Exhibit 10.12
AMENDED AND RESTATED
SUBORDINATION AND STAND-BY AGREEMENT
THIS AMENDED AND RESTATED SUBORDINATION AND STAND-BY AGREEMENT (together
with all amendments, supplements, renewals, replacements or other modifications
thereto or thereof is hereinafter referred to as this "Subordination Agreement")
made as of January 30, 1998, by and among PNC BANK, NATIONAL ASSOCIATION, a
national banking association (the "Bank"), UNIVERSAL STAINLESS & ALLOY
PRODUCTS, INC., a Delaware corporation (the "Debtor") and USAP HOLDINGS, INC., a
Delaware corporation (the "Creditor") and amends and restates in its entirety
that certain Subordination and Stand-By Agreement dated as of January 31, 1996
and entered into by and among the Bank, the Debtor and the Creditor (the
Subordination and Stand-By Agreement dated as of January 31, 1996 is hereinafter
referred to as the "Original Subordination Agreement").
RECITALS
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WHEREAS, the Original Subordination Agreement was entered into as an
inducement for an in consideration of the various credit facilities made
available to the Borrower by the Bank pursuant to the Amended and Restated
Credit Agreement between the Borrower and the Bank dated January 31, 1996, as
amended by that certain First Amendment to Amended and Restated Credit Agreement
dated May 1, 1997 (the "First Amendment") (the Amended and Restated Credit
Agreement, as amended by the First Amendment, and together with all exhibits and
schedules thereto, is hereinafter referred to as the "Amended and Restated
Credit Agreement"); which amended and restated in its entirety that certain
credit agreement between the Borrower and the Bank dated November 18, 1994, as
amended by the first amendment thereto dated March 30, 1995, the second
amendment thereto dated June 2, 1995, the third amendment thereto dated August
25, 1995, the fourth amendment thereto dated October 3, 1995, and the fifth
amendment thereto dated October 9, 1995; and
WHEREAS, the Borrower and the Bank have agreed to amend and restate the
Amended and Restated Credit Agreement in its entirety and have done so pursuant
to the terms of that certain Second Amended and Restated Credit Agreement dated
as of even date herewith (the Second Amended and Restated Credit Agreement,
together with all exhibits and schedules thereto and all extensions,
modifications, renewals, amendments, substitutions and replacements thereof, is
hereinafter referred to as the "Second Amended and Restated Credit Agreement"),
as well as the Notes and other Loan Documents provided in connection with the
Second Amended and Restated Credit Agreement (the Obligations and Indebtedness
evidenced by the Notes and other Loan Documents, including the Second Amended
and Restated Credit Agreement, are hereinafter referred to as the "Senior
Obligations"); and
EXHIBIT I
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WHEREAS, pursuant to the terms of the Second Amended and Restated Credit
Agreement, the Bank has expanded the credit facilities made available to the
Borrower under the Amended and Restated Credit Agreement by making available to
the Borrower, in addition to the $6,500,000.00 Revolving Credit Commitment, a
Term Loan Commitment in the amount of $415,000,000.00; and
WHEREAS, to secure the extension of the credit facility, as set forth in
the Second Amended and Restated Credit Agreement, the Bank has requested that
the Borrower execute and deliver or cause to be executed and delivered to the
Bank amendments to or restatements of the Security Documents previously executed
in connection with the Credit Agreement and the Amended and Restated Credit
Agreement and the Borrower has agreed to do so, including, but not limited to,
this Subordination Agreement.
NOW THEREFORE, in consideration of the premises (each of which are hereby
incorporated by reference and made a material part hereof), the mutual covenants
and agreements contained herein and other valuable consideration, the receipt
and adequacy of which are hereby acknowledged, and with the intent to be legally
bound hereby, the parties hereto agree as follows:
1. Subordination. Except as set forth in Section 2 hereof, until all the
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Senior Obligations have been fully paid, (a) the Creditor shall not demand or
receive from the Debtor any part of the loans, advances, debts, liabilities and
obligations of any kind or nature now owing by the Debtor to the Creditor or
that may hereafter be due and payable to the Creditor by the Debtor as evidenced
by that certain Note of the Debtor in the original principal amount of
$20,000,000 or any replacement thereof or substitute therefor (the "Subordinated
Note") and (b) the Debtor shall not make payment on the Subordinated Note. The
Debtor shall not grant or give a security interest in any of the Debtor's
property to the Creditor to secure its obligations under the Subordinated Note.
The Creditor waives all notice of the acceptance of this Subordination Agreement
by the Bank, or of the creation, renewal, extension, or accrual of the Senior
Obligations, or of the reliance of the Bank upon this Subordination Agreement.
2. Payments on Subordinated Note.
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a. Interest. The Debtor may make scheduled payments of interest, when
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due, on the Subordinated Note in accordance with the terms of the Subordinated
Note and the Creditor may receive such interest payments so long as no Event of
Default as that term is defined in the Second Amended and Restated Credit
Agreement (a "Senior Event of Default") or condition, event, omission or act,
which with the giving of notice, the passage of time or both, would constitute
an Event of Default (a "Potential Default") exists at the time of such payment
or would result from such payment.
b. Principal. The Debtor may not make any payment of principal on the
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Subordinated Note without the express prior written consent to the Bank, unless
the
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Senior Obligations are indefeasibly paid in full and the Revolving Credit
Commitment and Term Loan Commitment are terminated.
Notwithstanding the foregoing, if the Debtor shall make any payment to the
Creditor prohibited by the foregoing provisions of this Section 2, then in such
event such payment shall be received and held in trust for the Bank and shall be
paid over and delivered forthwith to the Bank, to the extent necessary to pay
all such Senior Obligations in full.
3. Standby Limitation. Notwithstanding any breach or default by the
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Debtor under the Subordinated Note, the Creditor shall not at any time or in any
manner accelerate the Subordinated Note or proceed in any way to enforce any
claims it has or may have against the Debtor without the express prior written
consent of the Bank unless or until the Senior Obligations are indefeasibly paid
in full and the Revolving Credit Commitment and Term Loan Commitment are
terminated.
4. Subordinated Note. The Creditor shall cause a conspicuous legend to be
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placed on the Subordinated Note to the following effect:
"This note and the indebtedness evidenced thereby is subordinate and junior
to the Senior Obligations, to the extent and in the manner set forth in
that certain Amended and Restated Subordination and Stand-By Agreement
dated as of January 8, 1998 by Universal Stainless & Alloy Products, Inc.
and the payee of this note in favor of PNC Bank, National Association."
The Creditor shall deliver to the Bank a photocopy of the original executed
Subordinated Note as marked with the above legend at the Closing.
5. Payment Over of Proceeds Upon Dissolution. In the event of (i) any
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insolvency or bankruptcy case or proceeding, or any receivership, liquidation,
reorganization or other similar case or proceeding in connection therewith,
relative to the Debtor or to its assets, (ii) any liquidation, dissolution or
other winding up of the Debtor, whether voluntary or involuntary and whether or
not involving insolvency or bankruptcy or (iii) any assignment for the benefit
of creditors or any other marshalling of assets and liabilities of the Debtor,
then and in any such event:
(x) the holder of Senior Obligations shall be entitled to receive
payment in full of all amounts due or to become due on or in respect of all
Senior Obligations, before the Creditor is entitled to receive any payment
on account of the Subordinated Note; and
(y) any payment or distribution of assets of the Debtor of any kind
or character, whether in cash, property or securities, by set-off or
otherwise, to which the Bank would be entitled, including any such payment
or distribution which may be payable or deliverable by reason of the
payment of any other
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Indebtedness of the Debtor being subordinated to the payment of the Senior
Obligations shall be paid by the liquidating trustee or agent or other
Person making such payment or distribution, whether a trustee in
bankruptcy, a receiver or liquidating trustee or otherwise, directly to the
holder of Senior Obligations to the extent necessary to pay all such Senior
Obligations in full, after giving effect to any concurrent payment or
distribution to the Bank; and
(z) in the event that, notwithstanding the foregoing, the Creditor
shall have received any such payment or distribution of assets of the
Debtor of any kind or character, whether in cash, property or securities,
including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other Indebtedness of the
Debtor being subordinated to the payment of the Senior Obligations before
all Senior Obligations are paid in full, then and in such event such
payment or distribution shall be received and held in trust for the Bank
and shall be paid over or delivered forthwith to the Bank to the extent
necessary to pay all such Senior Obligations in full after giving effect to
any concurrent payment or distribution to the Bank.
The Bank may, in its discretion, file a proof of claim for or collect the
Creditor's claim to the extent of the unpaid Senior Obligations first for the
benefit of the Bank and then for the benefit of the Creditor (but without
creating any duty or liability to the Creditor other than to remit to the
Creditor distributions, if any, actually received in such proceedings after the
Senior Obligations have been satisfied in full) directly from the receiver,
trustee, liquidation or representative of the Debtor's estate in such
proceeding.
Upon any payment or distribution of assets of the Debtor referred to in
this Section 5, the Bank shall be entitled to rely upon any order or decree
entered by any court of competent jurisdiction in which such insolvency,
bankruptcy, receivership, liquidation, reorganization, dissolution, winding up
or similar case or proceeding is pending, or a certificate of the trustee in
bankruptcy, receiver, liquidating trustee, custodian, assignee for the benefit
of creditors, agent or other Person making such payment or distribution,
delivered to the Bank for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of Senior Obligations
and other Indebtedness of the Debtor, the amount thereof or payable thereon and
the amount or amounts paid or distributed thereon.
6. Modifications. Without notice to or further assent by the Creditor,
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the liability of the Debtor or any other party, the Senior Obligations may from
time to time, in whole or in part, be renewed, extended, modified, waived,
accelerated, altered, compromised, or released by the Bank, and collateral or
liens for any such Senior Obligations may be increased, released, substituted,
exchanged, sold, or surrendered by the Bank, and the Bank may exercise or
refrain from exercising any of its other rights under the Senior Obligations all
without affecting the obligations of the Creditor and Debtor under this
Subordination Agreement. The Borrower and the Creditor shall not amend or
otherwise modify the Subordinated Note without the express prior written consent
of the Bank.
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7. Representations and Covenants. The Creditor and the Debtor represent
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and covenant that there is no defense, offset or counterclaim to any amount now
due to the Creditor from the Debtor as evidenced by any of the Subordinated Note
and that, at no time until all the Senior Obligations incurred under and
pursuant to the Second Amended and Restated Credit Agreement have been fully
paid, will there be any defense, offset or counterclaim to any amount owing to
the Creditor from the Debtor as evidenced by any of the Subordinated Note. The
Creditor shall not, without the written consent of the Bank, dispose of any
claims or demands of the Creditor against the Debtor with respect to any of the
Subordinated Obligations. Any such disposition, if made, shall be subject to
the terms of this Subordination Agreement.
8. Books. The Debtor will tender to the Bank upon demand and from time to
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time a statement of the account of the Creditor with the Debtor, and will give
the Bank access from time to time to the books of the Debtor in order that the
Bank may make a full examination of the state of accounts of the Creditor with
the Debtor.
9. Default. In the event of a breach by either the Creditor or the Debtor
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of any of the terms of this Subordination Agreement, all of the Senior
Obligations, at the Bank's option, without notice to or demand upon either the
Creditor or the Debtor, may become immediately due and payable.
10. Waiver. No waiver shall be deemed to have been made by the Bank of
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any of its rights hereunder unless such waiver is in writing, signed by the
Bank, and then only with respect to the specific instance involved, and shall in
no way impair or offset the rights of the Bank, or the obligations of the Debtor
and of the Creditor, in any other respect or at any other time. No executory
agreement shall be effective to modify this Subordination Agreement unless such
executory agreement is in writing and signed by the Bank.
11. Successors. The terms Debtor and Creditor as used in this Agreement
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shall include the entities named herein, and any successor person, association,
partnership, or corporation to which all or substantially all of the business or
assets of the Debtor or Creditor shall be transferred.
12. Benefit. This Subordination Agreement shall be binding upon the
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Debtor and the Creditor, and their respective legal representatives, successors,
and assigns, and shall inure to the benefit of the Bank and its successors and
assigns. The Creditor agrees that it will not make any assertion, claim or
argument in any action, suit or proceeding of any nature whatsoever in any way
challenging the priority, validity or effectiveness of the liens and security
interests granted to the Bank.
13. Notices. Any notice or other thing required or desired to be served,
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given or delivered hereunder shall be in writing and shall be sent to the
following address by hand delivery, telex, telegram, telecopier or other means
of electronic data communication or by United States Mail first class postage
prepaid:
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(a) If to the Bank:
PNC Bank, National Association
One PNC Plaza
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, Vice President
Telecopier: (000) 000-0000
(b) If to the Debtor at:
Universal Stainless & Alloy Products, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopier: (000) 000-0000
(c) If to the Creditor at:
USAP Holdings, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Vice President
Telecopier: (000) 000-0000
or to such other address as any party may hereafter designate for itself by
written notice to the other parties in the manner herein prescribed. Any notice
sent pursuant hereto shall be effective three (3) days after mailing or when
received, whichever is earlier.
14. Further Assurances. The parties hereto agree to execute and deliver
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all such other instruments and take all such other action as any party hereto
may reasonably request from time to time in order to effectuate the provisions
and purposes of this Subordination Agreement.
15. Severability. Whenever possible each provision of this Subordination
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Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Subordination Agreement shall
be prohibited by or be invalid under such law, such provision shall be
ineffective to the extent of such prohibition or invalidly, without invalidating
the remainder of such provision or the remaining provisions of this
Subordination Agreement.
16. Indemnification of Bank. The Creditor agrees to indemnify and to hold
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the Bank and its officers, directors, agents and employees harmless for any and
all losses,
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damages, liabilities, expenses and obligations, including attorneys' fees and
expenses, as they arise, relating to the action of the Creditor taken contrary
to this Subordination Agreement.
17. Governing Law. This Subordination Agreement shall be a contract made
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under and governed by the laws of the Commonwealth of Pennsylvania, excluding
its conflict of law rules. Each of the Debtor and the Creditor hereby
irrevocably consents to the exclusive jurisdiction of any state or federal court
for the county or judicial district where the Bank's office indicated above is
located, and consents that all service of process be sent by nationally
recognized overnight courier service directed to it at its address set forth
herein and service so made will be deemed to be completed on the Business Day
after deposit with such courier; provided that nothing contained in this
Subordination Agreement will prevent the Bank from bringing any action,
enforcing any award or judgment or exercising any rights against the Debtor or
the Creditor individually, against any security or against any property of the
Debtor within any other county, state or other foreign or domestic jurisdiction.
The parties hereto agree that the venue provided above is the most convenient
forum for each of the parties. Each of the Debtor and the Creditor waives any
objection to venue and any objection based on a more convenient forum in any
action instituted under this Agreement.
18. Definitions. All terms used herein which are not defined herein but
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which are defined in the Second Amended and Restated Credit Agreement shall have
the same meanings herein as are ascribed to them in the Second Amended and
Restated Credit Agreement.
19. Section Headings. The section headings herein are for convenience
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only and shall not affect the interpretation of any of the provisions hereof.
20. Counterparts. This Subordination Agreement may be executed in several
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counterparts and by each party on a separate counterpart, each of which, when so
executed and delivered, shall be regarded as an original, and all such
counterparts shall constitute but one and the same instrument.
21. Waiver of Jury Trial. EACH OF THE DEBTOR, THE CREDITOR AND THE BANK
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IRREVOCABLY WAIVES ANY AND ALL RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS SUBORDINATION
AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS SUBORDINATION
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. THE DEBTOR, THE CREDITOR AND
THE BANK ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have caused this Subordination Agreement to be executed by their
respective duly authorized officers as of the date first written above.
PNC BANK, NATIONAL ASSOCIATION
/s/ Xxxx X. Xxxxxxxxxx
By ____________________________________
Xxxx X. Xxxxxxxxxx
Name:__________________________________
Vice President
Title:_________________________________
UNIVERSAL STAINLESS & ALLOY PRODUCTS, INC.
/s/ Xxxxxxx X. Xxxxxxx
By ____________________________________
Xxxxxxx X. Xxxxxxx
Name:__________________________________
CFO/Treasurer
Title:_________________________________
USAP HOLDINGS, INC.
/s/ X. X. XxXxxxxx
By ____________________________________
X. X. XxXxxxxx
Name:__________________________________
President & CEO
Title:_________________________________
BF 78066.4 01/28/98
000011 - 012932
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