1
Exhibit 10.11
PROMISSORY NOTE
Original Principal Amount Cleveland, Ohio
$675,000 February 22, 2001
FOR VALUE RECEIVED, DAVID A. WOLFORT ("Maker") promises to pay to the
order of OLYMPIC STEEL, INC. ("Holder") the principal amount of Six Hundred
Seventy Five Thousand Dollars ($675,000) together with interest thereon as
hereinafter provided.
1. PRINCIPAL. The principal amount hereof shall be due and payable in
full on January 1, 2006, or, if earlier, (i) six (6) months after Wolfort's
termination of employment with Olympic Steel, Inc., for any reason other than
death or disability, or (ii) twelve (12) months after his termination of
employment due to death or disability (the "Maturity Date").
2. INTEREST. The principal amount outstanding under this Promissory
Note from time to time shall bear interest from and including the date hereof at
the rate of five and 7/100ths percent (5.07%) per annum, compounded annually on
each anniversary of February 22, 2001, until paid in full. Interest on this
Promissory Note shall be computed on the basis of a 365 day year for the actual
number of days elapsed.
3. PAYMENT IN FULL ON MATURITY DATE. Maker shall pay the full amount
then due under this Promissory Note, both principal and interest (including
compounded interest) in a single payment on the maturity Date. Payment of the
principal of and interest on this Promissory Note shall be made in lawful money
of the United States of America to Holder at 5096 Richmond Road, Bedford
Heights, Ohio 44146 or to such other payee or at such other address as may be
designated to Maker by Holder from time to time.
4. MANDATORY PREPAYMENT ON SALE OF SHARES. Maker has used the proceeds
of the loan from Holder that is evidenced by this Promissory Note to fund the
purchase of 300,000 Olympic Steel, Inc. Common Shares (the "Shares"). Upon any
sale of any portion of the Shares, Maker shall promptly pay to Holder such
amount, if any, as is necessary so that, immediately after that payment, the
portion of the original principal on this Promissory Note that has been repaid,
and as to which all accrued interest has been paid, is at least directly
proportionate to the portion of the 300,000 Shares that have been sold by Maker
through the date of that payment. For example, if, on a particular date Maker,
having not previously sold any of the Shares and having not previously made any
payment on this Promissory Note, sells 75,000 Shares (1/4 of the original
number), Maker shall promptly pay to Holder at least $168,750 of principal (1/4
of the original principal), together with all accrued interest on that amount of
principal.
Page 53
2
5. WAIVER OF DEMAND, ETC. Maker waives demand, presentment, notice of
dishonor, protest, notice of protest, and diligence in collection and bringing
suit and agrees that Holder may extend the time for payment, accept partial
payment, or take security therefor without discharging or releasing Maker.
6. GOVERNING LAW. This Promissory Note has been executed in Bedford
Heights, Ohio. The construction, validity, and enforceability of this Promissory
Note shall be governed by the laws of the State of Ohio applicable to promissory
notes made and to be satisfied entirely within the State of Ohio.
7. COSTS OF ENFORCEMENT. Maker agrees to pay all costs and expenses
(including reasonable attorneys' fees) incurred by Holder in the collection of
this Promissory Note and in the enforcement of the rights under this Promissory
Note.
8. WAIVER. MAKER, TO THE EXTENT NOT PROHIBITED BY LAW, WAIVES ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, BETWEEN HOLDER AND MAKER ARISING OUT OF, IN
CONNECTION WITH THIS PROMISSORY NOTE OR THE RELATED PLEDGE AGREEMENT.
9. PREPAYMENT. Maker may prepay all or any portion of the principal sum
hereof at any time without penalty. All such prepayments shall be applied to the
payment of the principal due hereon, and shall be accompanied by the payment of
accrued interest on the amount of the prepayment to the date thereof.
10. OVERDUE PAYMENTS. Holder must receive any payment of principal and
interest under this Promissory Note by 5:00 p.m., E.S.T., on a business day in
order to be credited on such date. If Maker fails to make any payment of
principal, interest, or other amount becoming due pursuant to the provisions of
this Promissory Note within ten (10) business days of the date due and payable,
Maker also shall pay to Holder a late charge equal to five percent (5%) of the
amount of such payment. Such ten (10) day period shall not be construed in any
way to extend the due date of any such or subsequent payment.
11. SECURITY. Security for repayment of this Note has been given in the
form of a pledge on the 300,000 Shares, pursuant to a Pledge Agreement of even
date herewith.
______________________________
David A. Wolfort
Page 54
3
STOCK PLEDGE AGREEMENT
----------------------
THIS PLEDGE AGREEMENT made and entered into as of this 22 day of
February, 2001, at Bedford Heights, Ohio, by and between Olympic Steel, Inc., an
Ohio corporation ("Pledgee"), and David A. Wolfort ("Pledgor") evidence the
following agreements and understandings:
WITNESSETH:
----------
WHEREAS, Pledgee has loaned ("Loan") to Pledgor the sum of Six Hundred
Seventy Five Thousand Dollars ($675,000) to fund the purchase of 300,000 Common
Shares of the Company (the "Pledged Stock");
WHEREAS, Pledgor has executed a Promissory Note dated of even date
herewith (the "Note") which evidences Pledgor's obligation to repay the Loan;
WHEREAS, Pledgor's obligations under the Note are to be secured by a
pledge of the Pledged Stock.
NOW THEREFORE, in consideration of the mutual promises contained
herein, and other good and valuable consideration, the receipt, adequacy and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. DEPOSIT OF COLLATERAL. Pledgor hereby deposits with Kahn, Kleinman,
Yanowitz & Arnson Co., L.P.A. as Agent (the "Agent"), a stock certificate
representing the Pledged Shares, and an Irrevocable Stock Power duly endorsed by
Pledgor to transfer the Pledged Shares. Such stock certificate and stock power
shall be held by the Agent, on behalf of Pledgee, subject to the terms and
conditions of this Agreement in order to secure the payment obligations of
Pledgor to Pledgee pursuant to the Note. Upon the payment in full of the Note,
such certificate of stock and stock power shall be returned by the Agent to the
Pledgor.
2. DEFAULT.
(a) In the event that Pledgor fails to remedy a default by Pledgor
under the terms of the Note within any applicable cure period, Pledgee shall be
entitled to exercise concurrently or successively any one or more of the
following rights and remedies as well as any other right or remedy which Pledgee
may possess hereunder, at law or in equity:
(i) Agent may exercise, on behalf of the Pledgee, all rights
of a shareholder of record of Olympic Steel, Inc. (the "Company"),
including, without limitation, the right, with or without effecting a
transfer of the shares on the books
Page 55
4
of the Company, to receive and collect for Pledgee's account any and
all amounts which are payable to or on account of the Pledged Shares
(including, without limitation, dividends and distributions), or may
otherwise be considered proceeds of the Pledged Shares to the extent of
the amount then owning on the Note; and
(ii) Agent, on behalf of the Pledgee, may sell, assign,
transfer or otherwise dispose of the Pledged Shares or any portion
thereof, for cash, upon credit or upon such other commercially
reasonable terms and conditions as Pledgee shall deem appropriate,
PROVIDED, HOWEVER, that if the proceeds from such sale, transfer or
disposition exceed the amount then due and owning from Pledgor to
Pledgee under the Note, then such excess shall be promptly paid over to
Pledgor; and PROVIDED FURTHER, that if such proceeds are not sufficient
to pay the amounts due and owing from Pledgor to Pledgee, then Pledgor
shall remain obligated for any amounts still owing under the Note.
Nothing contained in this Section 2(a) shall prevent Pledgee from seeking a
judgment against Pledgor pursuant to the Note or otherwise pursuing its other
rights available at law or in equity.
(b) Anything contained herein to the contrary notwithstanding, any
funds, monies, proceeds or other property received by Agent, on behalf of
Pledgee upon exercise of any right or remedy hereunder, may be retained by
Pledgee only to the extent of actual damages suffered by Pledgee on account of a
default by Pledgor hereunder, and the balance of such funds, monies, proceeds or
other property shall be delivered promptly to Pledgor.
(c) So long as there exists no default under the Note, (i) Pledgor
shall be entitled to receive, retain and use any and all dividends or
distributions made on account of the Pledged Shares, such dividends or
distributions being and remaining the property of Pledgor, and (ii) as owner of
the Pledged Shares, Pledgor shall be entitled to exercise all rights and
privileges attendant thereto.
3. TERMINATION. This Pledge Agreement and all of its terms and
conditions shall remain in full force and effect for so long as the Note remains
unpaid, in whole or in part, or until the Pledged Shares are sold, liquidated or
disposed of by Pledgee, as the case may be. At such time as the Note is paid in
full, or deemed paid, this Pledge Agreement shall terminate and shall cease to
be of further force and effect. At such time of termination, Agent shall deliver
to Pledgor the certificates representing the Pledged Shares and the Irrevocable
Stock Power, together with an instrument signed by Pledgee relinquishing all
right, title and interest of Pledgee in and to the Pledged Shares.
4. TRANSFERS AND OTHER LIENS. Pledgor agrees that he will not (a) sell
or otherwise dispose of or grant any option with respect to any of the Pledged
Shares, (b)
Page 56
5
create or permit to exist any other lien upon or with respect to any of the
Pledged Shares or (c) enter into any obligations that may restrict or inhibit
Pledgee's rights or ability to sell or otherwise dispose of the Pledged Shares
or any part thereof after the occurrence and during the continuance of an event
of default under the terms of the Note.
5. INDEMNIFICATION OF AGENT. Pledgor and Pledgee will indemnify, hold
harmless and defend against any claim, loss, liability, or damage, incurred by
Agent in connection with carrying out its duties under this Agreement. In the
event that any legal action is instituted against Agent as such, Agent may
implead or interplead the parties hereto in such action and may deposit with the
court in which such action is pending the Pledged Shares which is the subject of
this Agreement, and which is also the subject matter of such action. Agent shall
thereupon be relieved and discharged from any and all obligations and
liabilities under and pursuant to this Agreement and Pledgor and Pledgee shall
thereupon release Agent from any and all further obligations and liabilities
under and pursuant to this Agreement.
In the event Agent impleads or interpleads Pledgor or Pledgee, such
party or parties shall pay Agent's cost in connection therewith.
6. MISCELLANEOUS.
(a) Any notice or other communications under this Agreement to any
party will be adequately given when it is personally delivered or when it is
sent by fax, with confirmation of receipt, or one day after it is sent by
overnight courier, or three days after it is sent by certified mail, return
receipt requested, addressed in any case as follows:
to Pledgor: David A. Wolfort
Olympic Steel, Inc.
5096 Richmond Road
Bedford Heights, Ohio 44146
Facsimile No.: 216-292-3974
to Pledgee: Olympic Steel, Inc.
5096 Richmond Road
Bedford Heights, Ohio 44146
Facsimile No.: 216-292-3974
Page 57
6
to Agent: Kahn, Kleinman, Yanowitz & Arnson Co., L.P.A.
The Tower at Erieview, Suite 2600
1301 East Ninth Street
Cleveland, Ohio 44114-1824
ATTN: Michael A. Ellis, Esq.
Facsimile No.: 216-623-4912
(b) This Agreement, which shall be governed by and interpreted in
accordance with the laws of the State of Ohio, shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
(c) This Agreement, together with the Note, constitutes the entire
agreement between the parties hereto with respect to the matters herein
addressed. Any modification or amendment to this Agreement shall be effective
only if in writing and executed by Pledgor and Pledgee.
(d) All rights and remedies provided herein or otherwise existing at
law or in equity are cumulative, and the exercise of one or more of such rights
or remedies by Pledgee shall not preclude or waive its right to exercise any or
all of the other rights and remedies.
(e) The captions in this Agreement are included for convenience of
reference only and shall be of no force and effect in construing the provisions
hereof.
(f) Any provisions contained in this Agreement which are contrary to,
prohibited by, or invalid under applicable laws or regulations shall be modified
and enforced to the greatest extent permitted by law and shall not invalidate
the remaining provisions hereof.
(g) This Agreement may be executed in counterparts, each of which shall
be deemed an original and all of which together shall constitute one agreement.
Page 58
7
IN WITNESS WHEREOF, the parties hereto have executed this Pledge
Agreement the day and year first above written.
__________________________________________
David A. Wolfort
"Pledgor"
Olympic Steel, Inc.
an Ohio corporation
By: __________________________________
Michael D. Siegal, Chairman & Chief
Executive Officer
"Pledgee"
Page 59