Universal Stainless & Alloy Products Inc

Item 1A. RISK FACTORS

In addition to the other information set forth in this Quarterly Report on Form 10-Q, the factors discussed in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023 could materially affect our business, financial conditions or future results. Those risk factors are not the only risks facing us. Additional risks and uncertainties not currently known or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or operating results. We Except as set forth below, we believe that there have been no material changes in our risk factors from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Risks Related to the Pending Merger

The pendency of the transactions contemplated by the Merger Agreement could adversely affect our business, results of operations and financial condition.

The pendency of the transactions contemplated by the Merger Agreement, including the merger of the Company and a wholly owned indirect subsidiary of Aperam with the Company surviving as a wholly owned indirect subsidiary of Aperam (the Merger), could cause disruptions in and create uncertainty surrounding our business, including affecting our relationships with our existing and future customers, suppliers and employees, which could have an adverse effect on our business, results of operations and financial condition, regardless of whether the proposed Merger is completed. In particular, we could potentially lose additional important personnel as a result of the departure of employees who decide to pursue other opportunities in light of the Merger. We could also potentially lose additional customers or suppliers, and business relationships with new customers or supplier contracts could be delayed or decreased. In addition, we have allocated, and will continue to allocate, significant management resources towards the completion of the Merger, which could adversely affect our business and results of operations.

We are subject to restrictions on the conduct of our business prior to the consummation of the Merger as provided in the Merger Agreement, including, among other things, certain restrictions on our ability to acquire other businesses, sell or transfer our assets and amend our organizational documents. These restrictions could result in our inability to respond effectively to competitive pressures, industry developments and future opportunities, retain key employees and may otherwise harm our business, results of operations and financial condition.

Because of the risks associated with the Merger, we can provide no assurance that the Merger will close on the terms and conditions we currently anticipate.

Regulatory approvals may not be received, may take longer than expected, or may impose conditions that are not presently anticipated or that could have an adverse effect on the combined company following the Merger.

Before the Merger may be completed, various consents, approvals, waiver or non-objections must be obtained from certain governmental authorities. Satisfying the requirements of these governmental authorities may delay the date of completion of the Merger, or one or more of these approvals may not be obtained at all. In addition, these governmental authorities may include conditions or restrictions on the completion of the Merger, or require changes to the terms of the Merger.

The Merger Agreement and the transactions contemplated by the Merger Agreement are subject to approval by stockholders of the Company.

The Merger cannot be completed unless, among other conditions, the Merger Agreement is adopted by the Companys stockholders by the affirmative vote of a majority of the outstanding shares of the Companys common stock entitled to vote thereon (the Requisite Company Vote). If the Companys stockholders do not adopt the Merger Agreement by the Requisite Company Vote, the Merger cannot be completed.

Failure to complete the Merger could negatively impact the stock price of the Company and future businesses and financial results of the Company.

The Merger Agreement is subject to a number of customary closing conditions, including the receipt of regulatory approvals and the Requisite Company Vote. Conditions to the closing of the Merger may not be fulfilled in a timely manner or at all and, accordingly, the Merger may be delayed or may not be completed. In addition, we and/or Aperam may elect to terminate the Merger Agreement under certain conditions. If the Merger is not completed, the ongoing businesses, financial condition and results of operation of the Company may be adversely affected and market prices of the Companys common stock may decline significantly, particularly to the extent that the current market prices reflect a market assumption that the Merger will be consummated. If the consummation of the Merger is delayed, including by the receipt of a competing acquisition proposal, the Companys business, financial condition and results of operations may be materially adversely affected.

In addition, the Company has incurred and will incur substantial expenses in connection with the negotiation and completion of the transactions contemplated by the Merger Agreement, as well as the costs and expenses of filing, printing and mailing a proxy statement and all filing and other fees paid to the SEC and other regulatory agencies in connection with the Merger. If the Merger is not completed, the Company would have to recognize these expenses without realizing the expected benefits of the Merger. Any of the foregoing, or other risks arising in connection with the failure of or delay in consummating the Merger, including the diversion of managements attention from pursuing other opportunities and the constraints in the Merger Agreement on the ability to make significant changes to the Companys ongoing business during the pendency of the Merger, could have a material adverse effect on the Companys businesses, financial conditions and results of operations.

Additionally, the Companys business may be adversely impacted by the failure to pursue other beneficial opportunities due to the focus of management on the Merger, without realizing any of the anticipated benefits of completing the Merger. If the Merger Agreement is terminated and the Companys board of directors seeks another merger or business combination, the Companys stockholders cannot be certain that the Company will be able to find a party willing to engage in a transaction on more attractive terms than the proposed Merger.

The Merger Agreement limits the Companys ability to pursue alternatives to the Merger and may discourage other companies from trying to acquire the Company.

The Merger Agreement contains no shop covenants that restrict the Companys ability to, directly or indirectly, among other things, initiate, solicit, knowingly encourage or knowingly facilitate, inquiries or proposals with respect to, or, subject to certain exceptions generally related to the exercise of fiduciary duties by the Companys board of directors, engage in any negotiations concerning, or provide any confidential or non-public information or data relating to, any acquisition proposal. These provisions, which include a $14.8 million termination fee payable by the Company under certain circumstances, may discourage a potential third-party acquirer that might have an interest in acquiring all or a significant part of the Company from considering or proposing that acquisition.

Holders of Company common stock will not have any ownership or voting interest in the combined company after the consummation of the Merger and have no influence over management and the policies of the combined company.

Stockholders of the Company currently have the right to vote in the election of the board of directors and on other matters affecting the Company. Assuming the Merger is completed, the Company will become a wholly owned indirect subsidiary of Aperam, and each share of the Companys common stock issued and outstanding immediately prior to the effectiveness of the Merger will be cancelled and converted into the right to receive the applicable merger consideration, subject to applicable tax withholdings, whereupon such shares will cease to exist and no longer be outstanding. Upon the effectiveness of the Merger, each holder of the Companys common stock immediately prior to the effectiveness of the Merger will cease to have any rights with respect to such shares. Following the effectiveness of the Merger, the Companys common stock will be delisted from the Nasdaq Global Select Market deregistered under the Securities and Exchange Act of 1934. Accordingly, holders of the Companys common stock prior to the effectiveness of the Merger will have no ownership or voting interest in the combined company or any influence on the management and policies of the combined company.

Stockholder litigation could prevent or delay the completion of the Merger or otherwise negatively impact the business and operations of the Company.

Stockholders of Aperam or the Company may file lawsuits against Aperam, the Company and/or the directors and officers of either company in connection with the Merger. One of the conditions to the closing is that no governmental entity of competent jurisdiction shall have issued any order (whether temporary, preliminary or permanent) that has become final and non-appealable and that restrains, enjoins or otherwise prohibits the consummation of the Merger. If any plaintiff were successful in obtaining an injunction prohibiting Aperam or the Company from completing the Merger or any of the other transactions contemplated by the Merger Agreement, then such injunction may delay or prevent the effectiveness of the Merger and could result in significant costs to the Company, including any cost associated with the indemnification of directors and officers the Company. The Company may incur costs in connection with the defense or settlement of any stockholder lawsuits filed in connection with the Merger. Such litigation could have an adverse effect on the financial condition and results of operations of the Company and could prevent or delay the completion of the Merger.