Exhibit 10.1

SECOND AMENDMENT TO CREDIT AGREEMENT

Second Amendment to Credit Agreement, dated the 29th day of March, 2013, by and
among UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC., a Delaware corporation
(“Universal”), DUNKIRK SPECIALTY STEEL, LLC, a Delaware limited liability
company (“Dunkirk”), NORTH JACKSON SPECIALTY STEEL, LLC, a Delaware limited
liability company (“North Jackson”) (Universal, Dunkirk and North Jackson are,
each, a “Borrower” and collectively, the “Borrowers”), USAP HOLDINGS, INC., a
Delaware corporation (the “Guarantor”), PNC Bank, National Association (“PNC”)
and various other financial institutions from time to time (PNC and such other
financial institutions are each, a “Lender” and collectively, the “Lenders”) and
PNC, as administrative agent for the Lenders (PNC, in such capacity, the
“Administrative Agent”) (the “Second Amendment”).

W I T N E S S E T H:

WHEREAS, the Borrowers, the Guarantor, the Lenders party thereto and the
Administrative Agent entered into that certain Credit Agreement, dated as of
August 18, 2011, as amended by that certain First Amendment to Credit Agreement,
dated March 19, 2012 (such Credit Agreement, as so amended and as further
amended, modified, supplemented or restated from time to time, the “Credit
Agreement”), pursuant to which, among other things, the Lenders agreed to extend
credit to the Borrowers; and

WHEREAS, the Borrowers and the Guarantor desire to amend certain provisions of
the Credit Agreement and the Administrative Agent and the Lenders desire to
permit such amendments pursuant to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the premises contained herein and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:

1. All capitalized terms used herein which are defined in the Credit Agreement
shall have the same meaning herein as in the Credit Agreement unless the context
clearly indicates otherwise.

2. Section 1.1 of the Credit Agreement is hereby amended by deleting the
following definition in its entirety and in its stead inserting the following:

Specified North Jackson Capital Expenditures shall mean capital expenditures
made to complete construction at the Mortgaged Premises and the installation and
commissioning of equipment to be installed at the Mortgaged Premises in
connection with Universal’s purchase of the Business (as such term is defined in
the Acquisition Agreement) pursuant to the Acquisition Agreement; provided,
however, that (i) with respect to such capital expenditures made in fiscal year
2012, such capital expenditures shall be deemed to be (a) Sixteen Million Two
Hundred Thousand and 00/100 Dollars ($16,200,000.00) for purposes of calculating

--------------------------------------------------------------------------------

Fixed Charges for the period of determination ending March 31, 2013, (b) Nine
Million and 00/100 Dollars ($9,000,000.00) for purposes of calculating Fixed
Charges for the period of determination ending June 30, 2013, and (c) Two
Million Two Hundred Thousand and 00/100 Dollars ($2,200,000.00) for purposes of
calculating Fixed Charges for the period of determination ending September 30,
2013, and (ii) with respect to such capital expenditures made after fiscal year
2012, such capital expenditures shall not be considered Specified North Jackson
Capital Expenditures for the applicable period during which such expenditures
were made and shall accordingly be included in the calculation of Fixed Charges.

3. Section 8.2.17 of the Credit Agreement is hereby deleted in its entirety and
in its stead is inserted the following:

8.2.17 Minimum Fixed Charge Coverage Ratio. The Loan Parties shall not permit
the Fixed Charge Coverage Ratio to be less than (i) 1.10 to 1.00, calculated as
of March 31, 2013 and the end of each fiscal quarter thereafter through and
including June 30, 2014, in each case for the four (4) fiscal quarters then
ended, and (ii) 1.20 to 1.00, calculated as of September 30, 2014 and the end of
each fiscal quarter thereafter, in each case for the four (4) fiscal quarters
then ended.

4. Section 8.2.18 of the Credit Agreement is hereby deleted in its entirety and
in its stead is inserted the following:

8.2.18 Maximum Leverage Ratio. The Loan Parties shall not permit the Leverage
Ratio to exceed (i) 3.75 to 1.00, calculated as of March 31, 2013, June 30, 2013
and September 30, 2013 in each case for the four (4) fiscal quarters then ended,
(ii) 3.50 to 1.00, calculated as of December 31, 2013 for the four (4) fiscal
quarters then ended, (iii) 3.25 to 1.00, calculated as of March 31, 2014 for the
four (4) fiscal quarters then ended, (iv) 3.00 to 1.00, calculated as of
June 30, 2014 for the four (4) fiscal quarters then ended, and (v) 2.75 to 1.00,
calculated as of September 30, 2014 and the end of each fiscal quarter
thereafter, in each case for the four (4) fiscal quarters then ended.

5. Schedule 1.1(A) of the Credit Agreement is hereby deleted in its entirety and
in its stead is inserted the Schedule 1.1(A) attached hereto.

6. Exhibit 8.3.3 of the Credit Agreement is hereby deleted in its entirety and
in its stead is inserted the Exhibit 8.3.3 attached hereto.

--------------------------------------------------------------------------------

7. The provisions of Sections 2 through 6 of this Second Amendment shall not
become effective until the Administrative Agent has received the following, each
in form and substance acceptable to the Administrative Agent:

 

  (a) this Second Amendment, duly executed by the Borrowers, the Guarantor, the
Lenders and the Administrative Agent;

 

  (b) the documents and conditions listed in the Preliminary Closing Agenda set
forth on Exhibit A attached hereto and made a part hereof;

 

  (c) payment of all fees and expenses owed to the Agent and its counsel in
connection with this Second Amendment; and

 

  (d) such other documents as may be reasonably requested by the Administrative
Agent.

8. The Loan Parties hereby reconfirm and reaffirm all representations and
warranties, agreements and covenants made by and pursuant to the terms and
conditions of the Credit Agreement, except as such representations and
warranties, agreements and covenants may have heretofore been amended, modified
or waived in writing in accordance with the Credit Agreement or as set forth in
this Second Amendment and except any such representations or warranties made as
of a specific date or time, which shall have been true and correct in all
material respects as of such date or time.

9. The Loan Parties acknowledge and agree that each and every document,
instrument or agreement which at any time has secured payment of the Obligations
including, but not limited to, the Credit Agreement, each Patent, Trademark and
Copyright Security Agreement, each Pledge Agreement, the Security Agreement, the
Mortgage and the Lease Assignment continue to secure prompt payment when due of
the Obligations.

10. The Loan Parties hereby represent and warrant to the Lenders and the
Administrative Agent that (i) the Loan Parties have the legal power and
authority to execute and deliver this Second Amendment; (ii) the officers of the
Loan Parties executing this Second Amendment have been duly authorized to
execute and deliver the same and bind the Loan Parties with respect to the
provisions hereof; (iii) the execution and delivery hereof by the Loan Parties
and the performance and observance by the Loan Parties of the provisions hereof
and of the Credit Agreement and all documents executed or to be executed
therewith, do not violate or conflict with the organizational documents of the
Loan Parties or any law applicable to the Loan Parties or result in a breach of
any provision of or constitute a default under any other agreement, instrument
or document binding upon or enforceable against the Loan Parties and (iv) this
Second Amendment, the Credit Agreement and the documents executed or to be
executed by the Loan Parties in connection herewith or therewith constitute
valid and binding obligations of the Loan Parties in every respect, enforceable
in accordance with their respective terms.

11. The Loan Parties represent and warrant that (i) no Event of Default exists
under the Credit Agreement, nor will any occur as a result of the execution and
delivery of this Second

--------------------------------------------------------------------------------

Amendment or the performance or observance of any provision hereof; and
(ii) they presently have no claims or actions of any kind at law or in equity
against the Lenders and/or the Administrative Agent arising out of or in any way
relating to the Credit Agreement or the other Loan Documents.

12. Each reference to the Credit Agreement that is made in the Credit Agreement
or any other document executed or to be executed in connection therewith shall
hereafter be construed as a reference to the Credit Agreement as amended hereby.

13. The agreements contained in this Second Amendment are limited to the
specific agreements contained herein. Except as amended hereby, all of the terms
and conditions of the Credit Agreement and the other Loan Documents shall remain
in full force and effect. This Second Amendment amends the Credit Agreement and
is not a novation thereof.

14. This Second Amendment may be executed in any number of counterparts and by
the different parties hereto on separate counterparts each of which, when so
executed, shall be deemed to be an original, but all such counterparts shall
constitute but one and the same instrument.

15. This Second Amendment shall be governed by, and shall be construed and
enforced in accordance with, the Laws of the Commonwealth of Pennsylvania
without regard to the principles of conflicts of law thereof. The Loan Parties
hereby consent to the jurisdiction and venue of any federal or state court
located in the Commonwealth of Pennsylvania with respect to any suit arising out
of or mentioning this Second Amendment.

[INTENTIONALLY LEFT BLANK]

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto, have
caused this Second Amendment to be duly executed by their duly authorized
officers on the day and year first above written.

 

    BORROWERS: WITNESS:     UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.

/s/    Paul A. McGrath        

    By:  

/s/    Douglas McSorley        

  (SEAL)     Name:  

Douglas McSorley

      Title:  

Chief Financial Officer

  WITNESS:     DUNKIRK SPECIALTY STEEL, LLC

/s/    Paul A. McGrath        

    By:  

/s/    Douglas McSorley        

  (SEAL)     Name:  

Douglas McSorley

      Title:  

Executive Officer

  WITNESS:     NORTH JACKSON SPECIALTY STEEL, LLC

/s/    Paul A. McGrath        

    By:  

/s/    Douglas McSorley        

  (SEAL)     Name:  

Douglas McSorley

      Title:  

Treasurer

      GUARANTOR: WITNESS:     USAP HOLDINGS, INC.

/s/    Paul A. McGrath        

    By:  

/s/    Douglas McSorley        

  (SEAL)     Name:  

Douglas McSorley

      Title:  

Vice President

 

--------------------------------------------------------------------------------

ADMINISTRATIVE AGENT AND LENDERS: PNC BANK, NATIONAL ASSOCIATION, as a Lender
and as Administrative Agent By:  

/s/ James O’Brien

Name:  

James O’Brien

Title:  

Assistant Vice President

THE HUNTINGTON NATIONAL BANK, as a Lender By:  

/s/ M. P. DiClemente

Name:  

Michael P. DiClemente

Title:  

Vice President

FIFTH THIRD BANK, as a Lender By:  

/s/ Victor Notaro

Name:  

Victor Notaro

Title:  

Senior Vice President

FIRST NATIONAL BANK OF PENNSYLVANIA, as a Lender By:  

/s/ Diane Geisler

Name:  

Diane Geisler

Title:  

Vice President

FIRST COMMONWEALTH BANK, as a Lender By:  

/s/ Brian J. Sohocki

Name:  

Brian J. Sohocki

Title:  

Senior Vice President

--------------------------------------------------------------------------------

EXHIBIT A

PRELIMINARY CLOSING AGENDA

(See Attached)

--------------------------------------------------------------------------------

PRELIMINARY CLOSING AGENDA

This preliminary closing agenda contains the documents to be delivered in
connection with a second amendment to One Hundred Twenty-Five Million and 00/100
Dollar ($125,000,000.00) credit facility provided to Universal Stainless & Alloy
Products, Inc., a Delaware corporation (“Universal”), Dunkirk Specialty Steel,
LLC, a Delaware limited liability company (“Dunkirk”) and North Jackson
Specialty Steel, LLC, a Delaware limited liability company (“North Jackson”)
(Universal, Dunkirk and North Jackson are each, a “Borrower” and collectively,
the “Borrowers”, by PNC Bank, National Association (“PNC Bank”) and various
other financial institutions from time to time (PNC Bank and such other
financial institutions are each, a “Lender” and collectively, the “Lenders”),
PNC Bank, as administrative and collateral agent for the Lenders (in such
capacity, the “Agent”) and PNC Capital Markets LLC, a Pennsylvania limited
liability company, as the lead arranger (the “Lead Arranger”).

 

No.

  

GENERAL LOAN DOCUMENTS

  

Responsible
Party

  

Status

1.    Second Amendment to Credit Agreement, by and among the Borrowers, USAP
Holdings, Inc., a Delaware corporation, the Lenders and the Agent (the “Second
Amendment”).    Agent    2.    Amended schedules to Credit Agreement, as
applicable and appropriate:         

a.      Schedule 1.1(A) – Pricing Grid (Interest and Letter of Credit Fee).

   Agent    3.    Amended exhibits to Credit Agreement:    Agent      

a.      Exhibit 8.3.3 – Form of Compliance Certificate.

   Agent    4.    Second Modification to Open-End Mortgage and Security
Agreement and Assignment of Rents and Leases, made by North Jackson to the Agent
with respect to certain premises and improvements located thereon located in
Mahoning County, Ohio (the “Mortgaged Premises”) (the “Modification”).    Agent
        

TITLE AND SURVEY DOCUMENTS

            5.    Title Bring-Down with respect to the Mortgaged Premises and
Modification Endorsement insuring the Modification.    Borrowers/ Agent   
Waived 6.    Flood Certificate with respect to the Mortgaged Premises.    Agent
  

--------------------------------------------------------------------------------

     

ORGANIZATIONAL DOCUMENTS

                 

Universal

            7.    Good Standing Certificates of Universal from the Secretary of
State of the State of Delaware (long form), and each jurisdiction in which it is
registered to do business as a foreign corporation, if any.    Borrowers    8.
   Tax Lien Certificates of Universal from each jurisdiction in which it is
registered to do business as a foreign corporation, if any, to the extent that
such certificates are available in such jurisdictions.    Borrowers    9.   
Certificate of the Secretary of Universal as to (i) resolutions of its Board of
Directors authorizing Universal to enter into the Second Amendment and all
related documents, (ii) incumbency of its officers, and (iii) no amendments to
its Certificate of Incorporation or Bylaws.    Borrowers         

Dunkirk

            10.    Good Standing Certificates of Dunkirk from the Secretary of
State of the State of Delaware (long form), and each jurisdiction in which it is
registered to do business as a foreign limited liability company, if any.   
Borrowers    11.    Tax Lien Certificates of Dunkirk from the Department of
Revenue of the State of Delaware and each jurisdiction in which it is registered
to do business as a foreign limited liability company, if any, to the extent
that such certificates are available in such jurisdictions.    Borrowers    12.
   Certificate of the Secretary of Dunkirk as to (i) resolutions of the sole
Member authorizing Dunkirk to enter into the Second Amendment and all related
documents, (ii) incumbency of its officers, and (iii) no amendments to its
Certificate of Formation or Limited Liability Company Agreement.    Borrowers   
     

North Jackson

            13.    Good Standing Certificates of North Jackson from the
Secretary of State of the State of Delaware (long form), and each jurisdiction
in which it is registered to do business as a foreign limited liability company,
if any.    Borrowers   

 

- 2 -

--------------------------------------------------------------------------------

14.    Tax Lien Certificates of North Jackson from the Department of Revenue of
the State of Delaware and each jurisdiction in which it is registered to do
business as a foreign limited liability company, if any, to the extent that such
certificates are available in such jurisdictions.    Borrowers    15.   
Certificate of the Secretary of North Jackson as to (i) resolutions of sole
Member authorizing North Jackson to enter into the Second Amendment and all
related documents, (ii) incumbency of its officers, and (iii) no amendments to
its Certificate of Formation or Limited Liability Company Agreement.   
Borrowers         

Guarantor

            16.    Good Standing Certificates of the Guarantor from the
Secretary of State of the State of Delaware (long form), and each jurisdiction
in which it is registered to do business as a foreign corporation, if any.   
Borrowers    17.    Tax Lien Certificates of the Guarantor from each
jurisdiction in which it is registered to do business as a foreign corporation,
if any, to the extent that such certificates are available in such
jurisdictions.    Borrowers    18.    Certificate of the Secretary of the
Guarantor as to (i) resolutions of its Board of Directors authorizing the
Guarantor to enter into the Second Amendment and all related documents,
(ii) incumbency of its officers, and (iii) no amendments to its Certificate of
Incorporation or Bylaws.    Borrowers         

RELATED DOCUMENTS

            19.    UCC Lien Searches with respect to each Loan Party (at the
state level only) in such party’s jurisdiction of formation or incorporation, as
the case may be (collectively, the “Lien Searches”).    Borrowers    20.   
Fully-executed copies of the UCC-3 Termination Statements and any other releases
that may be necessary to satisfy any and all existing liens on the assets of the
Loan Parties or the Sellers or disclosed by the Lien Searches which are not
permitted pursuant to the terms of the Credit Agreement (including, payoff
letters, if applicable), all in form and substance satisfactory to the Agent and
the Lead Arranger.    Borrowers/ Agent   

 

- 3 -

--------------------------------------------------------------------------------

21.    Opinions of Counsel to the Loan Parties (including local counsel
opinions), in form and substance satisfactory to the Agent, the Lead Arranger
and the Lenders.    Borrowers    Ohio Opinion of Counsel Waived 22.    Officer’s
Certificate regarding no Event of Default or Potential Default, compliance with
covenants, no material adverse change and the accuracy of representations and
warranties, etc..    Borrowers   

 

- 4 -

--------------------------------------------------------------------------------

SCHEDULE 1.1(A)

PRICING GRID—

VARIABLE PRICING AND LETTER OF CREDIT FEES BASED ON LEVERAGE RATIO

 

Level

  

Leverage Ratio

   Letter
of
Credit
Fee     Revolving
Credit
Base Rate
Spread     Term
Loan
Base
Rate
Spread     Revolving
Credit
LIBOR
Rate
Spread     Term
Loan
LIBOR
Rate
Spread  

I

   Less than 1.5 to 1.0      1.50 %      .50 %      .50 %      1.50 %      1.50
% 

II

   Greater than or equal to 1.5 to 1.0 but less than 2.25 to 1.0      1.75 %   
  .75 %      .75 %      1.75 %      1.75 % 

III

   Greater than or equal to 2.25 to 1.0 but less than 3.0 to 1.0      2.00 %   
  1.00 %      1.00 %      2.00 %      2.00 % 

IV

   Greater than or equal to 3.00 to 1.0 but less than 3.5 to 1.0      2.25 %   
  1.25 %      1.25 %      2.25 %      2.25 % 

V

   Greater than or equal to 3.50 to 1.0      2.50 %      1.50 %      1.50 %     
2.50 %      2.50 % 

For purposes of determining the Applicable Margin and the Applicable Letter of
Credit Fee Rate:

(a) The Applicable Margin and the Applicable Letter of Credit Fee Rate shall be
determined on the Closing Date based on the Leverage Ratio computed on such date
pursuant to the Closing Compliance Certificate.

--------------------------------------------------------------------------------

(b) The Applicable Margin and the Applicable Letter of Credit Fee Rate shall be
recomputed as of the end of each fiscal quarter ending after the Closing Date
based on the Leverage Ratio as of such quarter end. Any increase or decrease in
the Applicable Margin or the Applicable Letter of Credit Fee Rate computed as of
a quarter end shall be effective on the date on which the Compliance Certificate
evidencing such computation is due to be delivered under Section 8.3.3
[Certificate of Universal]. If a Compliance Certificate is not delivered when
due in accordance with such Section 8.3.3, then the rates in Level V shall apply
as of the first Business Day after the date on which such Compliance Certificate
was required to have been delivered and shall remain in effect until the date on
which such Compliance Certificate is delivered.

(c) If, as a result of any restatement of or other adjustment to the financial
statements of the Loan Parties or for any other reason, the Loan Parties or the
Lenders determine that (i) the Leverage Ratio as calculated by the Loan Parties
as of any applicable date was inaccurate and (ii) a proper calculation of the
Leverage Ratio would have resulted in higher pricing for such period, the
Borrowers shall immediately and retroactively be obligated to pay to the
Administrative Agent for the account of the applicable Lenders, promptly on
demand by the Administrative Agent (or, after the occurrence of an actual or
deemed entry of an order for relief with respect to any Loan Party under the
Bankruptcy Code of the United States, automatically and without further action
by the Administrative Agent, any Lender or the Issuing Lender), an amount equal
to the excess of the amount of interest and fees that should have been paid for
such period over the amount of interest and fees actually paid for such period.
This paragraph shall not limit the rights of the Administrative Agent, any
Lender or the Issuing Lender, as the case may be, under Section 2.8 [Letter of
Credit Subfacility] or 4.3 [Interest After Default] or 9 [Default]. The
Borrowers’ obligations under this paragraph shall survive the termination of the
Commitments and the repayment of all other Obligations hereunder.

--------------------------------------------------------------------------------

EXHIBIT 8.3.3

FORM OF COMPLIANCE CERTIFICATE

(See Attached)

--------------------------------------------------------------------------------

EXHIBIT 8.3.3

FORM OF

COMPLIANCE CERTIFICATE

                    , 201  

PNC Bank, National Association,

as Administrative Agent

Three PNC Plaza

255 Fifth Avenue

Pittsburgh, PA 15222

Ladies and Gentlemen:

I refer to the Credit Agreement, dated as of August 18, 2011, by and among
Universal Stainless & Alloy Products, Inc., a Delaware corporation
(“Universal”), Dunkirk Specialty Steel, LLC, a Delaware limited liability
company (“Dunkirk”), North Jackson Specialty Steel, LLC, a Delaware limited
liability company (“North Jackson”) (Universal, Dunkirk, and North Jackson are
each, a “Borrower” and collectively, the “Borrowers”), the Guarantors (as
defined therein) party thereto, PNC Bank, National Association (“PNC Bank”) and
various other financial institutions from time to time (PNC Bank and such other
financial institutions are each a “Lender” and collectively, the “Lenders”), and
PNC Bank, as administrative agent for the Lenders (in such capacity, the
“Administrative Agent”),as amended by that certain (i) First Amendment to Credit
Agreement, dated March 19, 2012, by and among the Borrowers, the Guarantors
party thereto, the Lenders party thereto and the Administrative Agent and
(ii) Second Amendment to Credit Agreement, dated March 29, 2013, by and among
the Borrowers, the Guarantors party thereto, the Lenders party thereto and the
Administrative Agent (as may be further amended, modified, supplemented or
restated from time to time, the “Credit Agreement”). Unless otherwise defined
herein, terms defined in the Credit Agreement are used herein with the same
meanings.

I, the                                  [Chief Executive Officer/President/Chief
Financial Officer/Treasurer or Assistant Treasurer] of each Borrower, do hereby
certify on behalf of the Borrowers as of the              [quarter/year] ended
                         , 201   (the “Report Date”), as follows:

1. CHECK ONE:

 

   The annual financial statements of Universal and its Subsidiaries, consisting
of an audited consolidated balance sheet and related audited consolidated
statements of income, stockholders’ equity and cash flows being delivered to the
Administrative Agent and the Lenders with this Compliance Certificate (a) are
all in reasonable detail and set forth in comparative form the financial
statements as of the end of and for the preceding fiscal year, and (b) comply
with the reporting requirements for such financial statements as set forth in
Section 8.3.2 [Annual Financial Statements] of the Credit Agreement.

--------------------------------------------------------------------------------

   OR    The quarterly unaudited financial statements of Universal and its
Subsidiaries, consisting of a consolidated balance sheet and related
consolidated statements of income, stockholders’ equity and cash flows being
delivered to the Administrative Agent and the Lenders with this Compliance
Certificate (a) are all in reasonable detail and have been prepared in
accordance with GAAP, consistently applied (subject to normal year-end audit
adjustments), and set forth in comparative form the respective financial
statements for the corresponding date and period in the previous fiscal year,
and (b) comply with the reporting requirements for such financial statements as
set forth in Section 8.3.1 [Quarterly Financial Statements] of the Credit
Agreement.

2. The representations and warranties of the Loan Parties contained in Section 6
[Representations and Warranties] of the Credit Agreement and in each of the
other Loan Documents to which they are a party are true and correct in all
respects with the same effect as though such representations and warranties had
been made on and as of the Report Date (except representations and warranties
which relate solely to an earlier date or time, which representations and
warranties were true and correct in all respects on and as of the specific dates
or times referred to therein).

3. In accordance with Section 6.2 [Updates to Schedules] of the Credit
Agreement, attached hereto as Exhibit A are updates to the schedules to the
Credit Agreement (the “Updated Schedules”). Notwithstanding the foregoing, the
Borrowers hereby acknowledge and agree that no schedule shall be deemed to have
been amended, modified or superseded by the Updated Schedules, nor shall any
breach of warranty or representation resulting from the inaccuracy or
incompleteness of any such Schedule be deemed to have been cured by the Updated
Schedules, unless and until the Required Lenders, in their commercially
reasonable discretion, shall have accepted in writing the Updated Schedules.

4. No Event of Default or Potential Default has occurred and is continuing on
the Report Date.

[NOTE: If any Event of Default or Potential Default has occurred and is
continuing, set forth on an attached sheet the nature thereof and the action
which the Loan Parties have taken, are taking or propose to take with respect
thereto.]

5. Indebtedness (Section 8.2.1(iii)). Indebtedness of the Loan Parties and their
Subsidiaries with respect to Purchase Money Security Interests and capitalized
leases, in the aggregate, as of the Report Date is $        , which does not
exceed Ten Million and 00/100 Dollars ($10,000,000.00) in the aggregate for all
such Indebtedness.

6. Indebtedness (Section 8.2.1(vii)). Unsecured Indebtedness of the Loan Parties
and their Subsidiaries, in the aggregate, as of the Report Date is $        ,
which is Indebtedness other than the Indebtedness permitted by clauses
(i) through (vi) of Section 8.2.1 of the Credit Agreement, which is not more
than the permitted maximum of Five Million and 00/100 Dollars ($5,000,000.00) in
the aggregate at any time outstanding.

 

- 2 -

--------------------------------------------------------------------------------

7. Subsidiaries, Partnerships and Joint Ventures. The aggregate investment by
the Loan Parties or any of them in all Joint Ventures as of the Report Date is
$        , which is not more than the permitted maximum of Fifteen Million and
00/100 Dollars ($15,000,000.00) at any time.

8. Minimum Fixed Charge Coverage Ratio (Section 8.2.17). The Fixed Charge
Coverage Ratio for the period equal to the four (4) consecutive fiscal quarters
ending as of the Report Date is                      to 1.0, which is not less
than the required ratio of [1.10 to 1.00] [1.20 to 1.00] for such period.

(A) Consolidated EBITDA for the period equal to the four (4) consecutive fiscal
quarters ending as of the Report Date equals $        (the calculation of which
is set forth in the attached spreadsheet).

(B) Fixed Charges for the period equal to the four (4) consecutive fiscal
quarters ending as of the Report Date equals $        (the calculation of which
is set forth in the attached spreadsheet).

(C) the ratio of item 8(A) to item 8(B) equals the Fixed Charge Coverage Ratio.

9. Maximum Leverage Ratio (Section 8.2.18). The Leverage Ratio for the period
equal to the four (4) consecutive fiscal quarters ending as of the Report Date
is                      to 1.0, which is not greater than the permitted ratio of
[3.75 to 1.00] [3.50 to 1.00] [3.25 to 1.00] [3.00 to 1.00] [2.75 to 1.00] for
such period.

(A) Senior Indebtedness as of the Report Date equals $         (the calculation
of which is set forth in the attached spreadsheet).

(B) Consolidated EBITDA for the period equal to the four (4) consecutive fiscal
quarters ending as of the Report Date equals $         (the calculation of which
is set forth in the attached spreadsheet).

(C) The ratio of item 9(A) to item 9(B) equals the Leverage Ratio.

[INTENTIONALLY LEFT BLANK]

 

- 3 -

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, and intending to be legally bound, the undersigned have
executed this Compliance Certificate this      day of                     ,
201  .

 

    BORROWERS:   WITNESS:     Universal Stainless & Alloy Products, Inc.  

 

    By:  

 

  (SEAL)     Name:  

 

    Title:  

 

WITNESS:     Dunkirk Specialty Steel, LLC  

 

    By:  

 

  (SEAL)     Name:  

 

    Title:  

 

WITNESS:     North Jackson Specialty Steel, LLC  

 

    By:  

 

  (SEAL)     Name:  

 

    Title:  

 

--------------------------------------------------------------------------------

EXHIBIT A

[see attached]

--------------------------------------------------------------------------------

SPREADSHEET

[see attached]