SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from ______ to ______
Commission File Number 0-25032
------------------------------------
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 25-1724540
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
600 Mayer Street
Bridgeville, PA 15017
(Address of principal executive offices, including zip code)
(412) 257-7600
(Telephone number, including area code)
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 / /
As of March 31, 1997, there were 6,283,734 shares of the
Registrant's Common Stock, $.001 par value, outstanding.
600602.1
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
This Quarterly Report on Form 10-Q contains historical information and
forward-looking statements. Statements looking forward in time are included in
this Form 10-Q pursuant to the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995. They involve known and unknown risks
and uncertainties that may cause the Company's actual results to differ from
future performance suggested herein. In the context of forward-looking
information provided in this Form 10-Q and in other reports, please refer to the
discussion of risk factors detailed in, as well as the other information
contained in, the Company's filings with the Securities and Exchange Commission
during the past 12 months.
INDEX PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Statement of Operations 1
Consolidated Condensed Balance Sheets 2
Consolidated Condensed Statements of Cash Flows 3
Notes to Consolidated Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 7
Item 2. Changes in Securities 7
Item 3. Defaults upon Senior Securities 7
Item 4. Submission of Matters to a Vote of Securityholders 7
Item 5. Other Information 7
Item 6. Exhibits and Reports on Form 8-K 7
SIGNATURES 8
ii
600602.1
Part I. Financial Information
Item 1. Financial Statements.
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Dollars in Thousands, except per share information)
(Unaudited)
For the
Three-month period ended
March 31,
1997 1996
---- ----
Net sales $ 18,771 $ 12,609
Cost of products sold 15,059 10,644
--------------- ---------------
Gross profit 3,712 1,965
Selling and administrative expenses 1,141 1,003
--------------- ---------------
Operating income 2,571 962
Interest and other income 41 105
Interest and other financing costs (55) (24)
--------------- ---------------
Income before taxes 2,557 1,043
Income taxes 946 396
--------------- ---------------
Net income $ 1,611 $ 647
=============== ===============
Net income per share of Common Stock $ 0.26 $ 0.10
=============== ===============
Weighted average number of shares of Common Stock outstanding 6,283,734 6,270,000
=============== ===============
The accompanying notes are an integral part of these financial statements.
1
600602.1
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Dollars in Thousands)
March 31, December 31,
1997 1996
---- ----
ASSETS (Unaudited)
Current assets
Cash and cash equivalents $ 1,537 $ 4,219
Accounts receivable (less allowance for doubtful accounts of $253 and $238) 13,915 9,409
Inventory (Note 2) 12,765 9,784
Prepaid Expenses 584 629
--------------- ---------------
Total current assets 28,801 24,041
--------------- ---------------
Property, plant and equipment 20,021 18,545
Accumulated depreciation (939) (735)
--------------- ---------------
Net property, plant and equipment 19,082 17,810
--------------- ---------------
Other assets 239 247
--------------- ---------------
Total assets $ 48,122 $ 42,098
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $ 8,072 $ 5,415
Bank overdrafts 1,224 442
Current portion of long-term debt 264 260
Accrued employment costs 1,605 1,403
Other current liabilities 1,240 540
--------------- ---------------
Total current liabilities 12,405 8,060
Long-term debt 2,466 2,534
Deferred taxes 1,143 1,007
--------------- ---------------
Total liabilities 16,014 11,601
--------------- ---------------
Commitments and contingencies (Note 3) -- --
Stockholders' equity
Senior Preferred Stock, par value $.001 per share; liquidation value $100 per
share; 2,000,000 shares authorized; and 0 shares issued and outstanding -- --
Common Stock, par value $.001 per share; 10,000,000 shares authorized;
6,283,734 shares issued and outstanding 6 6
Additional paid-in capital 25,451 25,451
Retained earnings 6,651 5,040
--------------- ---------------
Total stockholder's equity 32,108 30,497
--------------- ---------------
Total liabilities and stockholders' equity $ 48,122 $ 42,098
=============== ===============
The accompanying notes are an integral part of these financial statements.
2
600602.1
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(Unaudited)
For the
Three-month period ended
March 31,
1997 1996
---- ----
Cash flows from preoperating and operating activities:
Net income $1,611 $647
Adjustments to reconcile to net cash used by operating activities:
Depreciation and amortization 218 103
Deferred taxes 136 -
Changes in assets and liabilities:
Accounts receivable, net (4,506) (2,086)
Inventory (2,981) (2,770)
Accounts payable and bank overdrafts 3,439 2,503
Other, net 946 60
------------ -------------
Net cash used by operating activities (1,137) (1,541)
------------ -------------
Cash flows from investing activities:
Capital expenditures (1,477) (2,072)
------------ -------------
Net cash used by investing activities (1,477) (2,072)
------------ -------------
Cash flows from financing activities:
Proceeds from issuance of long-term debt - 400
Long-term debt repayment (64) (18)
Deferred financing costs (4) (12)
------------ -------------
Net cash provided by financing activities (68) 368
Net decrease in cash (2,682) (3,245)
Cash at beginning of period 4,219 10,038
------------ -------------
Cash at end of period $1,537 $6,793
============ =============
Supplemental disclosure of cash flow information:
Interest paid $42 $9
Income taxes paid $737 $313
The accompanying notes are an integral part of these financial statements.
3
600602.1
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
NOTES TO THE CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1) Universal Stainless & Alloy Products, Inc. (the "Company"), was
incorporated in 1994 for the principal purpose of acquiring
substantially all of the idled equipment and related assets located at
the Bridgeville, Pennsylvania, production facility of Armco, Inc. in
August 1994.
The accompanying unaudited, consolidated condensed financial statements
as of and for the quarters ended March 31, 1997 and 1996 have been
prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, these statements should
be read in conjunction with the audited financial statements as of and
for the year ended December 31, 1996. In the opinion of management, the
accompanying unaudited, consolidated financial statements contain all
adjustments, all of which were of a normal recurring nature, necessary
to present fairly, in all material respects, the consolidated results
of operations and of cash flows for the three-month period ended March
31, 1997 and 1996, and are not necessarily indicative of the results to
be expected for the full year.
2) The major classes of inventory are as follows (dollars in thousands):
March 31, December 31,
1997 1997
---- ----
Raw materials and supplies $2,762 $1,715
Semi-finished steel products 8,243 6,205
Operating materials 1,760 1,864
-------------- --------------
Total Inventory $12,765 $9,784
============== ==============
3) The Company has reviewed the status of its environmental contingencies
and believes there are no material changes from that disclosed in the
Company's Annual Report on Form 10-K for the year ended December 31,
1996.
4
600602.1
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations.
Results of Operations
THREE-MONTH PERIOD ENDED MARCH 31, 1997 AS COMPARED TO THE SIMILAR PERIOD
IN 1996
The Company had net income of $1,611,000 or $0.26 per share of Common Stock for
the three-month period ended March 31, 1997, as compared to net income of
$894,000 or $0.10 per share of Common Stock for the three-month period ended
March 31, 1996.
Net sales by product line and cost of products sold were as follows (dollars in
thousands):
For the
Three-Month Period Ended March 31
1997 1996
---------------------------------- -------------------------------------
Amount % Amount %
--------------- --------------- ---------------- -----------------
Net sales
Stainless steel $ 14,723 78.4% $ 9,471 75.1%
Tool steel 2,041 10.9% 1,981 15.7%
Conversion services 1,142 6.1% 733 5.8%
Other 865 4.6% 424 3.4%
--------------- --------------- ---------------- -----------------
Total net sales $ 18,771 100.0% $ 12,609 100.0%
--------------- --------------- ---------------- -----------------
Cost of products sold
Raw materials 7,683 40.9% 5,287 41.9%
Other 7,376 39.3% 5,357 42.5%
--------------- --------------- ---------------- -----------------
Total cost of products sold 15,059 80.2% 10,644 84.4%
--------------- --------------- ---------------- -----------------
Gross profit $ 3,712 19.8% $ 1,965 15.6%
=============== =============== ================ =================
The increase in net sales for the three-month period ended March 31, 1997 as
compared to the similar period in 1996 reflects increased shipments, primarily
within the reroller and forger market segments, partially offset by continued
soft pricing of stainless steel products due to imports.
Cost of products sold, as a percent of net sales, was 80.2% and 84.4% for the
three-month periods ended March 31, 1997 and 1996, respectively. This
improvement is primarily due to improved manufacturing yields and cost savings
achieved through capital improvements completed in 1996. First quarter 1996
results were adversely affected by lower than expected manufacturing yields
experienced on production of both tool steel and forging billets.
Selling and administrative expenses increased from $1,003,000 in the three-month
period ended March 31, 1996 to $1,141,000 in the three-month period ended March
31, 1997. The increase primarily relates to the addition of personnel as a
result of the continued growth of the business.
Interest and other income decreased from $105,000 in the three-month period
ended March 31, 1996 to $41,000 in the three-month period ended March 31, 1997
due to a decrease in cash available for investing purposes. The available cash
is directly related to the sale of 1,700,000 shares of Common Stock in a public
offering completed in November 1995. Interest and other financing costs
increased from $24,000 in the three-month period ended March 31, 1996 to $55,000
in the same period of 1997 due to increased borrowings under several
low-interest government loan programs.
5
600602.1
The effective income tax rate utilized in the three-month periods ended March
31, 1997 and 1996 was 37.0% and 38.0%, respectively. The lower effective income
tax rate in the 1997 period reflects a lower effective state tax rate, net of
the federal benefit, and is consistent with the ultimate effective income tax
rate utilized for the year ended December 31, 1996.
Financial Condition
The Company financed its activities during the first quarter of 1997 through
cash flows from operations and cash on hand at the beginning of the period. The
ratio of current assets to current liabilities decreased from 3.0:1 at December
31, 1996 to 2.3:1 at March 31, 1997 primarily due to the funding of capital
expenditures during the three-month period ended March 31, 1997. The debt to
capitalization ratio was 8% at March 31, 1997 and at December 31, 1996. Accounts
receivable, net increased by $4.5 million for the three-month period ended March
31, 1997 as compared to an increase of $2.1 million for the three-month period
ended March 31, 1996. Inventory increased by $3.0 million for the three-month
period ended March 31, 1997 as compared to an increase of $2.8 million for the
three-month period ended March 31, 1996. Accounts payable and bank overdrafts
increased by $3.4 million for the three-month period ended March 31, 1997 as
compared to an increase of $2.5 million for the three-month period ended March
31, 1996. Each of these increases can be primarily attributed to the continued
growth of the business. The Company's capital expenditures approximated $1.5
million for the three-month period ended March 31, 1997, which primarily related
to the completion of the 1995-96 capital expenditures program. At March 31,
1997, the Company has outstanding purchase commitments in addition to the
expenditures incurred to date of approximately $1.9 million. These expenditures
are expected to be funded substantially from internally generated funds. In
April 1997, the Company executed loan documents in connection with the issuance
of a $500,000 loan from the Commonwealth of Pennsylvania's Machinery and
Equipment Loan Fund. On May 1, 1997, the Company extended its $6.5 million
Working Capital Agreement with PNC Bank to April 2000. In addition, the
amendment reduced the annual interest rate charged on the unpaid principal
balance from PNC Bank's prime rate plus 0.25% to PNC Bank's prime rate. The
annual interest rate may be further reduced based on the Company maintaining
certain financial ratios.
1997 Outlook
Increased shipments in the three-month period ended March 31, 1997 are primarily
attributed to increased demand from the aerospace sector and new product
introductions, which are expected to continue throughout 1997. The cost savings
associated with the Company's capital expenditure program has met or exceeded
management's expectations to date. In light of these factors, the Company
expects 1997 results to be greater than those achieved in 1996.
New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 128, "Earnings per Share", which
establishes standards for computing and presenting earnings per share
information for periods ending after December 15, 1997. The Company does not
believe that the adoption of this statement will materially affect its earnings
per share disclosures except for the required presentation of diluted earnings
per share.
6
600602.1
Part II. Other Information
Item 1. Legal Proceedings.
There are no legal proceedings pending or, to the Company's best
knowledge, threatened against the Company.
Item 2. Changes in Securities.
None.
Item 3. Defaults upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit No.
10.1 First Amendment to Amended and Restated Credit
Agreement, dated as of May 1, 1997, by
and between the Company and PNC Bank, National
Association.
10.2 Working Cash, Line of Credit, Investment Sweep
Agreement, dated as of May 1, 1997, by
and between the Company and PNC Bank, National
Association.
10.3 Working Cash Trust Agreement, dated as of
May 1, 1997, by and between the Company and
PNC Bank, National Association.
27.1 Financial Data Schedule.
(b) The following reports on Form 8-K were filed during the
first quarter of 1997:
None.
7
600602.1
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 thereunto duly authorized.
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
Date: May 13, 1997 /s/ Clarence M. McAninch
-----------------------------------------------
Clarence M. McAninch
Exhibit 10.1
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
Between
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
as the Borrower
and
PNC BANK, NATIONAL ASSOCIATION
as the Bank
Dated as of
May 1, 1997
C/M 11834.0000 491934.1
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT
(the "First Amendment") made as of May 1, 1997 to that certain Amended and
Restated Credit Agreement dated as of January 31, 1996 (the Amended and Restated
Credit Agreement together with the exhibits and schedules thereto, the "Existing
Agreement") by and between UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC., a
corporation organized and existing under the laws of the State of Delaware (the
"Borrower") and PNC BANK, NATIONAL ASSOCIATION (the "Bank").
WITNESSETH:
WHEREAS, the Borrower and the Bank entered into the Existing
Agreement pursuant to which the Bank made certain financial accommodations
available to the Borrower including a Revolving Credit Commitment facility in an
aggregate principal amount not to exceed $6,500,000;
WHEREAS, the Borrower has requested that the Bank, and the
Bank is willing upon the following terms and conditions, to modify the Existing
Agreement; and
WHEREAS, the Borrower and the Bank desire to amend the
Existing Agreement as set forth herein.
NOW THEREFORE, in consideration of the mutual premises
contained herein and other good and valuable consideration, the Borrower and the
Bank with the intent to be legally bound hereby, agree that the Existing
Agreement shall be amended as follows:
ARTICLE I
AMENDMENTS TO EXISTING AGREEMENT
Section 1.01. Additional Definitions. Section 1.1 from and
after the First Amendment Effective Date is hereby amended such that the
following definition shall be added thereto in the appropriate alphabetical
order:
Account: As used in each Loan Document except the Working Cash
Sweep Agreement and the Trust Agreement, an account, as that term is defined in
the Uniform Commercial Code, due the Borrower, whether now in existence or
hereafter created or
C/M 11834.0000 491934.1
acquired, and as used in the Working Cash Sweep Agreement and the Trust
Agreement, the account defined in this Agreement as the Parent Account.
Agreement: As used in each Loan Document except the Working
Cash Sweep Agreement and the Trust Agreement, this Amended and Restated Credit
Agreement, all exhibits and schedules hereto and all extensions, renewals,
amendments, substitutions and replacements hereof and hereto; and when this
Agreement is referred to in the Working Cash Sweep Agreement and the Trust
Agreement shall be referred to as the "Line of Credit Agreement".
Applicable Margin: The percentage (expressed in basis points)
determined from time to time based upon the ratio of the Borrower's Consolidated
Total Liabilities to the Borrower's Consolidated Tangible Net Worth set forth
under the relevant column heading below.
Ratio of Consolidated Total
Liabilities to Consolidated
Tangible Net Worth Applicable Margin
Less than .5:1.0 100 basis points
Greater than or equal to 50 basis points
.5:1.0 but less than .75:1.0
Greater than or equal to 0 basis points
.75:1.0 but less than 1.0:1.0
Credit: A Credit as defined in the Working Cash Sweep
Agreement.
Customer: The Borrower in its capacity as the customer under
the Working Cash Sweep Agreement.
Customer's Trust: The trust created pursuant to the Working
Cash Sweep Agreement.
DDA: Each checking account now or hereafter identified on the
Schedule to the Working Cash Sweep Agreement.
Debit: As defined in the Working Cash Sweep Agreement.
Federal Funds Effective Rate: For any day shall mean the rate
per annum (based on a year of 360 days and actual days elapsed and rounded
upward to the nearest 1/100 of 1%) announced by the Federal Reserve Bank of New
York (or any successor) on such day as being weighted average of the rates on
overnight federal funds transactions
C/M 11834.0000 491934.1
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arranged by federal funds brokers on the previous trading day, as computed and
announced by such Federal Reserve Bank (or any successor) in substantially the
same manner as such Federal Reserve Bank computes and announces the weighted
average it refers to as the "Federal Funds Effective Rate" as of the date of
this Agreement; provided, if such Federal Reserve Bank (or its successor) does
not announce such rate on any day, the "Federal Funds Effective Rate" for such
day shall be the Federal Funds Effective Rate for the last day on which such
rate was announced.
First Amendment: The First Amendment to Amended and Restated
Credit Agreement dated as of May 1, 1997 by and between the Borrower and the
Bank.
First Amendment Effective Date shall mean May 1, 1997.
Grantor: The Borrower in its capacity as Grantor under the
Trust Agreement.
Ineligible Securities: Any security which may not be
underwritten or dealt in by member banks of the Federal Reserve System under
Section 16 of the Bank Act of 1933 (12 U.S.C. Section 24, Seventh), as amended.
Net Credit: As defined in the Working Cash Sweep Agreement.
Net Debit: As defined in the Working Cash Sweep Agreement.
Parent Account: The parent account as so designated in the
Working Cash Sweep Agreement and referred to in the Working Cash Sweep Agreement
and Trust Agreement as the Account.
Section 20 Subsidiary: The Subsidiary of the bank holding
company controlling the Bank, which Subsidiary has been granted authority by the
Federal Reserve Board to underwrite and deal in certain Ineligible Securities.
Target Balance: As defined in the Working Cash Sweep
Agreement.
Transfer Difference: As defined in the Working Cash Sweep
Agreement.
Trust Agreement: The Working Cash(R) Trust Agreement dated as
of the First Amendment Effective Date by and between the Grantor and the Trustee
and all extensions, renewals, amendments, substitutions and replacements thereto
and thereof.
Trustee: PNC Bank, National Association in its capacity as
trustee under the Trust Agreement.
Working Cash Agreements: This Agreement, the Working Cash
Sweep Agreement and the Trust Agreement.
C/M 11834.0000 491934.1
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Working Cash Sweep Agreement: The Working Cash(R), Line of
Credit, Investment Sweep Agreement dated as of the First Amendment Effective
Date by and between the Borrower as the Customer and the Bank and all
extensions, renewals, amendments, substitutions and replacements thereto and
thereof.
Section 1.02. Amended and Restated Definitions. Section 1.1
from and after the First Amendment Effective Date is hereby amended such that
the following definitions shall be amended and restated in their entirety.
Base Rate: A fluctuating rate of interest per annum equal to
the greater of (i) the Prime Rate or (ii) the sum of (A) the Federal Funds
Effective Rate plus (B) 1/2 of one percent per annum.
Business Day: A day other than a Saturday or Sunday on which
the Bank and the Trustee are open for Business.
Collateral: Collectively, all of the property (whether real,
personal or mixed, and whether tangible or intangible), rights, titles and
interests subject to any Encumbrance in favor of the Bank pursuant to this
Agreement or any other Loan Document, including but not limited to the cash and
other assets held by the Bank in the Lockbox Account, each DDA, the Parent
Account and each other bank account maintained by the Bank in order to implement
the Working Cash Agreements.
Fee: Any of the fees payable or to be payable by the Borrower
to the Bank or the Trustee pursuant to any of the Loan Documents including but
not limited to the Commitment Fee, or any Letter of Credit Fee.
Letter of Credit: Any letter of credit issued by the Bank
pursuant to any application for letter of credit and/or any Reimbursement
Agreement.
Letter of Credit Fee: Any fee due the Bank for the issuance of
or processing of a Letter of Credit or a draw thereunder.
Loan Document: Any of this Agreement, the Note, any Security
Document, any Letter of Credit, any application for Letter of Credit, any
Reimbursement Agreement, any Lockbox Agreement, the Working Cash Sweep
Agreement, the Trust Agreement, any other cash management agreement and all
other documents and instruments executed and delivered from time to time to
govern, evidence or secure the Obligations, and the exhibits, schedules,
statements, reports, certificates and other documents required by, or related
to, any of the foregoing, and all extensions, renewals, amendments,
substitutions and replacements thereto and thereof.
Lockbox Account: A U.S. Postal Service lockbox in the
Borrower's name over which, pursuant to the Lockbox Agreement, the Bank has
dominion and control to the
C/M 11834.0000 491934.1
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exclusion of the Borrower or other Persons acting by or through the Borrower,
and the related account into which the proceeds of the items received in the
Lockbox Account are processed, which may be a DDA.
Obligations: Collectively, (i) all unpaid principal and
accrued and unpaid interest under the Loans, (ii) all accrued and unpaid Fees
hereunder or under any of the other Loan Documents, (iii) all obligations
(contingent or matured) due the Bank pursuant to draws on Letters of Credit,
(iv) any other amounts due hereunder or under any of the other Loan Documents,
including all reimbursements, indemnities, Fees, costs, expenses, prepayment
premiums, and other obligations of the Borrower or any Subsidiary to the Bank,
the Trustee or any indemnified party hereunder and thereunder, (v) all other
existing and future obligations of the Borrower or any Subsidiary to the Bank
for the payment of money under any other agreement or instrument between the
Borrower or any Subsidiary and the Bank or among the Borrower or any Subsidiary,
the Bank and any other Person, and (vi) all reasonable out-of-pocket costs and
reasonable expenses incurred by the Bank in connection with this Agreement and
the other Loan Documents, including but not limited to the reasonable fees and
expenses of the Bank's counsel.
Outstanding Revolving Credit Amount: The sum of the aggregate
principal amount of outstanding Loans.
Reimbursement Agreement: Any agreement relating to a Letter of
Credit issued by the Bank for the account of the Borrower or an Affiliate
pursuant to which the Borrower agrees to reimburse the bank for any draw against
such letter of credit.
Revolving Credit Commitment: The obligation of the Bank to
make available to the Borrower an amount which does not exceed $6,500,000 at any
one time outstanding.
Revolving Credit Termination Date: Initially, April 30, 2000,
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.
Subsidiary: (i) Any corporation or trust of which 50% or more
(by number of shares or number of votes) of the outstanding capital stock or
shares of beneficial interest normally entitled to vote for the election of one
or more directors or trustees (regardless of any contingency which does or may
suspend or dilute the voting rights) is at such time owned directly or
indirectly by another Person or one or more of such other Person's subsidiaries,
(ii) any partnership of which such other Person is a general partner or of which
50% or more of the partnership interests is at the time directly or indirectly
owned by such other Person or one or more of such other Person's Subsidiaries,
(iii) any limited liability company of which such Person is a member or of which
50% or more of the limited liability company interests is at the time directly
or indirectly owned by such other Person or one or more of such other Person's
Subsidiaries or (iv) any corporation, trust, partnership, limited
C/M 11834.0000 491934.1
-5-
liability company or other entity which is controlled or capable of being
controlled by such other Person or one or more of such other Person's
Subsidiaries.
Section 1.03. Deleted Definitions. From and after the First
Amendment Effective Date Section 1.1 is amended by deleting the following
defined terms and their related definitions:
Borrowing Base
Borrowing Base Certificate
Cash Collateral Account
Controlled Disbursement Account
Controlled Disbursement Account Agreement
Federal Funds Rate
Qualified Account
Qualified Inventory
Section 1.04. Revision of Revolving Credit Commitment. From
and after the First Amendment Effective Date Section 2.1 is amended and restated
in its entirety to read as follows:
2.1 Revolving Credit Commitment.
2.1a Loans. The Bank agrees, subject to the terms and conditions
hereof and relying upon the representations and warranties herein set forth,
that the Borrower shall have the right to borrow, repay and reborrow, from the
date hereof until the Revolving Credit Termination Date, an aggregate principal
amount shall not exceed $6,500,000 in the aggregate at any one time outstanding.
2.1b Mandatory and Voluntary Reductions of Revolving Credit
Commitment.
(i) DELETED
(ii) Asset Sales. Subject to the provisions of Section 6.8
hereof, upon the sale or disposition in one or a series of transactions of the
Borrower's assets which yields Net Cash Proceeds in excess of $250,000 per
annum, the Borrower shall make a mandatory payment of the outstanding Loans in
an amount equal to the Net Cash Proceeds in excess of $250,000 relating to any
such sale or disposition, and at the Bank's option, the Revolving Credit
Commitment shall be permanently reduced by such amount, and, if so reduced, the
portion of the Revolving Credit Commitment so terminated shall no longer be
available for borrowing.
(iii) Voluntary Reductions. Upon at least ten Business Days'
prior written notice to the Bank, the Borrower may from time to time permanently
reduce the Revolving Credit Commitment, and, to the extent of such reduction,
the portion of the Revolving Credit
C/M 11834.0000 491934.1
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Commitment shall no longer be available for borrowing. Simultaneously with any
such voluntary permanent reduction, the Borrower shall make a payment of the
outstanding Loans equal to the excess, if any, of (A) the Outstanding Revolving
Credit Amount over (B) the Revolving Credit Commitment, as so reduced. Each such
reduction shall be in a minimum principal amount of $500,000 or, if in excess of
$500,000, in integral multiples of $250,000.
Notice of a reduction, once given, shall be irrevocable.
(iv) Application of Payments. Any and all Revolving Credit
Commitment reductions or mandatory or voluntary prepayments made pursuant to any
particular item of this Section 2.1b shall be made in addition to, and not in
lieu of, any and all Revolving Credit Commitment reductions and mandatory and
voluntary prepayments required to be made pursuant to any other item of this
Section 2.1b. All such mandatory and voluntary prepayments shall be accompanied
by all accrued and unpaid interest thereon, and all amounts due pursuant to
Section 2.4, if any.
2.1c Advance Procedures. In the event that the assets transferred
into the Parent Account from the Customer's Trust under the Working Cash Sweep
Agreement are insufficient to cover the Net Debit, the Bank shall on behalf of
the Borrower advance an amount equal to the lesser of (i) the remaining amount
of the Net Debit or (ii) the Revolving Credit Commitment.
2.1d Payment Terms. Any Credit in the Parent Account shall, to the
extent available at the end of any Business Day, be automatically applied to the
repayment of the outstanding balance of the Loans. In addition, the outstanding
principal balance of the Loans and any accrued and unpaid interest thereon shall
be due and payable on the Revolving Credit Termination Date. If any payment
hereunder shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and such extension of time
shall be included in computing interest with such payment. Borrower hereby
authorizes the Bank to charge the Parent Account or any deposit account
maintained by the Borrower, individually or jointly with others with the Bank
for any payment when due hereunder. Payments received will be applied to
charges, fees, expenses, accrued interest and principal in any order the Bank
may choose in its sole discretion.
2.1e Note. The obligation of the Borrower to repay on or before the
Revolving Credit Termination Date the aggregate unpaid principal amount of all
Loans shall be evidenced by the Note substantially in the form of Exhibit "B"
attached hereto, executed by the Borrower and delivered to the Bank.
2.1f Extension of Revolving Credit Termination Date. The provisions
of Section 2.1 shall be in effect until, and all Obligations relating to the
Revolving Credit Commitment shall be due and payable on, the Revolving Credit
Termination Date, unless terminated earlier, as provided in Section 8.2. The
Borrower in March of 1998 and in each subsequent month of March during the term
of the Revolving Credit Commitment (whether the original term or any extended
term as provided hereby) when the remaining term of the Revolving
C/M 11834.0000 491934.1
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Credit Commitment is approximately twenty-six (26) months, may request, by
written notice executed by an Authorized Officer and delivered to the Bank, an
extension or further extension of the Revolving Credit Commitment and a
corresponding alteration of the Revolving Credit Commitment. The Bank shall
inform the Borrower not later than the last Business Day in April in each year
the request is made whether or not such extension has been agreed to. If the
Bank does not respond to any such request within the specified time period, such
request, in the absence of a written agreement between the Bank and the Borrower
to the contrary, shall be deemed to be denied.
2.1g Lockbox.
(i) Lockbox Account. On or prior to the Closing Date, the Bank
and the Borrower shall enter into a Lockbox Agreement in the form of Exhibit "C"
hereto. The Borrower shall notify all Account Debtors to make payment directly
to the Lockbox Account. All notifications to Account Debtors shall contain such
instructions regarding the address and account number of the Lockbox Account as
may be specified by the Bank to the Borrower from time to time, and shall
otherwise be satisfactory to the Bank. The Bank may also instruct Account
Debtors to make payment to the Lockbox Account at any time. The Bank, pursuant
to the term of the Lockbox Agreement, shall process all items received in the
lockbox and deposit the proceeds of the Lockbox Account into a DDA.
(ii) Other Bank Accounts. The Borrower agrees that it shall
not maintain any other depository accounts in which cash or proceeds of
Collateral could be deposited, except for those accounts meeting the
requirements of this item (ii). Pursuant to an agreement satisfactory in form
and substance to the Bank, each bank or other financial institution at which
such an account is maintained by the Borrower shall acknowledge that the Bank
has a security interest in and to such account maintained with it, and shall
agree that, either on a daily basis or upon receipt of instructions from the
Bank, it will cause all collected funds in such account (except for any required
minimum balances) to be deposited in a DDA by wire transfer.
2.1h Termination of Working Cash Sweep Agreement. The Working Cash
Sweep Agreement may be terminated by the Borrower or the Bank on thirty (30)
days' prior written notice from the Person terminating the Working Cash Sweep
Agreement to the other party thereto. During such thirty (30) day period the
Bank and the Borrower shall attempt to agree on an alternative mechanism for
funding Loans under this Agreement. Failure of the Borrower and the Bank to
agree on an alternative funding mechanism shall constitute an Event of Default
hereunder at the end of such thirty (30) day period.
Section 1.05. Deletion of Letter of Credit Facility. From and
after the First Amendment Effective Date Section 2.2 shall be deleted in its
entirety without there being a renumbering of the remaining Sections of Article
II.
C/M 11834.0000 491934.1
-8-
Section 1.06. Revision of Interest Provisions. From and after
the First Amendment Effective Date Section 2.3 shall be amended and restated in
its entirety to read as follows:
2.3 Interest.
2.3a Interest Rate. During the term hereof, all amounts outstanding
hereunder shall bear interest at a rate per annum equal to the sum of (i) the
Base Rate less (ii) the Applicable Margin.
2.3b Adjustments to Interest Rates.
(i) Changes in Applicable Margin. The Applicable Margin shall
be adjusted as of the first day of each Fiscal Quarter based upon the ratio of
the Borrower's Consolidated Total Liabilities to the Borrower's Consolidated
Tangible Net Worth as shown in the Compliance Certificate for the immediately
preceding Fiscal Quarter.
(ii) Changes in Prime Rate or Federal Funds Effective Rate.
The Base Rate shall be adjusted from time to time, without notice to the
Borrower, as necessary to reflect any changes in the Prime Rate or in the
Federal Effective Funds Rate, as applicable, which adjustments shall be
automatically effective on the day of any such change.
(iii) Event of Default. Upon the occurrence of and during the
continuance of an Event of Default, the outstanding principal amount of the
Loans shall bear interest from the date of such occurrence at a rate per annum
which is equal to 2% (200 basis points) in excess of the rate or rates which
would then otherwise be in effect pursuant to this Section 2.3 with respect to
such Loans.
2.3c Interest Payment and Dates of Payment. Interest will be due
and payable on or about the last date of each month and will be charged to the
Parent Account or another account created by the Bank to implement the Working
Cash Agreements. In the event that there is insufficient Credit in the Parent
Account or such other account to pay interest, the Bank will advance funds on
behalf of the Borrower as provided by Subsection 2.1c hereof to the extent the
Borrower has availability under the Revolving Credit Commitment. If not paid by
one of the two foregoing alternates interest will be immediately due and payable
by the Borrower. The foregoing notwithstanding, automatic payments of interest
pursuant to this Subsection 2.3c shall be based exclusively on the Prime Rate
less the Applicable Margin. In the event that the sum of Federal Funds Effective
Rate plus fifty (50) basis points is, for any period during any month, greater
than the Prime Rate a separate billing for additional interest due shall be sent
to the Borrower. Such additional interest shall be due and payable within ten
(10) days.
C/M 11834.0000 491934.1
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2.3d Method of Calculation. The interest rate shall be calculated
on the basis of the actual number of days elapsed, using a year of 360 days.
Interest for any period shall be calculated from and including the first day
thereof to but not including the last day thereof.
Section 1.07. Payment Instruction. From and after the First
Amendment Effective Date, Section 2.6 shall be amended and restated in its
entirety to read as follows:
2.6 Payments. All payments of principal, interest, fees, costs
and other amounts due hereunder and under the other Loan Documents not credited
to the Bank directly pursuant to the terms hereof or of the Working Cash Sweep
Agreement shall be made by the Borrower to the Bank at the Bank's principal
office at One PNC Plaza, Fifth Avenue and Wood Street, Pittsburgh, Pennsylvania
15222, Attention: Metals Group, not later than 12:00 noon (Eastern time) on the
due date. All such payments with respect to the Loans shall be immediately good
funds when delivered by the Borrower to the Bank.
Section 1.08. Letter of Credit Fee Adjustment. From and after
the First Amendment Effective Date Subsection 2.8a shall be amended and restated
in its entirety to read as follows:
2.8a Letter of Credit Fees. The Borrower shall pay Letter of
Credit Fees in accordance with the terms of the relevant application for Letter
of Credit or the Reimbursement Agreement, as the case may be.
Section 1.09. Payment from Accounts. From and after the First
Amendment Effective Date, Section 2.9 shall be amended and restated in its
entirety to read as follows:
2.9 Payment from Accounts Maintained by Borrower. In the event
that any payment of principal, interest, Commitment Fee, Letter of Credit Fee,
other Fee or expense or any other amount due the Bank under any of the Loan
Documents is not paid when due, the Bank is hereby authorized to effect such
payment by debiting the Parent Account or any deposit account now or in the
future maintained with the Bank by the Borrower, either individually or with
another Person. This right of debiting accounts of the Borrower is in addition
to any right of setoff accorded the Bank hereunder or by operation of law.
Section 1.10. Modification of Reporting Requirements. From and
after the First Amendment Effective Date Section 5.2 shall be amended by
deleting therefrom existing Subsection 5.2f through 5.2i inclusive and by
redesignating Subsection 5.2j as Subsection 5.2f and Subsection 5.2k as
Subsection 5.2g.
Section 1.11. Modification of Financial Covenants. From and
after the First Amendment Effective Date item (iii) of Section 6.4 shall be
amended and restated in its entirety to read as follows:
C/M 11834.0000 491934.1
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(iii) Leverage. The Borrower's ratio of Consolidated Total
Liabilities to Tangible Net Worth shall at no time exceed 1.00:1.00.
Section 1.12. Adjustment of Capital Expenditure Limitation.
From and after the First Amendment Effective Date Section 6.5 shall be amended
and restated in its entirety to read as follows:
6.5 Capital Expenditure. The Borrower shall not in any one Fiscal
Year make Consolidated Capital Expenditures in excess of $10,000,000.
Section 1.13. Limitation Upon Use of Proceeds. From and
after the First Amendment Effective Date Section 6.12 shall be amended and
restated in its entirety to read as follows:
6.12 Use of Proceeds. The Borrower shall not use any proceeds of
the Loans or any Letter of Credit either directly or indirectly (i) for the
purpose of "purchasing or carrying any margin stock" within the meaning of
Regulations G, T, U or X, or (ii) (x) to knowingly purchase any Ineligible
Securities from a Section 20 Subsidiary during any period in which such Section
20 Subsidiary makes a market in such Ineligible Security, (y) to knowingly
purchase during the underwriting or placement period Ineligible Securities being
underwritten or privately placed by a Section 20 Subsidiary or (z) to make
payments of principal or interest on Ineligible Securities underwritten or
privately placed by a Section 20 Subsidiary and issued by or for the benefit of
the Borrower or an Affiliate of the Borrower.
Section 1.14. Modification of Advance Prerequisites. From and
after the First Amendment Effective Date Section 7.1 shall be amended and
restated in its entirety to read as follows:
7.1 All Loans. The obligation of the Bank to make any Loan is
subject to the satisfaction of each of the following conditions precedent:
7.1a Working Cash Sweep Agreement. No advance pursuant to
Section 2.1 shall occur if either the Borrower or the Bank has terminated the
Working Cash Sweep Agreement.
7.1b No Default or Event of Default. The Borrower shall have
performed and complied with all agreements and conditions which are required
hereby or by any other Loan Document to be performed or complied with by it
prior to such Loan being made and, at the time of such Loan, no Default or Event
of Default has occurred and is continuing or will result from the making of such
Loan.
7.1c No Material Adverse Change. At the time of making such Loan,
no Material Adverse Change has occurred and is continuing.
C/M 11834.0000 491934.1
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7.1d Representations Correct. The representations and warranties
contained in Article 4 hereof and in the other Loan Documents and otherwise made
in writing by or on behalf of the Borrower in connection with the transactions
contemplated by this Agreement shall be (i) correct when made and (ii) correct
in all material respects at the time of such Loan.
Each Loan shall be deemed to be, as of the time made, a certification by the
Borrower as to the accuracy of the matters set forth in Sections 7.1b, 7.1c and
7.1d.
Section 1.15. Additional Event of Default. From and after the
First Amendment Effective Date Section 8.1 shall be amended by adding thereto a
new Subsection 8.1l which shall read as follows:
8.1l Termination of Working Cash Sweep Agreement. The termination
upon thirty (30) days' prior written notice by either the Bank or the Borrower
of the Working Cash Sweep Agreement.
Section 1.16. No Other Amendments or Waivers. The amendments
to the Existing Agreement set forth in Sections 1.01 through 1.15 inclusive
above do not either implicitly or explicitly alter, waive or amend, except as
expressly provided in this First Amendment, the provisions of the Existing
Agreement. The amendments set forth in Sections 1.01 through 1.15 inclusive
hereof 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 Existing Agreement with respect to any such
violation. Nothing in this First 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 Existing Agreement and the other Loan Documents,
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 First Amendment, the Borrower hereby repeats herein
for the benefit of the Bank the representations and warranties made by the
Borrower in Sections 4.1 through 4.24, inclusive, of the Existing Agreement, as
amended hereby, except that for purposes hereof such representations and
warranties shall be deemed to extend to and cover this First Amendment.
C/M 11834.0000 491934.1
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ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. Conditions Precedent. Each of the following
shall be a condition precedent to the effectiveness of this First Amendment:
(i) The Bank shall have received, as of the First Amendment
Effective Date, duly executed counterpart originals of this First Amendment.
(ii) The Bank shall have received, as of the First Amendment
Effective Date, duly executed counterpart originals of the Working Cash Sweep
Agreement and the Trust Agreement.
(iii) The Bank shall have received resolutions of the board of
directors of the Borrower authorizing execution and delivery of the First
Amendment, the Working Cash Sweep Agreement and the Trust Agreement certified by
the Secretary of the Borrower as being true, correct, complete and in effect as
of the First Amendment Effective Date in form and substance satisfactory to the
Bank.
(iv) The following statements shall be true and correct on the
First Amendment Effective Date and the Bank shall have received a certificate
signed by an Authorized Officer of the Borrower, dated the First Amendment
Effective Date, stating that:
(A) except to the extent modified in writing
by the Borrower and delivered to the Bank on or prior to the date hereof, the
representations and warranties made pursuant to Section 2.01 of this First
Amendment and in the other Loan Documents are true and correct in all material
respects on and as of the First Amendment Effective Date as though made on and
as of such date;
(B) no Event of Default or event which with
the giving of notice or 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 First Amendment;
(C) 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 Existing Agreement and the other Loan
Documents; and
(D) the certificate of incorporation of the
Borrower, the bylaws of the Borrower and the incumbency certificate of the
Borrower delivered on the Closing Date, unless amendments are delivered at the
First Amendment Effective Date, remain unchanged and are still in full force and
effect.
C/M 11834.0000 491934.1
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ARTICLE IV
GENERAL PROVISIONS
Section 4.01. Ratification of Terms. Except as expressly
amended by this First Amendment, the Existing Agreement and each and every
representation, warranty, covenant, term and condition contained therein is
specifically ratified and confirmed in all material respects. The Borrower
hereby confirms that any collateral for the Bank Indebtedness, including but not
limited to liens, security interests, granted by the Borrower, shall continue
unimpaired and in full force and effect.
Section 4.02. References. All notices, communications,
agreements, certificates, documents or other instruments executed and delivered
after the execution and delivery of this First Amendment in connection with the
Agreement, any of the other Loan Documents or the transactions contemplated
thereby may refer to the Existing Agreement without making specific reference to
this First Amendment, but nevertheless all such references shall include this
First Amendment unless the context requires otherwise. From and after the First
Amendment Effective Date, all references in the Existing Agreement and each of
the other Loan Documents to the "Agreement" shall be deemed to be references to
the Existing Agreement as amended hereby.
Section 4.03. Counterparts. This First 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 First Amendment.
Section 4.04. Capitalized Terms. Except for proper nouns and
as otherwise defined herein, capitalized terms used herein as defined terms
shall have the meanings ascribed to them in the Existing Agreement, as amended
hereby.
Section 4.05. Governing Law. THIS FIRST 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.
C/M 11834.0000 491934.1
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Section 4.06. Headings. The headings of the sections in this
First Amendment are for purposes of reference only and shall not be deemed to be
a part hereof.
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound hereby, have caused this First Amendment to be duly executed by
their proper and duly authorized officers the day first above written.
ATTEST: (SEAL) UNIVERSAL STAINLESS & ALLOY
PRODUCTS, INC., a Delaware
corporation
By By
Name Name
Title Title
PNC BANK, NATIONAL
ASSOCIATION
By
Name
Title
C/M 11834.0000 491934.1
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President and Chief Executive Officer
Date: May 13, 1997 /s/ Richard M. Ubinger
-----------------------------------------------
Richard M. Ubinger
Chief Financial Officer,
Principal Accounting Officer and
Treasurer
8
600602.1
Exhibit 10.2
Working Cash(R), Line of Credit, Investment Sweep Agreement PNC BANK
- --------------------------------------------------------------------------------
THIS WORKING CASH(R), LINE OF CREDIT, INVESTMENT SWEEP AGREEMENT ("Working Cash
Sweep Agreement") is made as of May 1, 1997, between Universal Stainless & Alloy
Products, Inc. ("Customer") and PNC Bank, National Association, with an office
located at One PNC Plaza, 249 Fifth Avenue, Pittsburgh, Pennsylvania 15222
("Bank").
1. TRANSFER INSTRUCTIONS. Customer has executed and delivered to PNC Bank,
National Association, as Trustee (the "Trustee"), a Working Cash(R) Trust
Agreement establishing a revocable trust (the "Customer's Trust") and has
executed and delivered to the Bank an Amended and Restated Credit Agreement (the
"Line of Credit Agreement"), each of which is incorporated by reference herein
(individually and collectively, the "Working Cash Agreement(s)"). During the
term of this Working Cash Sweep Agreement, the following instructions from
Customer to Bank concerning transfer of assets between the Trust and the parent
account (the "Account") identified on the Schedule set forth at the end of this
Working Cash Sweep Agreement (the "Schedule") and between the Account and each
checking account listed on the Schedule (each, a "DDA") shall apply. Pursuant to
the terms of the Line of Credit Agreement, monies may be borrowed from time to
time for the purposes set forth herein up to the maximum amount of the Revolving
Credit Commitment upon certain terms and conditions set forth in the Line of
Credit Agreement.
At the close of each day on which Bank and Trustee are both open for business
("Business Day"), Bank will review the activity in each DDA. For any Business
Day in which the Final Available Balance in a DDA exceeds the Target Balance for
such DDA by at least the amount of the Transfer Difference, Bank is directed to
debit the DDA for that Business Day in an amount by which the Final Available
Balance exceeds the Target Balance and credit those funds to the Account
("Credit"). For any Business Day in which the Final Available Balance in any DDA
is less than the Target Balance by no less than the amount of the Transfer
Difference, Bank shall transfer to such DDA an amount equal to the difference
between the Target Balance and the Final Available Balance ("Debit") as set
forth below. The minimum amount credited or debited to the Account from any DDA
on any Business Day will be an amount equal to the Transfer Difference for such
DDA. Accordingly, on any Business Day when the Final Available Balance in any
DDA is plus or minus the Target Balance by less than the Transfer Difference,
there will be no transfer of a Debit or Credit.
At the close of each Business Day, Bank will review the activity in the Account.
For any Business Day when the sum of all Credits and Debits transferred to or
from the Account is a positive number ("Net Credit"), Bank is directed to use
the amount of the Net Credit available for that Business Day to repay amounts
outstanding under the Line of Credit and to debit any amount remaining and
transmit such remainder to the Customer's Trust. For any Business Day when the
sum of all Credits and Debits transferred to or from the Account is a negative
number ("Net Debit"), Bank shall direct Trustee to transfer to Bank assets from
the Customer's Trust in an amount equal to the Net Debit for that Business Day.
In no case shall the Trustee transfer assets in an amount in excess of the
aggregate of the Final Available Balance in the Customer's Trust. In the event
that the assets transferred to the Account from the Customer's Trust under this
Working Cash Sweep Agreement are insufficient to cover the Net Debit, Bank
shall, on behalf of Customer, make an advance equal to the amount of (a) the
remaining amount of the Net Debit, or (b) the amount, if any, available under
the Line of Credit. The amount of such advances, together with interest thereon
and fees shall be charged to the Account and the payment of which shall be
governed by the terms and conditions set forth in the Line of Credit Agreement.
2. CUSTOMER ACKNOWLEDGEMENTS. Customer acknowledges that Bank and Trustee are
acting solely as Customer's agents in transferring funds between the Account and
the Customer's Trust pursuant to the terms of this Working Cash Sweep Agreement.
Customer releases Bank and Trustee from all liability in effecting these
transfers. In no event shall Trustee have any liability to Bank for amounts due
Bank under the Line of Credit Agreement.
3. STANDARD OF CARE AND LIMITATION OF LIABILITY. With respect to the performance
of services under this Working Cash Sweep Agreement, Bank and Trustee will be
governed by a standard of ordinary care. In any event, Bank and Trustee shall
only be liable for Customer's actual damages. Neither Bank nor Trustee shall be
liable for any consequential, incidental, special or indirect losses, damages or
expenses (including counsel fees) which Customer may incur by reason of this
Working Cash Sweep Agreement or the services provided hereunder. In no event
will Bank or Trustee be liable for its inability to perform its obligations
hereunder when such inability arises out of causes beyond their control.
4. TERMINATION. This Working Cash Sweep Agreement may be terminated by either
party upon thirty (30) days' prior written notice to the other.
5. FEES. Bank will be compensated for its services relating to the Working Cash
Agreements initially in accordance with the fees set forth on the Schedule, as
such fees may be modified by Bank from time to time. Trustee will be compensated
for its services relating to the Working Cash Agreements in accordance with its
Schedule of Fees in effect from time to time. Customer acknowledges receipt and
review of the current fee arrangements for each of Bank and Trustee.
6. CHANGES IN WRITING. No modification, amendment or waiver of any provision of
any of the Working Cash Agreements nor consent to any departure by Customer
therefrom, will in any event be effective unless the same is in writing and
signed by Bank and Trustee, where appropriate, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given.
7. ENTIRE AGREEMENT. The Working Cash Agreements and all of the documents and
instruments referred to therein constitute the entire agreement and supersede
all other prior agreements and understandings, both written and oral, between
the parties with respect to the subject matter hereof.
8. SUCCESSORS AND ASSIGNS. The Working Cash Agreements will be binding upon and
inure to the benefit of the Customer, Bank and Trustee and their respective
heirs, executors, administrators, successors and assigns; provided, however,
that Customer may not assign any of the Working Cash Agreements in whole or in
part without the prior written consent of Bank; and Bank and Trustee may, at any
time, assign any of their respective rights and obligations under the Working
Cash Agreements in whole or in part.
C/M 11834.0000 491945.1
9. DEFINITIONS. For purposes of this Working Cash Sweep Agreement, the term
"Final Available Balance" shall mean the collected balance after all items have
been posted to the DDA for the Business Day. All terms capitalized but undefined
above shall have the meanings set forth on the Schedule.
SCHEDULE
The commercial checking accounts ("DDAs") listed below are considered related to
the Parent Account (the "Account") identified below and to the Working Cash
Sweep Agreement for the purpose of aggregating balances to ascertain the dollar
amount to be transferred on any Business Day to or from the Customer's Trust
created pursuant to the Trust Agreement between Trustee and Customer.
The DDAs listed below will be governed by Bank's policies, procedures and fee
arrangements that are generally applicable to commercial demand deposit accounts
from time to time.
================================================================================
PARENT ACCOUNT NUMBER AUTHORIZED CUSTOMER CONTACT (NAME)
Richard M. Ubinger
================================================================================
================================================================================
CHECKING ACCOUNT (DDA) NO. TARGET BALANCE TRANSFER DIFFERENCE
1001348476 $25,000 $1,000
================================================================================
================================================================================
FIXED CHARGE
/ / Compensating Balance of $___________________ |X| Monthly Fee of $150
================================================================================
================================================================================
BALANCE REVIEW PERIOD AUTHORIZED CUSTOMER CONTACT (NAME)
Richard M. Ubinger
================================================================================
================================================================================
CHECKING ACCOUNT (DDA) NO. TARGET BALANCE TRANSFER DIFFERENCE
$ $
================================================================================
================================================================================
FIXED CHARGE
/ / Compensating Balance of $______________ / / Monthly Fee of $___________
================================================================================
================================================================================
BALANCE REVIEW PERIOD AUTHORIZED CUSTOMER CONTACT (NAME)
================================================================================
================================================================================
CHECKING ACCOUNT (DDA) NO. TARGET BALANCE TRANSFER DIFFERENCE
$ $
================================================================================
================================================================================
FIXED CHARGE
/ / Compensating Balance of $______________ / / Monthly Fee of $___________
================================================================================
================================================================================
BALANCE REVIEW PERIOD AUTHORIZED CUSTOMER CONTACT (NAME)
================================================================================
Customer Name:
PNC Bank, National Association Universal Stainless & Alloy Products, Inc.
By: By:
Title: Title:
C/M 11834.0000 491945.1
Exhibit 10.3
Working Cash(R) Trust Agreement
- -----------------------------------------------------------------------PNC BANK
THIS WORKING CASH(R) TRUST AGREEMENT ("Trust Agreement") made this 1st day of
May, 1997, between Universal Stainless & Alloy Products, Inc., as Grantor, and
PNC Bank, National Association, as Trustee ("Trustee"):
WITNESSETH:
WHEREAS, pursuant to the terms of the Working Cash(R), Line of Credit,
Investment Sweep Agreement (the "Working Cash Sweep Agreement") appended hereto
and incorporated by reference herein, Grantor maintains with PNC Bank, National
Association in its non-representative capacity (the "Bank") the account
("Account") indicated below:
Account Name Account Number
, and
WHEREAS, pursuant to the terms of the Working Cash Sweep Agreement, Grantor will
cause Bank, from time to time, to transfer certain sums from Grantor's Account
to Trustee for the short-term investment of those sums; and
WHEREAS, pursuant to the terms of the Working Cash Sweep Agreement, Trustee will
be from time to time directed to transfer certain sums from the Trust to the
Account; and
WHEREAS, whenever the assets held in the Trust hereunder ("Principal") and
Credits transferred to the Account are insufficient to cover the Debits to the
Account, Bank shall, pursuant to the Amended and Restated Credit Agreement (the
"Line of Credit Agreement") with Grantor incorporated herein by reference and
subject to the limitations as set forth therein, transfer sufficient funds to
the Account; and
WHEREAS, Trustee shall have no liability to repay amounts so advanced by Bank
and shall be indemnified by Grantor for all claims against Trustee by Bank or
any third parties in connection with amounts due under the Line of Credit
Agreement.
NOW, THEREFORE, the parties agree that Trustee shall hold the Principal in
trust, and invest and administer such Principal upon the following terms:
1. Trustee shall invest and reinvest the Principal of the Trust in such
short-term investments, including any common trust fund maintained by Trustee
for the short-term investment of funds, as Trustee, after consultation with
Grantor, shall deem appropriate.
2. The Trustee may invest the Principal or the assets of any common trust fund
in which the Trust is invested, in related investments, including but not
limited to, securities underwritten by Bank or an affiliate of Bank, mutual
funds advised or otherwise serviced by Bank or an affiliate, deposits of Bank or
an affiliate, and repurchase and reverse-repurchase agreements with Bank.
Grantor acknowledges that Bank may be separately and additionally compensated or
may derive profit in connection with such related investments and consents to
such additional compensation and/or profit.
3. Trustee shall, from time to time, transfer the net income of the Trust to the
Account.
4. Trustee shall transfer such amounts of Principal to the Account as Bank may
from time to time direct, pursuant to the terms of the Working Cash Sweep
Agreement and Trustee shall be without liability for complying with any such
direction from Bank and shall have no duty to inquire about or in any way
confirm the appropriateness of such direction or of such Account.
5. Trustee shall have no liability to repay amounts advanced by Bank and Grantor
shall indemnify and hold Trustee harmless for all claims made against it by Bank
or any third parties in connection with amounts due Bank under the Line of
Credit Agreement.
6. Except as limited by the Line of Credit Agreement, Grantor reserves the
right, by a signed instrument delivered to Trustee, to revoke this Trust
Agreement. Further, this Trust Agreement may be amended by an instrument signed
by Grantor and Trustee.
7. Without prejudice to Bank's rights under the Line of Credit Agreement,
Trustee may resign at any time by delivering thirty days' written notice of such
resignation to Grantor and Bank.
8. Trustee shall be entitled to compensation for its services in accordance with
its Schedule of Fees as such may be amended from time to time.
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be
executed by their respective duly authorized representatives as of the day and
the year first above written.
ATTEST/WITNESS: GRANTOR:
UNIVERSAL STAINLESS & ALLOY
PRODUCTS, INC.
TRUSTEE: PNC BANK, NATIONAL ASSOCIATION
By:
Name:
By: Title:
Name:
Title:
LAV/WORKCASH.TRU APRIL 29, 1997
BF 55806.2: 4/29/97
C/M 11834.0000 491947.1
5
3-MOS
DEC-31-1996
JAN-01-1997
MAR-31-1997
1,537
0
14,168
(253)
12,765
28,801
20,021
(939)
48,122
12,405
2,466
0
0
6
32,102
48,122
18,771
18,771
15,059
15,059
1,126
15
(14)
2,557
946
1,611
0
0
0
1,611
0.26
0.26
