EX-10.16



 





Exhibit 10.16




     SECOND AMENDMENT dated as of April 28, 2006 (“Amendment”), to the SECOND LIEN
FINANCING AGREEMENT, dated as of July 15, 2005 (as amended, modified or supplemented from time to
time, the “Financing Agreement”), among HORSEHEAD CORP. (f/k/a Horsehead Acquisition
Corp.), a Delaware corporation (the “Company”), HORSEHEAD INTERMEDIARY CORP., a Delaware
corporation (“Horsehead Intermediary”), CHESTNUT RIDGE RAILROAD CORP., a Delaware
corporation (together with the Company and Horsehead Intermediary, the “Credit Parties”)
and CML I, LLC (as successor by assignment to Contrarian Service Company, LLC) (the
“Lender”). Terms which are capitalized in this Amendment and not otherwise defined shall
have the meanings ascribed to such terms in the Financing Agreement.



     WHEREAS, the Credit Parties have requested that the Lender amend certain provisions of the
Financing Agreement, and the Lender is willing to amend such provisions of the Financing Agreement
on the terms and subject to the conditions set forth herein.



     NOW, THEREFORE, in consideration of the mutual promises contained herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:



     Section One.  Amendments to Financing Agreement. Effective as of the
Effective Date (as defined below), the Financing Agreement is hereby amended as follows:



          (a) Notwithstanding anything to the contrary contained in the definition of “Consolidated
Fixed Charges” contained in Section 1.1 of the Financing Agreement, neither the repayment of the
Tranche B Special Accommodation Advance nor the repayment of the Subject Loan shall constitute part
of the Consolidated Fixed Charges.




          (b) The definition of “Permitted Indebtedness” contained in Section 1.1 of the Financing
Agreement is amended by deleting the words and amount “Fifty Seven Million Dollars ($57,000,000)”
contained in subsection (g) therein and replacing the same with the words and amount “Sixty Four
Million Dollars ($64,000,000), less all principal payments actually made by the Credit Parties with
respect to the Tranche A Special Accommodation Advance and the Tranche B Special Accommodation
Advance (each as defined in the CIT Financing Agreement)”.




     Section Two.  Consent. On the Effective Date, the Lender consents to (i) the
Company’s incurrence of a loan from Sun Capital in the original principal amount of Five Million
Dollars ($5,000,000) (the “Subject Loan”), notwithstanding any prohibition on the
incurrence of the Subject Loan contained in Sections 7.4(b) or (h) of the Financing Agreement, and
(ii) the repayment in full of the Subject Loan, together with interest thereon at a rate not to
exceed ten percent (10%) per annum (together with the Subject Loan, collectively, the “Subject
Loan Obligations”), on or substantially contemporaneous with the Effective Date,
notwithstanding any prohibition on such repayment contained in Section 7.4(i) of the Financing
Agreement. On the Effective Date, the consent contained in the preceding clause (i) shall be
deemed to be retroactively effective to April 4, 2006 (i.e., the funding date of the Subject Loan).



 









 





     Section Three.  Representations and Warranties. Each of the Credit Parties
warrants and represents to the Lender as follows:



          (a) the execution, delivery and performance of this Amendment and the other documents
described herein by such Credit Party is within its corporate powers, has been duly authorized by
all necessary corporate action, and such Credit Party has received all necessary consents and
approvals (if any shall be required) for the execution and delivery of this Amendment and such
other documents;




          (b) upon the execution of this Amendment and the other documents described herein, this
Amendment and such other documents shall constitute the legal, valid and binding obligation of such
Credit Party, enforceable against such Credit Party in accordance with their terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency or similar laws affecting creditors’
rights generally and (ii) general principles of equity;




          (c) no Default or Event of Default has occurred and is continuing; and




          (d) each Credit Party confirms, reaffirms and restates to the Lender, as of the Effective
Date, the representations and warranties set forth in the Financing Agreement, except to the extent
that such representations and warranties solely relate to a specific earlier date in which case
each Credit Party confirms, reaffirms and restates such representations and warranties as of such
earlier date.




     Section Four.  Conditions Precedent. The effectiveness of the amendments and
other provisions hereof are subject to the following conditions precedent, including, where
applicable, that the Lender shall have received the following documents and other items (all such
documents and other items to be in form and substance satisfactory to the Lender):



          (a) This Amendment duly executed by authorized representatives of the Credit Parties and the
Lender;




          (b) The Second Amendment to the Intercreditor Agreement duly executed by an authorized
representative of CIT;




          (c) An amendment to the CIT Financing Documents covering such matters as may be reasonably
satisfactory to the Lender duly executed by authorized representatives of the Credit Parties and
CIT; and




          (d) Evidence that the execution, delivery and performance of this Amendment by each of the
Credit Parties have been duly authorized by all necessary action, and that no amendment or other
modification to the articles or certificate of incorporation or bylaws of any Credit Party has been
made since the date of the original delivery thereof to the Lender and that such documents (in the
form delivered to the Lender) remain in full force and effect.




     The date which all of the conditions precedent set forth in this Section 4 hereof shall have
been satisfied is referred to herein as the “Effective Date”.



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     Section Five.  General Provisions.



          (a) Except as herein expressly amended, the Financing Agreement and all other agreements,
documents, instruments and certificates executed in connection therewith, are ratified and
confirmed in all respects and shall remain in full force and effect in accordance with their
respective terms.




          (b) All references to the Financing Agreement in the Financing Agreement and each other Loan
Document shall mean the Financing Agreement as amended hereby and as hereafter amended,
supplemented and modified from time to time.




          (c) This Amendment embodies the entire agreement between the parties hereto with respect to
the subject matter hereof and supercedes all prior agreements, commitments, arrangements,
negotiations or understandings, whether written or oral, of the parties with respect thereto.




          (d) This Amendment shall be governed by and construed in accordance with the internal laws of
the State of New York, without regard to the conflicts of law principles thereof.




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     IN WITNESS WHEREOF, the parties to this Amendment have signed below to indicate their
agreement with the foregoing and their intent to be bound thereby.



	 	 	 	 	 
	 	HORSEHEAD CORP.

 	 
	 	By:  	/s/ Robert D. Scherich
 	 
	 	 	Name:  	Robert D. Scherich 	 
	 	 	Title:  	Vice President and Chief Financial Officer 	 
	 
	 	HORSEHEAD INTERMEDIARY CORP.

 	 
	 	By:  	/s/ Robert D. Scherich
 	 
	 	 	Name:  	Robert D. Scherich 	 
	 	 	Title:  	Vice President and Chief Financial Officer 	 
	 
	 	CHESTNUT RIDGE RAILROAD CORP.

 	 
	 	By:  	/s/ Robert D. Scherich
 	 
	 	 	Name:  	Robert D. Scherich 	 
	 	 	Title:  	Vice President and Chief Financial Officer 	 
	 
	 	CML I, LLC



By:  Contrarian Funds, L.L.C., its sole Member

By:  Contrarian Capital Management, LLC as manager

 	 
	 	By:  	/s/ Janice M. Stanton
 	 
	 	 	Name:  	Janice M. Stanton 	 
	 	 	Title:  	Member 	 
	 	 	 
	 	By:  	/s/ Stephen J. Czech
 	 
	 	 	Name:  	Stephen J. Czech 	 
	 	 	Title:  	Managing Director