Exhibit 10.1
 
CREDIT AGREEMENT

THIS CREDIT AGREEMENT (this "Agreement") is dated as of June 24, 2013, by and
between THE INTERNATIONAL METALS RECLAMATION COMPANY, INC., a Delaware
corporation  (the "Borrower"), and WELLS FARGO BANK, N. A., a national banking
association (the "Bank").

RECITALS

Borrower has requested that Bank extend credit to Borrower as described below,
and Bank has agreed to provide such credit to Borrower on the terms and
conditions contained herein.

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Bank and Borrower hereby agree as follows:

ARTICLE I
CREDIT TERMS

SECTION 1.1  LINE OF CREDIT.

(a)             Line of Credit.  Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time up
to and including June 23, 2016, not to exceed at any time the aggregate
principal amount of Fifteen Million and 00/100 Dollars ($15,000,000.00) (the
"Line of Credit"), the proceeds of which shall be used to support working
capital requirements and general corporate purposes of Borrower.  Borrower's
obligation to repay advances under the Line of Credit shall be evidenced by a
promissory note dated as of even date hereof (the "Line of Credit Note," all
terms of which are incorporated herein by this reference.

(b)             Borrowing and Repayment.  Borrower may from time to time during
the term of the Line of Credit borrow, partially or wholly repay outstanding
borrowings, and reborrow, subject to all of the limitations, terms and
conditions contained herein or in the Line of Credit Note; provided, however,
that the total outstanding borrowings under the Line of Credit shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above.

(c)             Closing Date.  The closing date shall mean shall mean June 24,
2013 or such other date as may be agreed to by the parties (the “Closing Date”).
 
 
SECTION 1.2  INTEREST/FEES.

(a)             Interest.  The outstanding principal balance of the Line of
Credit shall bear interest at the rate of interest set forth in the Line of
Credit Note.

(b)             Computation and Payment.  Interest shall be computed on the
basis of a 360-day year, actual days elapsed.  Interest shall be payable at the
times and place set forth in the Line of Credit Note or each promissory note or
other instrument or document required hereby.

(c)             Upfront Facility Fee.  Borrower shall pay to Bank a
non-refundable upfront facility fee equal to one-half percent (.50%) of the
maximum principal amount of the Line of Credit Note, which fee shall be due and
payable in full on the Closing Date.
 
 
 

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(d)             Unused Commitment Fee.  Borrower shall pay to Bank a fee equal
to three-eight percent (.375%) per annum (computed on the basis of a 360-day
year, actual days elapsed) on the average daily unused amount of the Line of
Credit, which fee shall be calculated on a monthly basis by Bank and shall be
due and payable by Borrower in arrears within thirty (30) days after each
billing is sent by Bank.
 
SECTION 1.3    COLLECTION OF PAYMENTS.

Borrower authorizes Bank to collect all principal, interest and fees due under
each credit subject hereto by charging Borrower's primary deposit account with
Bank, as designated by the Borrower, or any other deposit account maintained by
Borrower with Bank, for the full amount thereof.  Should there be insufficient
funds in any such deposit account to pay all such sums when due, the full amount
of such deficiency shall be immediately due and payable by Borrower.

SECTION 1.4    COLLATERAL.

As security for all indebtedness and other obligations of Borrower to Bank
subject hereto, Borrower hereby grants to Bank security interests of first
priority (subject to the liens permitted hereunder) in all of the Borrower's
personal property, including but not limited to accounts receivable, inventory,
deposit accounts, equipment and general intangibles.
 
All of the foregoing shall be evidenced by and subject to the terms of such
security agreements, pledge agreements, financing statements, deeds of trust or
mortgages, and other documents as Bank shall reasonably require, all in form and
substance satisfactory to Bank.  Borrower shall pay to Bank immediately upon
demand the full amount of all charges, costs and expenses (to include fees paid
to third parties and all allocated costs of Bank personnel), expended or
incurred by Bank in connection with any of the foregoing security, including
without limitation, filing and recording fees and costs of appraisals, audits
and title insurance.

SECTION 1.5         GUARANTIES.  The payment and performance of all indebtedness
and other obligations of Borrower to Bank shall be guaranteed by HORSEHEAD
HOLDING CORP. (the "Guarantor"), as evidenced by and subject to the terms of a
guaranty agreement in form and substance satisfactory to Bank (Guarantor, and
together with Borrower, each a "Loan Party" and collectively, the "Loan
Parties").
 
   SECTION 1.6         GUARANTOR COLLATERAL.  As security for all current and
future indebtedness of Borrower to Bank, and all current and future indebtedness
of the Guarantor to the Bank under the applicable guaranty or pledge agreement,
the Guarantor hereby grants to Bank a security interest of first priority
(subject only to liens expressly permitted hereunder) in the 500 shares of
common stock of the Borrower, evidenced by certificate number 1, owned or held
by the Guarantor (the “Borrower Stock”).

All of the foregoing shall be evidenced by and subject to the terms of such
security agreements, financing statements, deeds of trust or mortgages, and
other documents as Bank shall reasonably require, all in form and substance
satisfactory to Bank.  Borrower shall pay to Bank immediately upon demand the
full amount of all charges, costs and expenses (to include fees paid to third
parties and all allocated costs of Bank personnel), expended or incurred by Bank
in connection with any of the foregoing security, including without limitation,
filing and recording fees and costs of appraisals, audits and title insurance.
 
 
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SECTION 1.7    SUBORDINATION OF DEBT.  Each of the Borrower and Guarantor
acknowledge and agree that all indebtedness and other obligations of Borrower to
the Guarantor shall be subordinated in right of repayment to all indebtedness
and other obligations of Borrower to Bank.

ARTICLE II
REPRESENTATIONS AND WARRANTIES

Each of the Borrower and the Guarantor makes the following representations and
warranties to Bank, which representations and warranties shall survive the
execution of this Agreement, and which representations and warranties shall be
true and correct on the date of this Agreement, the date of each extension of
credit under this Agreement and the date of each compliance certificate provided
in connection with the delivery of annual and quarterly financial statements
under this Agreement:

SECTION 2.1.    LEGAL STATUS.  Borrower is a corporation, duly organized and
existing and in good standing under the laws of the state of Delaware, and is
qualified or licensed to do business (and is in good standing as a foreign
corporation, if applicable) in all jurisdictions in which such qualification or
licensing is required or in which the failure to so qualify or to be so licensed
could have a material adverse effect on Borrower.  Guarantor is a corporation,
duly organized and existing and in good standing under the laws of the state of
Delaware, and is qualified or licensed to do business (and is in good standing
as a foreign limited liability company, if applicable) in all jurisdictions in
which such qualification or licensing is required or in which the failure to so
qualify or to be so licensed could have a material adverse effect on Guarantor.

SECTION 2.2.    AUTHORIZATION AND VALIDITY.  This Agreement and each promissory
note, contract, agreement, instrument and other document required hereby or at
any time hereafter delivered to Bank in connection herewith (collectively, the
"Loan Documents") have been duly authorized, and upon their execution and
delivery in accordance with the provisions hereof will constitute legal, valid
and binding agreements and obligations of Borrower, Guarantor or the party which
executes the same, as applicable, enforceable in accordance with their
respective terms.

SECTION 2.3.    NO VIOLATION.  The execution, delivery and performance by each
Loan Party of each of the Loan Documents to which it is a party do not violate
any provision of any law or regulation, or contravene any provision of its
charter or organizational documents or result in any breach of or default under
any contract, obligation, indenture or other instrument to which such Loan Party
is a party or by which such Loan Party may be bound.

SECTION 2.4.    LITIGATION.  There are no pending, or to the best of Borrower's
knowledge threatened, actions, claims, investigations, suits or proceedings by
or before any governmental authority, arbitrator, court or administrative agency
which could reasonably be expected to have a material adverse effect on the
financial condition or operation of any Loan Party other than those disclosed by
Borrower to Bank in writing prior to the date hereof.

SECTION 2.5.    CORRECTNESS OF FINANCIAL STATEMENTS.  The annual financial
statements of Borrower dated December 31, 2012, and all interim financial
statements delivered to Bank since said date, true copies of which have been
delivered by Borrower to Bank prior to the date hereof, (a) are complete and
correct and present fairly the financial condition of Borrower, (b) disclose all
liabilities of Borrower that are required to be reflected or reserved against
under generally accepted accounting principles in the United States of America
in effect from time to time applied on a basis consistent with prior practices
(“GAAP”), whether liquidated or unliquidated, fixed or contingent, and (c) have
been prepared in accordance with GAAP.  Since the dates of such financial
statements there has been no material adverse change in the financial condition
of Borrower, nor has Borrower mortgaged, pledged, granted a security interest in
or otherwise encumbered any of its assets or properties except in favor of Bank
or as otherwise permitted by Bank in writing.

 
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SECTION 2.6.    INCOME TAX RETURNS.  Borrower has no knowledge of any pending
assessments or adjustments of any Loan Party’s income tax payable with respect
to any year.

SECTION 2.7.    NO SUBORDINATION.  There is no agreement, indenture, contract or
instrument to which Borrower is a party or by which Borrower may be bound that
requires the subordination in right of payment of any of Borrower's obligations
subject to this Agreement to any other obligation of Borrower.

SECTION 2.8.    PERMITS, FRANCHISES.  Each Loan Party possesses all permits,
consents, approvals, franchises and licenses required and rights to all
trademarks, trade names, patents, and fictitious names, if any, necessary to
enable it to conduct the business in which it is now engaged in compliance with
applicable law, and each Loan Party will continue to possess the same so long as
such Loan Party continues to conduct such business.

SECTION 2.9.    ERISA.  Borrower is in compliance in all material respects with
all applicable provisions of the Employee Retirement Income Security Act of
1974, as amended or recodified from time to time ("ERISA"); Borrower has not
violated any provision of any defined employee pension benefit plan (as defined
in ERISA) maintained or contributed to by Borrower (each, a "Plan") except where
the Borrower’s failure to be in compliance would not have a material adverse
effect on the Borrower’s business, operations, or financial condition; no
Reportable Event as defined in ERISA has occurred and is continuing with respect
to any Plan initiated by Borrower; Borrower has met its minimum funding
requirements under ERISA with respect to each Plan; and each Plan will be able
to fulfill its benefit obligations as they come due in accordance with the Plan
documents and under GAAP.

SECTION 2.10.          OTHER OBLIGATIONS.  No Loan Party is in default on any
obligation for borrowed money, any purchase money obligation or any other
material lease, commitment, contract, instrument or obligation.

SECTION 2.11.          ENVIRONMENTAL MATTERS.  Except as disclosed by Borrower
to Bank in writing prior to the date hereof, Borrower is in compliance, and
will, after the date hereof, be, in all material respects with all applicable
federal or state environmental, hazardous waste, health and safety statutes, and
any rules or regulations adopted pursuant thereto, which govern or affect any of
Borrower's operations and/or properties, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendments and Reauthorization Act of 1986, the Federal Resource
Conservation and Recovery Act of 1976, and the Federal Toxic Substances Control
Act, as any of the same may be amended, modified or supplemented from time to
time, except where the Borrower’s failure to be in compliance would not have a
material adverse effect on the Borrower’s business, operations, or financial
condition.  The Borrower has not has received any notice of any actual or
threatened federal or state investigation evaluating whether any remedial action
involving a material expenditure is needed to respond to a release of any toxic
or hazardous waste or substance into the environment, nor does the Borrower have
reason to believe that any such notice will be received or is being
threatened.   Borrower has no material contingent liability in connection with
any release of any toxic or hazardous waste or substance into the environment.

 
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SECTION 2.12.          SECURITY INTEREST.  All filings and other actions
necessary or desirable to perfect and protect the security interest in the
collateral created under the Loan Documents have been duly made or taken and are
in full force and effect, and the applicable Loan Documents create in favor of
the Bank a valid and, upon such filings and the execution and delivery of the
INMETCO Intercreditor Agreement by US Bank, a perfected first priority (subject
to the liens permitted hereunder) security interest in the collateral, securing
the payment of the indebtedness under this Agreement and the other Loan
Documents, and all filings and other actions necessary or desirable to perfect
and protect such security interest have been duly taken.  The Borrower is the
legal and beneficial owner of such collateral free and clear of any liens,
except for the liens and security interests created or permitted under the Loan
Documents.

SECTION 2.13.  COLLATERAL MATTERS.  Other than (a) the operating and depository
accounts of the Borrower maintained with the Bank, (b) local bank accounts for
petty cash and similar convenience purposes which do not in the aggregate
maintain average daily balances in excess of Twenty Five Thousand and 00/100
Dollars ($25,000.00), and the Borrower’s existing operating and deposit accounts
with JPMorgan Chase & Co. (the “JP Morgan Collection Accounts”), which JP Morgan
Collection Accounts, which shall be subsequently closed as set forth below, the
Borrower does not maintain any other deposit or investment account with any
other financial institution.  Other than as disclosed to the Bank prior to the
date hereof, the Borrower does not have any other investments or leases of real
property or own any other real property or material intellectual property.
 
SECTION 2.14.  BORROWER STOCK.  The Borrower Stock represents and warrants that
the Borrower Stock pledged by the Guarantor as collateral represents one hundred
percent (100%) of the issued and outstanding shares of capital stock of the
Borrower and the Guarantor is the sole owner of the Borrower Stock.
 

ARTICLE III
CONDITIONS

SECTION 3.1.    CONDITIONS OF INITIAL EXTENSION OF CREDIT.  The obligation of
Bank to extend any credit contemplated by this Agreement is subject to the
fulfillment to Bank's satisfaction of all of the following conditions:

(a)             Approval of Bank Counsel.  All legal matters incidental to the
extension of credit by Bank shall be satisfactory to Bank's counsel.

(b)             Documentation.  Bank shall have received, in form and substance
satisfactory to Bank, each of the following, duly executed where applicable:

(i)   This Agreement, the Line of Credit Note and each other Loan Document or
instrument or document required hereby, including but not limited to the INMETCO
Intercreditor Agreement between U.S. Bank, National Association (“US Bank”),
collateral agent, under the Indenture, dated July 26, 2012, with respect to the
Guarantor’s senior secured notes issued thereunder (the “INMETCO Intercreditor
Agreement”).
 
 
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(ii)   Each document (including any Uniform Commercial Code financing
statements) required by this Agreement, any related agreement or under law or
reasonably requested by Bank to be filed, registered or recorded in order to
create, in favor of Bank, a perfected security interest in or lien upon the
collateral shall have been properly filed, registered or recorded in each
jurisdiction in which the filing, registration or recordation thereof is so
required or requested, and Bank shall have received an acknowledgment copy, or
other evidence satisfactory to it, of each such filing, registration or
recordation and satisfactory evidence of the payment of any necessary fee, tax
or expense relating thereto; and
 
(iii)   A copy of (a) Certificate of Incorporation of Borrower, and all
amendments thereto, together with copies of Borrower's Bylaws, all certified as
accurate and complete by the Secretary or other authorized officer of Borrower,
and (b) the Certificate of Incorporation, and all amendments thereto, together
with copies of Guarantor's Bylaws, all certified as accurate and complete by the
Secretary or other authorized officer of Guarantor.
 
(iv)   A certificate of the Secretary of the Borrower or other authorized
officer of the Borrower as to (i) resolutions of the directors of the Borrower
approving and authorizing (a) the Borrower to enter into any and all Loan
Documents to which it is a party, (b) the granting by Borrower of liens upon the
collateral required hereunder; (ii) incumbency, (iii) good standing certificate
for Borrower issued by the Secretary of State of the state of Delaware, and (iv)
a subsistence certificate for the Borrower issued by the Secretary of State of
the Commonwealth of Pennsylvania.
 
(v)   A certificate of the Secretary of the Guarantor or other authorized
officer of the Guarantor as to (i) resolutions of the directors of the Guarantor
approving and authorizing (a) the Guarantor to enter into any and all Loan
Documents to which it is a party, (b) the granting by Guarantor of liens upon
the collateral required hereunder; (ii) incumbency, (iii) good standing
certificate for Guarantor issued by the Secretary of State of the state of
Delaware.
 
(vi)   Tax lien certificate for Guarantor issued by the Department of Revenue of
the Commonwealth of Pennsylvania.
 
(vii)   The certificate or certificates evidencing the Borrower Stock, together
with the appropriate stock or transfer power, in form and substance satisfactory
to the Bank, signed by the Guarantor.
 
 
(viii)   An officer's certificate of the Borrower certifying that each of the
conditions of this Section 3.1 have been satisfied as of the date of such
initial borrowing and that the Borrower is in compliance with the matters
described under Sections 3.1(j) and 3.1(k); and

(ix)   Such other documents as Bank may require under any other Section of this
Agreement.
 
(c)             Financial Condition; No Material Adverse Change.  There shall
have been no material adverse change, as determined by Bank, in the financial
condition or business of Borrower or any guarantor hereunder, nor any material
decline, as determined by Bank, in the market value of any collateral required
hereunder or a substantial or material portion of the assets of Borrower or any
such guarantor.

 
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(d)             Insurance.  Borrower shall have delivered to Bank evidence of
insurance coverage on all Borrower's property, in form, substance, amounts,
covering risks and issued by companies satisfactory to Bank, and where required
by Bank, with loss payable endorsements in favor of Bank, including without
limitation, policies of fire and extended coverage insurance covering all real
property collateral required hereby, with replacement cost and mortgagee loss
payable endorsements, and such policies of insurance against specific hazards
affecting any such real property as may be required by governmental regulation
or Bank.

(e)             Lien Searches.  The Bank shall have received the results of a
recent lien search in each relevant jurisdiction with respect to the Borrower
and such search shall reveal no liens of record with respect to any of the
collateral required hereunder other than liens to be terminated on or before the
date of this Agreement, or liens otherwise permitted hereunder.

(f)             Legal Opinion.  Bank shall have received a written opinion of
Buchanan Ingersoll & Rooney PC, counsel for the Borrower and Guarantor, dated
the Closing Date, in form and substance satisfactory to the Bank.

(g)             Financial Statements.  Bank shall have received and reviewed to
its satisfaction consolidated and consolidating financial statements of
Guarantor and its subsidiaries for the fiscal years ended December 31, 2010,
2011 and 2012.

(h)             Business Plans.  Bank shall have received and reviewed to its
satisfaction Guarantor’s and Borrower’s three (3) year business plans.

(i)             Due Diligence and Final Credit Approval.  Bank shall have
completed to its satisfaction all of its due diligence and clearance activities,
and the extension of credit to the Borrower as described herein shall have
received final Bank-internal credit approval.

(j)             Representations and Warranties. The representations and
warranties of the Loan Parties contained in this Agreement and in each of the
other Loan Documents shall be true and correct in all material respects (except
for those representations and warranties that are by their terms qualified by a
standard of materiality, which representations shall be true and correct in all
respects) as of the date of this Agreement and the date of the initial extension
of credit, except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties
were true and correct on and as of such date.

(k)             No Event of Default. No event or condition shall have occurred
and be continuing which constitutes an Event of Default or potential Event of
Default and no Event of Default or potential Event of Default shall occur as a
result of the Company's execution of this Agreement or any other Loan Document
and consummation of the transactions contemplated thereby.

SECTION 3.2.    CONDITIONS OF EACH EXTENSION OF CREDIT.  The obligation of Bank
to make each extension of credit requested by Borrower hereunder shall be
subject to the fulfillment to Bank's satisfaction of each of the following
conditions:

 
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(a)             Compliance.  The representations and warranties contained herein
and in each of the other Loan Documents shall be true on and as of the date of
the signing of this Agreement and on the date of each extension of credit by
Bank pursuant hereto, with the same effect as though such representations and
warranties had been made on and as of each such date, and on each such date, no
Event of Default as defined herein, and no condition, event or act which with
the giving of notice or the passage of time or both would constitute such an
Event of Default, shall have occurred and be continuing or shall exist.  The
submission by the Borrower of the request for such extension of credit shall
constitute certification of compliance with the conditions set forth in this
Section 3.2.

(b)             Documentation.  Bank shall have received all additional
documents which may be required by the Bank in connection with such extension of
credit.

ARTICLE IV
AFFIRMATIVE COVENANTS

Borrower covenants that so long as Bank remains committed to extend credit to
Borrower pursuant hereto, or any liabilities (whether direct or contingent,
liquidated or unliquidated) of Borrower to Bank under any of the Loan Documents
remain outstanding, and until payment in full of all obligations of Borrower
subject hereto, unless Bank otherwise consents in writing:

SECTION 4.1.    PUNCTUAL PAYMENTS.  Borrower shall punctually pay all principal,
interest, fees or other liabilities due under any of the Loan Documents at the
times and place and in the manner specified therein.

SECTION 4.2.    ACCOUNTING RECORDS.  Each Loan Party shall maintain adequate
books and records in accordance with generally accepted accounting principles
consistently applied, and permit any representative of Bank, at any reasonable
time, to inspect, audit and examine such books and records, to make copies of
the same, and to inspect the properties of such Loan Party.

SECTION 4.3.    FINANCIAL AND OTHER INFORMATION.  Borrower and Guarantor, as
applicable, shall provide or cause to be provided to Bank all of the following,
in form and detail satisfactory to Bank:

(a)             no later than one hundred twenty (120) days after the end of
each fiscal year of Guarantor, (i) audited financial statements of Guarantor and
its subsidiaries on a consolidated basis, including statements of income and
stockholders’ equity and cash flow from the beginning of such fiscal year
through the end of such fiscal year and the balance statement as of the end of
such fiscal year, all prepared in accordance with GAAP, and in reasonable detail
and reported upon without qualification by Grant Thornton LLP, or such other
independent certified public accounting firm selected by the Loan Parties and
satisfactory to the Bank, together with any management letters of such
accountants and related consolidating schedules (including the Borrower) that
accompany or support such audited consolidated financial statements.

            (b)             no later than forty-five (45) days after the end of
each fiscal quarter, except for the fourth (4th) fiscal quarter, an unaudited
balance sheet of the Guarantor and its subsidiaries on a consolidated and
consolidating basis (including the Borrower), including unaudited statements of
income and stockholders’ equity and cash flow on a consolidated and
consolidating basis, reflecting results of operations from the beginning of the
current fiscal year through the end of such quarter and for such quarter,
prepared on a basis consistent with prior practices and complete and correct in
all material respects, subject to normal and recurring year-end adjustments that
individually and in the aggregate are not material to the Borrower’s or
Guarantor’s business, as applicable, and accompanied by comparative financial
statements for the same fiscal year-to-date period in the prior fiscal year.

 
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(c)             contemporaneously with each annual and quarterly financial
statement required hereby, a certificate of compliance signed by the Chief
Executive Officer and President, Chief Executive Officer, President, or Chief
Financial Officer of Guarantor, which shall state that, based upon an
examination sufficient to permit such officer to make an informed statement, (i)
such financial statements are complete and accurate, (ii) the representations
and warranties contained in this Agreement and in each of the other Loan
Documents  are true on and as of the date of the signing of such compliance
certificate, with the same effect as though such representations and warranties
had been made on and as of each such date, except to the extent such
representations and warranties specifically relate to an earlier date, in which
case such representations and warranties were true and correct on and as of such
date, and (iii) no Event of Default, and no condition, event or act which with
the giving of notice or the passage of time or both would constitute an Event of
Default, has occurred or shall exist, including but not limited to compliance
with the Borrower’s financial covenants, and that reflects any information and
calculations necessary to determine and demonstrate compliance with this
Agreement.

(d)             no later than January 31st of each fiscal year, a
quarter-by-quarter projected operating and cash flow budget of the Guarantor and
its subsidiaries on a consolidated and consolidating basis for such fiscal year
(including an income statement for each month and a balance sheet as of the end
of the last month in each fiscal quarter, such projections to be accompanied by
a certificate signed by the President and Chief Executive Officer, Chief
Executive Officer, President, or the Chief Financial Officer of the Borrower to
the effect that such projections have been prepared on the basis of sound
financial planning practices consistent with past budgets and financial
statements.

(e)             from time to time such other information as Bank may reasonably
request, including but not limited to complete and accurate copies of
Guarantors’ filed consolidated Federal income tax returns (including the
Borrower) and any requested supporting schedules thereto.

SECTION 4.4.    COMPLIANCE.  Preserve and maintain all licenses, permits,
governmental approvals, rights, privileges and franchises necessary for the
conduct of its business; and comply with the provisions of all documents
pursuant to which Borrower is organized and/or which govern Borrower's continued
existence and with the requirements of all laws, rules, regulations and orders
of any governmental authority applicable to Borrower and/or its business.

SECTION 4.5.    INSURANCE.  Maintain and keep in force, for each business in
which Borrower is engaged, insurance of the types and in amounts customarily
carried in similar lines of business, including but not limited to fire,
extended coverage, general liability, public liability, flood, property damage
and workers' compensation, with all such insurance in form and substance, and
carried with companies and in amounts, reasonably satisfactory to Bank, and
deliver to Bank from time to time at Bank's request schedules setting forth all
insurance then in effect and certificates and copies of such insurance policies
evidencing the insurance required under this Agreement and the other Loan
Documents.

 
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SECTION 4.6.    FACILITIES.  Keep all properties useful or necessary to
Borrower's business in good repair and condition, and from time to time make
necessary repairs, renewals and replacements thereto so that such properties
shall be fully and efficiently preserved and maintained.

SECTION 4.7.    TAXES AND OTHER LIABILITIES.  Pay and discharge when due any and
all indebtedness, obligations, assessments and taxes, both real or personal,
including without limitation federal and state income taxes and state and local
property taxes and assessments, except (a) such as Borrower may in good faith
contest or as to which a bona fide dispute may arise, and (b) for which Borrower
has made provision, to Bank's satisfaction, for eventual payment thereof in the
event Borrower is obligated to make such payment.

SECTION 4.8.    LITIGATION.  Promptly give notice in writing to Bank of any
litigation pending or threatened against Borrower with a claim in excess of Five
Hundred Thousand and 00/100 Dollars ($500,000).

SECTION 4.9.    NOTICE TO BANK.  Promptly (but in no event more than five (5)
days after the occurrence of each such event or matter) give written notice to
Bank in reasonable detail of:  (a) the occurrence of any Event of Default, or
any condition, event or act which with the giving of notice or the passage of
time or both would constitute an Event of Default, and the steps that Borrower
or Guarantor is taking with respect to such Event of Default or condition, event
or act; (b) any change in the name or the organizational structure of Borrower;
(c) the occurrence and nature of any Reportable Event or Prohibited Transaction,
each as defined in ERISA, or any funding deficiency with respect to any Plan;
(d) any termination or cancellation of any insurance policy which Borrower is
required to maintain, or any uninsured or partially uninsured loss through
liability or property damage, or through fire, theft or any other cause
affecting Borrower's property in amount in excess of One Hundred Thousand and
00/100 Dollars ($100,000.00); of (e) any other development in the business or
affairs of any Loan Party, which could reasonably be expected to have a material
adverse effect on the business, operations or financial condition of such Loan
Party.

SECTION 4.10.          FINANCIAL CONDITION.  Maintain Borrower's financial
condition as follows based upon and determined using GAAP (except to the extent
modified by the definitions set forth below), with compliance determined
commencing with Borrower's financial statements for the period ending June 30,
2013:

(a)           Tangible Net Worth of not less than $15 Million at each fiscal
quarter-end, with "Tangible Net Worth" defined as the Borrower’s net worth less
any intangible assets less any receivables from, loans or advances to, or
investments in, any related entities or individuals.

(b)           Cash Flow Leverage Ratio of not greater than 2.00 to 1.0 as of
each fiscal quarter-end, determined on a rolling four (4) quarter basis, with
"Cash Flow Leverage Ratio” defined as Total Funded Debt divided by Adjusted
EBITDA, “Total Funded Debt” defined as the sum of all obligations of the
Borrower for borrowed money (including subordinated debt) plus all capital lease
obligations, and “Adjusted EBITDA” defined as net income of the Borrower for
such period plus, without duplication and to the extent deducted in determining
net income, the sum of (i) interest expense for such period, (ii) income tax
expense for such period, (iii) depreciation and amortization for such period,
and (iv) all other non-cash charges (including metal hedge adjustments) and
expenses.

 
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(c)           Net income after taxes of the Borrower of not less than $100,000,
on a rolling four (4) quarter basis, determined as of each fiscal quarter-end.

SECTION 4.11.  ANTI-TERRORISM LAWS.  The Borrower is not currently, and the
Borrower shall not be (i) a person or entity with whom the Bank is restricted
from doing business under Executive Order No. 13224 or any other law relating to
terrorism or money laundering, the laws comprising or implementing the Bank
Secrecy Act, and the laws administered by the United States Treasury
Department’s Office of Foreign Assets Control (as any of the foregoing Laws may
from time to time be amended, renewed, extended, or replaced), (ii) engaged in
any business involved in making or receiving any contribution of funds, goods or
services to or for the benefit of such a person or in any transaction that
evades or avoids, or has the purpose of evading or avoiding, the prohibitions
set forth in any laws relating to terrorism or money laundering, or (iii)
otherwise in violation of any laws relating to terrorism or money laundering.
 
SECTION 4.12       CASH MANAGEMENT.  The Borrower shall (a) request not less
than weekly (from the Closing Date until the JP Morgan Collection Accounts have
been closed) wire transfers or automated clearing house entries with respect to
the JP Morgan Collection Accounts such that all available collected funds in the
JP Morgan Collection Accounts in excess of Two Hundred Fifty Thousand and 00/100
Dollars ($250,000.00) are transferred via wire transfers to the Wells Fargo
Account, and (ii) close the JP Morgan Collection Accounts on or before September
30, 2013 and transfer all remaining funds in such accounts to the Borrower’s
accounts at the Bank.

SECTION 4.13  OPERATING AND DEPOSITORY ACCOUNTS.  On or before July 31, 2013,
the Borrower shall have established it primary operating and depository accounts
with the Bank, and the Borrower shall maintain its primary operating and
depository accounts with the Bank, provided, however, that the fees and other
charges with respect to such operating accounts shall be consistent with the
Bank’s fees and expenses charged to other similar account holders.

SECTION 4.14.  FURTHER ASSURANCES.  Promptly upon request by the Bank, (a)
correct, any material operational, administrative or typographical defect or
error that may be discovered in this Agreement, any promissory note or any other
Loan Document, or in the execution, acknowledgment, filing or recordation
thereof; and (b) execute and deliver such agreements, certificates, instruments,
acknowledgments and other documents and take any and all actions, as the Bank
may reasonably require from time to time, in order to carry out the purposes and
intents of this Agreement and the Loan Documents.
 
ARTICLE V
NEGATIVE COVENANTS

Borrower further covenants that so long as Bank remains committed to extend
credit to Borrower pursuant hereto, or any liabilities (whether direct or
contingent, liquidated or unliquidated) of Borrower to Bank under any of the
Loan Documents remain outstanding, and until payment in full of all obligations
of Borrower subject hereto, Borrower will not without Bank's prior written
consent:

SECTION 5.1.    USE OF FUNDS.  Use any of the proceeds of any credit extended
hereunder except for the purposes stated in Article I hereof.

 
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 SECTION 5.2.   CAPITAL EXPENDITURES.  Make any additional investment in fixed
assets in any calendar year in excess of an aggregate of Five Million and 00/100
Dollars ($5,000,000).

 SECTION 5.3    LEASE EXPENDITURES.  Incur operating lease expense in any
calendar year in excess of an aggregate of Three Hundred Thousand and 00/100
Dollars ($300,000).

 SECTION 5.4.   OTHER INDEBTEDNESS.  Create, incur, assume or permit to exist
any indebtedness or liabilities resulting from borrowings, loans or advances,
whether secured or unsecured, matured or unmatured, liquidated or unliquidated,
joint or several, except (a) the liabilities of Borrower to Bank, (b) any other
liabilities of Borrower existing as of, and disclosed to Bank prior to, the date
hereof, and (c) such other indebtedness and liabilities in an amount not to
exceed Five Hundred Thousand and 00/100 Dollars ($500,000).

 SECTION 5.5.   MERGER, CONSOLIDATION, TRANSFER OF ASSETS.  (a) Merge into or
consolidate with any other entity, unless the Borrower is the survivor of such
merger or consolidation; (b) make any substantial change in the nature of
Borrower's business as conducted as of the date hereof; (c) acquire all or
substantially all of the assets of any other entity other than the Guarantor or
a third party where the aggregate consideration is greater than Five Hundred
Thousand and 00/100 Dollars ($500,000), provided that the Borrower must provide
the Bank with at least fifteen (15) business days prior written notice of such
acquisition setting forth a detailed description of the proposed transaction; or
(d) sell, lease, transfer or otherwise dispose of all or a substantial or
material portion of Borrower's assets except in the ordinary course of its
business.

 SECTION 5.6.   GUARANTIES.  Guarantee or become liable in any way as surety,
endorser (other than as endorser of negotiable instruments for deposit or
collection in the ordinary course of business), accommodation endorser or
otherwise for, nor pledge or hypothecate any assets of Borrower as security for,
any liabilities or obligations of any other person or entity where such total
liabilities or obligations of such other person or entity, together with the
indebtedness and other liabilities incurred as permitted under Section 5.4(c),
exceed Five Hundred Thousand and 00/100 Dollars ($500,000), except any of the
foregoing in favor of Bank.

 SECTION 5.7.   LOANS, ADVANCES, INVESTMENTS.  Make any loans or advances to or
investments in any person or entity, except any of the foregoing existing as of,
and disclosed to Bank prior to, the date hereof, and except for loans or
advances to the Guarantor.

 SECTION 5.8.   DIVIDENDS, DISTRIBUTIONS.  Declare or pay any dividend or
distribution either in cash, stock or any other property on Borrower's stock now
or hereafter outstanding, if at the time of such dividend or distribution an
Event of Default has occurred and is continuing, or would be caused by such
dividend or distribution, or any fact, condition or event exists that with the
giving of notice or passage of time, or both, could become an Event of
Default;  nor redeem, retire, repurchase or otherwise acquire any shares of any
class of Borrower's stock now or hereafter outstanding,.

      SECTION 5.9.           PLEDGE OF ASSETS.  Mortgage, pledge, grant or
permit to exist a security interest in, or lien upon, all or any portion of
Borrower's assets now owned or hereafter acquired, except any of the foregoing
in favor of Bank or which is existing as of, and disclosed to Bank in writing
prior to, the date hereof, or the following liens:

 
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             (a)            Liens for taxes, assessments or other governmental
charges not delinquent or being properly contested;

             (b)            Deposits or pledges to secure obligations under
worker’s compensation, social security or similar laws, or under unemployment
insurance;

             (c)            Deposits or pledges to secure bids, tenders,
contracts (other than contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds and other obligations of like nature
arising in the ordinary course of business;

            
             (d)            Mechanics’, workers’, materialmen’s or other like
liens arising in the ordinary course of business with respect to obligations
which are not due or which are being properly contested;

             (e)             Liens placed upon fixed assets hereafter acquired
to secure a portion of the purchase price thereof, provided that (x) any such
lien shall not encumber any other property of the Borrower and (y) the aggregate
amount of Indebtedness secured by such Liens incurred as a result of such
purchases shall not exceed the amount permitted under Section 5.4;

             (f)             Easements (including, without limitation,
reciprocal easement agreements and utility agreements), encroachments,
rights-of-way, covenants, consents, reservations, defects or irregularities in
title, variations, zoning, and other restrictions, charges or encumbrances
(whether or not recorded) affecting the Borrower’s real property, if applicable,
and which do not, individually or in the aggregate (i) materially interfere with
the occupation, use or enjoyment by the Borrower of its business or property so
encumbered and (ii) do not materially and adversely affect the value of such
real property;

             (g)            Liens arising from the precautionary Uniform
Commercial Code (“UCC”) financing statements filed under any lease or license
permitted by this Agreement;

             (h)            Liens of local or state authorities for franchise or
other like Taxes, provided that such liens do not exceed One Hundred Thousand
and 00/100 Dollars ($100,000.00) in the aggregate at any time for the Borrower;

             (i)             Liens on insurance policies and the proceeds
thereof securing the financing of the premiums with respect thereto;

             (j)             Customary rights of set-off, revocation, refund or
chargeback under deposit agreements of banks or other financial institutions
where  the Borrower   maintains deposits (other than deposits intended as cash
collateral) in the ordinary course of business; and

             (k)            Any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any lien referred
to in the foregoing clauses (a) through (n), provided that any such extension,
renewal or replacement lien shall be limited to all or a part of the property
that was the subject to the lien so extended, renewed or replaced (plus any
improvements on such property) and provided that any such extension, renewal or
replacement Lien shall not secure an amount (i.e., outstanding principal plus
accrued and unpaid interest and fees and expenses in the case of Indebtedness
permitted pursuant to this Agreement) greater than the amount outstanding
immediately prior to such extension, renewal or replacement lien.
 
 
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SECTION 5.10.          DOUBLE NEGATIVE PLEDGE.  Enter into or suffer to exist
any agreement with any person or entity, other than in connection with this
Agreement, which prohibits or limits the ability of the Borrower to create,
incur, assume or suffer to exist any lien or encumbrance upon or with respect to
any real property of the Borrower, except for any mortgage existing as of, and
disclosed to Bank in writing prior to, the date hereof.
.

ARTICLE VII
EVENTS OF DEFAULT

SECTION 6.1.    The occurrence of any of the following shall constitute an
"Event of Default" under this Agreement:

(a)             Borrower shall fail to pay within ten (10) days of the date when
due any principal, interest, fees or other amounts payable under any of the Loan
Documents.

(b)             Any financial statement or certificate furnished to Bank in
connection with, or any representation or warranty made by Borrower or any other
party under, this Agreement or any other Loan Document shall prove to be
incorrect, false or misleading in any material respect when furnished or made.

(c)             Any default in the performance of or compliance with any
obligation, agreement or other provision contained herein or in any other Loan
Document (other than those referred to in subsections (a) and (b) above), and
with respect to any such default which by its nature can be cured, such default
shall continue for a period of thirty (30) days from its occurrence.

(d)             Any default in the payment or performance of any material
obligation, or any defined event of default, under the terms of any material
contract or instrument with respect to indebtedness (including capital leases)
of the Borrower (other than any of the Loan Documents) pursuant to which
Borrower, any guarantor hereunder or any general partner or joint venturer in
Borrower if a partnership or joint venture (with each such guarantor, general
partner and/or joint venturer referred to herein as a "Third Party Obligor") has
incurred any debt or other liability to any person or entity, including Bank, if
such default consists of the failure to make a payment  (beyond any applicable
grace period) or if such default permits or causes the acceleration of such debt
or other obligation.

(e)             The filing of a notice of judgment lien against Borrower or any
Third Party Obligor; or the recording of any abstract of judgment against
Borrower or any Third Party Obligor in any county in which Borrower or such
Third Party Obligor has an interest in real property; or the service of a notice
of levy and/or of a writ of attachment or execution, or other like process,
against the assets of Borrower or any Third Party Obligor; or the entry of a
judgment against Borrower or any Third Party Obligor, which judgment is not
covered by insurance (as determined by the Bank in its reasonable discretion) or
is not discharged, vacated, bonded or stayed pending appeal within a period of
thirty (30) days after the date of such entry.

(f)             Borrower or any Third Party Obligor shall become insolvent, or
shall suffer or consent to or apply for the appointment of a receiver, trustee,
custodian or liquidator of itself or any of its property, or shall generally
fail to pay its debts as they become due, or shall make a general assignment for
the benefit of creditors; Borrower or any Third Party Obligor shall file a
voluntary petition in bankruptcy, or seeking reorganization, in order to effect
a plan or other arrangement with creditors or any other relief under the
Bankruptcy Reform Act, Title 11 of the United States Code, as amended or
recodified from time to time ("Bankruptcy Code"), or under any state or federal
law granting relief to debtors, whether now or hereafter in effect; or any
involuntary petition or proceeding pursuant to the Bankruptcy Code or any other
applicable state or federal law relating to bankruptcy, reorganization or other
relief for debtors is filed or commenced against Borrower or any Third Party
Obligor and not stayed or dismissed within sixty (60) days, or Borrower or any
Third Party Obligor shall file an answer admitting the jurisdiction of the court
and the material allegations of any involuntary petition; or Borrower or any
Third Party Obligor shall be adjudicated a bankrupt, or an order for relief
shall be entered against Borrower or any Third Party Obligor by any court of
competent jurisdiction under the Bankruptcy Code or any other applicable state
or federal law relating to bankruptcy, reorganization or other relief for
debtors.

 
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(g)             There shall exist or occur any event or condition which Bank in
good faith believes could reasonably be expected to have a material adverse
effect on the financial condition or operation of the Borrower and/or the
Borrower’s ability to fulfill and perform its material obligations under any of
the Loan Documents. 

(h)             The dissolution or liquidation of Borrower or any Third Party
Obligor; or Borrower or any such Third Party Obligor, or any of its directors,
stockholders or members, shall take action seeking to effect the dissolution or
liquidation of Borrower or such Third Party Obligor.

(i)             The sale, transfer, hypothecation, assignment or encumbrance,
whether voluntary, involuntary or by operation of law, without Bank's prior
written consent, of all or any part of or interest in any real property
collateral specifically required hereby, if any.

SECTION 6.2.    REMEDIES.  Upon the occurrence and continuance of any Event of
Default:  (a) all indebtedness of Borrower under each of the Loan Documents, any
term thereof to the contrary notwithstanding, shall at Bank's option and without
notice become immediately due and payable without presentment, demand, protest
or notice of dishonor, all of which are hereby expressly waived by Borrower;
(b) the obligation, if any, of Bank to extend any further credit under any of
the Loan Documents shall immediately cease and terminate; and (c) Bank shall
have all rights, powers and remedies available under each of the Loan Documents,
or accorded by law, including without limitation the right to resort to any or
all security for any credit subject hereto and to exercise any or all of the
rights of a beneficiary or secured party pursuant to applicable law.  All
rights, powers and remedies of Bank may be exercised at any time by Bank and
from time to time after the occurrence of an Event of Default, are cumulative
and not exclusive, and shall be in addition to any other rights, powers or
remedies provided by law or equity.
 
 
ARTICLE VII
MISCELLANEOUS

SECTION 7.1.    INDEMNITY.  Each Loan Party shall indemnify the Bank, and each
of its officers, directors, affiliates, attorneys, employees and agents from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses and disbursements of any kind or
nature whatsoever (including fees and disbursements of counsel) which may be
imposed on, incurred by, or asserted against the Bank or any such person in any
claim, litigation, proceeding or investigation instituted or conducted by any
governmental body or instrumentality or any other person with respect to any
aspect of, or any transaction contemplated by, or referred to in, or any matter
related to, this Agreement or the other Loan Documents, whether or not the Bank
is a party thereto, except to the extent that any of the foregoing arises out of
the willful misconduct or gross negligence of the party being indemnified (as
determined by a court of competent jurisdiction in a final and non-appealable
judgment).  

 
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SECTION 7.2.    NO WAIVER.  No delay, failure or discontinuance of Bank in
exercising any right, power or remedy under any of the Loan Documents shall
affect or operate as a waiver of such right, power or remedy; nor shall any
single or partial exercise of any such right, power or remedy preclude, waive or
otherwise affect any other or further exercise thereof or the exercise of any
other right, power or remedy.  Any waiver, permit, consent or approval of any
kind by Bank of any breach of or default under any of the Loan Documents must be
in writing and shall be effective only to the extent set forth in such writing.

SECTION 7.3.    NOTICES.  All notices, requests and demands which any party is
required or may desire to give to any other party under any provision of this
Agreement must be in writing delivered to each party at the following address:
  
    BORROWER:
THE INTERNATIONAL METALS RECLAMATION COMPANY, INC.
 
4955 Steubenville Pike #405
 
Pittsburgh, PA 15205
 
Attention: Robert D. Scherich, Chief Financial Officer
 
Telephone: (724) 773-9000
 
Facsimile: (724) 774-4348
     
with a copy to:
      Horsehead Holding Corp.   4955 Steubenville Pike, Suite 405   Pittsburgh,
PA 15056   Attention: Gary R. Whitaker, General Counsel
                                
Telephone: (724)-773-2270
                                
Facsimile: (412) 788-1812        
    GUARANTOR:
HORSEHEAD HOLDING CORP.
 
4955 Steubenville Pike #405
 
Pittsburgh, PA 15205
 
Attention: Robert D. Scherich, Chief Financial Officer
 
Telephone: (724) 773-9000
 
Facsimile: (724) 774-4348
     
with a copy to:
      Horsehead Holding Corp.   4955 Steubenville Pike, Suite 405   Pittsburgh,
PA 15056   Attention: Gary R. Whitaker, General Counsel
                                
Telephone: (724)-773-2270
                                
Facsimile: (412) 788-1812    

 
 
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    BANK:
WELLS FARGO BANK, N. A.
 
Four Gateway Center
 
444 Liberty Avenue, Suite 1400
 
Pittsburgh, PA 15222
 
Attention: Joseph J. Bianchin, III, Senior Vice President
 
Telephone: (412) 454-4604
 
Facsimile: (412) 454-4609
     
with a copy to:
     
Sherrard, German & Kelly, P.C.
 
Two PNC Plaza, 28th Floor
 
Pittsburgh, PA 15222
 
Attention: Robert J. Courie, Esquire
 
Telephone: (412) 258-6732
 
Facsimile: (412) 261-6221

 
or to such other address as any party may designate by written notice to all
other parties.  Each such notice, request and demand shall be deemed given or
made as follows:  (a) if sent by hand delivery, upon delivery; (b) if sent by
mail, upon the earlier of the date of receipt or three (3) days after deposit in
the U.S. mail, first class and postage prepaid; and (c) if sent by facsimile or
telecopy, upon receipt.

SECTION 7.4.    COSTS, EXPENSES AND ATTORNEYS' FEES.  Borrower shall pay to Bank
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys' fees (to include outside
counsel fees and all allocated costs of Bank's in-house counsel), expended or
incurred by Bank in connection with (a) the negotiation and preparation of this
Agreement and the other Loan Documents, Bank's continued administration hereof
and thereof, and the preparation of any amendments and waivers hereto and
thereto, (b) the enforcement of Bank's rights and/or the collection of any
amounts which become due to Bank under any of the Loan Documents, and (c) the
prosecution or defense of any action in any way related to any of the Loan
Documents, including without limitation, any action for declaratory relief,
whether incurred at the trial or appellate level, in an arbitration proceeding
or otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to
Borrower or any other person or entity.

SECTION 7.5.    SUCCESSORS, ASSIGNMENT.  This Agreement shall be binding upon
and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties; provided, however, that
Borrower may not assign or transfer its interests or rights hereunder without
Bank's prior written consent.  Bank reserves the right to sell, assign,
transfer, negotiate or grant participations in all or any part of, or any
interest in, Bank's rights and benefits under each of the Loan Documents.  In
connection therewith, Bank may disclose all documents and information which Bank
now has or may hereafter acquire relating to any credit subject hereto, Borrower
or its business, any guarantor hereunder or the business of such guarantor, or
any collateral required hereby.

 
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SECTION 7.6.    ENTIRE AGREEMENT; AMENDMENT.  This Agreement and the other Loan
Documents constitute the entire agreement between Borrower and Bank with respect
to each credit subject hereto and supersede all prior negotiations,
communications, discussions and correspondence concerning the subject matter
hereof.  This Agreement may be amended or modified only in writing signed by
each party hereto.

SECTION 7.7.    NO THIRD PARTY BENEFICIARIES.  This Agreement is made and
entered into for the sole protection and benefit of the parties hereto and their
respective permitted successors and assigns, and no other person or entity shall
be a third party beneficiary of, or have any direct or indirect cause of action
or claim in connection with, this Agreement or any other of the Loan Documents
to which it is not a party.

SECTION 7.8.    TIME.  Time is of the essence of each and every provision of
this Agreement and each other of the Loan Documents.

SECTION 7.9.    SEVERABILITY OF PROVISIONS.  If any provision of this Agreement
shall be prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or any remaining provisions of this
Agreement.

SECTION 7.10.          COUNTERPARTS.  This Agreement may be executed in any
number of counterparts, each of which when executed and delivered shall be
deemed to be an original, and all of which when taken together shall constitute
one and the same Agreement.

SECTION 7.11.          GOVERNING LAW.  This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.

SECTION 7.12.          GUARANTOR JOINDER.  Each guarantor hereunder joins in the
execution of this Agreement as evidence of its acknowledgment of the provisions
hereof and its agreement to be bound by the covenants made by such guarantor
hereunder.

SECTION 7.13.          ARBITRATION.

(a)           Arbitration.  The parties hereto agree, upon demand by any party,
to submit to binding arbitration all claims, disputes and controversies between
or among them (and their respective employees, officers, directors, attorneys,
and other agents), whether in tort, contract or otherwise in any way arising out
of or relating to (i) any credit subject hereto, or any of the Loan Documents,
and their negotiation, execution, collateralization, administration, repayment,
modification, extension, substitution, formation, inducement, enforcement,
default or termination; or (ii) requests for additional credit, provided,
however, that nothing herein shall preclude or limit Bank's right to confess
judgment pursuant to a warrant of attorney provision set forth in any Loan
Document; and, provided, further, that no party shall have the right to demand
binding arbitration of any claim, dispute or controversy seeking to (A)
strike-off or open a judgment obtained by confession pursuant to a warrant of
attorney contained in any Loan Document, or (B) challenge the waiver of a right
to prior notice and a hearing before judgment is entered, or after judgment is
entered, but before execution upon the judgment, which such claims, disputes or
controversies shall be commenced and prosecuted in accordance with the
procedures set forth, and in the forum specified by, Rules 2950 through and
including Rule 2986 of the Pennsylvania Rules of Civil Procedure or any such
other applicable federal or state law.
 
 
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(b)           Governing Rules.  Any arbitration proceeding will (i) proceed in a
location in Pittsburgh, Pennsylvania selected by the American Arbitration
Association (“AAA”); (ii) be governed by the Federal Arbitration Act (Title 9 of
the United States Code), notwithstanding any conflicting choice of law provision
in any of the documents between the parties; and (iii) be conducted by the AAA,
or such other administrator as the parties shall mutually agree upon, in
accordance with the AAA’s commercial dispute resolution procedures, unless the
claim or counterclaim is at least $1,000,000.00 exclusive of claimed interest,
arbitration fees and costs in which case the arbitration shall be conducted in
accordance with the AAA’s optional procedures for large, complex commercial
disputes (the commercial dispute resolution procedures or the optional
procedures for large, complex commercial disputes to be referred to herein, as
applicable, as the “Rules”).  If there is any inconsistency between the terms
hereof and the Rules, the terms and procedures set forth herein shall
control.  Any party who fails or refuses to submit to arbitration following a
demand by any other party shall bear all costs and expenses incurred by such
other party in compelling arbitration of any dispute.  Nothing contained herein
shall be deemed to be a waiver by any party that is a bank of the protections
afforded to it under 12 U.S.C. §91 or any similar applicable state law.

(c)           No Waiver of Provisional Remedies, Self-Help and Foreclosure.  The
arbitration requirement does not limit the right of any party to (i) foreclose
against real or personal property collateral; (ii) exercise self-help remedies
relating to collateral or proceeds of collateral such as setoff or repossession;
or (iii) obtain provisional or ancillary remedies such as replevin, injunctive
relief, attachment or the appointment of a receiver, before during or after the
pendency of any arbitration proceeding.  This exclusion does not constitute a
waiver of the right or obligation of any party to submit any dispute to
arbitration or reference hereunder, including those arising from the exercise of
the actions detailed in sections (i), (ii) and (iii) of this paragraph.

(d)           Arbitrator Qualifications and Powers.  Any arbitration proceeding
in which the amount in controversy is $5,000,000.00 or less will be decided by a
single arbitrator selected according to the Rules, and who shall not render an
award of greater than $5,000,000.00.  Any dispute in which the amount in
controversy exceeds $5,000,000.00 shall be decided by majority vote of a panel
of three arbitrators; provided however, that all three arbitrators must actively
participate in all hearings and deliberations.  The arbitrator will be a neutral
attorney licensed in the Commonwealth of Pennsylvania or a neutral retired judge
of the state or federal judiciary of Pennsylvania, in either case with a minimum
of ten years experience in the substantive law applicable to the subject matter
of the dispute to be arbitrated.  The arbitrator will determine whether or not
an issue is arbitratable and will give effect to the statutes of limitation in
determining any claim.  In any arbitration proceeding the arbitrator will decide
(by documents only or with a hearing at the arbitrator's discretion) any
pre-hearing motions which are similar to motions to dismiss for failure to state
a claim or motions for summary adjudication.  The arbitrator shall resolve all
disputes in accordance with the substantive law of the Commonwealth of
Pennsylvania and may grant any remedy or relief that a court of such state could
order or grant within the scope hereof and such ancillary relief as is necessary
to make effective any award.  The arbitrator shall also have the power to award
recovery of all costs and fees, to impose sanctions and to take such other
action as the arbitrator deems necessary to the same extent a judge could
pursuant to the Federal Rules of Civil Procedure, the Pennsylvania Rules of
Civil Procedure or other applicable law.  Judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction.  The institution
and maintenance of an action for judicial relief or pursuit of a provisional or
ancillary remedy shall not constitute a waiver of the right of any party,
including the plaintiff, to submit the controversy or claim to arbitration if
any other party contests such action for judicial relief.

 
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(e)           Discovery.  In any arbitration proceeding, discovery will be
permitted in accordance with the Rules.  All discovery shall be expressly
limited to matters directly relevant to the dispute being arbitrated and must be
completed no later than 20 days before the hearing date.  Any requests for an
extension of the discovery periods, or any discovery disputes, will be subject
to final determination by the arbitrator upon a showing that the request for
discovery is essential for the party's presentation and that no alternative
means for obtaining information is available.

(f)           Class Proceedings and Consolidations.  No party hereto shall be
entitled to join or consolidate disputes by or against others in any
arbitration, except parties who have executed any Loan Document, or to include
in any arbitration any dispute as a representative or member of a class, or to
act in any arbitration in the interest of the general public or in a private
attorney general capacity.

(g)           Payment Of Arbitration Costs And Fees.  The arbitrator shall award
all costs and expenses of the arbitration proceeding.

(h)           Miscellaneous.  To the maximum extent practicable, the AAA, the
arbitrators and the parties shall take all action required to conclude any
arbitration proceeding within 180 days of the filing of the dispute with the
AAA.  No arbitrator or other party to an arbitration proceeding may disclose the
existence, content or results thereof, except for disclosures of information by
a party required in the ordinary course of its business or by applicable law or
regulation.  If more than one agreement for arbitration by or between the
parties potentially applies to a dispute, the arbitration provision most
directly related to the Loan Documents or the subject matter of the dispute
shall control.  This arbitration provision shall survive termination, amendment
or expiration of any of the Loan Documents or any relationship between the
parties.
 
[SIGNATURE PAGE FOLLOWS]

 
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.

THE INTERNATIONAL
METALS                                                                                                    WELLS
FARGO BANK, N.A.
RECLAMATION COMPANY, INC.
 
 

         
/s/ Robert D. Scherich
   
/s/ Joseph J. Bianchin
 
Robert D. Scherich
   
Joseph J. Bianchin, III,
 
Chief Financial Officer
   
Senior Vice President
 

 
GUARANTOR:

Guarantor joins in the execution of this Agreement to evidence its
acknowledgment of the provisions hereof and its agreement to be bound by the
representations, warranties, and covenants made by such Guarantor hereunder.

HORSEHEAD HOLDING CORP.
 

         
/s/ Robert D. Scherich
   
 
 
Robert D. Scherich, Chief Financial Officer
   
 
 
 
   
 
 

 

[Signature Page to Credit Agreement]