Document:

EX-10.12

 

Exhibit 10.12

     THIRD AMENDMENT dated as of April 28, 2006 (“Amendment”), to the 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”), THE CIT GROUP/BUSINESS
CREDIT, INC. (“CIT”), PNC BANK, NATIONAL ASSOCIATION (“PNC” and together with CIT,
collectively, the “Lenders”), and CIT, as agent for the Lenders (the “Agent”).
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 Agent and Lenders amend certain provisions
of the Financing Agreement, and the Agent and Lenders are 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) (i) On the Effective Date, the Lenders, pro rata in accordance with their
respective Pro Rata Percentages, severally (and not jointly) agree to make a term loan to the
Company in the original principal amount of Seven Million Dollars ($7,000,000) (the “Tranche B
Special Accommodation Advance”). The Tranche B Special Accommodation Advance shall be repaid
in eleven (11) consecutive monthly installments each in the amount of Five Hundred Eighty-Three
Thousand Three Hundred Thirty-Three and 33/100 Dollars ($583,333.33) commencing February 1, 2007,
and continuing on the first day of each calendar month thereafter with a final payment of all
outstanding principal and accrued interest due and payable on January 1, 2008; provided,
however, that if the Tranche A Special Accommodation Advance (as defined below) is prepaid
in full prior to January 1, 2007, then the installment payments in respect of the Tranche B Special
Accommodation Advance shall commence on the first day of the month immediately following the date
of such prepayment, and shall continue on the first day of each calendar month thereafter with a
final payment of all outstanding principal and accrued interest due and payable on the first day of
the month immediately following the due date of the eleventh (11th) installment payment. No
payments of the Tranche B Special Accommodation Advance may be reborrowed. The Tranche B Special
Accommodation Advance shall be evidenced by one or more secured promissory notes (collectively, the
“Tranche B Special Accommodation Advance Notes”) substantially in the form executed in
connection with this Amendment, which notes shall be deemed to constitute Promissory Notes. The
“Tranche A Special Accommodation Advance” means the “Special Accommodation Advance” as
defined in the

 

 

Second Amendment, dated as of January 18, 2006, among the Credit Parties, the Agent and the
Lenders.

               (ii) The Company may make voluntary prepayments of the Tranche B Special Accommodation Advance
from time to time upon not less than five (5) days’ prior written notice to the Agent and Lenders
in the minimum principal amount of Five Hundred Thousand Dollars ($500,000) or a whole multiple of
One Hundred Thousand Dollars ($100,000) in excess thereof (or, if less, the entire principal amount
thereof then outstanding). Any such voluntary prepayment shall be applied against the remaining
installments of principal in the inverse order of their maturities until the Tranche B Special
Accommodation Advance is repaid in full.

               (iii) The interest rate applicable to the outstanding principal balance of the Tranche B
Special Accommodation Advance shall be determined in the same manner (and using the same interest
rate margins) as the interest rate applicable to the Revolving Loans under the Financing Agreement
(and the Tranche B Special Accommodation Advance or any applicable portion thereof shall be deemed
to constitute a Chase Bank Rate Loan or LIBOR Loan, as applicable). Interest on the outstanding
principal balance of the Tranche B Special Accommodation Advance shall accrue, and shall be due and
payable, in the same manner as interest on the outstanding principal balance of the Revolving Loans
under the Financing Agreement.

               (iv) Each payment (including each prepayment) on account of the principal of and interest on
the Tranche B Special Accommodation Advance or on account of the Tranche B Special Accommodation
Advance Fee shall be applied pro rata in accordance with the respective Pro Rata
Percentages of the Lenders.

               (v) The proceeds of the Tranche B Special Accommodation Advance shall be used solely to repay
in full the Subject Loan (as defined below) and to repay a portion of the Revolving Loans.

               (vi) To induce the Agent and Lenders to enter into this Amendment and to extend to the Company
the Tranche B Special Accommodation Advance, the Company agrees to pay to the Agent, for the
ratable benefit of the Lenders, a fee in the amount of One Hundred Five Thousand Dollars ($105,000)
(the “Tranche B Special Accommodation Advance Fee”), which shall be fully earned and due
and payable on the Effective Date.

               (vii) Without limiting the Agent’s right to charge the Revolving Loan Account for any other
purpose under the Financing Agreement, the Company authorizes the Agent to charge the Revolving
Loan Account: (i) to make all payments of the Tranche B Special Accommodation Advance and interest
thereon and the Tranche B Special Accommodation Advance Fee as and when such payments are due and
payable, and (ii) to fund Out-of-Pocket Expenses incurred in connection with the negotiation,
documentation and closing of this Amendment.

 - 2 - 

 

               (viii) All obligations of the Company under or in connection with the Tranche B Special
Accommodation Advance shall constitute part of the Obligations, shall be absolutely and
unconditionally guarantied by the Credit Parties and shall be secured by the Collateral.

          (b) 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.

          (c) Notwithstanding anything to the contrary contained in Section 3.5(c) or 10.4 of the
Financing Agreement, if an Event of Default shall have occurred and remain outstanding, in applying
the Proceeds of Collateral and the other payments received by the Agent to the payment of the
Obligations in accordance with Section 10.4, the Agent shall be entitled to apply such Proceeds and
payments to the payment of the Obligations relating to the Revolving Loans, the Tranche A Special
Accommodation Advance or the Tranche B Special Accommodation Advance, in such order at the Agent
shall determine in its sole discretion; provided, however, that until the exercise
by the Agent of its rights under Section 10.2(a) of the Financing Agreement, the Agent shall (i)
apply to the Tranche A Special Accommodation Advance principal payments received from the Company
and designated by the Company for application to the Tranche A Special Accommodation Advance, (ii)
apply to the Tranche B Special Accommodation Advance principal payments received from the Company
and designated by the Company for application to the Tranche B Special Accommodation Advance, and
(iii) to the extent an Overadvance exists, apply to the Revolving Loans principal payments received
from the Company and designated by the Company for application to the Revolving Loans.

          (d) Section 8.16(b) of the Financing Agreement is amended such that any Lender to be replaced
in accordance with Section 8.16 shall be entitled to receive payment of an amount equal to its
pro rata share (in accordance with the respective Pro Rata Percentages of the Lenders) of
the outstanding principal balance of the Tranche B Special Accommodation Advance and accrued
interest thereon, together with all other amounts described in Section 8.16(b), prior to the
effectiveness of such Lender’s assignment in accordance with Section 8.16.

          (e) Section 14.10(a) of the Financing Agreement is amended such that any amendment reducing
the principal of, or rate of interest on, the Tranche B Special Accommodation Advance shall require
the prior written consent of all Lenders.

     Section Two.  Consent. On the Effective Date, the Agent and Lenders consent
to (i) the Company’s incurrence of a loan from Sun Capital in the original principal amount of Five
Million Thirty-Three Thousand Three Hundred Thirty-Three Dollars ($5,033,333) (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

 - 3 - 

 

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 Agent and each 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 Agent and each 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 Agent shall have received the following documents and other items (all such
documents and other items to be in form and substance satisfactory to the Agent):

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

          (b) A Tranche B Special Accommodation Advance Note in favor of each Lender duly executed by an
authorized representative of the Company;

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

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

 - 4 - 

 

          (e) 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 Agent and that such documents (in the
form delivered to the Lender) remain in full force and effect; and

          (f) A written opinion of counsel for the Credit Parties addressed to the Agent and the Lenders
covering such matters as may be reasonably requested by the Agent.

          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”.

     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.

          (e) By its signature below, PNC also hereby confirms its consent to the execution and delivery
by the Agent of the Second Amendment to the Intercreditor Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 - 5 - 

 

     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: VP and CFO	 	 
	 
	 	 	 	 	 	 
	 	 	HORSEHEAD INTERMEDIARY CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ Robert D. Scherich	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Robert D. Scherich	 	 
	 	 	Title: VP and CFO	 	 
	 
	 	 	 	 	 	 
	 	 	CHESTNUT RIDGE RAILROAD CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ Robert D. Scherich	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Robert D. Scherich	 	 
	 	 	Title: VP and CFO	 	 
	 
	 	 	 	 	 	 
	 	 	THE CIT GROUP/BUSINESS CREDIT, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ Anthony Lavinio	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Anthony Lavinio	 	 
	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	PNC BANK, NATIONAL ASSOCIATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ Douglas A. Hoffman	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Douglas A Hoffman	 	 
	 	 	Title: Vice PresidentEX-10.13

 

Exhibit 10.13

     FOURTH AMENDMENT AND CONSENT dated as of October 25, 2006 (“Amendment”), to the
FINANCING AGREEMENT, dated as of July 15, 2005 (as amended, modified or supplemented from time to
time, the “Financing Agreement”), among HORSEHEAD CORPORATION (f/k/a Horsehead Corp. and
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”), THE CIT GROUP/BUSINESS CREDIT, INC. (“CIT”), PNC BANK, NATIONAL
ASSOCIATION (“PNC” and together with CIT, collectively, the “Lenders”), and CIT, as
agent for the Lenders (the “Agent”). 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 Agent and Lenders (i) amend certain
provisions of the Financing Agreement, and consent to the payment by the Company of certain fees
and the payment by the Company and Horsehead Intermediary of a special dividend, in each case
effective on the First Effective Date, as hereinafter defined, and (ii) amend certain other
provisions of the Financing Agreement, and consent to the payment by the Company to Sun Capital
Partners Management III, LLC (“SCP Management”) of a certain management fee, in each case in
connection with a proposed 144A offering of common stock, par value $0.01 per share, of the Parent
(the “Offering”) and effective on the Second Effective Date, as hereinafter defined, and the Agent
and Lenders are willing to amend such provisions of the Financing Agreement and provide such
consents, in each case 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.  Initial Amendments to Financing Agreement. Effective as of the
First Effective Date (as defined in Section Five hereof), the Financing Agreement is hereby amended
as follows:

          (a) Clause (a) of the definition of the term Net Availability is amended by deleting the
phrase “Forty-Five Million Dollars ($45,000,000)” and by substituting in lieu thereof the phrase
“Seventy-Five Million Dollars ($75,000,000)”;

          (b) Clause (g) of the definition of the term Permitted Indebtedness is amended by deleting the
phrase “Twenty-Seven Million Dollars ($27,000,000)” and by substituting in lieu thereof the phrase
“Fifty-Seven Million Dollars ($57,000,000)”;

 

 

           (c) The definition of the term Revolving Line of Credit is amended by deleting the phrase
“Forty-Five Million Dollars ($45,000,000)” and by substituting in lieu thereof the phrase
“Seventy-Five Million Dollars ($75,000,000);

          (d) Section 7.3 of the Financing Agreement is amended by deleting in its entirety subsection
(d) thereof and substituting the following in lieu thereof:

               “(d) Capital Expenditures. To cause the Company and its consolidated subsidiaries not
to contract for, purchase, make expenditures for, lease pursuant to a Capital Lease or otherwise
incur obligations with respect to Capital Expenditures (whether subject to a security interest or
otherwise) during any fiscal year of the Company in the aggregate amount in excess of the amount
corresponding to such fiscal year as set forth below:

	 	 	 	 	 
	Fiscal Year:	 	Maximum Capital Expenditures:
	2005
	 	$	9,400,000	 
	2006
	 	$	15,000,000	 
	2007
	 	$	40,000,000	 
	2008
	 	$	15,000,000	 
	2009 and thereafter
	 	$	11,000,000”	 

          (e) Schedule 7.4(h) is amended and restated as set forth on Exhibit A annexed to this
Amendment.

     Section Two.  Initial Consent. Notwithstanding any prohibition against the
payment of dividends contained in Section 7.4(f) of the Financing Agreement, or the prohibition
against the payment of management fees contained in Section 7.4 (i) of the Financing Agreement, the
Agent and the Lenders hereby consent to the following transactions:

               (i) the payment by the Company, in cash, on or about the date hereof, of a management fee to
SCP Management in the amount of $500,000 (the “First Management Fee”);

               (ii) the payment by the Company, in cash, on a regularly scheduled payroll date occurring on
or before December 31, 2006, of management bonuses in the aggregate amount of $476,521.70 (the
“Management Bonuses”);

               (iii) the payment in cash, on or about the date hereof, of a dividend (the “Permitted
Dividend”) by the Company to Horsehead Intermediary in an amount equal to $49,023,478.30;

               (iv) the payment in cash, on or about the date hereof (utilizing the proceeds of the Permitted
Dividend), of a dividend by Horsehead Intermediary to the Parent 

 - 2 - 

 

in an amount equal to the amount
of the Permitted Dividend, a portion of the proceeds of which shall
be used by the Parent in payment of the principal amount of certain indebtedness owing by the Parent to its shareholders
(the “Shareholder Debt”), and the balance of the proceeds of which shall be distributed by the
Parent to its shareholders as a special dividend; and

               (v) the payment in cash, on or about the date hereof, of a management fee by the Company to
SCP Management in the amount of $5,000,000, as a prepayment of the management fees owing by the
Company to SCP Management in 2007 (the “Second Management Fee”),

provided that (x) the First Management Fee and the Second Management Fee are paid in full
on or about the date hereof, (y) all of the proceeds of the Permitted Dividend are distributed on
or about the date hereof and either applied by the Parent in payment of the Shareholder Debt or
declared and paid as a dividend by the Parent to its shareholders and (z) all of the proceeds of
the Revolving Loans in the aggregate principal amount of $24,523,478.30 made on or about the date
hereof in connection with the increase in the Revolving Line of Credit, as provided under Section
One of this Amendment (together with all of the proceeds of the loans made on or about the date
hereof by Contrarian or its affiliate to the Company in the aggregate principal amount of
$30,000,000) are used solely to pay the First Management Fee, the Second Management Fee and the
Permitted Dividend.

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

          (a) the execution, delivery and performance of this Amendment and the other documents
described herein by such Credit Party are within its corporate powers, have 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 its 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) The payment of the Management Bonuses, the First Management Fee, the Second Management Fee
and the Permitted Dividend, and the payment of the Third Management Fee (as defined in Section
Seven hereof) and the consummation of the transactions contemplated thereby are and will be within
the corporate powers of the Company and Horsehead Intermediary, and have been duly authorized by
all necessary corporate action. At the time of consummation thereof, the payment of the Management
Bonuses, the First Management Fee, the Second Management Fee, the Third Management Fee and the
Permitted Dividend shall have been made in accordance with all applicable laws. At the time of
consummation thereof, all consents and approvals of, and filings and registrations with, and all
other actions in respect of, all governmental agencies, authorities or instrumentalities required
in order to pay the

 - 3 - 

 

Management Bonuses, the First Management Fee, the Second Management Fee, the
Third Management Fee and the Permitted Dividend in accordance with all applicable laws have been
obtained, given, filed or taken and are or will be in full force and effect;

          (d) On a pro forma basis, after giving effect to the payment of the Management
Bonuses, the First Management Fee, the Second Management Fee, the Third Management Fee and the
Permitted Dividend, and the incurrence by the Company of all Indebtedness under the Financing
Agreement and the Contrarian Transaction Documents to be incurred by it in order to finance the
payment of the Management Bonuses, the First Management Fee, the Second Management Fee, the Third
Management Fee and the Permitted Dividend (i) the sum of the assets, at a fair valuation of the
Company (on a consolidated basis with its consolidated subsidiaries) will exceed its debts, (ii)
the Company (on a consolidated basis with its consolidated subsidiaries) has not incurred and does
not intend to incur, nor believes that it will incur, debts beyond its ability to pay such debts as
such debts mature and (iii) the Company (on a consolidated basis with its consolidated
subsidiaries) will have sufficient capital with which to conduct its business. For purposes of
this clause (d), (1) “debt” means any liability on a claim, and “claim” means (x) right to payment,
whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an
equitable remedy for breach of performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured,
disputed, undisputed, secured or unsecured; and (2) the amount of contingent liabilities at any
time shall be computed as the amount that can reasonably be expected to become an actual or matured
liability; and

          (e) no Default or Event of Default has occurred and is continuing.

Each Credit Party confirms, reaffirms and restates to the Agent and each Lender, as of the First
Effective Date each of 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.  Amendment Fee. As consideration for the amendments contained
in Sections One and Six of this Amendment, and the consents provided for in Sections Two and Seven
of this Amendment, the Company shall pay to the Agent, for the ratable benefit of Lenders, a
non-refundable amendment fee in the amount of Three Hundred Sixty Thousand Dollars ($360,000) (the
“Amendment Fee”), which Amendment Fee shall be fully earned and due and payable on the First
Effective Date.

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

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

 - 4 - 

 

          (b) An amendment to the Contrarian Financing Documents covering such matters as may be
reasonably satisfactory to the Agent, duly executed by authorized representatives of each of the
Credit Parties and Contrarian;

          (c) A Second Amended and Restated Promissory Note (Revolving Loan) in the principal amount of
$50,025,000, duly executed in favor of CIT by an authorized representative of the Company;

          (d) A First Amended and Restated Promissory Note (Revolving Loan) in the principal amount of
$24,975,000, duly executed in favor of PNC by an authorized representative of the Company;

          (e) A Third Amendment to the Contrarian Intercreditor Agreement, duly executed by an
authorized representative of Contrarian, covering such matters as may be reasonably satisfactory to
the Agent;

          (f) Amendments to each of the Mortgages duly executed by an authorized representative of the
Company (or other Credit Party, if applicable);

          (g) A valuation report, prepared as of a recent date by Valuation Research Corporation,
pursuant to which Valuation Research Corporation shall have set forth its analysis of the value of
the Company, on a consolidated basis with its consolidated subsidiaries and as a going concern,
which report shall be addressed to (among others) each Lender party to the Financing Agreement as
of the First Effective Date;

          (h) A pro forma Consolidated Balance Sheet, prepared by or under the direction
of, and certified by, the Company’s chief financial officer, which Consolidated Balance Sheet shall
reflect that the Company and its consolidated subsidiaries have a net worth, as defined in
accordance with GAAP of not less than $8,000,000, after giving effect to the payment of the
Permitted Dividend, the First Management Fee, the Second Management Fee and the Third Management
Fee;

          (i) 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 Agent and that such documents (in the
form delivered to the Agent) remain in full force and effect; and

          (j) A written opinion of counsel for the Credit Parties addressed to the Agent and the Lenders
covering such matters as may be reasonably requested by the Agent.

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

     Section Six.   Subsequent Amendment to Financing Agreement. Effective as of
the Second Effective Date (as defined in Section Eight hereof), the definition of Permitted

 - 5 - 

 

Distributions is amended by (i) deleting the word “and” at the end of clause (c) thereof, (ii)
deleting the period at the end of clause (d) thereof, and substituting in lieu thereof a
semi-colon, followed by the word “and” and (iii) inserting the following new clause (e) at the end
thereof:

     “(e) dividends from the Company to Horsehead Intermediary, the
proceeds of which are used solely by Horsehead Intermediary to fund
the concurrent declaration and payment by Horsehead Intermediary of
dividends to the Parent, the proceeds of which are used solely by
the Parent to fund the payment of out-of-pocket costs and expenses
(including reasonable fees and disbursements of attorneys and
accountants) paid or incurred by the Parent, arising directly from
and solely in connection with (i) the consummation of the Offering
and the transactions contemplated to occur thereunder, and
thereafter (ii) the obligation of the Parent, in accordance with the
rules and regulations of the Securities Exchange Commission and the
requirements of any national securities exchanges on which the
Parent lists a class of equity securities, respectively, to make
public disclosure from time to time of its results of operation and
financial condition, on a consolidated basis with its subsidiaries,
and other similar kinds of public reporting requirements, and
listing requirements.”

     Section Seven.  Subsequent Consent. Notwithstanding any prohibition against
the payment of management fees contained in Section 7.4 (i) of the Financing Agreement, the Agent
and the Lenders hereby consent to the payment in cash, on or about the Second Effective Date, of a
management fee by the Company to SCP Management (the “Third Management Fee”) in the amount of
$4,500,000.

     Section Eight.  Conditions Precedent to Subsequent Amendment to Financing
Agreement and Subsequent Consent. The effectiveness of the amendment to the Financing Agreement
set forth in Section Six of this Amendment, and to the consent contained in Section Seven of this
Amendment, is subject to the following conditions precedent, including, where applicable, that the
Agent shall have received the following documents and other items (all such documents and other
items to be in form and substance satisfactory to the Agent):

          (a) The Agent and its counsel shall have received final versions of the offering memorandum
for the Offering and all material documents and agreements to be executed or delivered by the
Parent or the Credit Parties in connection with the Offering (such memorandum, together with such
documents and agreements, collectively, the “Offering Documents”) and the Offering shall have been
consummated in accordance with the terms of the Offering Documents;

          (b) Each of James Hensler and Robert Scherich shall have entered into an employment agreement
with the Company, substantially in the forms that the Agent received and

 - 6 - 

 

reviewed to its reasonable
satisfaction prior to the First Effective Date, and the Company shall have delivered to the Agent a
fully executed copy of each such agreement; and

          (c) The Agent shall have received a certificate executed by a duly authorized officer of the
Company, stating that after giving effect to the consummation of the Offering, no Change of Control
shall have occurred.

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

     Section Nine.  Termination of Sun Management Agreement. Each Credit Party
agrees (and warrants and represents that SCP Management has heretofore agreed) that the Sun
Management Agreement shall be terminated effective as of the Second Effective Date, at which time
the Sun Management Agreement shall cease to be of any further force or effect. Each Credit Party
further agrees that (i) notwithstanding the terms of Section 7.4 (i) of the Financing Agreement, at
all times after the Second Effective Date, such Credit Party shall not pay any management,
consulting or other similar fees or compensation to SCP Management, make any Permitted Management
Fee Payments, or pay any “Management Fee” as defined under the Sun Management Agreement and (ii)
for avoidance of doubt, for purposes of calculating Consolidated EBITDA and Consolidated Fixed
Charges for any fiscal quarter (each a “referenced fiscal quarter”) following the fiscal quarter
during which the Second Effective Date occurs (x) no fees accrued or accruing under the Sun
Management Agreement may be added back to Consolidated Net Income for such referenced fiscal
quarter and (y) no amounts described in clause (i) of the defined term Consolidated Fixed Charges
may be included in the calculation of Consolidated Fixed Charges for such referenced fiscal
quarter. Finally, each Credit Party agrees that if the Offering is not consummated in accordance
with the terms of the Offering Documents (a) the Sun Management Agreement, at the election of the
parties thereto, may continue in full force and effect, in which event clauses (i) and (ii)
contained in the previous sentence shall be null and void and (b) the Company and SCP Management
shall reconcile, as soon as practicable after the basis for calculating the same becomes available,
the amount of the Second Management Fee and settle between themselves any overpayment or
underpayment thereof, based on the amount of the Permitted Management Fee Payment that would
otherwise be due and payable by the Company to SCP Management in 2007, in accordance with the terms
of the Sun Management Agreement.

     Section Ten.  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) The execution, delivery and effectiveness of the consent contained in Section Two hereof
shall not operate as a waiver of any right, power or remedy of any Lender or of Agent under the
Financing Agreement or any of the other Loan Documents, nor constitute a waiver of any other
provision of the Financing Agreement or any of the other Loan Documents.

 - 7 - 

 

          (c) All references to 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.

          (d) 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.

          (e) 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.

          (f) By its signature below, PNC also hereby confirms its consent to the execution and delivery
by the Agent of the Third Amendment to the Contrarian Intercreditor Agreement.

          (g) Notwithstanding anything to the contrary contained in the definition of the term
“Commitment” in the Financing Agreement, the Commitments of each Lender as of the First Effective
Date are reflected on the signature page to this Amendment.

          (h) The Company shall deliver to the Agent as soon as practicable after the Second Effective
Date, and in any event no later than ten (10) Business Days thereafter, a capitalization chart
which shall set forth, after giving effect to the consummation of the Offering, the name of each
holder, beneficially or of record, of shares of capital stock of the Parent, together with the
corresponding number (and relative percentage) of such shares so held.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 - 8 - 

 

     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 CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ Robert D. Scherich	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Robert D. Scherich	 	 
	 	 	Title: CFO	 	 
	 
	 	 	 	 	 	 
	 	 	HORSEHEAD INTERMEDIARY CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ Robert D. Scherich	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Robert D. Scherich	 	 
	 	 	Title: CFO	 	 
	 
	 	 	 	 	 	 
	 	 	CHESTNUT RIDGE RAILROAD CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ Robert D. Scherich	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Robert D. Scherich	 	 
	 	 	Title: CFO	 	 
	 
	 	 	 	 	 	 
	 	 	THE CIT GROUP/BUSINESS CREDIT, INC.,	 	 
	 	 	as a Lender and as Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ Michael Aliberto	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Michael Aliberto	 	 
	 	 	Title: Vice President	 	 
	 
	 	 	Commitment: $50,025,000	 	 
	 
	 	 	 	 	 	 
	 	 	PNC BANK, NATIONAL ASSOCIATION,	 	 
	 	 	as a Lender	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	     /s/ Douglas Hoffman	 	 
	 

	 	 	 	 	 	 
	 	 	Name: Douglas Hoffman	 	 
	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	Commitment: $24,975,000	 	 

Signature Page to Fourth Amendment and Consent

 

 

EXHIBIT A

Section 7.4(h) to Financing Agreement

Contribution Agreement, dated March 15, 2004, by and between Horsehead Corporation and Chestnut
Ridge Railroad Corp.

Administrative Services Agreement, dated February 4, 2004, by and between Horsehead Corporation and
Chestnut Ridge Railroad Corp.

Management Services Agreement, dated December 23, 2003, by and between Horsehead Corporation and
Sun Capital Partners Management III, LLC

Agreement, dated as of October 25, 2006, by and between Horsehead Corporation and Sun Capital
Partners Management III, LLC

Purchase/Placement Agreement to be entered into in connection with the Offering (as defined in the
Fourth Amendment and Consent to Financing Agreement dated as of October 25, 2006) by and among
Friedman, Billings, Ramsey & Co., Inc., Horsehead Holding Corp., Horsehead Intermediary Corp.,
Horsehead Corporation and Chestnut Ridge Railroad Corp.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00121-of-00352.parquet"}]]