Document:

<PAGE>

Exhibit No. 10.1

                      SECOND AMENDMENT TO SECOND AMENDED
                         AND RESTATED CREDIT AGREEMENT

     This SECOND AMENDMENT TO SECOND AMENDED AND RESTATED REVOLVING CREDIT
AGREEMENT (this "Second Amendment") is made as of May 25, 2000 and entered into
by and between UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC., a corporation
organized and existing under the laws of Delaware (the "Borrower") and PNC BANK,
NATIONAL ASSOCIATION (the "Bank") and amends that certain Second Amended and
Restated Credit Agreement dated as of January 30, 1998 by and between the
Borrower and the Bank (the Second Amended and Restated Credit Agreement, as
amended prior to the date hereof, is hereinafter referred to as the "Original
Credit Agreement").

                                  WITNESSETH:

     WHEREAS, the Borrower and the Bank entered into the Original Credit
Agreement; and

     WHEREAS, upon the request of the Borrower, the Bank has agreed to modify
the Original Credit Agreement, all as more particularly set forth herein.

     NOW THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and
with the intent to be legally bound hereby, the parties hereto agree as follows:

                                   ARTICLE I
                    AMENDMENTS TO ORIGINAL CREDIT AGREEMENT
                    ---------------------------------------

Section 1.01 No Other Amendments or Waivers. (a) The following defined terms and
             ------------------------------
the definitions therefor are hereby added to Section 1.1 of the Original Credit
Agreement and inserted in correct alphabetical order:

             Second Amendment: The Second Amendment to Second Amended and
             ----------------
     Restated Credit Agreement entered into by and between the Borrower and the
     Bank and dated as of May 25, 2000.

             Second Amendment Effective Date: May 25, 2000, or such later date
             -------------------------------
     as all of the conditions set forth in the Second Amendment have either been
     satisfied by the Borrower or waived in writing by the Bank.

(b)  The definition for the following defined term contained in the Original
Credit Agreement is hereby amended and restated in its entirety as follows:
<PAGE>

             Revolving Credit Termination Date: April 30, 2002, as such date may
             ---------------------------------
     be extended upon the terms and conditions set forth in Section 2.1f, or if
     any such day is not a Business Day, the Business Day next preceding such
     date.

Section 1.02. No Other Amendments. The amendments to the Original Credit
              -------------------
Agreement set forth herein do not either implicitly alter, waiver or amend,
except as expressly provided in this Second Amendment, the provisions of the
Original Credit Agreement. The amendments set forth herein do not waive, now or
in the future, compliance with any other covenant, term or condition to be
performed or complied with nor do they impair any rights or remedies of the Bank
under the Original Credit Agreement with respect to any such violation. Nothing
in this Second Amendment shall be deemed or construed to be a waiver or release
of, or a limitation upon, the Bank's exercise of any of its rights and remedies
under the Original Credit Agreement or any other document or instrument
delivered in connection therewith, whether arising as a consequence of any
Events of Default which may now exist or otherwise, and all such rights and
remedies are hereby expressly reserved.

                                  ARTICLE II
                    BORROWER'S SUPPLEMENTAL REPRESENTATIONS
                   ----------------------------------------

Section 2.01 Incorporation by Reference. As an inducement to the Bank to enter
             --------------------------
into this Second Amendment, the Borrower hereby repeats herein for the benefit
of the Bank each of the representations and warranties made by the Borrower in
the Original Credit Agreement, as amended hereby, except that for purposes
hereof such representations and warranties shall be deemed to extend to and over
this Second Amendment.

                                  ARTICLE III
                             CONDITIONS PRECEDENT
                             --------------------

Section 3.01 Conditions Precedent. Each of the following shall be a condition
             --------------------
precedent to the effectiveness of this Second Amendment:

     (a) The Bank shall have received, on or before the Second Amendment
Effective Date, the following items, each, unless otherwise indicated, dated on
or before the Second Amendment Effective Date and in form and substance
satisfactory to the Bank:

         (i)     A duly executed counterpart original of this Second Amendment;

         (ii)    A certificate from the Secretary of the Borrower certifying
                 that the Articles of Incorporation and Bylaws of the Borrower
                 previously delivered to the Bank are true, complete, and
                 correct; and

         (iii)  Such other instruments, documents and opinions of counsel as the
                bank shall reasonably require, all of which shall be
                satisfactory in form and content to the Bank.

                                     - 2 -
<PAGE>

(b)  The following statements shall be true and correct on the Second Amendment
Effective Date and the Bank shall have received a certificate signed by an
Authorized Officer of the Borrower, dated the Second Amendment Effective Date,
stating that:

         (i)    the representations and warranties made pursuant to this Second
                Amendment and in the other Loan Documents, as amended hereby,
                are true and correct on and as of the Second Amendment Effective
                Date as though made on and as of such date;

         (ii)   no petition by or against the Borrower has at any time been
                filed under the United States Bankruptcy Code or under any
                similar act;

        (iii)   no Event of Default or event which with the giving of notice,
                the passage of time or both would become an Event of Default has
                occurred and is continuing, or would result from the execution
                of or performance under this Second Amendment;

        (iv)    no material adverse change in the properties, business,
                operations, financial condition or prospects of the Borrower has
                occurred which has not been disclosed in writing to the Bank;
                and

        (v)     the Borrower has in all material respects performed all
                agreements, covenants and conditions required to be performed on
                or prior to the date hereof under the Original Credit Agreement
                and the other Loan Documents.

                                  ARTICLE IV
                              GENERAL PROVISIONS
                              ------------------

Section 4.01 Ratification of Terms. Except as expressly amended by this
             ---------------------
Second Amendment, the Original Credit Agreement and each and every
representation, warranty, covenant, term and condition contained therein is
specifically ratified and confirmed. The Borrower hereby confirms that any
collateral for the Obligations, including but not limited to liens,
Encumbrances, security interests, mortgages and pledges granted by the Borrower
or third parties, shall continue unimpaired and in full force and effect. The
Borrower expressly ratifies and confirms the confession of judgment and waiver
of jury trial provisions contained in the Original Credit Agreement and the
other Loan Documents.

Section 4.02 References. All notices, communications, agreements, certificates,
             ----------
documents or other instruments executed and delivered after the execution and
delivery of this Second Amendment in connection with the Original Credit
Agreement, any of the other Loan Documents or the transactions contemplated
thereby may refer to the Original Credit Agreement without making specific
reference to this Second Amendment, but nevertheless all such references shall
include this Second Amendment unless the context requires otherwise. From and
after the Second Amendment Effective Date, all references in the Original Credit
Agreement and each of the other Loan Documents to the Original Credit Agreement
shall be deemed to be references to the Original Credit Agreement, as amended
hereby.

                                     - 3 -
<PAGE>

Section 4.03 Incorporation Into Original Credit Agreement. This Second
             --------------------------------------------
Amendment is deemed incorporated into the Original Credit Agreement. To the
extent that any term or provision of this Second Amendment is or may be deemed
expressly inconsistent with any term or provision of the Original Credit
Agreement, the terms and provisions hereof shall control.

Section 4.04 Counterparts. This Second Amendment may be executed in different
             ------------
counterparts, each of which when executed by the Borrower and the Bank shall be
regarded as an original, and all such counterparts shall constitute one Second
Amendment.

Section 4.05 Capitalized Terms. Except for proper nouns and as otherwise
             -----------------
defined herein, capitalized terms used herein as defined terms shall have the
same meanings herein as are ascribed to them in the Original Credit Agreement,
as amended hereby.

Section 4.06 Taxes. The Borrower shall pay any and all stamp and other taxes
             -----
and fees payable or determined to be payable in connection with the execution,
delivery, filing and recording of this Second Amendment and such other documents
and instruments as are delivered in connection herewith and agrees to save the
Bank harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees.

Section 4.07 Costs and Expenses. The Borrower will pay all costs and expenses
             ------------------
of the Bank (including, without limitation, the reasonable fees and the
disbursements of the Bank's counsel, Tucker Arensberg, P.C.) in connection with
the preparation, execution and delivery of this Second Amendment and the other
documents, instruments and certificates delivered in connection herewith.

Section 4.08 GOVERNING LAW. THIS SECOND AMENDMENT AND THE RIGHTS AND
             -------------
OBLIGATIONS HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD TO THE PROVISIONS
THEREOF REGARDING CONFLICTS OF LAW.

Section 4.09 Headings. The headings of the sections in this Second Amendment
             --------
are for purposes of reference only and shall not be deemed to be a part hereof.

                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                     - 4 -
<PAGE>

        IN WITNESS WHEREOF, the parties hereto, with the intent to be legally
bound hereby, have caused this Second Amendment to Second Amended and Restated
Credit Agreement to be duly executed by their respective proper and duly
authorized officers as a document under seal, as of the day and year first above
written.

ATTEST:                         UNIVERSAL STAINLESS & ALLOY PRODUCTS,
                                INC.

/s/ PAUL A. McGRATH             BY:   /s/ RICHARD M. UBINGER       (SEAL)
--------------------------           ------------------------------------
NAME: PAUL A. McGRATH           NAME:   RICHARD M. UBINGER
TITLE: SECRETARY                TITLE:  CHIEF FINANCIAL OFFICER

                                PNC BANK, NATIONAL ASSOCIATION

                                BY:  /s/ TROY BROWN                (SEAL)
                                    ------------------------------------
                                NAME:   TROY BROWN
                                TITLE:  ASSISTANT VICE PRESIDENT

                                     - 5 -<PAGE>

                                                                    EXHIBIT 10-1
                                                                          TIER 1
                            RGS ENERGY GROUP, INC.
                                ENERGETIX, INC.

                              SEVERANCE AGREEMENT

          This Severance Agreement is made, effective as of April 26, 2000, by
and between RGS Energy Group, Inc. (RGS) and Energetix, Inc. (Energetix), both
New York corporations having their principal place of business in Rochester, New
York (collectively the "Company"), and Michael J. Bovalino, an individual
currently residing in Manlius, New York (the "Employee").

          1.      Purposes.   The Company's Boards of Directors (the "Board")
consider the creation and retention of a sound and vital management team to be
essential to protecting and enhancing the best interests of the Company, its
customers and its shareowners.  In this connection, the Company recognizes that
if the possibility of a Change of Control arises, the uncertainty and discomfort
it may raise could result in the departure or distraction of management
personnel during the period leading up to and during a possible Change of
Control to the detriment of the Company, its customers and its shareowners.
Furthermore, in addition to their regular duties management will be called upon
during this period to assist in the assessment of third party proposals, to
advise the Board as to whether such proposals would be in the best interests of
the Company, its customers and its shareowners and to take such other action as
the Board may determine appropriate.  Accordingly, to assure the Company that it
will have the continued dedication of the Employee and the availability of his
advice and counsel notwithstanding the possibility, threat or occurrence of a
bid to take over control of the Company, and to induce the Employee to remain in
the employ of the Company, the Board has determined that it is in the Company's
best interests to provide the Employee with certain benefits in the event of the
Employee's termination of employment under the terms and conditions below.

          2.      Employee's Services During Attempted or Actual Change of
Control.   In the event a third party takes any steps designed to effect a
Change of Control, the Employee agrees not to effect a Voluntary Termination,
and to render the services contemplated in paragraph 1, until the third party
has abandoned or terminated efforts to effect a Change of Control or until three
months after an actual Change of Control has occurred.

          3.      Payment of Severance Amount.  In the event of an Involuntary
Termination of the Employee's employment by the Company or any subsidiary or
successor of the Company occurring within three years after a Change of Control,
then the Company shall pay the Employee a lump sum amount equal to the Severance
Amount, payable within 15 business days after the Termination Date, plus such
other benefits as may be provided in subsequent provisions of this Agreement.

          4.      Definitions.  All the terms defined in this paragraph 4 shall
have the meanings given below throughout this Agreement.
<PAGE>

                                      -2-

          (a) "Annual Salary" shall, as determined on the Termination Date, be
equal to the greater of:

               i)    the highest annual compensation (including base salary and
bonus) paid or payable to the Employee with respect to any twelve (12)
consecutive month period, as selected by the Employee, during the three years
ending with the Termination Date, or

               ii)   the Employee's annual salary plus bonus on the Termination
Date.

"Bonus" for the purpose of this definition of Annual Salary shall mean the
Executive Incentive Plan (EIP) bonus for the Employee's final year or the
average of the bonuses for the three years prior to the Termination Date,
whichever is greater.

          (b)  "Change in Duties" shall mean any one or more of the following:

               i)    a significant change in the nature or scope of the
Employee's authorities or duties from those applicable to her/him immediately
prior to the date on which a Change of Control occurs;

               ii)   a reduction in the Employee's Annual Salary from that
provided to her/him immediately prior to the date on which a Change of Control
occurs;

               iii)  a diminution in the Employee's eligibility to participate
in bonus, incentive award and other compensation plans which provide
opportunities to receive compensation, from the greater of:

               the opportunities provided by the Company (including its
                  subsidiaries) for executives with comparable duties; or

               the opportunities under any such plans under which she/he was
                  participating immediately prior to the date on which a Change
                  of Control occurs;

               iv)   a diminution in employee benefits (including but not
limited to medical, dental, life insurance and long-term disability plans) and
perquisites applicable to the Employee, from the greater of:

               the employee benefits and perquisites provided by the Company
                  (including its subsidiaries), to executives with comparable
                  duties; or

               the employee benefits and perquisites to which the Employee was
                  entitled immediately prior to the date on which a Change of
                  Control occurs;

               v)    a change in the location of the Employee's principal place
of employment by the Company (including its subsidiaries) by more than fifty
miles from the location where she/he was principally employed immediately prior
to the date on which a Change
<PAGE>

                                      -3-

of Control occurs; or

               vi)   a reasonable determination by the Employee that, as a
result of a Change of Control and a change in circumstances thereafter
significantly affecting her/his position, she/he is unable to exercise the
authorities, powers, functions or duties attached to her/ his position
immediately prior to the date on which a Change of Control occurs.

          (c)  a "Change of Control" shall be deemed to have occurred if:

               i)    any "person," including a "group" as determined in
accordance with Section 13(d)(3) of the Securities Exchange Act of 1934 (the
"Exchange Act"), is or becomes the beneficial owner, directly or indirectly, of
securities of RGS representing 20 percent or more of the combined voting power
of RGS's then outstanding Voting Securities;

               ii)   as a result of, or in connection with, any tender offer or
exchange offer, merger or other business combination, sale of assets or
contested election, or any combination of the foregoing transactions (a
"Transaction"), the persons who were directors of RGS before the transaction
shall cease to constitute a majority of the Board of Directors of RGS or any
successor to RGS;

               iii)  RGS is merged or consolidated with another corporation and
as a result of the merger or consolidation less than 50 percent of the
outstanding Voting Securities of the surviving or resulting corporation (or
ultimate parent of such surviving or resulting corporation) shall then be owned
in the aggregate by the stockholders of RGS immediately prior to such merger or
consolidation, other than (x) affiliates within the meaning of the Exchange Act
or (y) any party to the merger or consolidation;

               iv)   a tender offer or exchange offer is made and consummated
for the ownership of securities of RGS representing 20 percent or more of the
combined voting power of RGS's then outstanding Voting Securities; or

               v)    RGS transfers substantially all of its assets to another
corporation, which is not a wholly owned subsidiary of RGS.

          (d)  "Involuntary Termination" shall mean any termination which:

               i)    does not result from a resignation by the Employee (other
than a resignation pursuant to clause ii of this subparagraph (d)), or

               ii)   results from a resignation following any Change in Duties;
provided, however, the term "Involuntary Termination" shall not include:

                     x.   a Termination for Cause, or

                     y.   any termination as a result of death, disability, or
normal retirement pursuant to a retirement plan to which the Employee was
subject prior to any Change of Control.
<PAGE>

                                      -4-

          (e)  "Severance Amount" is equal to three (3) times the Employee's
Annual Salary, i.e. for a period of 36 months.

          (f)  "Termination for Cause" shall mean only a termination as a result
of fraud, misappropriation of, or intentional material damage to, the property
or business of the Company (including its subsidiaries), or commission of a
felony by the Employee.

          (g)  "Voluntary Termination" shall mean any termination, which is not:

               i)    an Involuntary Termination;

               ii)   a Termination for Cause; or

               iii)  the result of death, disability, or normal retirement
pursuant to a retirement plan to which the Employee was subject prior to any
Change of Control.

          (h)  "Voting Securities" shall mean any securities which ordinarily
possess the power to vote in the election of directors without the happening of
any pre-condition or contingency.

          (i)  "Termination Date" shall mean the date on which the Employee's
employment terminates.

     5.   Additional Payment for Excise Tax on Golden Parachute Payment. It is
anticipated that the payments to be made and benefits to be provided to the
Employee under this Agreement and other agreements (collectively, the "Change of
Control Amounts") may become subject to the excise tax imposed by Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code") (or any similar
tax that may hereafter be imposed), on account of "excess parachute payments" as
defined in Section 280G of the Code. In the event such excise tax is payable,
the Company shall pay to the Employee, in addition to the amounts payable
pursuant to paragraph 3 of this Agreement and any other Change of Control
Amounts, an additional amount which, together with any federal, state or local
excise or income taxes payable by the Employee on such additional amount, will
provide the Employee with a sum on a net after-tax basis equal to the amounts he
would have received if the excise tax were not applicable to the Change of
Control Amounts. The determination of the amount to be paid hereunder shall be
made at the expense of the Company by the independent certified public
accounting firm acting as auditors for the Company on the date of a Change of
Control (or another accounting firm designated by that firm).
<PAGE>

                                      -5-

     6.   Other Benefits.

          (a)  Health and Death Benefits.  From the date benefits become payable
               -------------------------
under paragraph 3 through the end of the number of months used in determining
the Employee's Severance Amount in paragraph 4(e), the Company shall continue to
provide the Employee with life, accident, death and health insurance plans and
benefits to the same extent such benefits are provided during this period to
active employees holding positions equivalent to the position of the Employee
immediately prior to his termination.  The Company's share of the cost of
providing such benefits shall be the same as its share of the benefit costs for
providing such benefits to other employees holding positions equivalent to the
position the Employee held immediately prior to his termination.

          (b)  Outplacement and Relocation. The Company shall also reimburse the
               ---------------------------
Employee the aggregate expenses the Employee incurs for outplacement assistance
or relocation expenses in order to pursue other business opportunities within
two (2) years of the Termination Date which are not reimbursed by another
employer.

          (c)  Pension.  To the extent that any Company supplemental executive
               -------
retirement plan benefit formula(s) takes into account service, age and annual
compensation, the Employee shall be given credit under the formula(s) for (i)
the same number of months used in determining the Employee's Severance Amount in
paragraph 4(e), and (ii) annual compensation increases equal to the highest base
salary increases received by the Employee in the three years prior to the
Termination Date and bonus payouts at target.

          (d)  Benefits of General Applicability.  The Employee shall remain
               ---------------------------------
eligible to receive other Company benefits that apply by their terms to persons
who terminate employment with RGS.

          (e) Incentive Compensation.  Any awards previously made shall vest on
              ----------------------
the Termination Date and be computed and paid notwithstanding any contrary plan
provisions provided that, if the plan providing for any such award stipulates an
earlier date for vesting, such provision shall control.

     7.   Legal Fees.  The Company shall pay all legal fees and expenses the
Employee may incur as a result of any litigation brought to enforce or interpret
any provision of this Agreement, regardless of outcome.

     8.   Obligations of Employee.   Employee agrees that upon termination of
employment he will turn over to the Company all materials and documents, whether
written or electronic, that pertain to the operation, products, services,
processes, plans, business or customers of the Company. Employee also agrees not
to disclose to any person any confidential information of the Company. If the
Employee fails to return materials required to be returned or discloses
confidential information of the Company to any person, all payments and benefits
still remaining to be paid or offered to the Employee under this Agreement shall
be forfeited.

     9.   Notices.  Notices and all other communications under this Agreement
shall be in writing and shall be deemed given when personally delivered or when
mailed by United States registered or certified mail, return receipt requested,
postage prepaid, addressed as
<PAGE>

                                      -6-

follows:

          If to the Company, to:

               RGS Energy Group, Inc.
               89 East Avenue
               Rochester, New York  14649-0001
               ATTENTION:  Vice President, Human Resource Services

          If to the Employee, to:

               Michael J. Bovalino
               8438 Woodbox Road
               Manlius, New York 13104

or to such other address as either party may furnish to the other in writing,
except that a notice of a change of address shall be effective only upon
receipt.

     10.  Applicable Law.  This contract is entered into under, and shall be
governed for all purposes by, the laws of the State of New York.

     11.  Severability.  If a court of competent jurisdiction determines that
any provision of this Agreement is invalid or unenforceable, then the invalidity
or unenforceability of that provision shall not affect the validity or
enforceability of any other provision of this Agreement and all other provisions
shall remain in full force and effect.

     12.  Withholding of Taxes.  The Company shall withhold from any benefits
payable under this Agreement all Federal, state, city or other taxes as may be
required pursuant to any law, governmental regulation or ruling.

     13.  Not an Employment Agreement.  Nothing in this Agreement shall give the
Employee any rights (or impose any obligations to continued employment by the
Company or any subsidiary or successor of the Company), nor shall it give the
Company any rights (or impose any obligations) for the continued performance of
duties by the Employee for the Company or any subsidiary or successor of the
Company.

     14.  No Assignment.  The Employee's right to receive payments or benefits
under this Agreement shall not be assignable or transferable, whether by pledge,
creation of a security interest or otherwise, other than a transfer by will or
by the laws of descent or distribution. In the event of any attempted assignment
or transfer contrary to this paragraph, the Company shall have no liability to
pay any amount so attempted to be assigned or transferred. This Agreement shall
inure to the benefit of and be enforceable by the Employee's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
<PAGE>

                                      -7-

     15.  Successors.  This Agreement shall be binding upon and inure to the
benefit of the Company, its successors and assigns (including, without
limitation, any company into or with which the Company may merge or
consolidate). The Company agrees that it will not effect the sale or other
disposition of all or substantially all of its assets unless either (i) the
person or entity acquiring the assets or a substantial portion of the assets
shall expressly assume by an instrument in writing all duties and obligations of
the Company under this Agreement, or (ii) the Company shall provide, through the
establishment of a separate reserve for the payment in full of all amounts which
are, or may reasonably be expected to become, payable to the Employee under this
Agreement.

     16.  Other Benefits and Compensation.  The compensation and benefits
provided hereunder shall not limit or reduce compensation or benefits otherwise
payable to Employee pursuant to arrangements between Employee and the Company,
unless specific reference to any such reduction or limit is made herein. It is
not intended that this Agreement constitute a waiver of rights under federal,
state or local law, including, without limitation, Title VII of the Civil Rights
Act of 1964, the Age Discrimination in Employment Act and the Employee
Retirement Income Security Act of 1974.

     17.  Payment Obligations Absolute.  The Company 's obligation to pay the
Employee the compensation and to make the arrangements provided herein shall be
absolute and unconditional and shall not be affected by any circumstances,
including, without limitation, any set-off, counterclaim, recoupment, defense or
other right that the Company may have against him or anyone else. All amounts
payable by the Company hereunder shall be paid without notice or demand. Each
and every payment made hereunder by the Company shall be final and the Company
will not seek to recover all or any part of such payment from the Employee or
from whosoever may be entitled thereto, for any reason whatsoever.

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered as of June 1, 2000.

                                    RGS ENERGY GROUP, INC.

                                    By:  /s/ J B Stokes
                                         ----------------------------

                                    Its: Senior VP & CFO
                                         ----------------------------

                                    ENERGETIX, INC.

                                    By:  /s/ David C. Heiligman
                                         ----------------------------
/s/ Michael J. Bovalino
------------------------
       Employee                     Its: Secretary
                                         ----------------------------

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