Document:

Exhibit 10.5

 

Exhibit 10.5

THE KITCHEN COLLECTION, INC.

2005 ANNUAL INCENTIVE COMPENSATION PLAN

Introduction

     The Kitchen Collection, Inc. (“the Company”) has established an Annual Incentive Compensation
Plan (“Plan”) as part of a competitive program for the officers and key management employees of the
Company.

Plan Objectives

     The Company desires to attract and retain talented employees to enable the Company to meet its
financial and business objectives. The objective of the Plan is to provide an opportunity to earn
annual incentive compensation to those employees whose performance has a significant impact on the
Company’s short-term and long-term profitability.

Administration

     The Plan is administered by the Compensation Committee of the Board of Directors of the
Company (the “Committee”). The Committee:

	 	A.  	May amend, modify, or discontinue the Plan.
	 
	 	B.  	Will designate Plan Participants.
	 
	 	C.  	Will determine the annual performance criteria which generate the incentive
compensation pool.
	 
	 	D.  	Will determine the total amount of both the target and actual annual incentive
compensation pool.
	 
	 	E.  	Will approve individual incentive Awards to Participants who are officers of
the Company.
	 
	 	F.  	May delegate to the Chief Executive Officer of the Company the approval of
incentive compensation Awards to Participants below officer level.
	 
	 	G.  	May approve a pro rata incentive compensation Award for Participants in the
Plan whose employment is terminated before the end of the Award Term (1) due to death,
disability, retirement or facility closure or (2) under other circumstances at the
recommendation of the Chief Executive Officer of the Company. In furtherance of, but
without limiting the foregoing, except as determined by the Committee, a Participant
must be employed on December 31 of the Award Term in order to be entitled to receive an
Award hereunder.

     The Committee shall have complete authority to interpret all provisions of this Plan
consistent with law, to prescribe the form of any instrument evidencing any Award granted or paid
under this Plan, to adopt, amend and rescind general and special rules and regulations for its
administration, and to make all other determinations necessary or advisable for the administration
of this Plan. A majority of the Committee shall constitute a quorum, and the action of members of
the Committee present at any meeting at which a quorum is present or acts unanimously approved in
writing, shall be the act of the Committee. All acts and decisions of the Committee with respect
to any questions arising in connection with the administration and interpretation of this Plan,
including the severability of any or all of the provisions hereof, shall be conclusive, final and
binding upon the Company and all present and former Participants and employees and their respective
descendants, successors and assigns. No member of the Committee shall be liable for any such act
or decision made in good faith.

Determination of Corporate Incentive Compensation Pool

     Each Participant in the Plan will have an individual target incentive compensation percentage
which is determined by the Participant’s salary grade. This percentage is multiplied by the
mid-point of

 

 

the Participant’s salary grade to determine his individual target incentive compensation Award. The
total of the target incentive compensation Awards of all participants equals the target corporate
incentive compensation pool (“Target Pool”). The Target Pool is approved at the beginning of each
Award Year by the Committee.

     The actual corporate incentive compensation pool (”Actual Pool”) is determined as of the end
of each Award Year based on the Company’s actual performance against specific criteria established
in the beginning of the Award Year by the Committee. The Target Pool is adjusted upwards or
downwards by corporate performance adjustment factors to determine the Actual Pool. In no event
will the Actual Pool exceed 150% of the Target Pool, except that the Committee elects to increase
the Actual Pool by up to 10% as described below.

     The Target and Actual Pools may consist of the sum of two or more subpools, provided the
subpools have individual objectives.

     Subject to the Committee’s right to amend or terminate the Plan at any time, it is the intent
of the Plan that the Actual Pool, as determined above, will be the final total corporate incentive
compensation pool. However, the Committee, in its sole discretion, may increase or decrease by up
to 10% of the Actual Pool or may approve an incentive compensation pool where there would normally
be no pool due to Company performance which is below the criteria established for the year.

     The Actual and Target Pools exclude the Marketing Incentive Plan for regional, district, store
and support managers. However, total compensation for employees covered by the Marketing Incentive
Plan will be based on competitive levels.

Determination of Individual Incentive Compensation Awards

     Salary grades and the corresponding target incentive percentage for each Participant in the
Plan will be established at the beginning of each Award Year and approved by the Committee.
Individual target incentive compensation will then be adjusted by the appropriate pool or subpool
factor. Such adjusted individual incentive compensation will be further modified based on a
Participant’s performance as compared to his individual goals for the Award Year.

     The total of all individual incentive compensation Awards must not exceed the Actual Pool for
the Award Year.

	 	A.  	Example Calculation for Determination of Actual Pool

Intentionally Omitted

 

 

	 	B.  	Example Calculation for Determination of Individual

Incentive Compensation Awards

Intentionally Omitted

Payment Date/Taxes

     Promptly following the Committee’s approval of the final Awards, the Company shall pay the
amount of such Awards to the Participants in cash, subject to all withholdings and deductions
described in the following sentence; provided, however, that (i) no Award shall be payable to a
Participant except as determined by the Committee and (ii) in no event shall the Awards be paid
later than two and one-half months after the close of the Award Term. Any Award paid to a
Participant under this Plan shall be subject to all applicable federal, state and local income tax,
social security and other standard withholdings and deductions.

Definitions

     (a) “Award” means cash paid to a Participant under the Plan for the Award Term in an amount
determined in accordance with the Plan.

     (b) “Award Term” means the period from January 1, 2005 through December 31, 2005.

     (c) “Participant” means any person who is classified by the Company as a salaried employee and
in salary grades 4 and above, who in the judgment of the Committee occupies a key position in which
his efforts may significantly contribute to the profits or growth of the Company; provided,
however, that the Committee may select any employee who is expected to contribute, or who has
contributed, significantly to the Company’s profitability to participate in the Plan and receive an
Award hereunder; and further provided, however, that following the end of the Award Term the
Committee may make one or more discretionary Awards to employees of the Company who were not
previously designated as Participants. Directors of the Company who are also employees of the
Company are eligible to participate in the Plan. The Committee shall have the power to add
Participants at any later date in the Award Term if individuals subsequently become eligible to
participate in the Plan. Each Participant shall be notified that he is eligible to receive an
Award and the amount of his target Award. If a Participant receives a change in salary midpoint,
such Participant shall be notified of any resulting change in his target Award.

General Plan Provisions

     (a) No Right of Employment. Neither the adoption or operation of this Plan, nor any
document describing or referring to this Plan, or any part thereof, shall confer upon any employee
any right to continue in the employ of the Company, or shall in any way affect the right and power
of the Company to terminate the employment of any employee at any time with or without assigning a
reason therefor to the same extent as the Company might have done if this Plan had not been
adopted.

     (b) Governing Law. The provisions of this Plan shall be governed by and construed in
accordance with the laws of the State of Ohio.

     (c) Miscellaneous. Headings are given to the sections of this Plan solely as a
convenience to facilitate reference. Such headings, numbering and paragraphing shall not in any
case be deemed in any way material or relevant to the construction of this Plan or any provisions
thereof. The use of the masculine gender shall also include within its meaning the feminine. The
use of the singular shall also include within its meaning the plural, and vice versa.

 

 

     (d) American Jobs Creation Act. It is intended that this Plan be exempt from the
requirements of Section 409A of the Internal Revenue Code, as enacted by the American Jobs Creation
Act.

     (e) Limitation on Rights of Participants; No trust.  No trust has been created by the
Company for the payment of Awards granted under this Plan; nor have the Participants been granted
any lien on any assets of the Company to secure payment of such benefits. This Plan represents
only an unfunded, unsecured promise to pay by the Company and a Participant hereunder is a mere
unsecured creditor of the Company.

     (f) Payment to Guardian. If an Award is payable to a minor, to a person declared
incompetent or to a person incapable of handling the disposition of his property, the Committee may
direct payment of such Award to the guardian, legal representative or person having the care and
custody of such minor, incompetent or person. The Committee may require such proof of
incompetency, minority, incapacity or guardianship as it may deem appropriate prior to the
distribution of such Award. Such distribution shall completely discharge the Company from all
liability with respect to such Award.

     (g) Effective Date. This Plan shall become effective as of January 1, 2005.

2005 Performance Targets

The performance targets for the Plan are attached as an Addendum to this document.<PAGE>
                                                                    EXHIBIT 4.11

            AMENDMENT NO. 9 TO AMENDED AND RESTATED CREDIT AGREEMENT

         THIS AMENDMENT dated as of March 31, 2005, and effective as of March
31, 2005 by and among the financial institutions whose signatures appear below
(individually a "Bank," collectively the "Banks"), Comerica Bank, as
Administrative Agent for the Banks (in such capacity, "Agent"), and Olympic
Steel, Inc., an Ohio corporation (the "Company").

         RECITALS:

         A. Company, Agent and Comerica Bank, Fifth Third Bank, Standard Federal
Bank N.A., Fleet Capital Corporation and KeyBank National Association are
parties to that certain Amended and Restated Credit Agreement dated as of
December 30, 2002, as previously amended ("Credit Agreement").

         B. Company, the Banks and Agent desire to amend the Credit Agreement as
set forth below.

         NOW THEREFORE, the parties agree as follows:

         1. The definition of "Revolving Credit Aggregate Commitment" set forth
in Section 1.1 of the Credit Agreement are amended to read as follows:

              `Revolving Credit Aggregate Commitment' shall mean (i) from March
         31, 2005 through June 30, 2005, One Hundred Thirty Million Dollars
         ($130,000,000) and (ii) commencing July 1, 2005 and thereafter, One
         Hundred Ten Million Dollars ($110,000,000), in either case, subject to
         reduction or termination under Section 2.13, 2.14 or 9.2 hereof."

         2. Schedule 1.2 of the Agreement is amended to read in the form annexed
hereto.

         3. On July 1, 2005, Company shall repay the indebtedness outstanding
under the Revolving Credit Notes to the extent such indebtedness exceeds One
Hundred Ten Million Dollars ($110,000,000).

         4. The Obligations, as increased by this Amendment, continue to be
secured by the liens on and security interest in the Collateral under terms of
the Collateral Documents.

         5. Upon execution of this Amendment, Company agrees to pay to the Agent
a $5,000 non-refundable fee for each of the Banks executing this Amendment (an
aggregate payment of Twenty Five Thousand Dollars ($25,000)).

         6. Except as expressly modified hereby, all the terms and conditions of
the Credit Agreement shall remain in full force and effect.

         7. Company hereby represents and warrants that, after giving effect to
the amendments contained herein, (a) execution, delivery and performance of this
Amendment and any other documents and instruments required under this Amendment
or

                                       4
<PAGE>

the Credit Agreement are within its corporate powers, have been duly authorized,
are not in contravention of law or the terms of its Articles of Incorporation or
Bylaws, and do not require the consent or approval of any governmental body,
agency, or authority; and this Amendment and any other documents and instruments
required under this Amendment or the Credit Agreement, will be valid and binding
in accordance with their terms; (b) the continuing representations and
warranties made by Company set forth in Sections 6.1 through 6.19 and 6.21
through 6.24 of the Credit Agreement are true and correct on and as of the date
hereof with the same force and effect as if made on and as of the date hereof;
(c) the continuing representations and warranties of Company set forth in
Section 6.20 of the Credit Agreement are true and correct as of the date hereof
with respect to the most recent financial statements furnished to the Bank by
Company in accordance with Section 7.1 of the Credit Agreement; and (d) no
Default or Event of Default has occurred and is continuing as of the date
hereof.

         8. Capitalized terms used but not defined herein shall have the meaning
set forth in the Credit Agreement.

         9. This Amendment may be signed in counterparts.

         10. This Amendment shall become effective (according to the terms and
as of the date hereof) upon satisfaction by Company of the following conditions:

                  (a) Agent shall have received counterpart originals of this
         Amendment, in each case duly executed and delivered by Company, the
         Agent, the Banks, and the Guarantors and originals of the Loan
         Documents identified on the Closing Agenda annexed hereto duly executed
         by the parties thereto and, where applicable, in recordable form; and

                  (b)      Company shall have paid to the Agent for the benefit
         of the Banks the fee required in paragraph 5, above.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]

                                       5
<PAGE>

         WITNESS the due execution hereof as of the day and year first above
written.

COMERICA BANK,                         OLYMPIC STEEL, INC.
as Agent

By:                                    By:
   ---------------------------            --------------------------------------

Its:                                   Its:
    --------------------------             -------------------------------------

SWING LINE BANK:                       COMERICA BANK

                                       By:
                                          --------------------------------------

                                       Its:
                                           -------------------------------------

ISSUING BANK:                          COMERICA BANK

                                       By:
                                          --------------------------------------

                                       Its:
                                           -------------------------------------

BANKS:                                 COMERICA BANK

                                       By:
                                          --------------------------------------

                                       Its:
                                           -------------------------------------

                                       STANDARD FEDERAL BANK N.A.

                                       By:
                                          --------------------------------------

                                       Its:
                                           -------------------------------------

                                       6
<PAGE>

                                       FIFTH THIRD BANK

                                       By:
                                          --------------------------------------

                                       Its:
                                           -------------------------------------

                                       FLEET CAPITAL CORPORATION

                                       By:
                                          --------------------------------------

                                       Its:
                                           -------------------------------------

                                       KEYBANK NATIONAL ASSOCIATION

                                       By:
                                          --------------------------------------

                                       Its:
                                           -------------------------------------

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<PAGE>

Acknowledged by the undersigned Guarantor as of March 31, 2005.

                                       GUARANTORS:

                                       OLYMPIC STEEL LAFAYETTE, INC.

                                       By:
                                          --------------------------------------

                                       Its:
                                           -------------------------------------

                                       OLYMPIC STEEL MINNEAPOLIS,
                                          INC.

                                       By:
                                          --------------------------------------

                                       Its:
                                           -------------------------------------

                                       OLYMPIC STEEL IOWA, INC.

                                       By:
                                          --------------------------------------

                                       Its:
                                           -------------------------------------

                                       OLY STEEL WELDING, INC.

                                       By:
                                          --------------------------------------

                                       Its:
                                           -------------------------------------

                                       OLYMPIC STEEL RECEIVABLES,
                                          L.L.C.

                                       By:
                                          --------------------------------------

                                       Its:
                                           -------------------------------------

                                       8

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