-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
 MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
 TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
 WXbpEMq41qcfgEhxTRNJxLY1fwHRLf9+UAWvGIig0n5M4jtrNxwrHHQTL93Cymqa
 kFUny31D0Pfa+o78iszlxA==

<SEC-DOCUMENT>0000950152-02-004308.txt : 20020515
<SEC-HEADER>0000950152-02-004308.hdr.sgml : 20020515
<ACCEPTANCE-DATETIME>20020515144244
ACCESSION NUMBER:		0000950152-02-004308
CONFORMED SUBMISSION TYPE:	10-Q
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20020331
FILED AS OF DATE:		20020515

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			OLYMPIC STEEL INC
		CENTRAL INDEX KEY:			0000917470
		STANDARD INDUSTRIAL CLASSIFICATION:	WHOLESALE-METALS SERVICE CENTERS & OFFICES [5051]
		IRS NUMBER:				341245650
		STATE OF INCORPORATION:			OH
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		10-Q
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-23320
		FILM NUMBER:		02651140

	BUSINESS ADDRESS:	
		STREET 1:		5080 RICHMOND RD
		CITY:			BEDFORD HEIGHTS
		STATE:			OH
		ZIP:			44146
		BUSINESS PHONE:		2162923800

	MAIL ADDRESS:	
		STREET 1:		5096 RICHMOND RD
		CITY:			BEDFORD HIEGHTS
		STATE:			OH
		ZIP:			44146
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>l93932ae10-q.txt
<DESCRIPTION>OLYMPIC STEEL, INC.        10-Q
<TEXT>
<PAGE>


================================================================================

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

[X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2002
                                                 --------------

[ ]    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934

                         Commission File Number 0-23320
                                                -------

                               OLYMPIC STEEL, INC.
             (Exact name of registrant as specified in its charter)

             Ohio                                          34-1245650
- ---------------------------------                 -------------------------
(State or other jurisdiction of                       (I.R.S. Employer
incorporation or organization)                      Identification Number)

5096 Richmond Road, Bedford Heights, Ohio                    44146
- -----------------------------------------              ----------------
(Address of principal executive offices)                  (Zip Code)

        Registrant's telephone number, including area code (216) 292-3800
                                                           --------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No ( )

Indicate the number of shares of each of the issuer's classes of common stock,
as of the latest practicable date:

                     Class                  Outstanding as of May 13, 2001
       -------------------------------      ------------------------------
       Common stock, without par value              9,633,100


================================================================================



                                    1 of 42
<PAGE>
                               OLYMPIC STEEL, INC.
                               Index to Form 10-Q

<TABLE>
<CAPTION>
                                                                                                    PAGE NO.
                                                                                                  -------------

<S>        <C>                                                                                           <C>
PART I.              FINANCIAL INFORMATION

           ITEM 1.   FINANCIAL STATEMENTS

                     Consolidated Balance Sheets - March 31, 2002 and                                        3
                       December 31, 2001

                     Consolidated Statements of Income - for the three months                                4
                       ended March 31, 2002 and 2001

                     Consolidated Statements of Cash Flows - for the three                                   5
                       months ended March 31, 2002 and 2001

                     Notes to Consolidated Financial Statements                                            6-8

           ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL                                    9-14
                     CONDITION AND RESULTS OF OPERATIONS

           ITEM 3.   QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET                                   14
                     RISK

PART II.             OTHER INFORMATION

           ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                                                       15

SIGNATURES                                                                                                  16

EXHIBITS                                                                                                 17-42
</TABLE>


                                    2 of 42
<PAGE>

PART I.  FINANCIAL INFORMATION

                               OLYMPIC STEEL, INC.
                           CONSOLIDATED BALANCE SHEETS

                                 (in thousands)

                                                    March 31,      December 31,
                                                       2002           2001
                                                    ---------       ---------
                                                   (unaudited)      (audited)

                             Assets

 Cash                                               $     768       $   1,054
 Accounts receivable                                   55,851          38,754
 Inventories                                           70,604          72,287
 Prepaid expenses and other                             4,519           3,514
 Assets held for sale                                   1,660           1,660
                                                    ---------       ---------
    Total current assets                              133,402         117,269
                                                    ---------       ---------
 Property and equipment, at cost                      159,991         159,544
 Accumulated depreciation                             (50,672)        (48,433)
                                                    ---------       ---------
    Net property and equipment                        109,319         111,111
                                                    ---------       ---------
 Investments in joint ventures                            223              31
 Goodwill                                               3,415           3,415
 Other assets                                           3,235           3,589
                                                    ---------       ---------
    Total assets                                    $ 249,594       $ 235,415
                                                    =========       =========
                           Liabilities

 Current portion of long-term debt                  $   5,286       $   4,786
 Accounts payable                                      24,120          20,143
 Accrued payroll                                        2,431           3,200
 Other accrued liabilities                              6,117           4,326
                                                    ---------       ---------
    Total current liabilities                          37,954          32,455
                                                    ---------       ---------
 Credit facility revolver                              33,253          24,359
 Term loans                                            47,676          48,237
 Industrial revenue bonds                               7,117           7,117
                                                    ---------       ---------
    Total long-term debt                               88,046          79,713
                                                    ---------       ---------
 Deferred income taxes                                  2,120           1,975
                                                    ---------       ---------
    Total liabilities                                 128,120         114,143
                                                    ---------       ---------

                      Shareholders' Equity

 Preferred stock                                            -               -
 Common stock                                          99,733          99,733
 Officer note receivable                                 (675)           (675)
 Retained earnings                                     22,416          22,214
                                                    ---------       ---------
    Total shareholders' equity                        121,474         121,272
                                                    ---------       ---------
    Total liabilities and shareholders' equity      $ 249,594       $ 235,415
                                                    =========       =========


      The accompanying notes are an integral part of these balance sheets.



                                    3 of 42
<PAGE>


                               OLYMPIC STEEL, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                      FOR THE THREE MONTHS ENDED MARCH 31,

                (in thousands, except per share and tonnage data)

<TABLE>
<CAPTION>
                                                                          2002              2001
                                                                  ----------------  ----------------
                                                                              (unaudited)

<S>                                                                       <C>               <C>
Tons sold
   Direct                                                                 273,190           254,796
   Toll                                                                    40,367            33,715
                                                                  ----------------  ----------------
                                                                          313,557           288,511
                                                                  ----------------  ----------------

Net sales                                                                $112,017          $117,120
Cost of sales                                                              85,026            90,676
                                                                  ----------------  ----------------
   Gross margin                                                            26,991            26,444

Operating expenses

   Warehouse and processing                                                 7,528             8,128
   Administrative and general                                               6,353             6,742
   Distribution                                                             4,376             4,000
   Selling                                                                  3,352             3,286
   Occupancy                                                                1,159             1,500
   Depreciation and amortization                                            2,595             2,315
                                                                  ----------------  ----------------
      Total operating expenses                                             25,363            25,971
                                                                  ----------------  ----------------
      Operating income                                                      1,628               473
Income (loss) from joint ventures                                             192              (223)
                                                                  ----------------  ----------------
   Income before interest and taxes                                         1,820               250
Interest expense                                                            1,491             1,200
Receivable securitization expense                                               -               694
                                                                  ----------------  ----------------
   Income (loss) before taxes                                                 329            (1,644)
Income taxes                                                                  127              (633)
                                                                  ----------------  ----------------
      Net income (loss)                                                     $ 202          $ (1,011)
                                                                  ================  ================
      Basic and diluted net income (loss) per share                        $ 0.02           $ (0.11)
                                                                  ================  ================
      Weighted average shares outstanding                                   9,631             9,460
                                                                  ================  ================
</TABLE>








        The accompanying notes are an integral part of these statements.




                                    4 of 42
<PAGE>



                               OLYMPIC STEEL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      FOR THE THREE MONTHS ENDED MARCH 31,

                                 (in thousands)
<Table>
<Caption>
                                                           2002           2001
                                                         --------       --------
                                                              (unaudited)
<S>                                                      <C>            <C>
Cash flows from operating activities:
  Net income (loss)                                      $    202       $ (1,011)
  Adjustments to reconcile net income (loss) to net
   cash from (used for) operating activities-
      Depreciation and amortization                         2,595          2,315
      (Income) loss from joint ventures                      (192)           223
      Long-term deferred income taxes                         145            484
                                                         --------       --------

                                                            2,750          2,011

Changes in working capital:
  Accounts receivable                                     (17,097)        (6,605)
  Inventories                                               1,683          4,985
  Prepaid expenses and other                               (1,005)          (885)
  Accounts payable                                          3,977          2,621
  Accrued payroll and other accrued liabilities             1,022            578
                                                         --------       --------

                                                          (11,420)           694
                                                         --------       --------

     Net cash from (used for) operating activities         (8,670)         2,705
                                                         --------       --------

Cash flows from investing activities:
  Capital expenditures, net                                  (449)          (908)
  Investments in joint ventures                                 -           (500)
                                                         --------       --------

     Net cash used for investing activities                  (449)        (1,408)
                                                         --------       --------

Cash flows from financing activities:
  Credit facility revolver                                  8,894         (1,672)
  Term loans and IRB's                                        (61)          (663)
                                                         --------       --------

     Net cash from (used for) financing activities          8,833         (2,335)
                                                         --------       --------

Cash:
  Net decrease                                               (286)        (1,038)
  Beginning balance                                         1,054          1,449
                                                         --------       --------

  Ending balance                                         $    768       $    411
                                                         ========       ========

</Table>





        The accompanying notes are an integral part of these statements.





                                    5 of 42
<PAGE>


                               OLYMPIC STEEL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
           (dollars in thousands, except share and per share amounts)

The accompanying consolidated financial statements have been prepared from the
financial records of Olympic Steel, Inc. and its wholly-owned subsidiaries
(collectively Olympic or the Company), without audit and reflect all adjustments
which are, in the opinion of management, necessary to fairly present the results
of the interim periods covered by this report. All significant intercompany
transactions and balances have been eliminated in consolidation. Investments in
the Company's joint ventures are accounted for under the equity method.


(1) JOINT VENTURES:

On April 1, 2002, Michael J. Guthrie and Carlton L. Guthrie (the Guthries)
withdrew as majority members of Trumark Steel & Processing, LLC (TSP). On that
date, Thomas A. Goss and Gregory F. Goss, executive officers of the Goss Group,
Inc., an insurance joint venture, assumed the Guthries 51% majority ownership
interest.

On April 30, 2002, the Company's Olympic Laser Processing, LLC (OLP) joint
venture entered into a new 2-year bank financing agreement.

As of March 31, 2002, Olympic guaranteed 50% of OLP's $18.5 million and 49% of
TSP's $2.0 million of outstanding debt on a several basis.


(2) GOODWILL:

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 141 (SFAS No. 141), "Business Combinations"
and SFAS No. 142, "Goodwill and Other Intangible Assets." These statements,
which became effective for the Company on January 1, 2002, result in
modifications relative to the Company's accounting for goodwill and other
intangible assets. Specifically, the Company ceased goodwill amortization
beginning January 1, 2002. Additionally, intangible assets, including goodwill,
are subjected to new impairment testing criteria. Other than the cessation of
goodwill amortization, which approximated $104 annually, the Company has not
determined the impact of adoption on the Company's financial statements. The
determination of any goodwill impairment charge is expected to be completed by
June 30, 2002.


                                    6 of 42
<PAGE>

(3) DEBT:

In June 2001, the Company entered into a 3-year, $135,000 secured financing
agreement (The Credit Facility). The Credit Facility is secured by the Company's
accounts receivable, inventories, and substantially all property and equipment.
Borrowings under the Credit Facility are limited to the lesser of a borrowing
base, comprised of eligible receivables, inventories and property and equipment,
or $135,000 in the aggregate. The Company has the option to borrow based on the
agent bank's base rate or London Interbank Offered Rates (LIBOR) plus a premium
(the Premium). The Company's effective borrowing rate for the first three months
of 2002 was 8.2% compared to 8.8% in 2001.

On January 1, 2002, the $20,000 term loan B component deferred pay rate declined
from 9.0% to 7.0%. Beginning March 1, 2002, the Premium for both the revolver
and term loan A component of the Credit Facility decreased 25 basis points based
on the Company's excess availability. Additionally, on March 1, 2002, the
Company's commitment fee on any unused portion of the Credit Facility was
reduced from .5% to .375% based on the Company's excess availability. Term loan
A monthly principal repayments of $167 commenced April 1, 2002.

The Credit Facility requires the Company to comply with various covenants, the
most significant of which include: (i) minimum excess availability of $10,000,
(ii) a minimum fixed charge coverage ratio, which commences in December 2002,
(iii) restrictions on additional indebtedness, and (iv) limitations on capital
expenditures. At March 31, 2002, the Company had approximately $38,048 of excess
availability under its Credit Facility. The Company was in compliance with its
various covenants at March 31, 2002.

Included in the Credit Facility revolver balances on the accompanying
consolidated balance sheets are $8,735 and $5,187 of checks issued that have not
cleared the bank as of March 31, 2002, and December 31, 2001, respectively.


(4) SHARES OUTSTANDING AND EARNINGS PER SHARE:

Earnings per share have been calculated based on the weighted average number of
shares outstanding. Basic and diluted earnings per share are the same, as the
effect of outstanding stock options is not dilutive.

                                    7 of 42
<PAGE>

(5) STOCK OPTIONS:

Shares available under the Stock Option Plan were increased from 950,000 to
1,300,000 by shareholder vote on April 26, 2002. Options to purchase 881,833
shares are currently outstanding, of which 451,500 are exercisable at prices
ranging from $1.97 to $15.50 per share.


(6) SUPPLEMENTAL CASH FLOW INFORMATION:

Interest paid during the first three months of 2002 and 2001 totaled $1,138 and
$1,219, respectively. Income taxes paid during the first three months of 2002
and 2001 totaled $42 and $31, respectively.



                                    8 of 42
<PAGE>


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The Company's results of operations are affected by numerous external factors,
such as general economic and political conditions, competition, steel pricing
and availability, energy prices, customer demand for steel, and layoffs or work
stoppages by suppliers' or customers' personnel.

Olympic sells a broad range of products, many of which have different gross
margins. Products that have more value-added processing generally have a greater
gross margin. Accordingly, the Company's overall gross margin is affected by
product mix and the amount of processing performed, as well as volatility in
selling prices and material purchase costs. The Company performs toll processing
of customer-owned steel, the majority of which is performed by its Detroit
operation. Toll processing generally results in lower selling prices and gross
margin dollars per ton but higher gross margin percentages than the Company's
direct sales.

The Company's two joint ventures include: Olympic Laser Processing (OLP), a
company that processes laser welded sheet steel blanks for the automotive
industry, and Trumark Steel & Processing (TSP), a Minority Business Enterprise
(MBE) company supporting the flat-rolled steel requirements of the automotive
industry. The Company's 50% interest in OLP and 49% interest in TSP are
accounted for under the equity method. The Company guarantees portions of
outstanding debt under both of the joint venture companies' bank credit
facilities. As of March 31, 2002, Olympic guaranteed 50% of OLP's $18.5 million
and 49% of TSP's $2.0 million of outstanding debt on a several basis.

Financing costs historically included interest expense on debt and costs
associated with the Company's accounts receivable securitization program (the
Financing Costs). In connection with the refinancing of its bank credit
agreement on June 28, 2001 (the Credit Facility), the Company's accounts
receivable securitization program was terminated. Receivable securitization
expense was based on commercial paper rates calculated on the amount of
receivables sold.

The Company sells certain products internationally, primarily in Puerto Rico and
Mexico. All international sales and payments are made in United States dollars.
These sales historically involve the Company's direct representation of steel
producers. Typically, international sales are more transactional in nature with
lower gross margins than domestic sales. Domestic steel producers generally
supply domestic customers before meeting foreign demand, particularly during
periods of supply constraints.



                                    9 of 42
<PAGE>

RESULTS OF OPERATIONS

Tons sold increased 8.7% to 314 thousand in the first quarter of 2002 from 289
thousand in the first quarter of 2001. Tons sold in the first quarter of 2002
included 273 thousand from direct sales and 41 thousand from toll processing,
compared with 255 thousand direct tons and 34 thousand toll tons in the
comparable period of last year. The increases in direct and toll tons sold were
attributable to improved demand primarily from the Company's automotive customer
base.

Net sales decreased 4.4% to $112.0 million for the first quarter of 2002 from
$117.1 million for 2001. Average selling prices decreased 12.0% due to depressed
steel pricing as compared to last year's first quarter.

As a percentage of net sales, gross margin increased to 24.1% for the first
quarter of 2002 from 22.6% for 2001. The gross margin percentage increase
reflects the benefit of lower raw material costs in the current year quarter.
The Company is currently experiencing a significant increase in its material
purchase costs as a result of tightening steel supply caused by the idling or
closure of domestic steel production facilities as well as lower import levels.
Due to competitive pressures on pricing in its market segments, the Company may
not be able to pass along all of the increased costs to its customers, which may
result in decreased gross margins.

Operating expenses in the first quarter of 2002 decreased 2.3% to $25.4 million
from $26.0 million in the same period last year. The operating expense decrease
was achieved notwithstanding the increase in tons sold and the inclusion of over
$350 thousand of incremental deferred financing fee amortization associated with
the refinancing of the Company's Credit Facility. For the first three months of
2002, warehouse and processing and administrative and general declined $600
thousand and $389 thousand, respectively, primarily as a result of lower payroll
costs. Occupancy expense declined $341 thousand primarily as a result of lower
natural gas and electric costs from last year's first quarter. As a percentage
of net sales, operating expenses increased to 22.6% for the first quarter of
2002 from 22.2% for 2001 due to lower average selling prices.

Income from joint ventures totaled $192 thousand in the first quarter of 2002,
compared with a loss of $223 thousand in 2001. Olympic's share of OLP's income
totaled $198 in the first quarter of 2002, compared to a loss of $220 in the
same period last year. Olympic's share of TSP's losses totaled $6 and $3 in the
first quarter of 2002 and 2001, respectively.



                                    10 of 42
<PAGE>


Financing Costs in the first quarter of 2002 decreased to $1.5 million from $1.9
million in the first quarter of 2001. The decrease between years is attributable
to a $23.8 million reduction in average borrowing levels inclusive of
receivables sold under the Company's former accounts receivable securitization
program. The Company's effective bank borrowing rate, excluding receivable
securitization borrowings, decreased to 8.2% in the first quarter of 2002 from
8.8% in the comparable 2001 period.

Income before taxes for the first quarter of 2002 totaled $329 thousand,
compared to a loss before taxes of $1.6 million for 2001. An income tax
provision of 38.5% was recorded in the first quarter of 2002, compared with an
income tax benefit of 38.5% in the comparable 2001 period.

Net income for the first quarter of 2002 totaled $202 thousand, or $.02 per
share, compared to a net loss of $1.0 million, or $.11 per share for 2001.
Weighted average shares outstanding totaled 9.6 million in the first quarter of
2002 compared to 9.5 million in last year's first quarter.


LIQUIDITY AND CAPITAL RESOURCES

The Company's principal capital requirements are to fund its working capital
needs, its upgrade of information technology and business system software, the
purchase and upgrading of processing equipment and facilities, and its
investments in joint ventures. The Company uses cash generated from operations,
leasing transactions, and its Credit Facility to fund these requirements.

Working capital at March 31, 2002 increased $10.6 million from the end of the
prior year. The increase was primarily attributable to a $17.1 million increase
in accounts receivable and a $1.0 million increase in prepaid expenses, offset
by a $4.0 million increase in accounts payable and a $1.7 million decrease in
inventories. The increase in accounts receivable was the result of an $18.3
million increase in net sales in the first quarter of 2002 from the fourth
quarter of 2001. Included in the prepaid expenses increase are net deposits of
$624 thousand for processing equipment the Company intends to lease in
Minneapolis.

Net cash used for operating activities totaled $8.7 million for the three months
ended March 31, 2002. Cash generated from earnings before non-cash charges
totaled $2.7 million, while cash used for working capital components totaled
$11.4 million.

During the first three months of 2002, net cash used for investing activities
totaled $449 thousand, consisting primarily of information technology spending.


                                    11 of 42
<PAGE>

During the first three months of 2002, net cash provided by financing activities
totaled $8.8 million and primarily consisted of borrowings on the Company's
Credit Facility to fund working capital requirements.

On March 9, 2002 the "Job Creation and Worker Assistance Act" (H.R. 3090) was
signed into law. A significant portion of this law is a temporary extension of
the net operating loss carryback period from two to five years for net operating
losses arising in taxable years ending in 2001 and 2002. As a result of this
change in tax law, the Company expects to receive approximately $3.0 million of
tax refunds during fiscal 2002 after filing its federal income tax return for
the fiscal year ended December 31, 2001. As of March 31, 2002 and December 31,
2001, the benefit associated with this tax refund is classified as an income tax
receivable on the accompanying consolidated balance sheets.

As of March 31, 2002, the Company had approximately $38.0 million of excess
availability under its Credit Facility and was in compliance with all of its
bank covenants. The Company believes that funds available under its Credit
Facility, together with funds generated from operations, will be sufficient to
provide the Company with the liquidity necessary to fund its anticipated working
capital requirements, capital expenditure requirements, and scheduled debt
maturities over the next 12 months. Capital requirements are subject to change
as business conditions warrant and opportunities arise.


IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 141 (SFAS No. 141), "Business Combinations"
and SFAS No. 142, "Goodwill and Other Intangible Assets." These statements,
which became effective for the Company on January 1, 2002, result in
modifications relative to the Company's accounting for goodwill and other
intangible assets. Specifically, the Company ceased goodwill amortization
beginning January 1, 2002. Additionally, intangible assets, including goodwill,
are subjected to new impairment testing criteria. Other than the cessation of
goodwill amortization, which approximated $104 annually, the Company has not
determined the impact of adoption on the Company's financial statements. The
determination of any goodwill impairment charge is expected to be completed by
June 30, 2002.



                                    12 of 42
<PAGE>


CRITICAL ACCOUNTING POLICIES

Management's discussion and analysis of its financial condition and results of
operations are based upon the Company's consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires
management to make estimates and judgments that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. On an on-going basis, we evaluate our
estimates and judgments, including those related to accounts receivable,
inventories, deferred tax assets, equity investment, goodwill and intangible
assets, and revenue recognition. We base our estimates and judgments on
historical experience and on various other factors that we believe to be
reasonable under the circumstances, the results of which form the basis for our
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions.

For further information regarding the accounting policies that we believe to be
critical accounting policies and that affect our more significant judgments and
estimates used in preparing our consolidated financial statements, see Footnote
1 of Notes to Consolidated Financial Statements from our December 31, 2001 Form
10-K.


FORWARD-LOOKING INFORMATION

This document contains various forward-looking statements and information that
are based on management's beliefs as well as assumptions made by and information
currently available to management. When used in this document, the words
"anticipate," "expect," "believe," "estimated," "project," "plan" and similar
expressions are intended to identify forward-looking statements, which are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Such statements are subject to certain risks, uncertainties
and assumptions including, but not limited to: general business and economic
conditions; competitive factors such as the availability and pricing of steel
and fluctuations in demand, specifically in the automotive, transportation, and
other service centers markets served by the Company; layoffs or work stoppages
by the Company's, suppliers', or customers' personnel; potential equipment
malfunction; equipment installation delays; the adequacy of information
technology and business system software investment; the successes of its joint
ventures; the successes of the Company's efforts and initiatives to increase
sales volumes, maintain gross margins--especially during periods of increased
material purchase costs and tightened steel availability, improve cash flows and
reduce debt, maintain or improve inventory turns and reduce its costs. Should
one or more


                                    13 of 42
<PAGE>

of these risks or uncertainties materialize, or should underlying assumptions
prove incorrect, actual results may vary materially from those anticipated,
expected, believed, estimated, projected or planned. Readers are cautioned not
to place undue reliance on these forward-looking statements, which speak only as
of the date hereof. The Company undertakes no obligation to republish revised
forward-looking statements to reflect the occurrence of unanticipated events or
circumstances after the date hereof.


QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK

There has been no material change during the three months ended March 31, 2002
from the disclosures about market risk provided in the Company's Annual Report
on Form 10-K for the year ended December 31, 2001. However, the Company is
currently experiencing a significant increase in its material purchase costs as
a result of tightening steel supply caused by the idling or closure of domestic
steel production facilities as well as lower import levels. Due to competitive
pressures on pricing in its market segments, the Company may not be able to pass
along all of the increased costs to its customers, which may result in decreased
gross margins.



                                    14 of 42
<PAGE>


PART II.  OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K

           Exhibit 10.5 - Operating Agreement of Trumark Steel & Processing,
           LLC, dated April 1, 2002, by and among The Goss Group, Inc., and Oly
           Steel Welding, Inc.

           There were no Form 8-K's filed in the quarter ended March 31, 2002.
           However, the Company did file a Form 8-K on May 3, 2002 in connection
           with a change in its certifying accountant.



                                    15 of 42
<PAGE>


                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.


                                     OLYMPIC STEEL, INC.
                                     (Registrant)


Date:    May 13, 2002                By: /s/ Michael D. Siegal
                                        ---------------------------------------
                                     MICHAEL D. SIEGAL
                                     Chairman of the Board and Chief Executive
                                     Officer


                                     By: /s/ Richard T. Marabito
                                        ---------------------------------------
                                     RICHARD T. MARABITO
                                     Chief Financial Officer and Treasurer
                                     (Principal Accounting Officer)








                                    16 of 42


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.5
<SEQUENCE>3
<FILENAME>l93932aex10-5.txt
<DESCRIPTION>EXHIBIT 10.5
<TEXT>
<PAGE>
                                                                    Exhibit 10.5

                               OPERATING AGREEMENT
                                       OF
                         TRUMARK STEEL & PROCESSING LLC

         This Operating Agreement ("Agreement") is entered into as of the 1st
day of April, 2002 by and among The Goss Group, Inc. ("G Member") and Oly Steel
Welding, Inc. ("O Member").

                                    ARTICLE I

                                   DEFINITIONS

         All terms used herein and not otherwise defined shall have the meanings
given in EXHIBIT A attached hereto and made a part hereof.

                                   ARTICLE II

                                  ORGANIZATION

         2.1 NAME. The name of the Company shall be Trumark Steel & Processing
LLC. The Company shall adopt the name style "Trumark Steel & Processing". Upon
unanimous agreement by O Member and G Member, the name of the Company can be
changed without impacting their remaining provisions of this Agreement. 2.2
MEMBERS. There shall be two (2) members of the Company, G Member, which shall
have a fifty-one percent (51%) interest, and O Member, which shall have a
forty-nine percent (49%) interest. G Member shall serve as the Managing Member.

         2.3 DURATION. The Company shall have a perpetual existence, unless
dissolved in accordance with the Michigan Limited Liability Company Act, the
Company's Articles of Organization or this Agreement.

         2.4 PURPOSE AND POWERS. The Company shall be for the purpose of and
have all the powers of a limited liability company under the laws of the State
of Michigan.


                                 Page 17 of 42
<PAGE>

         2.5 TAX MATTERS MEMBER. Subject to change by the Board, O Member is
appointed as tax matters member of the Company.

         2.6 MINORITY BUSINESS CERTIFICATION. The Members intend that the
Company be qualified as a minority business enterprise ("MBE") under the
certification guidelines of the Michigan Minority Business Development Council
("MMBDC"). Upon execution of this Agreement, the Company shall use its best
efforts to obtain MBE Certification for so long as this Agreement remains in
effect. As used in this Section 2.6 and elsewhere in this Agreement, the terms
"minority", "minorities" and "minority group" shall have the meaning given to it
in the MMBDC Certification Policy and Procedure Manual (March 1998 revision), as
from time to time amended and updated. If further action (including, without
limitation, amending this Agreement) is determined by the Members to be
necessary for the Company to obtain MBE Certification, the Members shall
consider and discuss such action in good faith, and if the Members agree, such
action shall be taken as promptly as practicable, but if either Member
determines that such action is unacceptable to it and MBE Certification cannot
be obtained without such action, the Company shall be dissolved.

                                   ARTICLE III

                          DISTRIBUTIONS AND ALLOCATIONS

         3.1 BOOKS OF ACCOUNT. The books of account of the Company that are kept
for other than tax purposes (the "GAAP books") shall be kept in accordance with
GAAP.

         3.2 DISTRIBUTIONS. Except to the extent limited by applicable law or by
the terms of any contract entered into by the Company and any lender, under the
discretion of the Board of Managers, the Company shall make distributions in
cash from time to time to the Members in proportion to their then percentage
interests in the Company.


                                 Page 18 of 42
<PAGE>

         3.3 ALLOCATIONS OF PROFITS AND LOSSES.

             (a) GENERAL RULE. For book accounting and other purposes (except
tax matters), profits and losses, and each item of income, gain, loss or
deduction comprising such profits and losses for any fiscal year shall be
allocated to the Members in accordance with their respective percentage
interests in the Company set forth in Section 2.2.

             (b) TAX ACCOUNTING RULES. For tax purposes, each item of gain,
loss, deduction or credit shall be allocated as set forth in the TAX APPENDIX.

             (c) MAINTENANCE OF CAPITAL ACCOUNTS. For tax purposes, capital
accounts shall be maintained as set forth in the TAX APPENDIX.

         3.4 FISCAL YEAR. The Company's fiscal year for all purposes shall be
the calendar year.

                                   ARTICLE IV

                              MANAGEMENT OF COMPANY

         4.1 GENERAL PRINCIPLES.

             (a) INDEPENDENCE OF COMPANY. The Company shall operate as an
independent business entity, separate and distinct from the operations of the
Members or their respective Affiliates. Pursuant to the Michigan Limited
Liability Company Act, the separate assets of any Member are not available to
satisfy the debts of the Company.

             (b) AFFILIATED PARTY TRANSACTIONS. Any contract or amendment
thereto between the Company and a Member or an Affiliate of a Member shall be
negotiated at arm's length.

         4.2 BOARD OF MANAGERS.


                                 Page 19 of 42
<PAGE>

             (a) GENERAL RESPONSIBILITY. The Company and its business affairs
shall be managed by five managers ("Managers"), to be known as its "Board of
Managers" or "Board". At all times a majority of the Managers shall be
minorities. The Board shall be responsible for overall policy matters and the
business operations of the Company. Officers and employees of the Company shall
conduct the operations of the Company and related business activities in a
manner consistent with the policies adopted from time to time by the Board. Each
Manager shall have one (1) vote.

             (b) SELECTION AND REMOVAL OF MANAGERS. Three (3) of the Managers
(and their replacements from time to time) shall be selected by G Member. Two
(2) of the Managers (and their replacements from time to time) shall be selected
by O Member. Managers may be removed by (i) the mutual agreement of O Member and
G Member; (ii) the Member who selected such Manager, or (iii) O Member or G
Member upon such Manager's theft or embezzlement from the Company or conviction
of any felony or crime involving moral turpitude. Managers shall be selected or
removed by written notice from the Member making the selection or removal
delivered to the other Member and the affected Manager.

             (c) TERM OF OFFICE. Each Manager shall hold office until his or her
successor is qualified, or until his or her earlier resignation, removal from
office, or death.

             (d) VACANCIES. In the case of a Manager vacancy, such vacancy may
be filled by the Member who originally selected such Manager.

             (e) REGULAR MEETINGS. Except as otherwise decided by the Board, the
Board shall hold regular meetings not less than four (4) times each year.

             (f) SPECIAL MEETINGS. Any Member or any Manager may call a special
meeting. Any Member or Manager who calls a special meeting shall, unless the
Members


                                 Page 20 of 42
<PAGE>

otherwise agree, provide at least fifteen (15) calendar days' notice,
which notice shall state the purpose or purposes of the proposed meeting and the
matters proposed to be acted on at the meeting, to all the members of the Board.

             (g) ACTION BY THE BOARD.

                 (i) The Board may act at a meeting by the affirmative vote of a
majority of the members of the Board; (ii) The Board may hold a meeting by means
of a conference telephone or other communications equipment through which all
persons participating at the meeting can hear each other and participation by
such means shall constitute presence in person at a meeting; and (iii) The Board
may act by written consent without a meeting by a written consent signed by all
members of the Board.

         4.3 OFFICERS.

             (a) APPOINTMENT AND DISMISSAL. The officers of the Company shall
consist of a Chief Executive Officer, a Treasurer and a Secretary and such
officers may be appointed and removed by the Board of Managers from time to
time. At all times, a majority of the Officers shall be minorities. The Officers
shall have (i) authority over the day-to-day affairs of the Company, and (ii)
such other powers as the Board may from time to time authorize; provided,
however, that any Company check written in excess of $100,000 shall require the
signature of at least two (2) Officers, and notice of any such checks shall be
provided in a prompt manner to all Members. In addition to the authority granted
to the Board of Managers, Officers may be dismissed or removed by any Member
upon an Officer's theft or embezzlement from the Company or conviction of any
felony or crime involving moral turpitude.



                                 Page 21 of 42
<PAGE>

             (b) DUTIES OF CHIEF EXECUTIVE OFFICER. The Chief Executive Officer
shall (1) direct the activities of all of the Company's employees, contractors,
agents and representatives and direct the use of all of the Company's assets,
except to the extent said employees, contractors, agents, representatives and
assets are to be directed by and responsible to the Board or except to the
extent of the dual signature requirement pursuant to Section 4.3; (2) for all
matters pertaining to its performance as Chief Executive Officer, maintain, and
cause the employees of the Company to maintain, accurate records regarding
operations; (3) report to the Board not less than quarterly regarding the status
of operations; and (4) make such other reports as shall be requested by any
Manager.

         4.4 REQUIREMENT OF BOARD ACTION ON CERTAIN MATTERS. Approval by the
Board, in accordance with Section 4.2(viii), shall be required in order to
constitute a valid authorization for the Company to:

             (1) Commit to any capital project or make any capital expenditure
in excess of $5,000;

             (2) Make any expenditure on a capital project which, when added to
all other expenditures covered by such project, would exceed the aggregate
amount approved for such project by ten percent (10%);

             (3) Enter into or assume any contract that is for a duration of
more than one (1) year;

             (4) Enter into, modify, amend, extend or waive any right with
respect to any contract providing for (i) the sale of any of the Company's
processing equipment; (ii) the merger or consolidation of the Company, or (iii)
any technology-related agreements;


                                 Page 22 of 42
<PAGE>

             (5) Incur or guarantee any indebtedness for money borrowed, except
for accounts payable and draws upon the Company's revolving line of credit
incurred in the ordinary course of business and the endorsement of checks and
other instruments in the ordinary course of business;

             (6) Approve or amend the Company's annual business plan, including
the capitalization of the Company as well as the Company's capital budget;

             (7) Approve any new or amend any existing employee benefit plan
that applies to any of the employees of the Company;

             (8) Approve any labor or personnel relations agreement, collective
bargaining agreement or any related policy;

             (9) Authorize any salary or wage in excess of $50,000 annually or
approve any bonus payment to an employee;

             (10) Enter into any employment contract;

             (11) Commence any suit or action, other than a proof of claim in
bankruptcy;

             (12) Make any donation of cash or assets in excess of $250;

             (13) Approve the annual audited financial statements of the
Company;

             (14) Approve the annual tax returns of the Company;

             (15) Change the Company's auditors from a nationally recognized
accounting firm or change any accounting principle or practice;

             (16) Approve the insurance coverage maintained by the Company;

             (17) Approve or consent to the shutdown or other such termination
of operations of the Company;


                                 Page 23 of 42
<PAGE>

             (18) Agree upon or take any action with respect to any other matter
that is not in the ordinary course of business; and

             (19) Make any press release or other public disclosure on behalf of
the Company.

                                    ARTICLE V

                             AGREEMENTS WITH MEMBERS

         The Company may from time to time enter into one or more agreements
with a Member concerning the purchase by the Company of administrative or other
services from a Member or Affiliates of a Member. Prior to each calendar
quarter, the Managers shall estimate the cost of such services for the following
quarter. Within fifteen (15) days after the end of each calendar quarter, the
Company shall reimburse each Member at cost for any such services provided.

                                   ARTICLE VI

                      CERTAIN COVENANTS CONCERNING MEMBERS

         6.1 INDEPENDENT ACTIVITIES.

             (a) The Members acknowledge that the primary business of the
Company will be steel processing and steel sales ("the Business").

             (b) None of the Members or any Affiliate of a Member shall engage
in a steel distribution business, whether independently or as a shareholder,
partner or member of another entity, within the states of Ohio, Indiana,
Michigan or Illinois in the Business as a minority business enterprise certified
by any federal, state or local certifying body recognized by the National
Minority Supplier Development Council or otherwise, unless such member or
Affiliate (the "Competing Member") first offers in writing the opportunity to
the other Members (the "Non-Competing Member") to participate equally in such
activity. The Non-Competing


                                 Page 24 of 42
<PAGE>

Member shall have fifteen (15) days following its receipt of notice from the
Competing Member to notify the Competing Member in writing whether it elects to
participate in the competing activity. If the Non-Competing Member elects not to
participate or has not responded to the Competing Member within the fifteen (15)
day period, the Competing Member may proceed with such activity. The notice to
be provided in this Section 6.1(b) shall include sufficient information from
which the notified party may make a fully informed decision regarding
participation.

             (c) Except as provided in Section 6.1(b), each Member and its
Affiliates may engage in whatever activities they may choose, regardless of
whether such activities compete with the Company, the other Members or an
Affiliate of the other Members.

         6.2 NON-DELEGATION. Except as provided herein, a Member shall not,
without the prior approval of the Board, engage in any transaction, make any
other commitment, enter into any agreement or incur any obligation, whether as
principal, surety or agent, or in any other way hold itself out as acting for,
or on behalf of, the Company. Any attempted action in contravention of this
Section 6.2 shall be null, void AB INITIO and not binding upon the Company,
unless subsequently ratified by the Board.

         6.3 CAPITAL CONTRIBUTIONS.

             (a) INITIAL CAPITAL CONTRIBUTIONS. The amount of each Member's
initial contributions is set forth on EXHIBIT B attached hereto and made a part
hereof.

             (b) FURTHER CAPITAL CONTRIBUTIONS. After such initial capital
contribution, a Member shall not be obligated to make any further capital
contribution unless agreed to by each Member. If so agreed, G Member shall make
the first contribution such that the GAAP basis capital accounts are in
proportion with G Member's and O Member's respective percentage


                                 Page 25 of 42
<PAGE>

ownership interest in the Company. Thereafter, the Members shall make additional
capital contributions in proportion to their respective percentage ownership
interests in the Company.

         6.4 RATIFICATION OF CERTAIN ACTIONS. The Members hereby ratify and
affirm as actions of the Company actions taken by the Members prior to the date
thereof in furtherance of the Business. The Company agrees to assume all matters
and shall indemnify both Members and their Affiliates against all such matters.

                                   ARTICLE VII

                        DISPOSITION OF MEMBER'S INTEREST

         7.1 RESTRICTION ON TRANSFER OF ASSIGNMENT.

             (a) During the first six months following the date of the
Agreement, except for transfers contemplated in Section 7.2 or Article VIII, the
interest in the Company owned by G Member shall not be transferred without the
written consent of O Member. Thereafter, G Member may do so only as provided in
Section 7.2, Section 7.3 or Article VIII. Any transfer, sale assignment, pledge,
encumbrance, mortgage or disposition of G Member's interest in the Company in
contravention of this Agreement shall be null and void, and if G Member attempts
to make a prohibited transfers, then O Member shall be entitled to take any and
all actions which may be necessary or appropriate to defeat or prevent the
prohibited transfer.

             (b) During the first six (6) months following the date of the
Agreement, except for transfers contemplated in Section 7.2 or Article VIII, O
Member shall not transfer its interest in the Company without the written
consent of G Member. Thereafter, O Member may do so only as provided in Sections
7.2, 7.3, 7.6 or Article VIII. Any transfer, sale assignment, pledge,
encumbrance, mortgage or disposition of O Member's interest in the Company in
contravention of this Agreement shall be null and void, and if O Member attempts



                                 Page 26 of 42
<PAGE>

to make a prohibited transfer, then G Member shall be entitled to take any and
all actions which may be necessary or appropriate to defeat or prevent the
prohibited transfer.

         7.2 TRANSFERS TO AFFILIATES.

             (a) G Member may transfer its respective interest in the Company at
any time to one of its shareholders or Affiliates, provided the transferee shall
have agreed in writing to be bound by the provisions of this Agreement affecting
the membership interest so transferred and provided further that such transfer
shall not affect the Company's MBE Certification.

             (b) O Member may transfer its interest in the Company at any time
to Olympic Steel, Inc., an Ohio corporation, ("OSI"), or to a wholly-owned
entity of OSI provided both OSI and the transferee shall have agreed in writing
to be bound by the provisions of this Agreement affecting the membership
interest so transferred.

         7.3 SALE OF INTEREST BY A MEMBER.

(a) RIGHT TO MATCH OFFER. After the expiration of the six (6) month period
following the date of this Agreement, in the event a Member elects to transfer
its interest in the Company (other than to an Affiliate as provided in Section
7.2 or as provided in Article VIII), it shall notify the other Member in writing
(the "Transfer Notice") of such intent, specifying all terms and conditions of
the transaction including the identity of the proposed transferee. The
non-selling Member shall have a period of sixty (60) days following receipt of
the Transfer Notice to notify the selling Member in writing (the "Consent
Notice") whether it consents to such transfer. In the event that the non-selling
Member does not consent to such transfer, the Consent Notice must specify
whether (i) the non-selling Member will purchase the interest being offered for
sale by the selling Member, under the same terms and conditions described in the
Transfer Notice, or (ii) if they elect to liquidate the Company in accordance
with Section 8.3. In


                                 Page 27 of 42
<PAGE>

the event the non-selling Member elects to acquire the selling Member's
interest, the Consent Notice shall specify a closing date in accordance with the
requirements of Section 7.3(b).

             (b) CLOSING FOR TRANSFER UNDER SECTION 7.3. In the event a
non-selling Member elects to purchase the interest being offered, the
transaction shall be consummated at a closing to be held on a date designated by
such purchasing Member that is a business day not less than ten (10) days or
more than sixty (60) days after the selling Member's receipt of the Consent
Notice subject to extension to permit any applicable governmental reviews or to
obtain any necessary governmental consents or approvals. At the closing, the
purchasing Member shall deliver the purchase price to the selling Member by
cashier's or certified check payable to the selling Member or by wire transfer
of immediately available funds to an account designated by the selling Member.

             (c) REQUIREMENTS AND CONDITIONS. All transfers of a selling
Member's interest pursuant to this Section 7.3 shall be subject to the
requirements of Sections 7.4 and 7.5 and the selling Member shall cause the
conditions set forth in Section 7.4 to be satisfied before or at the closing.

         7.4 CONDITIONS FOR VALID TRANSFER OF COMPANY INTEREST BY A MEMBER. In
the event a non-selling Member consents to a transfer by the selling Member
pursuant to Section 7.3(a), the selling Member and the person acquiring such
interest (the "Buyer") shall not accomplish or complete the transfer of such
interest unless (i) both selling Member and Buyer have executed and delivered an
agreement (the "Substitution Agreement"), (ii) such interest is transferred
pursuant to the Substitution Agreement, and (iii) the Substitution Agreement
provides, INTER ALIA, that upon consummation of the transactions provided for
therein at a closing (the "Transfer Closing"):


                                 Page 28 of 42
<PAGE>

             (1) the selling Member shall withdraw from the Company;

             (2) the selling Member shall transfer and convey to Buyer all of
the selling Member's interest;

             (3) the Company shall have no further obligations to selling Member
under this Agreement;

             (4) Buyer shall succeed to all of selling Member's interest and
selling Member's rights and obligations under this Agreement to the extent that
such rights and obligations relate to future performance; and

             (5) selling Member shall have no right to, and shall cease using,
the Company's name.

         7.5 TRANSFER CLOSING. Any Transfer Closing shall be held at the
principal offices of the Company at 10:00 a.m. on a date mutually agreed upon by
Buyer and the selling Member.

         7.6 PUT ARRANGEMENTS.

             (a) During the Put Periods (as hereinafter defined), O Member shall
have the right for any reason to require the Company to repurchase all, but not
less than all, of its interest in the Company at the Put Price (as hereinafter
defined) (the "Put") by delivering a written notice to the Company (the "Put
Notice"). For purposes hereof, the "Put Periods" shall mean the period between
March 1 and March 15 and the period between September 1 and September 15 of each
year, provided the period begins six (6) months or more after the date of this
Agreement.

             (b) Upon the delivery of the Put Notice, the Company, G Member and
O Member shall in good faith promptly determine the Put Price as provided
hereunder, and subject to the provisions hereof within ten (10) business days
after the determination of the Put Price, the


                                 Page 29 of 42
<PAGE>

Company shall purchase and O Member shall sell its interest in the Company at a
mutually agreeable time and place (the "Put Closing").

             (c) At the Put Closing, the Company shall deliver to O Member the
Put Price by cashier's or certified check payable to O Member or by wire
transfer of immediately available funds to an account designated by O Member.
For purposes hereof, the "Put Price" shall mean the "Net Book Value Interest" of
O Member's interest in the Company. For purposes of this Agreement, the "Net
Book Value Interest" of a Member shall mean a Member's capital account balance,
adjusted for profits and losses of the Company realized as of such date and
allocable to such Member to the extent not already factored into the capital
account balance of such Member.

         7.7 IMPACT OF TRANSFER. Notwithstanding the other provisions of this
Article VII, a Member may not transfer an interest in the Company, as specified
in Sections 7.1 or 7.2, if such transfer will terminate the Company for federal
income tax purposes or affect the Company's MBE Certification. If requested by
the non-transferring Member, the transferring Member shall provide an opinion of
counsel reasonably satisfactory to the non-transferring Member, concluding that
the contemplated transfer will not result in a termination of the Company for
federal income tax purposes and evidence satisfactory to the non-transferring
Member that the contemplated transfer will not affect the Company's MBE
Certification.

                                  ARTICLE VIII

                                   TERMINATION

         8.1 TERMINATION EVENTS. The Company shall terminate and wind up its
affairs upon the occurrence of the mutual election of O Member and G Member and,
in the event of any of the following events, the non-defaulting or non-bankrupt
Member, as the case may be, may elect to cause the Company to be terminated and
its affairs wound up:


                                 Page 30 of 42
<PAGE>

             (a) A material breach of either G Member or O Member of this
Agreement or any other material agreement which a Member or an Affiliate of a
Member has with the Company which continues for more than ninety (90) days after
written notice;

             (b) The Bankruptcy of the Company or any Member. For purposes
hereof, "Bankruptcy" shall mean the filing of a voluntary petition for relief
under the Bankruptcy Code, the filing on an involuntary petition for relief that
is not dismissed or stayed within sixty (60) days, the making of an assignment
for the benefit of creditors or insolvency of any such party;

             (c) The occurrence of a "Change of Control" in O Member. For
purposes hereof, a "Change in Control" in O Member shall mean that Michael D.
Siegal and David A. Wolfort are no longer employed by OSI; and

             (d) The Company's loss of MBE Certification, which loss is caused
by a Member, but only if the Member not causing the loss of certification elects
to terminate the Company.

         For purposes of this Article VIII, the Member or an affiliate of such
Member who: (i) is in default pursuant to Section 8.1(a), (ii) is bankrupt
pursuant to Section 8.1(b) or, (iii) suffers a Change in Control pursuant to
Section 8.1(c) or, (iv) causes the loss of MBE Certification shall be referred
to as the "Defaulting Member".

         8.2 EFFECT OF TERMINATION.

             (a) VALUATION. In the event of a termination pursuant to Sections
8.1(a), (b), (c) or (d), the Members shall promptly negotiate in good faith to
determine a fair market value on a going concern basis of the Company which
shall be the going concern value of the Company that a non-affiliated third
party would pay in cash all of the Company's assets and assume all of its
liabilities, both absolute and contingent. If O Member and G Member cannot agree
upon such

                                 Page 31 of 42
<PAGE>

a value within sixty (60) days after the termination event, they shall either
(i) jointly appoint a nationally recognized investment banking firm, commercial
bank or accounting firm; or (ii) if they cannot agree upon such an appointment,
they shall appoint the Company's then current auditors to determine the value
within sixty (60) days of such appointment (the "Value").

             (b) TERMINATION UPON MUTUAL ELECTION. In the event of a termination
pursuant to the mutual election of the Member, the Company shall be liquidated.

             (c) OTHER TERMINATION EVENTS. In the case of a termination event
other than the mutual election of the Members, the non-Defaulting Member shall
have the option, in its sole discretion, of selecting among the following
options by giving written notice to the other party (the "Termination Notice"):

                 (i) Purchasing the Defaulting Member's interest at a purchase
price equal to the lesser of (x) an amount equal to (A) the Value determined
pursuant to Section 8.2(a) above multiplied by (B) the then percentage interest
in the Company of the Defaulting Member, or (y) the Net Book Value Interest in
the Company of the Defaulting Member, as of the date the Termination Notice is
given.

                 (ii) Causing the Defaulting Member to acquire the
non-Defaulting Member's interest in the Company at a purchase price equal to the
greater of (x) an amount equal to (A) the Value determined pursuant to Section
8.2(a) above multiplied by (B) the then percentage interest in the Company of
the non-Defaulting Member; or (y) the Net Book Value Interest in the Company of
the non-Defaulting Member.

                 (iii) Requiring the Company to be liquidated in accordance with
Section 8.3.


                                 Page 32 of 42
<PAGE>

                 (iv) Selling the Company to a third party on terms determined
solely by the non-Defaulting Member, and requiring the Defaulting Member to sell
its interest in the Company to the third party on such terms as specified in the
Termination Notice.

                 The closing (the "Termination Closing") of a transaction
contemplated by the Termination Notice shall occur on a date mutually agreed to
by the Members but in any event within sixty (60) days of the date of the
Termination Notice, except that the closing of a transaction described in
Section 8.2(c)(iv) shall occur at the time specified in the Termination Notice.
In the event the non-Defaulting Member elects the options set forth in Section
8.2(c)(i) above, the non-Defaulting Member shall pay on-half (1/2) of the
purchase price to the Defaulting Member within six (6) months after the
Termination Closing and the remaining one-half (1/2) of the purchase price
within twelve (12) months after the Termination Closing. In the event the
non-Defaulting Member elects the option set forth in Section 8.2(c)(ii), the
Defaulting Member shall pay at least one-half (1/2) of the purchase price to the
non-Defaulting Member within three (3) months after the Termination Closing and
the remaining one-half (1/2) within six (6) months after the Termination
Closing.


         8.3 LIQUIDATION. If the Company is liquidating, such liquidation shall
be conducted in accordance with the then applicable Michigan Limited Liability
Company Act, the Internal Revenue Code and all regulations under either statute.
The liabilities of a defaulting Member to the non-Defaulting Member shall be
paid out of the defaulting Member's share of such distribution. Any amounts
remaining shall be distributed to the Member's in accordance with their capital
account balances as defined in the TAX APPENDIX.

         8.4 EXCLUSIVITY. The provisions of this Article VIII are the exclusive
means by which the Company may be terminated and each Member waives any rights
it may have, whether

                                 Page 33 of 42
<PAGE>

statutory or otherwise, to withdraw capital, terminate the Company or otherwise
cease its participation in the Company.

                                   ARTICLE IX

                                 INDEMNIFICATION

         9.1 STANDARD OF CONDUCT. The Company shall, to the maximum extent
permitted by law, indemnify and hold harmless each Member, each Manager,
Officer, employee and agent of the Company, either Member or the Affiliates of
either Member; and all other heirs, executors, successors and assigns of each of
the foregoing against any and all losses, damages, liabilities, costs and
expenses (including reasonable attorneys' fees) by reason of the fact that such
entity or person is or was serving as a Member, Manager, Officer, employee or
agent of the Company provided that (a) such entity or person acted in good
faith; (b) in a criminal action, such entity or person reasonably believed its
conduct was lawful; and (c) in the case of an action initiated by such person or
entity, the initiation of such action was approved by the Board.

         9.2 ADVANCE OF EXPENSES. The Company shall advance to all indemnified
entities and persons the costs and expenses of any covered proceeding provided
such indemnified entity or person provides the Company with an affidavit made in
good faith that he, she or it qualifies for such indemnification.

         9.3 DUAL REPRESENTATION. Subject to the applicable professional
conflict of interest rules, the Company and one or more indemnified entity or
person may be jointly represented by a single counsel.

         9.4 NOTICE. Any person claiming indemnification shall give the Company
prompt notice of its right to indemnification and the failure to give such
notice shall except the


                                 Page 34 of 42
<PAGE>

indemnification obligation to the extent the failure to
give such notice is materially prejudicial to the Company.

                                    ARTICLE X

                                  MISCELLANEOUS

         10.1 INSPECTIONS. Each Member shall at all reasonable times have the
right to inspect, audit and evaluate the Company's files, books, records,
computer data, contracts, assets, leased assets and operations, including, but
not limited to, the right to enter upon, investigate and collect air, surface
water, ground water and soil samples, provided that such entry, investigation
and sampling shall not interfere with the normal business and operations of the
Company.

         10.2 RIGHTS AND REMEDIES. The rights and remedies granted under this
Agreement shall not be exclusive, but shall be in addition to all other rights
and remedies available at law or in equity. The parties expressly agree that the
obligations of each party hereunder are expressly made enforceable by specific
performance.

         10.3 EXPENSES. Except as specifically provided herein or in any other
agreements between the Members or their Affiliates to the contrary, any costs,
expenses and charges incurred by either of the parties hereto in connection with
this Agreement shall be borne by the party incurring such costs, expenses or
charges.

         10.4 NOTICES. All notices and other communications hereunder shall be
effective upon receipt and shall be in writing and personally delivered or
mailed by courier or sent by facsimile as follows:

         If to the Company:

                  TRUMARK STEEL & PROCESSING LLC
                  Attn:  Tom or Greg Goss
                  222 Lavoy Road
                  Erie, MI  48133


                                 Page 35 of 42
<PAGE>

                  Telephone Number:  (734) 847-7706
                  Facsimile Number:  (734) 847-6694

         with a copy to:

                  L.R. Sowell & Associates, PLLC
                  Attn:  Leamon R. Sowell
                  277 Gratiot Avenue, Suite 700
                  Detroit, MI  48226
                  Telephone Number:  (313) 964-7900
                  Facsimile Number:  (313) 964-7900

         If to G Member:

                  The Goss Group, Inc.
                  Attn:  Tom & Greg Goss
                  333 West Fort Street, Suite 1200
                  Detroit, MI  48226
                  Telephone Number:  (313) 962-2200
                  Facsimile Number:  (313) 962-3145

         with a copy to:

                  L.R. Sowell & Associates PLLC
                  Attn:  Leamon R. Sowell
                  277 Gratiot Avenue, Suite 700
                  Detroit, MI  48226
                  Telephone Number:  (313) 964-7900
                  Facsimile Number:  (313) 964-7900

         If to O Member:

                  Oly Steel Welding, Inc.
                  Attn:  Michael D. Siegal
                  c/o Olympic Steel, Inc.
                  5096 Richmond Road
                  Bedford Heights, OH  44146
                  Telephone Number:  (216) 292-3900
                  Facsimile Number:  (216) 292-3974

         with a copy to:

                  Kahn, Kleinman, Yanowitz & Arnson, Co., L.P.A.
                  Attn:  Marc H. Morgenstern, Esq.
                  1301 E. 9th Street, Suite 2600


                                 Page 36 of 42
<PAGE>

                  Cleveland, OH  44114
                  Telephone Number:  (216) 696-3311
                  Facsimile Number:  (216) 696-1009

or to such other address as hereafter shall be furnished as provided in this
Section by one of the parties hereto or the other parties hereto.

         10.5 SUCCESSION AND ASSIGNMENT. Except as expressly contemplated
herein, no party shall assign this Agreement or any rights hereunder, or
delegate performance of any of its obligations hereunder, without the prior
consent of the other, and any such attempted assignment or delegation without
such consent shall be null, void AB INITIO and of no force or effect. Any
permitted assignment of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and permitted
assigns.

         10.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute a single instrument.

         10.7 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Appendices hereto) sets forth the entire understanding and agreement between the
parties as to the matters covered herein and supersedes and replaces any prior
understanding, agreement or statement of intent, in each case, written or oral.

         10.8 HEADINGS. The headings set forth in this Agreement are for
convenience of reference only and do not qualify or affect in any way the
meaning or interpretation of this Agreement.

         10.9 GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed by, the laws of the State of Michigan.


                                 Page 37 of 42
<PAGE>

         10.10 NO THIRD PARTY RIGHTS. This Agreement is intended to be solely
for the benefit of the parties hereto and is not intended to confer any benefits
upon, or create any rights in favor of, any person other than the parties
hereto.

         10.11 SEVERABILITY. In case any one or more of the provisions contained
in this Agreement is adjudged invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby, except to the
extent that doing so would be unjust or inequitable.

         10.12 AMENDMENTS. No amendment, modification or waiver of any term or
condition of this Agreement shall be valid or of any force or effect unless in a
writing signed by both Members.

                    [REST OF PAGE INTENTIONALLY LEFT BLANK.]



                                 Page 38 of 42
<PAGE>



         IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.

                                  TRUMARK STEEL & PROCESSING LLC



                                  By:
                                      -----------------------------------------
                                  Name:
                                        ---------------------------------------
                                  Title:
                                         --------------------------------------



                                  THE GOSS GROUP, INC.



                                  By:
                                      -----------------------------------------
                                  Name:
                                        ---------------------------------------
                                  Title:
                                         --------------------------------------



                                  OLY STEEL WELDING, INC.



                                  By:
                                      -----------------------------------------
                                  Name:
                                        ---------------------------------------
                                  Title:
                                         --------------------------------------


                                 Page 39 of 42
<PAGE>


                                    EXHIBIT A

                                  DEFINED TERMS

"Affiliate" shall mean, when used in reference to a specified person: (i) any
person who directly or indirectly, controls or is controlled by, or is under
common control with the specified person; (ii) any person who is an Officer,
Manager, employee, trustee or partner of, or serves in a similar capacity with
respect to the specified person, or of which the specified person is an Officer,
Manager, employee, trustee or partner, or with respect to which the specified
person serves in a similar capacity; (iii) any person who, directly or
indirectly, is the beneficial owner of ten percent (10%) or more of any class of
equity securities, or partnership, or limited liability company interest of, or
otherwise has a substantial beneficial interest in, the specified person or of
which the specified person is directly or indirectly the owner of ten percent
(10%) or more any class of equity securities, or partnership, or limited
liability company interest, or in which the specified person (and for this
purpose, a relative means a person's spouse, lineal descendants, ancestors,
siblings, sons-in-law or daughters-in-law).

"Bankruptcy" shall have the meaning given to it in Section 8.1(b).

"Board" or "Board of Managers" shall have the meaning given to it in Section
4.2(a).

"Business" shall have the meaning given to it in Section 6.1(a).

"Company" shall mean Trumark Steel & Processing LLC.

"Competing Member" shall have the meaning given to it in Section 6.1(b).

"Consent Notice" shall have the meaning given to it in Section 7.3(a).

"Defaulting Member" shall have the meaning given to it in Section 8.1.

"G Member" shall mean The Goss Group.

"GAAP" shall mean generally accepted accounting principles.

"Manager" or "Managing Member" shall mean G Member.

"Net Book Value Interest" shall have the meaning given to it in Section 7.6(c).

"Non-Competing Member" shall have the meaning given to it in Section 6.1(b).

"O Member" shall mean Oly Steel Welding, Inc., a Michigan corporation.

"Person" shall mean any individual, partnership, limited liability company,
corporation, trust, estate or any other entity, as the context may require.


                                 Page 40 of 42
<PAGE>

"Put", "Put Notice" and "Put Periods" shall have the meanings given to such
items in Section 7.6(a).

"Put Closing" shall have the meaning given to it in Section 7.6(b).

"Put Price" shall have the meaning given to it in Section 7.6(c).

"Tax Appendix" shall mean the Appendix attached to this Agreement.

"Termination Closing" shall have the meaning given to it in Section 8.2(c).

"Transfer Notice" shall have the meaning given to it in Section 7.3(a).

"Transfer Closing" shall have the meaning given to it in Section 7.4.



                                 Page 41 of 42
<PAGE>


                                    EXHIBIT B

                          INITIAL CAPITAL CONTRIBUTIONS

G Member:  $1.00

O Member:  AMOUNT TO BE DETERMINED AFTER THE MARCH 31, 2002 BOOKS ARE CLOSED.









                                 Page 42 of 42

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
