subject indebtedness.
6B. INDEMNITY: GOVERNMENTAL COSTS/FIXED-RATE LOANS -- If
(a) after the date hereof, there shall be introduced or
changed any treaty, statute, regulation or other law, or there
shall be any change in the interpretation or administration
thereof, or there shall be made any request from any central Bank
or other lawful governmental authority, which introduction, change
or compliance shall (1) impose, modify or deem applicable any
reserve or special deposit requirements against assets held by or
deposits in or loans by any Bank or (2) subject any Bank to any
tax, duty, fee, deduction or withholding or (3) change the basis
of taxation of payments due to any Bank from Borrower (otherwise
than by a change in taxation of that Bank's overall net income),
or (4) impose on any Bank any penalty in respect of any fixed-rate
loans and
(b) in that Bank's sole opinion any such event increases the
cost to that Bank of making, funding or maintaining any LIBOR loan
or reduces the amount of any payment to be made to that Bank in
respect of the principal or interest on any LIBOR loan or other
payment under this Agreement on an overall net basis for all of
the Bank's LIBOR loans, then, upon any such Bank's demand,
Borrower shall pay to that Bank from time to time such additional
amounts as will compensate that Bank for and indemnify it against
such increased costs or reduced payment.
6C. INDEMNITY: PREPAYMENT/LIBOR LOANS -- Whenever Borrower
shall pay any principal of any LIBOR loan prior to its stated maturity (whether
paid voluntarily, paid
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after any acceleration of maturity, paid pursuant to any requirement of this
Agreement or made otherwise), Borrower in each case shall pay the Bank that made
the loan a premium as liquidated damages for all losses (but excluding the loss
of any LIBOR margin), costs and expenses directly or indirectly relating
thereto. The premium shall be an amount (discounted to the present value in
accordance with standard financial practice at a rate equal to the treasury
yield plus fifty (50) basis points) equal to interest computed on principal in
question from the payment date to the respective stated maturities thereof at a
rate equal to the aggregate of the interest rate applicable thereto less the
treasury yield plus fifty (50) basis points, all as determined by the aforesaid
Bank in the reasonable exercise of its sole discretion. "Treasury yield" means
the annual yield on direct obligations of the United States having a principal
amount and maturity similar to that of the principal being paid.
6D. CREDIT REQUESTS -- Whenever Borrower shall revoke any credit
request for a LIBOR loan or shall for any other reason fail to borrow pursuant
thereto or shall fail otherwise to comply therewith, then, in each case on any
Bank's demand, Borrower shall pay that Bank such amount as will compensate it
for any loss, cost or profit incurred by it by reason of its liquidation or
reemployment of deposits or other funds.
6E. INDEMNITY: UNFRIENDLY TAKEOVERS -- Borrower agrees to
indemnify each Bank and NCB-Agent (each, an "indemnitee") and hold each
indemnitee harmless from and against any and all liabilities, losses, damages,
costs and expenses of any kind (including, without limitation, the reasonable
fees and disbursements of counsel for any indemnitee in connection with any
investigative, administrative or judicial proceeding, whether or not such
indemnitee shall be designated a party thereto) which may be incurred by any
indemnitee relating to or arising out of any actual or proposed use of proceeds
of the subject loans in connection with the financing of an acquisition of any
corporation or other business entity, provided that no indemnitee shall have the
right to be indemnified hereunder for its own gross negligence or willful
misconduct as determined by a court of competent jurisdiction.
6F. INDEMNITY: GOVERNMENTAL COSTS/SUBJECT LCs -- If, after the
date hereof, any change in any law or regulation or in the interpretation
thereof shall impose, modify, or deem applicable any reserve, special deposit,
or similar requirement which would impose on NCB-Agent or any Bank any
additional cost relating generally to the issuance or maintenance of letters of
credit or specifically to the issuance or maintenance of any subject LC, then,
on demand of NCB-Agent or of the Bank in question, Borrower shall pay NCB-Agent
or that Bank, as the case may be, the amount of each such additional cost.
6G. INDEMNITY: MISCELLANEOUS COSTS/SUBJECT LCs -- Borrower agrees
to defend and indemnify NCB-Agent against, and to hold NCB and NCB-Agent
harmless from, any loss, liability, damage, claim, cost, or expense relating to
NCB's issuance or maintenance of any subject LC or to NCB's payment of any draft
drawn thereunder, excluding any such loss, liability, damage, claim, cost, or
expense resulting from the gross negligence or willful misconduct of NCB or
NCB-Agent.
6H. INDEMNITY: CAPITAL REQUIREMENTS -- If
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(a) at any time any governmental authority shall require any
Bank (or any corporate shareholder of that Bank), whether or not
the requirement has the force of law, to maintain, as support for
that Bank's subject commitment, capital in a specified minimum
amount that either is not required or is greater than that
required at the date of this Agreement, whether the requirement is
implemented pursuant to the "risk-based capital guidelines"
published at 54 F.R. 4168 and 54 F.R. 4186 or otherwise, and
(b) as a result thereof the rate of return on capital of
that Bank or its shareholder or both (taking into account their
then policies as to capital adequacy and assuming full utilization
of their capital) shall be directly or indirectly reduced by
reason of any new or added capital thereby allocable to that
Bank's subject commitment
then and in each such case Borrower shall, on that Bank's demand,
pay that Bank as an additional fee such amounts as will in that
Bank's reasonable opinion reimburse that Bank or its shareholder
for any such reduced rate of return.
6I. INDEMNITY: COLLECTION COSTS -- If any event of default shall
occur and shall be continuing, Borrower will pay the Banks and NCB-Agent such
further amounts, to the extent permitted by law, as shall cover their respective
costs and expenses (including, without limitation, the reasonable fees,
interdepartmental charges and disbursements of counsel for the Banks and
NCB-Agent or any thereof) incurred in collecting the subject indebtedness or in
otherwise enforcing their respective rights and remedies in respect thereof.
6J. CERTIFICATE FOR INDEMNIFICATION -- Each demand by NCB-Agent or
a Bank for payment pursuant to ▇▇▇▇▇▇▇ ▇▇, ▇▇, ▇▇, ▇▇, ▇▇, ▇▇, ▇▇, ▇▇ ▇▇ ▇▇
shall be accompanied by a certificate setting forth the reason for the payment,
the amount to be paid, and the computations and assumptions in determining the
amount, which certificate shall be presumed to be correct in the absence of
manifest error. Each Bank agrees not to seek compensation and/or reimbursement
from the Borrower pursuant to Sections 6B, 6F or 6H unless (a) such Bank is
seeking similar compensation and/or reimbursement from its other borrowers
similarly situated or (b) the Borrower's LIBOR loans or the subject LCs have
been specifically designated as subject to the one or more items enumerated
above. In determining the amount of any such payment, each Bank may use
reasonable averaging and attribution methods.
7A. BANKS' PURPOSE -- Each Bank represents and warrants to the
other Banks and to Borrower that that Bank is familiar with the Securities Act
of 1933, as amended, and the rules and regulations thereunder and that it is not
entering into this Agreement with any intention to violate that Act or any rule
or regulation thereunder, it being understood, however, that each Bank shall at
all times retain full control over the disposition of its assets subject only to
this Agreement and to all applicable law.
7B. NCB-AGENT -- Each Bank irrevocably appoints National City
Bank to be its agent for the purpose of receiving and transmitting payments and
granting waivers and consents
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pursuant to this Agreement and for the other purposes specified in this
Agreement; PROVIDED, that this agency shall not extend to the giving of any
notice pursuant to Section 5A or 5B, each Bank reserving to itself the right to
give such notices.
7B.01 COMPENSATION -- NCB-Agent shall receive compensation
for its services as stated in a separate letter agreement between
NCB-Agent and Borrower and Borrower shall reimburse NCB-Agent
periodically on its demand for out-of-pocket expenses, if any,
reasonably incurred by it as such in respect of this Agreement and
the related writings.
7B.02 NO RELIANCE ON NCB-AGENT -- Each Bank represents to
NCB- Agent that that Bank is entering into this Agreement on the
basis of its own inquiry into the relevant facts and its own
credit analysis. Each Bank acknowledges that NCB-Agent is acting
as such solely as a convenience to Borrower and to the Banks and
not as a manager of the subject commitments or subject
indebtedness, that NCB- Agent has no duties and no liabilities
beyond those expressly assumed by NCB-Agent in this Agreement and
the related writings, and that NCB-Agent shall lose no rights as a
Bank by acting as NCB-Agent. Without limiting the generality of
the foregoing, each Bank agrees NCB and its affiliates may accept
deposits from, make loans to, enter into trust indentures with and
generally transact business with the companies without notice to
the Banks and without prejudice to NCB's rights as a Bank under
this Agreement and the related writings and without prejudice to
NCB's rights in respect of those other business transactions. Each
Bank agrees that it will not rely on any of the other Banks or on
NCB-Agent for any future inquiry or analysis in respect of this
Agreement or any related writing.
7B.03 NCB-AGENT'S EXCULPATION -- NCB-Agent shall not be
required to make any inquiry concerning the Borrower or any matter
relating to this Agreement or any related writing. NCB-Agent shall
not be liable for any representation, warranty, agreement or
obligation of any kind of Borrower or anyone else, nor shall
NCB-Agent be deemed to have made any representation or warranty of
any kind to any Bank by reason of any notice or any other
communication pursuant to this Agreement or any related writing.
NCB-Agent may consult with its counsel from time to time and shall
not be liable for any action taken or suffered in good faith by it
in accordance with the advice of its counsel. NCB-Agent shall be
entitled to rely on any communication to it which it believes to
be genuine and shall be under no duty to inquire into the
validity, effectiveness, genuineness or value of this Agreement or
of any related writing or of any such communication. Neither
NCB-Agent nor any of its directors, officers, employees, attorneys
and other agents shall be liable for any action or omission on
their respective parts except for gross negligence or willful
misconduct.
7B.04 DISBURSEMENTS -- Whenever NCB-Agent shall receive any
funds in respect of the subject indebtedness or otherwise in
respect of this Agreement or any related writing, whether from
Borrower for the account of the Banks or from the Banks for the
account of Borrower, NCB-Agent shall disburse the funds on the day
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the funds shall be deemed to have been received. NCB-Agent shall
be entitled (but not obligated) to make a timely disbursement of
loan proceeds to Borrower before actually receiving funds from the
Banks (except if and to the extent NCB-Agent shall have received
written instructions to the contrary from any Bank or Banks) and
to make a timely disbursement of payments to the Banks before
actually receiving funds from Borrower; PROVIDED, that if any such
disbursement is made and the funds in question are in fact not
received by NCB-Agent, the disbursement shall be rescinded and the
funds returned to NCB-Agent with interest computed thereon at the
federal funds rate incurred by NCB-Agent.
7B.05 NCB-AGENT'S INDEMNITY -- The Banks shall indemnify
NCB-Agent (to the extent NCB-Agent is not reimbursed by Borrower)
from and against any loss or liability (other than any caused by
NCB-Agent's gross negligence or willful misconduct) incurred by
NCB-Agent as such in respect of this Agreement or any related
writing and from and against any out-of-pocket expenses incurred
in defending itself or otherwise related to this Agreement or any
related writing including, without limitation, reasonable fees and
expenses paid by NCB-Agent to counsel of its own selection in the
defense of any claim against it or in the prosecution of its
rights and remedies as NCB-Agent; PROVIDED, that each Bank shall
be liable for only a ratable part of the whole loss or liability
according to the ratio that its subject commitment bears to the
aggregate of all of the subject commitments.
7B.06 ACTIONS AFTER A DEFAULT UNDER THIS AGREEMENT -- In the
event that NCB-Agent, pursuant to subsection 3A.03 shall have been
notified of any default under this Agreement, NCB-Agent:
(i) shall promptly notify the Banks:
(ii) shall take such action and assert such
rights under this Agreement as it is expressly
required to do pursuant to the terms of this
Agreement;
(iii) shall take such action and assert such
rights as it is directed to take or assert pursuant to
subsection 5B.01;
(iv) may take such other actions and assert
such other rights as it deems advisable, in its sole
discretion, for the protection of the interests of the
Banks; and
(v) shall inform all the Banks of the taking of
action or assertion of rights pursuant to this
subsection.
Each Bank agrees with NCB-Agent and the other Banks that, with
respect to the decisions and determinations to be made by the
majority of the Banks in enforcing this Agreement and in guiding
NCB-Agent in those matters, such decisions and
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determinations shall be binding upon all the Banks, including,
without limitation, authorizing NCB-Agent at the pro rata expense
of all the Banks (to the extent not reimbursed by Borrower) to
retain attorneys to seek judgment on the subject loans. Each Bank
similarly agrees with the other Banks that it will not, without
the consent of the majority of the Banks, seek to separately
institute any legal action on this Agreement.
7B.07 ACTIONS REQUIRING CONSENT OF A MAJORITY OF THE BANKS
-- The approval of a majority of the Banks is required to amend or
waive any of the provisions of Sections 3A, 3B, 3C and 3D of this
Agreement.
7B.08 ACTIONS REQUIRING CONSENT OF ALL BANKS --
Notwithstanding any other provisions of this Agreement, all of the
Banks must approve any waiver or amendment to this Agreement which
would (i) extend the expiration date; (ii) extend the date on
which any subject indebtedness is due; (iii) reduce any interest
rate, commission, commitment fee or other amount payable by
Borrower hereunder; (iv) increase any Bank's subject commitment;
(v) change the percentage of the Banks whose approval is required
to take any action hereunder; (vi) change any of the provisions of
subsections 2D.02 and 5A.04; or release any collateral securing
the subject loans and (vii) release or modification of the subject
guaranty.
7B.09 ACTIONS BY AGENT -- Except as otherwise provided in
subsection 7B.06, 7B.07 or 7B.08, or as otherwise specifically
provided in this Agreement, NCB-Agent may take such action on
behalf of the Banks as it may from time to time deem appropriate.
7B.10 RESIGNATION OF AGENT -- NCB-Agent may resign as such
at any time upon at least 30 days prior notice to Borrower and the
Banks. If NCB- Agent at any time shall resign or if the office of
NCB-Agent shall become vacant for any other reason, the majority
of the Banks shall, by written instrument, appoint a successor
agent satisfactory to such Banks, and, so long as no default or
event of default has occurred and is continuing, to Borrower. Such
successor agent shall thereupon become the agent hereunder, as
applicable, and shall be entitled to receive from NCB-Agent (or
the prior agent) such documents of transfer and assignment as such
successor agent may reasonably request. Any such successor agent
shall be a commercial bank organized under the laws of the United
States or any state thereof and shall have a combined capital and
surplus of at least $500,000,000. If a successor is not so
appointed or does not accept such appointment before the resigning
agent's resignation becomes effective, the resigning agent may
appoint a temporary successor to act until such appointment by a
majority of the Banks is made and accepted or if no such temporary
successor is appointed as provided above by the resigning agent, a
majority of the Banks shall thereafter perform all of the duties
of the resigning agent hereunder until such appointment by a
majority of the banks is made and accepted. Such successor agent
shall succeed to all of the rights and obligations of the
resigning agent as if originally named. The resigning agent shall
duly assign, transfer and deliver to such successor agent all
moneys at the time held
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by the resigning agent hereunder after deducting therefrom its
expenses for which it is entitled to be reimbursed. Upon such
succession of any such successor agent, the provisions of this
Section 7 shall continue in effect for the benefit of the
resigning agent in respect of any actions taken or omitted to be
taken by it while it was acting as agent.
8. INTERPRETATION -- This Agreement and the related writings shall
be governed by the following provisions:
8.01 WAIVERS -- The Banks and NCB-Agent may from time to
time grant waivers and consents in respect of this Agreement or
any related writing or assent to amendments thereof, but no
waiver, consent or amendment shall be binding upon the Banks and
NCB-Agent or any thereof unless (a) it shall have been reduced to
writing, each such writing to be narrowly construed, and (b) the
waiver, consent or amendment shall have been approved by a
majority of the Banks in any case referred to in subsection 7B.07
or by all the Banks and NCB-Agent in any case referred to in
subsection 7B.08. Without limiting the generality of the
foregoing, Borrower agrees that no course of dealing in respect
of, nor any omission or delay in the exercise of, any right, power
or privilege by the Banks and NCB-Agent or any thereof shall
operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or privilege preclude any
further or other exercise thereof or of any other right, power or
privilege (whether granted by other contract or by operation of
law or otherwise), as each right, power or privilege may be
exercised either independently or concurrently with others and as
often and in such order as the party or parties exercising the
same may deem expedient.
8.02 CUMULATIVE PROVISIONS -- Each right, power or privilege
specified or referred to in this Agreement is in addition to and
not in limitation of any other rights, powers and privileges that
the Banks and NCB-Agent may respectively otherwise have or acquire
by operation of law, by other contract or otherwise.
8.03 BINDING EFFECT -- The provisions of this Agreement
shall bind and benefit Borrower, NCB-Agent and each Bank and their
respective successors and assigns, including each subsequent
holder, if any, of the subject notes or any thereof; provided,
that prior to an event of default, no Bank shall assign its
subject notes or an interest in any subject indebtedness, this
Agreement or any related writing without the prior written consent
of Borrower, which Borrower agrees it shall not unreasonably
withhold. Notwithstanding the foregoing or any other provisions of
this Agreement, any Bank may at any time assign all or any portion
of its subject loan and any of its subject notes to a Federal
Reserve Bank, but no such assignment shall release any Bank from
any of its obligations hereunder. No person other than Borrower
shall have or acquire any right to obtain any subject loan or to
have any subject LC issued; and provided, further, that neither
any holder of any subject note nor assignee of any subject loan,
whether in whole or in part, shall thereby become obligated
thereafter to grant Borrower any subject loan or to participate in
any subject LC.
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8.04 SURVIVAL OF PROVISIONS -- All representations and
warranties made in or pursuant to this Agreement shall survive the
execution and delivery of this Agreement and of the subject notes
and subject LCs. The provisions of Sections 6A and 6F and
subsection 7B.05 shall survive the payment of the subject
indebtedness for a period of ninety (90) days.
8.05 IMMEDIATE U.S. FUNDS -- Any reference to money is a
reference to lawful money of the United States of America which,
if in the form of credits, shall be in immediately available
funds.
8.06 CAPTIONS -- The several captions to different Sections
and to the respective subsections thereof are inserted for
convenience only and shall be ignored in interpreting the
provisions of this Agreement.
8.07 SUBSECTIONS -- Each reference to a subsection includes
a reference to all subsections thereof (i.e., those having the
same character or characters to the left of the decimal point)
except where the context clearly does not so permit.
8.08 ILLEGALITY -- If any provision in this Agreement or any
related writing shall for any reason be or become illegal, void or
unenforceable, that illegality, voidness or unenforceability shall
not affect any other provision.
8.09 OHIO LAW -- This Agreement and the related writings and
the respective rights and obligations of the parties hereto shall
be construed in accordance with and governed by internal Ohio law.
8.10 INTEREST/FEE COMPUTATIONS -- All interest and all fees
for any given period shall accrue on the first day thereof but not
on the last day thereof and in each case shall be computed on the
basis of a 365/366-day year except in the case of LIBOR loans
which shall be computed on the basis of a 360-day year on the
actual number of days elapsed. In no event shall interest accrue
at a higher rate than the maximum rate, if any, permitted by law.
8.11 NOTICE -- A notice to or request of Borrower shall be
deemed to have been given or made under this Agreement or any
related writing either upon the delivery of a writing to that
effect, to an officer of Borrower or five (5) days after a writing
to that effect shall have been deposited in the United States mail
and sent, with postage prepaid, by registered or certified mail,
addressed to Borrower (Attention: Borrower's chief financial
officer), at the address set forth below (or such other address as
Borrower may hereafter furnish to each Bank in writing for that
purpose). No other method of giving actual notice to or making a
request of Borrower is hereby precluded. Every notice required to
be given to any Bank pursuant to this Agreement shall be delivered
at that Bank's address set forth below (or at such other address
as that Bank may furnish to Borrower and to the other Banks in
writing for that purpose) to an account officer of that Bank. Each
Bank
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agrees to give prompt notice to NCB-Agent whenever it gives any
notice pursuant to Section 5A or 5B or grants any waiver or
consent as provided in subsection 8.01.
8.12 ACCOUNTING TERMS -- Any accounting term used in this
Agreement shall have the meaning ascribed thereto by GAAP subject,
however, to such modification, if any, as may be provided in
Section 9 or elsewhere in this Agreement. All financial items
shall be determined on a consolidated and consolidating basis in
accordance with generally accepted accounting principles.
9. DEFINITIONS -- As used in this Agreement and in the related
writings, except where the context clearly requires otherwise,
ACCOUNT OFFICER means that officer of the Bank in question who at
the time in question is designated by that Bank as the officer
having the primary responsibility for giving consideration to
Borrower's request for credit or, in that officer's absence, that
officer's immediate superior or any other officer who reports
directly to that superior officer;
ADDITIONAL SUBJECT LCS means any letter of credit (other than the
existing subject LCs) issued by NCB-Agent for account of Borrower
as part of the credit facility contained in this Agreement;
ADVANTAGE means any payment (whether made voluntarily or
involuntarily, by offset of any deposit or other indebtedness or
otherwise) received by a Bank in respect of the subject
indebtedness if the payment results in that Banks having less than
its ratable share of the subject indebtedness in question;
AGENT means NCB-Agent and any successor agent pursuant to
subsection 7B.10.
AGREEMENT means this Agreement and includes each amendment, if
any, to this Agreement;
BANK means one of the Banking institutions that is a party to this
Agreement including without limitation NCB;
BANKING DAY means (a) in the case of a LIBOR loan, a day on which
Banks in the London InterBank Market deal in United States dollar
deposits and on which Banking institutions are generally open for
domestic and international business in Cleveland and in New York
City and (b) in any other case, any day other than a Saturday or a
Sunday or a public holiday or other day on which Banking
institutions in Cleveland, Ohio, are generally closed and do not
conduct a Banking business;
BORROWER means Olympic Steel, Inc., an Ohio corporation;
CONTRACT PERIOD is defined in subsection 2B.04;
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CREDIT REQUEST is defined in subsection 2D.01;
DEBT means, collectively, liabilities of the party or parties in
question to the Banks and NCB-Agent or any thereof (whether owing
by one such party alone or with one or more others in a joint,
several, or joint and several capacity) whether now owing or
hereafter arising, whether owing absolutely or contingently, that
is created by loan, overdraft, guaranty of payment or otherwise
pursuant to this Agreement, any related writing or any other
contract with any of the Banks or NCB-Agent, whether incurred
directly to the Banks and NCB-Agent or any thereof or acquired by
purchase, pledge or otherwise, and whether participated to or from
the Bank and NCB-Agent or any thereof in whole or in part; and in
the case of Borrower includes, without limitation, the subject
indebtedness;
DEFAULT UNDER THIS AGREEMENT means an event, condition or thing
which constitutes, or which with the lapse of any applicable grace
period or the giving of notice or both would constitute, any event
of default referred to in Section 5A and which has not been
appropriately waived in writing in accordance with this Agreement
or fully corrected, prior to becoming an actual event of default,
to the full satisfaction of a majority of the Banks;
EBIT TO INTEREST RATIO means the ratio (on the basis of Borrower's
consolidated financial statements prepared for a period of four
(4) successive quarter annual fiscal periods and as at the end of
a quarter annual fiscal period or fiscal year, as the case may be,
ending two months and one day prior to the adjustment dates set
forth in 2B.08) of (a) the sum of Borrower's net income, exclusive
of any non-cash extraordinary items, for the year in question plus
its interest expense for that year plus its federal, state and
local taxes for that year to (b) its interest expense for that
year;
ERISA means the Employee Retirement Income Security Act of 1974
(P.L. 93-406) as amended from time to time; and in the event of
any amendment affecting any Section thereof referred to in this
Agreement, that reference shall be a reference to that Section as
amended, supplemented, replaced or otherwise modified;
EVENT OF DEFAULT is defined in Section 5A;
EXISTING SUBJECT LCS mean (a) the letter of credit in the face
amount of $3,545,444 which NCB has issued, for Borrower's account,
to The Central Trust Company, N.A., of Cincinnati, Ohio (now known
and hereafter referred to as "PNC Bank, Ohio, National
Association") as trustee pursuant to a Trust Indenture dated as of
December 1, 1989, which Trust Indenture relates to certain
Industrial Development Variable Rate Demand Revenue Bonds, Series
1989 (Olympic Steel, Inc. Project) issued by the City of Bedford
Heights, Ohio, and aggregating $3,400,000 in principal amount, (b)
the letter of credit in the face amount of $1,897,856 which NCB
has issued, for Borrower's account, to PNC Bank, Ohio National
Association, as trustee pursuant to a Trust Indenture dated as of
June 1, 1992 which Trust Indenture relates
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to certain Industrial Development Variable Rate Demand Revenue
Bonds, Series 1992 (Olympic Steel, Inc. Project) issued by the
Illinois Development Finance Authority and aggregating $1,820,000
principal amount and (c) the letter of credit in the face amount
of $5,481,000 which NCB has issued, for Borrower's account, to
Fifth Third Bank, as trustee, pursuant to a Trust Indenture dated
as of November 1, 1994, which Trust Indenture relates to certain
Variable Rate Demand Industrial Development Revenue Bonds, Series
1994 (Olympic Steel, Inc. Project) issued by the City of Plymouth,
Minnesota and aggregating $5,400,000 in principal amount and any
letter of credit issued in replacement or in substitution of the
foregoing;
EXPIRATION DATE means the date referred to as such in subsection
2A.03 or such later date, if any, as may be established pursuant
to subsection 2A.06;
FEDERAL FUNDS RATE means the rate of interest, as reasonably
determined by NCB- Agent, paid by NCB for the purchase of "federal
funds" at the time or times in question on a daily overnight
basis;
FRB RESERVE PERCENTAGE means the percentage (as determined by
NCB-Agent) which, for any given day and for Banks that are in
NCB's class, Regulation D of the Board of Governors of the Federal
Reserve system (or any successor) prescribes for determining the
reserve requirement (including, without limitation, any marginal,
emergency or supplemental reserve requirement) for the
"Eurocurrency liabilities" (as defined in Regulation D) of such
Banks in the case of LIBOR loans or, if any similar burden is
hereafter prescribed in lieu of such reserve requirements, the
economic equivalent of that burden;
GAAP means generally accepted accounting principles applied in a
manner consistent with those used in Borrower's latest fiscal
year-end financial statements referred to in subsection 4A.04;
GUARANTOR means one who pledges his credit or property in any
manner for the payment or other performance of the indebtedness,
contract or other obligation of another and includes (without
limitation) any guarantor (whether of collection or payment), any
obligor in respect of a standby letter of credit or surety bond
issued for the obligor's account, any surety, any co-maker, any
endorser, and anyone who agrees conditionally or otherwise to make
any loan, purchase or investment in order thereby to enable
another to prevent or correct a default of any kind; and GUARANTY
means the obligation of a guarantor;
INSOLVENCY ACTION means either (a) a pleading of any kind filed by
the person, corporation or entity (an "insolvent") in question to
seek relief from the insolvent's creditors, or filed by the
insolvent creditors or any thereof to seek relief of any kind
against that insolvent, in any court or other tribunal pursuant to
any law (whether federal, state or other) relating generally to
the rights of creditors or the relief of debtors or both, or (b)
any other action of any kind commenced by an insolvent or the
insolvent's creditors or any thereof for the purpose of
marshalling the insolvent's
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assets and liabilities for the benefit of the insolvent's
creditors; and "insolvency action" includes (without limitation) a
petition commencing a case pursuant to any chapter of the federal
Bankruptcy code, any application for the appointment of a
receiver, trustee, liquidator or custodian for the insolvent or
any substantial part of the insolvent's assets, and any assignment
by an insolvent for the general benefit of the insolvent's
creditors;
LIABILITIES-TO-WORTH RATIO means the ratio of (a) Borrower's total
liabilities to (b) Borrower's net worth;
LIBOR pre-margin rate means the rate per annum (rounded upwards,
if necessary, to the next higher 1/16 of 1), as determined by
NCB-Agent, which equals a fraction the numerator of which is the
"raw LIBOR rate" and the denominator of which is the difference of
one hundred percent (100%) less the FRB reserve percentage, the
"raw LIBOR rate" being the average rate per annum at which
deposits in United States dollars are offered for deposits of the
maturity and amount in question, at 11:00 A.M. London time (or as
soon thereafter as practicable) two Banking days prior to the
first day of the contract period in question, to NCB by prime
Banking institutions in any Eurodollar market reasonably selected
by NCB;
LIBOR LOAN means a subject loan having a contract period described
in clause (a) of subsection 2B.04 and bearing interest in
accordance with clause (b) of subsection 2B.07;
LIBOR MARGIN is defined in Section 2B.07;
LIENS means any lien (statutory or otherwise), security interest,
mortgage, deed of trust, priority, pledge, charge, conditional
sale, title retention agreement, financing lease or other
encumbrance or similar right of others or any agreement to give
any of the foregoing, except such as have been approved in writing
by NCB-Agent;
LONG TERM INDEBTEDNESS means all indebtedness of Borrower (i)
which matures no earlier than one (1) year from the time of
determination or (ii) which matures less than one (1) year from
the time of determination but may have its maturity extended at
the option of the obligor, to one (1) year or later from the time
of determination;
MAJORITY OF THE BANKS means Banks which have committed not less
than or two-thirds (2/3), by amount, of the subject commitments as
set forth in subsection 2A.01;
MATERIAL means material as determined by a majority of the Banks
in the reasonable exercise of their respective discretions;
MATURITY means the date on which the subject indebtedness (or
portion thereof) in question is scheduled for payment in
accordance with this Agreement (without the benefit of any grace
period) EXCEPT that in the event of any acceleration of maturity
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pursuant to Section 5B, "maturity" means the date as of which the
sum becomes immediately payable in full in accordance with
subsection 5B;
NCB means National City Bank;
NET INCOME means net income as determined in accordance with GAAP,
after taxes and after extraordinary items;
NET WORTH means the excess of the net book value of Borrower's
assets (after deducting all applicable valuation reserves) over
all of Borrower's total liabilities all on a consolidated basis;
OSLI means Olympic Steel Lafayette, Inc., an Ohio corporation that
is a wholly owned subsidiary of Borrower.
OSMI means Olympic Steel Minneapolis, Inc., a Minnesota
corporation that is a wholly owned subsidiary of Borrower.
PENSION PLAN means a defined benefit plan (as defined in Section
3(34) of ERISA) of Borrower or OSLI and includes, without
limitation, any such plan that is a multi-employer plan (as
defined in Section 3(37) of ERISA) applicable to any employees of
Borrower or OSLI;
PRIME RATE means the fluctuating rate, as in effect at the time in
question, that is publicly announced by NCB from time to time in
Cleveland, Ohio, as being its prime rate thereafter in effect;
such rate not necessarily being the interest rate charged by NCB
to its most creditworthy borrowing customer;
PRIME RATE LOAN means a subject loan maturing in the manner
described in the first sentence of subsection 2B.05 and bearing
interest in accordance with subsection 2B.07;
PRIME RATE MARGIN is defined in Section 2B.07;
PRIOR SECURITY INTEREST means an enforceable, perfected security
interest or lien under the UCC or other applicable law which is
prior to all liens except for the lien of taxes not due and
payable to the extent given priority by statute;
RATABLE and RATABLY mean in the proportion of the subject
commitments as set forth in subsections 2A.01 and 2A.02;
RELATED WRITING means any note, mortgage, guaranty, security
agreement, other lien instrument, financial statement, audit
report, notice, legal opinion, credit request, officer's
certificate or other writing of any kind which is executed by
Borrower or OSLI, or certified or signed by one or more of its
officers, auditors or counsel, and is delivered to the Banks and
NCB-Agent or any thereof pursuant to this Agreement
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or any related writing and includes, without limitation, the
subject notes and the other writings referred to in Sections 2A,
2B, 2C, 2D, 2E, 3A and 4A;
REPORTABLE EVENT has the meaning ascribed thereto by ERISA;
SERIES means a borrowing obtained by Borrower from the Banks
pursuant to this Agreement and divided ratably among the Banks and
includes, without limitation, a borrowing the proceeds of which
represent new money to Borrower and a borrowing the proceeds of
which are applied to other subject loans at the stated maturity
thereof;
SUBJECT COMMITMENT means the commitment of a Bank to extend credit
to Borrower pursuant to Section 2A of this Agreement and upon the
terms, subject to the conditions and in accordance with other
provisions of this Agreement;
SUBJECT GUARANTY means the guaranty of payment executed and
delivered by OSLI or OSMI pursuant to subsection 2F.01.
SUBJECT INDEBTEDNESS means, collectively, all principal of and
interest on the subject loans, all liability of Borrower to
reimburse NCB for any draft paid by NCB with respect to subject
LCs and all fees and other liabilities, if any, incurred to the
Banks and NCB-Agent or any thereof by Borrower pursuant to this
Agreement or any related writing;
SUBJECT LCS means any letter of credit issued by NCB-Agent for the
account of Borrower as part of the credit facility contained in
this Agreement;
SUBJECT LOAN means a loan obtained by Borrower pursuant to this
Agreement;
SUBJECT NOTE means a note executed and delivered by Borrower and
being in the form and substance of EXHIBIT 2B.01 with the blanks
appropriately filled;
SUBJECT REIMBURSEMENT AGREEMENTS mean the reimbursement agreements
dated as of December 1, 1989 (as amended on June 7, 1990), June 1,
1992 and October 1, 1994, as amended respectively, and any other
reimbursement agreements, letter of credit applications or similar
document executed by Borrower in connection with any subject LC;
SUBJECT REVOLVING CREDIT LOAN means a subject loan obtained by
Borrower that may be borrowed, repaid and reborrowed in accordance
with this Agreement;
SUBSIDIARY means a corporation or other business entity if shares
constituting a majority of its outstanding capital stock (or other
form of ownership) or constituting a majority of the voting power
in any election of directors (or shares constituting both
majorities) are (or upon the exercise of any outstanding warrants,
options or other rights would be) owned directly or indirectly at
the time in question by the
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corporation in question or another "subsidiary" of that
corporation or any combination of the foregoing;
SUPPLEMENTAL SCHEDULE means the schedule incorporated into this
Agreement as EXHIBIT 9S;
TOTAL LIABILITIES means the aggregate (without duplication) of all
of Borrower's liabilities and includes, without limitation, (a)
any indebtedness which is secured by any mortgage, security
interest or other lien on any of its property even if Borrower's
full faith and credit is not pledged to the payment thereof, (b)
an amount equal to any funding obligation of Olympic Steel
Receivables, L.L.C. ("OSRLLC") under section 4.03 of the
Receivable Purchase Agreement dated as of December 19, 1995, among
OSRLLC, as seller, Olympic Steel Receivables, Inc. ("OSRI"), as
managing member of seller, Borrower, as initial master servicer,
Clipper Receivables Corporation ("Clipper"), as purchaser, State
Street Boston Capital Corporation ("SSBCC"), as administrator, and
NCB, as relationship bank; (c) any outstanding Liquidity Loan made
to Clipper pursuant to the Liquidity Agreement dated as of
December 19, 1995, among Clipper, as borrower, SSBCC, as program
administrator, NCB, as liquidity agent, and the commercial lending
institutions party thereto as liquidity banks, as amended and
supplemented from time to time, and (d) any indebtedness for
borrowed money or funded indebtedness of any kind if Borrower is a
guarantor thereof; provided, that there shall be excluded any
liability under a reimbursement agreement relating to a letter of
credit issued to finance the importation or exportation of goods;
UCC means the Uniform Commercial Code in effect in Ohio or, with
respect to perfection, priority and enforcement of a security
interest in a jurisdiction other than Ohio, the Uniform Commercial
Code in effect in the jurisdiction where such security interest is
or is to be perfected or enforced; and
The foregoing definitions shall be applicable to the respective plurals of the
foregoing defined terms.
10. EXECUTION -- This Agreement may be executed in one or more
counterparts, each counterpart to be executed by Borrower, by NCB-Agent and by
one or more or all of the Banks. Each such executed counterpart shall be deemed
to be an executed original for all purposes but all such counterparts taken
together shall constitute but one agreement, which agreement constitutes the
entire agreement between the parties hereto with respect to the subject matter
hereof.
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This Agreement may be executed by representatives of the Banks
using facsimile signatures, and such facsimile signature pages shall in all
respects be binding on all parties hereto and thereto as if such signature pages
were originally delivered. Original signature pages for all such facsimile
signature pages shall be delivered to the parties hereto within ten (10) days
after the date hereof.
Address: OLYMPIC STEEL, INC.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
By: __________________________________________
R. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇, Chief Financial Officer
Address: NATIONAL CITY BANK, AGENT
Metro/Ohio Division
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
By: __________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Vice President
Address: NATIONAL CITY BANK
Metro/Ohio Division
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▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
By: __________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Vice President
Address: MELLON BANK, N.A.
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By: __________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
Address: COMERICA BANK
One Detroit Center
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By: __________________________________________
▇▇▇▇▇ ▇. Dragon, Assistant Vice President
