[Integra Bank Letterhead]
Integra Bank
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January 3, 1996
VIA CERTIFIED MAIL
Steel City Products, Inc.
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Attention: Chief Executive Officer
RE: Credit Agreement dated August 1, 1994, as amended (the "Credit Agreement")
by and between Steel City Products, Inc. (the "Borrower") and Integra
Bank (the "Bank")
Gentlemen:
This letter shall constitute notice that the Borrower is in violation of
Section 7.18(a)(ii) of the Credit Agreement which requires the Borrower to cause
Oakhurst to maintain "Consolidated Tangible Net Worth of Oakhurst not less than
$1,000,000 at the end of each of its fiscal quarters." The Borrower's failure to
cure the foregoing violation to the Bank's reasonable satisfaction within
fifteen (15) days after the date of this letter will constitute an Event of
Default under section 9.03 of the Credit Agreement. The Borrower has advised the
Bank that it will not be able to cure the aforesaid covenant violation and the
Borrower has therefore requested the Bank to modify the covenant requirements.
Capitalized terms used in this letter and not otherwise defined shall have the
meanings ascribed thereto in the Credit Agreement.
The Bank has considered the Borrower's request and, subject to the further
provisions of this letter, the Bank has agreed to modify Section 7.18(a)(ii) of
the Credit Agreement so that Oakhurst will now be required to maintain a
consolidated net worth not less than $6,500,000; for purposes of the foregoing,
"consolidated net worth" shall mean (i) the total shareholder's equity
(including capital stock, additional paid-in capital and retained earnings after
deducting treasury stock) which would appear on a consolidated balance sheet of
Oakhurst prepared in accordance with GAAP, minus (ii) any tax deferrals.
The foregoing modification is being granted by the Bank with the express
understanding and agreement of the Borrower that;
(i) the Bank does not intend to extend the Revolving Credit Expiration Date
(as defined in the Oakhurst Credit Agreement) beyond July 31, 1996,
(ii) the Term Loan will be immediately due and payable in full on the
Revolving Credit Expiration Date (as defined in the Oakhurst Credit
Agreement),
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman
January 3, 1996
Page 2
(iii) the Borrower will immediately begin to solicit loan commitments from
alternate financing sources to refinance the outstanding principal
balance of the Term Loan as soon as possible, but in any event no later
than July 31, 1996, and
(iv) if the Borrower has not refinanced the outstanding principal balance of
the Term Loan by February 28, 1996, then commencing on March 1, 1996,
the outstanding principal balance of the Term Loan will bear interest at
a rate per annum equal to ten and one-half percent (10.5%).
Except to the extent specifically provided for above, this letter does not
constitute a modification, alteration, release, limitation or waiver of any
default, breach, right, power, remedy or privilege under the Loan
Documents. The Bank expressly reserves all rights and remedies previously
availabe to it under the Loan Documents against the Borrower and the
Sureties and, except to the extent provided for herein, the Bank may at any
time exercise its rights and remedies.
Please signify your consent to the foregoing by signing below where indicated
and returning a signed copy to me.
Sincerely,
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Vice President - Corporate Banking
cc: ▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, III
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▇▇▇▇▇ ▇▇▇▇▇▇, Esquire
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
The foregoing is agreed to this 9th day of January, 1996.
STEEL CITY PRODUCTS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Chief Executive Officer