Document:

Exhibit 10.1

 

Letter
of Agreement

 

THIS
LETTER OF AGREEMENT (“Agreement”), by and between LYDALL, INC., a Delaware corporation (the “Company”),
and MONA G. ESTEY (the “Employee”), is dated September 30, 2013 (the “Effective Date”).

 

WITNESSETH

 

WHEREAS,
Employee is an officer of the Company, serving most recently in the capacity of Vice President – Human Resources, and has
expressed a desire to resign as an officer of the Company and pursue a reduced and more flexible work schedule as a transition
towards her voluntary retirement; and

 

WHEREAS,
the Company is interested in retaining Employee, on a transitional basis.

 

NOW,
THEREFORE, in consideration of the premises and mutual covenants contained herein and for other good and valuable consideration,
the Company and Employee (the “Parties”), intending to be legally bound, agree as follows:

 

1.          This
Agreement shall be effective for six (6) months from the Effective Date (the “Term”), unless sooner terminated as provided
herein, and is not subject to renewal.

 

2.          Employee
shall perform human resources-related services and such other related tasks as shall be assigned, from time-to-time, by the Vice
President – Human Resources. For the interim period (the “Transition Period”) from the Effective Date until December 31,
2013 (the “Transition Date”), Employee shall perform said services for the Company on a full-time basis at the current
salary and shall continue to be eligible to receive those related non-executive benefits as are afforded to her as a full-time
employee of the Company. Following the Transition Date and for the balance of the Term, Employee shall perform said services for
the Company for a minimum of twenty (20) hours per week on a mutually agreeable schedule. The remainder of Employee’s time
may be spent independently in pursuits which shall not conflict with the Company’s business in any manner.

 

3.          At
all times from the Transition Date and throughout the Term of this Agreement, Employee will be considered an at-will, part-time
employee of the Company eligible for such benefits as are afforded to other part-time employees of the Company working at least
twenty (20) hours per week. Additionally, the following shall apply during the Transition Period and the Term:

 

		(a)	The Company will provide Employee with such office equipment, including a computer and Company-issued
phone, and supplies as are reasonably necessary for her to perform her work.

 

		(b)	The business expenses incurred by Employee will be reimbursed to her in accordance with the Company’s
normal policies and procedures.

 

    	 

    	 

    

 

		(c)	Employee shall remain eligible to receive incentive compensation pursuant to the Company’s
Annual Incentive Performance (“AIP”) program for 2013, subject to and in accordance with the terms of
the AIP program. For periods after 2013, Employee will no longer be eligible to participate in or receive compensation under the
AIP program.

 

		(d)	Employee’s unvested stock options shall continue to vest in accordance with those terms set
forth in the applicable plan and agreement.

 

		(e)	The Plan Administrator has determined that Employee’s conversion from full-time to
                                                             part-time status is not deemed to be an event that results in the forfeiture of those unvested Restricted Shares issued to
                                                             Employee on or about January 1, 2011                                                              and
                                                             which are tentatively scheduled to vest in March 2014; said unvested Restricted Shares shall
                                                             continue to vest in accordance with those terms set forth in the
                                                             applicable plan and agreement.

 

		(f)	Employee will report to the Vice President – Human Resources of the Company who will assign
Employee such work as Vice President – Human Resources deems necessary and appropriate in furtherance of the Company’s
business pursuits. Such work may require Employee to travel from time to time, which will be at mutually agreeable times consistent
with the requirements of the work to be performed.

 

4.          As
of the Transition Date (unless otherwise noted), the Parties agree to and acknowledge the following:

 

		(a)	The Company will no longer fund the premiums related to the Executive Life Insurance provided to
Employee, but will consent to (if required) a request by Employee to convert said policy to a private-funded policy
in which premiums will be paid by Employee.

 

		(b)	As of the earlier of the Transition Date or the date on which the next annual premium is due, the
Company will no longer fund the premiums related to the Executive Long-Term Disability policy provided to Employee, but will consent
to (if required) a request by Employee to convert said policy to a private-funded policy in which premiums
will be paid by Employee.

 

    	 

    	 

    

 

		(c)	Employee will no longer be eligible to receive equity compensation on par with other executives.

 

		(d)	Employee will no longer be eligible to participate in the Company’s 401(k) plan or other
benefits available to full-time employees.

 

5.          Other
Agreements. The Restricted Share Award Agreements related to (i) those unvested Restricted Shares issued to Employee on
or about January 1, 2012 and which are tentatively scheduled to vest in March 2015; and (ii) those unvested Restricted Shares
issued to Employee on or about January 1, 2013  and which are tentatively scheduled to vest in March 2016, each are
terminated as of the Effective Date and all rights, privileges, duties and obligations arising thereunder shall expire and
be null and void as of such date. The Employment Agreement by and between the Parties, dated January 10, 2007, and the
Indemnification Agreement by and between the Parties, executed on March 1, 2000, each are terminated as of the Effective Date
and all rights, privileges, duties and obligations arising thereunder shall expire and be null and void as of such date. The
Confidentiality/Non-Compete Agreement executed on July 21, 1997 (the “Confidentiality Agreement”) is incorporated
herein by reference and shall each remain in full force and effect according to its terms.

 

6.          Release.
In consideration of the Company entering into this Agreement and its obligation to provide the continued benefits during the Term,
including the Transition Period, Employee agrees at the end of the Term to execute without revocation a valid release in substantially
the form attached to this Agreement as Exhibit A (the “Release”).

 

7.          Following
the Transition Date, Employee will accurately record all time spent performing work on behalf of the Company in the Kronos system
and include the date the work was performed.

 

8.          Following
the Transition Date, Employee will be compensated at the rate of $120.00 per hour for all work performed as evidenced by the Kronos
records in accordance with the normal practice of the Company. The Company will withhold, on Employee’s behalf, such sums
as required for payroll or income tax or any other tax, unemployment insurance, Social Security, or other withholding pursuant
to any law or requirement of any governmental body.

 

9.          The
Company may terminate Employee’s employment immediately for Cause for any of the following reasons: (i) an act or acts
of dishonesty or fraud by Employee relating to the performance of her services to the Company; (ii) a breach by Employee of
her duties or responsibilities under the Agreement resulting in significant demonstrable injury to the Company or any of its subsidiaries;
(iii) Employee’s conviction of a felony or any crime involving moral turpitude; (iv) Employee’s material
failure (for reasons other than death or Disability) to perform her duties under this Agreement or insubordination (defined as
refusal to execute or carry out directions from the Vice President – Human Resources or his/her duly appointed designees);
or (v) a breach by Employee of any provision of any material policy of the Company or of her obligations under the Confidentiality
Agreement. The Company shall exercise its right to terminate Employee’s employment for Cause by giving Employee written notice
of termination specifying in reasonable detail the circumstances constituting such Cause. In the event of such termination of Employee’s
employment for Cause, Employee shall be entitled to receive only (a) earned pay through the date of such termination of employment;
(b) any other compensation and benefits to the extent actually earned by Employee under any other benefit plan or program
of the Company as of the date of such termination of employment, such compensation and benefits to be paid at the normal time for
payment of such compensation and benefits to the extent not previously paid; and (c) any reimbursement amounts owed.

 

    	 

    	 

    

 

10.         Severability
or Partial Invalidity. The invalidity or unenforceability of a particular provision hereof shall not affect the other provisions
of this Agreement, and it shall be construed in all respects as if such invalid or unenforceable provision were omitted. In the
event any provision of this Agreement shall be determined by a court of competent jurisdiction to be unenforceable, the remainder
of this Agreement shall remain valid and binding in accordance with its terms.

 

11.         Assignment.
This Agreement and the rights, duties, and obligations hereunder may not be assigned or delegated by any Party without the prior
written consent of the other Party and any attempted assignment or delegation without such prior written consent shall be void
and be of no effect. Notwithstanding the foregoing, the Company may assign or delegate its rights, duties and obligations hereunder
to any affiliate or to any person or entity which succeeds to all or substantially all of the business of the Company or one of
its subsidiaries through merger, consolation, reorganization, or other business combination or by acquisition of all or substantially
all of the assets of the Company or one of its subsidiaries without Employee’s consent.

 

12.         Governing
Law; Jurisdiction. This Agreement shall be construed and enforced in accordance with the laws of the State of Connecticut,
without regard to the conflicts of law provisions thereof; and both Parties hereby consent to the exclusive jurisdiction of the
state and federal courts of the State of Connecticut with respect to any disputes relating to this Agreement.

 

13.         Amendments;
Waivers. No provision of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge
is agreed to in writing signed by Employee and the Company. No waiver by either Party hereto at any time of any breach by the other
Party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other Party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

 

14.         No
Disparagement. Both during the period of Employee’s employment with the Company, and following
the date of termination of her employment for any reason, Employee shall not publish or communicate to any person or entity any
Disparaging (as defined below) remarks, comments or statements concerning the Company, its subsidiaries or affiliates or any of
their shareholders, directors, officers, employees or agents. “Disparaging” remarks, comments or statements are those
that impugn the character, honesty, integrity or morality or business acumen or abilities in connection with any aspect of the
operation of business of the individual or entity being disparaged. The parties agree that the terms of this Section shall survive
the term of this Agreement and the termination of Employee’s employment.

 

15.         Covenant
to Notify Management. Employee agrees to abide by the ethics policies of the Company as well as the Company’s other rules,
regulations, policies and procedures. Employee agrees to comply in full with all governmental laws and regulations as well as ethics
codes applicable. In the event that Employee is aware or suspects the Company, or any of its officers or agents, of violating any
such laws, ethics, codes, rules, regulations, policies or procedures, Employee agrees to bring all such actual and suspected violations
to the attention of the Company immediately so that the matter may be properly investigated and appropriate action taken.

 

    	 

    	 

    

 

16.         Entire
Agreement. This Agreement, along with the Confidentiality Agreement, constitutes the entire agreement of the Parties and supersedes
all prior written or oral and all contemporaneous oral agreements, understandings, and negotiations between the Parties
with respect to the subject matter hereof including, but not limited to, the Employment Agreement dated January 10, 2007, and the
Indemnification Agreement, dated March 1, 2000. This Agreement may not be changed orally and may only be modified in writing
signed by both Parties. This Agreement, along with the Confidentiality Agreement, is intended by the Parties as the final expression
of their agreement with respect to such terms as are included herein and therein and may not be contradicted by evidence of any
prior or contemporaneous agreement. The Parties further intend that this Agreement, along with the Confidentiality Agreement, constitutes
the complete and exclusive statement of their terms and that no extrinsic evidence may be introduced in any judicial proceeding
involving such agreements.

 

17.         Counterparts.
This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed an original but all
of which together shall constitute one and the same instrument.

 

IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer and Employee has hereunto
set her hand as of the day and year first above written.

 

	 	LYDALL,
    INC.
	 	 	 
	 	By:	/s/
    Dale G. Barnhart
	 	 	Name:
    Dale G. Barnhart
	 	 	Title:
    President and Chief Executive Officer
	 	 	 
	 	 	/s/
    Mona, G. Estey
	 	 	MONA
    G. ESTEY

 

    	 

    	 

    

 

EXHIBIT A

 

TERMINATION,
VOLUNTARY RELEASE AND WAIVER OF RIGHTS AGREEMENT

 

I, Mona G. Estey,
unqualifiedly accept and agree to the relinquishment of my title, responsibilities and obligations as an employee of Lydall, Inc.
(“the Company”), and concurrently and unconditionally agree to sever my relationship as an employee of the Company,
in consideration for those benefits extended to me by the Company set forth in that certain Letter of Agreement dated as of September 30,
2013 by and between me and the Company (the “Letter Agreement”), which is made a part hereof.

 

1.          In
exchange for this consideration, which I understand that the Company is not otherwise obligated to provide to me, I voluntarily
agree to waive and forego any and all claims, rights, interests, covenants, contracts, warranties, promises, undertakings, actions,
suits, causes of action, obligations, debts, attorneys’ fees or other expenses, accounts, judgments, fines, fees, losses
and liabilities, of any kind, nature or description, in law, equity or otherwise (collectively, “Claims”) that I may
have against the Company and to release the Company and their respective affiliates, subsidiaries, officers, directors, employees,
representatives, agents, successors and assigns (hereinafter collectively referred to as “Releasees”) from any obligations
any of them may owe to me, accepting the aforestated consideration as full settlement of any monies or obligations owed to me by
Releasees that may have arisen at any time prior to the date of my execution of this Termination, Voluntary Release and Waiver
of Rights Agreement (the “Agreement”), except as specifically provided below in the following paragraph number 2.

 

2.          I
do not waive, nor has the Company asked me to waive, any rights arising exclusively under the Fair Labor Standards Act, except
as such waiver may henceforth be made in a manner provided by law. I do not waive, nor has the Company asked me to waive, any vested
benefits that I may have or that I may have derived from the course of my employment with the Company. I understand that such vested
benefits will be subject to and administered in accordance with the established and usual terms governing same. I do not waive
any rights which may in the future, after the execution of this Agreement, arise exclusively from a substantial breach by the Company
of a material obligation of the Company expressly undertaken in consideration of my entering into this Agreement.

 

3.          Except
as set forth in paragraph 2, I do fully, irrevocably and forever waive, relinquish and agree to forego any and all Claims whatsoever,
whether known or unknown, that I may have or may hereafter have against the Releasees or any of them arising out of or by reason
of any cause, matter or thing whatsoever from the beginning of the world to the date hereof, including without limitation any and
all matters relating to my employment with the Company and the cessation thereof and all matters arising under Title VII of the
Civil Rights Act of 1964, 42 U.S.C. § 2000 et seq., the Americans with Disabilities Act of 1990, 42 U.S.C.
§ 12101 et seq., the Family and Medical Leave Act of 1993, 29 U.S.C. § 2601 et seq.,
the Age Discrimination in Employment Act of 1967, 29 U.S.C. § 621 et seq., the Employee Retirement Income
Security Act of 1974, 29 U.S.C. § 1001 et seq., all as amended, or under any other laws, ordinances, Employee
orders, regulations or administrative or judicial case law arising under the statutory or common laws of the United States, the
State of Connecticut or any other applicable county or municipal ordinance.

 

    	 

    	 

    

 

4.          As
a material inducement to the Company to enter into this Agreement, I, the undersigned, recognize that I may have been privy to
certain confidential, proprietary and trade secret information of the Company which, if known to third parties, could be used in
a manner that would reduce the value of the Company for its shareholders. In order to reduce the risk of that happening, I, the
undersigned, agree that for a period of two (2) years after termination of employment, I, the undersigned, will not, directly or
indirectly, assist, or be part of or have any involvement in, any effort to acquire control of the Company through the acquisition
of its stock or substantially all of its assets, without the prior consent of the Board of Directors of the Company. This provision
shall not prevent the undersigned from owning up to not more than one percent (1%) of the outstanding publicly traded stock of
any company.

 

5.          I
further acknowledge pursuant to the Older Worker’s Benefit Protection Act (29 U.S.C. § 626(f)), I expressly agree that
the following statements are true:

 

a.           The
payment of the benefits described in the Letter Agreement is in addition to the standard employee benefits and anything else of
value which the Company owes me in connection with my employment with the Company or the separation of employment.

 

b.           I
have twenty one (21) days from the date of receipt to consider and sign this agreement. If I choose to sign this agreement before
the end of the twenty one (21) day period, that decision is completely voluntary and has not been forced on me by the Company.

 

c.           I
will have seven (7) days after signing the Agreement in which to revoke it, and the Agreement will not become effective or enforceable
until the end of those seven (7) days.

 

d.           I
am now being advised in writing to consult an attorney before signing this Agreement.

 

I acknowledge that
I have been given sufficient time to freely consult with an attorney or counselor of my own choosing and that I knowingly and voluntarily
execute this Agreement, after bargaining over the terms hereof, with knowledge of the consequences made clear, and with the genuine
intent to release claims without threats, duress, or coercion on the part of the Company. I do so understanding and acknowledging
the significance of such waiver.

 

6.          Further,
in view of the above-referenced consideration voluntarily provided to me by the Company, after due deliberation, I agree to waive
any right to further litigation or claim against any or all of the Releasees except as specifically provided in paragraph number
2 above. I hereby agree to indemnify and hold harmless the Releasees and their respective agents or representatives from and against
any and all losses, costs, damages or expenses, including, without limitation, attorneys’ fees incurred by said parties,
or any of them, arising out of any breach of this Agreement by me or by any person acting on my behalf, or the fact that any representation
made herein by the undersigned was false when made.

 

    	 

    	 

    

 

7.          As
a material inducement to the Company to enter into this Agreement, I, the undersigned, understand and agree that if I should fail
to comply with the conditions hereof or to carry out the agreement set forth herein, all amounts previously paid under this Agreement
shall be immediately forfeited to the Company and that the right or claim to further payments and/or benefits hereunder would likewise
be forfeited.

 

8.          As
a further material inducement to the Company to enter into this Agreement, the undersigned provides as follows:

 

First. I
represent that I have not filed any complaints or charges against the Company, or any of the Releasees relating to the relinquishment
of my former titles and responsibilities at the Company or the terms of my employment with the Company and that if any agency or
court assumes jurisdiction of any complaint or charge against the Company or any of the Releasees on behalf of me concerning my
employment with the Company, I understand and agrees that I have, by my knowing and willing execution of this Agreement waived
my rights to any form of recovery or relief against the Company, or any of the Releasees, including but not limited to, attorney’s
fees. Provided, however, that this provision shall not preclude the undersigned from pursuing appropriate legal relief against
the Company for redress of a substantial breach of a material obligation of the Company expressly undertaken in consideration of
my entering into this Agreement.

 

Second.
I acknowledge and understand that the consideration for this release shall not be in any way construed as an admission by the Company
or any of the Releasees of any improper acts or any improper employment decisions, and that the Company, specifically disclaims
any liability on the part of itself, the Releasees, and their respective agents, employees, representatives, successors or assigns
in this regard.

 

Third. I
acknowledge and agree that this Agreement shall be binding upon me, upon the Company, and upon our respective administrators, representatives,
Employees, successors, heirs and assigns and shall inure to the benefit of said parties and each of them.

 

Fourth.
I represent, understand and agree that this Agreement sets forth the entire agreement between the parties hereto, and fully supersedes
any and all prior agreements or understandings between the parties pertaining to the subject matter hereof, except for the confidentiality
and non-competition agreement previously executed by me, the terms of which retain their full force and effect, and which are in
no way limited or curtailed by this Agreement.

 

Fifth. Modification.
This Agreement may not be altered or changed except by an agreement in writing that has been properly executed by the party against
whom any waiver, change, modification or discharge is sought.

 

Sixth. Severability.
All provisions and terms of this Agreement are severable. The invalidity or unenforceability of any particular provision(s) or
term(s) of this Agreement shall not affect the validity or enforceability of the other provisions and such other provisions shall
be enforceable in law or equity in all respects as if such particular invalid or unenforceable provision(s) or term(s) were omitted.
Notwithstanding the foregoing, the language of all parts of this Agreement shall, in all cases, be construed as a whole, according
to its fair meaning, and not strictly for or against any of the parties.

 

    	 

    	 

    

 

Seventh.
No Disparagement. Unless otherwise required by a court of competent jurisdiction or pursuant to any recognized subpoena
power, I agree and promise that I will not make any oral or written statements or reveal any information to any person, company,
or agency which is disparaging or damaging to the reputation or business of the Company, its subsidiaries, directors, officers
or affiliates, or which would interfere in any way with the business relations between the Company or any of its subsidiaries or
affiliates and any of their customers, suppliers or vendors whether present or in the future.

 

Eighth. Confidentiality.
The Company and the undersigned agree to refrain from disclosing to third parties and to keep strictly confidential
all details of this Agreement and any and all information relating to its negotiation, except as necessary to each
party’s accountants or attorneys or as is otherwise required by law, regulation or rule (e.g., public disclosure
requirements imposed by the Securities and Exchange Commission or the New York Stock Exchange).

 

Ninth.  Termination
of Agreement. Notwithstanding anything to the contrary in this Agreement, this Agreement may be terminated by the Company and
all further payment obligations of the Company will cease, if: (a) the undersigned is terminated for “Cause” prior
to the undersigned’s separation date; or (b) facts are discovered after the undersigned’s separation date that would
have supported a termination for “Cause” had such facts been discovered prior to the undersigned’s separation
date.

 

AFFIRMATION
OF RELEASOR

 

I, Mona G. Estey,
warrant that I am competent to execute this Termination, Voluntary Release and Waiver of Rights Agreement and that I accept full
responsibility thereof.

 

I, Mona G. Estey,
warrant that I have had the opportunity to consult with an attorney of my choosing with respect to this matter and the consequences
of my executing this Termination, Voluntary Release and Waiver of Rights Agreement.

 

I, Mona G. Estey,
have read this Termination, Voluntary Release and Waiver of Rights Agreement carefully and I fully understand its terms. I execute
this document voluntarily with full and complete knowledge of its significance.

 

    	 

    	 

    

 

Executed this______
  day of ________________, 2014, at_____________________________.

 

	 	 
	 	Mona G. Estey

 

 

	STATE OF ________________________________  )	 	 
	)    	 	SS:
	COUNTY OF ______________________________  )	 	 

 

Subscribed
and sworn to before me, a Notary Public in and for said County and State, this __ day of _________________, 2014, under the
pains and penalties of perjury.

 

	 	 	 
	 	 	 
	, Notary Public	 	 
	My Commission Expires:________________________	 	 
	County of Residence:________________________a50719260ex10-1.htm

Exhibit 10.1

 

 

EXECUTION COPY

 

 

AMENDMENT NO. 1 TO REVOLVING CREDIT AND SECURITY AGREEMENT

 

THIS AMENDING AGREEMENT is made as of the 30th day of September, 2013

 

BY AND AMONG:

 

PNC BANK CANADA BRANCH, as Agent and as Lender

 

(hereinafter referred to as the “Agent”)

 

- and -

 

ZOCHEM INC., as Borrower

 

(hereinafter referred to as the “Borrower”)

 

- and –

 

HORSEHEAD HOLDING CORP.

 

(hereinafter collectively referred to as the “Guarantor”)

 

WHEREAS the Agent, the Borrower and the Guarantor entered into a Revolving Credit and Security Agreement dated as of December 21, 2012 (the “Credit Agreement”);

 

AND WHEREAS in connection with certain capital expenditures which the Borrower has made, the Borrower has requested the Agent amend the definitions of Eligible Receivables, Fixed Charge Coverage Ratio and Unfunded Capital Expenditures in Section 1.2 of the Credit Agreement, all upon the terms and conditions set forth in this Agreement.

 

NOW THEREFORE, in consideration of the premises and the agreements herein set out and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

ARTICLE 1

GENERAL

 

	
1.1

	
Definitions

 

Unless otherwise defined herein, capitalized terms used in this amending agreement (this “Agreement”), including in the recitals hereto, shall have the meanings ascribed to such terms in the Credit Agreement.

 

	
1.2

	
Amendment Effective Date

 

The Credit Agreement shall be deemed to be amended as of the Amendment Effective Date (as that term is hereinafter defined). The terms “hereof”, “herein”, “this Agreement” and similar terms used in the Credit Agreement, shall mean and refer to, from and after the Amendment Effective Date, the Credit Agreement as amended by this Agreement.

 

  

  

  

- 2 -

 

	
1.3

	
Continued Effectiveness

 

Each of the parties hereto agree that the Credit Agreement as amended by this Agreement shall remain in full force and effect.

 

	
1.4

	
Benefit of the Agreement

 

This Agreement shall enure to the benefit of and be binding upon the Borrower, the Guarantor, the Agent and the Lender and their respective successors and permitted assigns.

 

	
1.5

	
Invalidity of any Provisions

 

Any provision of this Agreement which is prohibited by the laws of any jurisdiction shall, as to such jurisdiction, be ineffective only to the extent of such prohibition in such jurisdiction without invalidating the remaining terms and provisions hereof and no such invalidity shall affect the obligation of the Borrower to pay the Obligations in full.

 

	
1.6

	
Captions and Headings

 

The inclusion of headings preceding the text of the sections of this Agreement and the headings following each Article in this Agreement are intended for convenience of reference only and shall not affect in any way the construction or interpretation thereof.

 

ARTICLE 2

AMENDMENTS

 

	
2.1

	
Amendments

 

With effect as of the Amendment Effective Date, the Credit Agreement is hereby amended to give effect to this Agreement and the Credit Agreement is further amended as follows: 

 

	
(a)

	
Part (j) of the definition of “Eligible Receivables” in Section 1.2 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

“(j) the Receivable arises with respect to a Customer whose aggregate amount of Receivables constitute forty percent (40%) or more of the aggregate amount of  all Receivables owed to the Borrower, to the extent such Receivables exceed such limit; provided that if such Customer’s credit rating is below any of (A) a Moody’s rating of Baa3, (B) an S&P rating of BBB-, (C) a Fitch rating of BBB-, or (D) a DBRS rating of BBB(low), then such percentage shall be decreased to fifteen percent (15%);”

 

	
(b)

	
the definition of “Fixed Charge Coverage Ratio” in Section 1.2 of the Credit Agreement is hereby amended by adding the following phrase after the words ‘such period’ in the third line thereof:

 

“to the extent in excess of $7,052,000 for any Testing Event that occurs between August 1, 2013 and July 31, 2014”

 

 

	
(c)

	
the definition of “Unfinanced Capital Expenditures” in Section 1.2 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

““Unfinanced Capital Expenditures” shall mean all Capital Expenditures of the Borrower and its Subsidiaries on a consolidated basis other than those made utilizing financing provided by the applicable seller or third party lenders or by a Lender hereunder. For the avoidance of doubt, Capital Expenditures made by the Borrower or any of its Subsidiaries utilizing Advances shall not be deemed Unfinanced Capital Expenditures.”

 

  

  

  

- 3 -

 

	
(d)

	
Section 7.6 of the Credit Agreement is hereby deleted in its entirety and replaced with the following:

 

“Declare, pay or make any dividend or distribution on any shares of the common shares, preferred shares, membership interests or partnership interests of any Borrower Party or apply any of its funds, property or assets to the purchase, redemption or other retirement of any common shares, preferred shares, membership interests or partnership interests or of any options to purchase or acquire any such shares of common or preferred shares, membership interests or partnership interests of any Borrower Party, except that (i) any Borrower Party may make any such payment or distribution to another Borrower Party, (ii) so long as no Event of Default shall have occurred and be continuing or shall occur as a result of giving effect to any such payment, the Borrower Parties shall be permitted to pay dividends or distributions to Holding to enable Holding to make payments as required or permitted under any Holding Bond Issuance or under any Indenture Document, (iii) so long as (y) no Event of Default or Default shall have occurred and be continuing or shall occur as a result of giving effect to any such payment and (z) Undrawn Availability, both prior to and after giving effect to any such payment, is equal to or greater than One Million Five Hundred Thousand and 00/100 Dollars ($1,500,000.00), the Borrower Parties shall be permitted to pay dividends or distributions, and (iv) the Borrower may pay a single dividend to Horsehead Holding Corp. of no more than $10,000,000.”

 

ARTICLE 3

REPRESENTATIONS, WARRANTIES AND COVENANTS

 

	
3.1

	
Representations and Warranties

 

Each of the Borrower and the Guarantor hereby represents and warrants to the Agent and the Lender as follows (which representations and warranties shall survive the execution and delivery of this Agreement, acknowledging that the Agent and Lender are relying thereon without independent inquiry in entering into this Agreement):

 

	
(a)

	
it has the corporate or partnership power and authority and all governmental licenses, authorizations, consents, registrations and approvals required to enter into and perform its obligations under this Agreement;

 

	
(b)

	
the execution, delivery and performance by it of this Agreement: (i) have been duly authorized by all necessary corporate or partnership action; (ii) do not contravene any provision of its articles, by-laws, partnership agreement or any shareholders agreement; (iii) do not contravene or violate any law, decree, order, rule or regulation of its jurisdiction of incorporation or formation or any legal requirement applicable to it, except for any contravention or violation of any such law, decree, order, rule or regulation individually or in the aggregate which has not had or could not reasonably be expected to have a Material Adverse Effect; and (iv) will not constitute or result in a breach of, or a default under, or be in conflict with, any deed, indenture, mortgage, franchise, license, judgment, agreement or instrument to which it is a party or by which it is bound except to the extent that any such breach, default or conflict of, under or with any such deed, indenture, mortgage, franchise, license, judgment, agreement or instrument has not had or could not reasonably be expected to have a Material Adverse Effect;

 

  

  

  

- 4 -

 

	
(c)

	
this Agreement has been duly executed and delivered by it and constitutes a legal, valid and binding obligation of it, enforceable against it in accordance with its terms except to the extent such enforcement may be restricted by any applicable bankruptcy, insolvency, moratorium, reorganization or other similar laws affecting creditors' rights generally and subject to the discretion of a court in regard to the availability of equitable remedies; and

 

	
(d)

	
no Default or Event of Default under the Credit Agreement has occurred or is continuing.

 

ARTICLE 4

CONDITIONS

 

	
4.1

	
Conditions to Effectiveness of Amendment

 

The amendments contained in Article 2 shall not become effective until the Agent shall have received the following deliveries in form and substance satisfactory to the Agent, acting reasonably (the date on which all such deliveries have been completed is hereinafter referred to as the “Amendment Effective Date”);

 

	
(a)

	
the execution and delivery of this Agreement by the parties hereto; and

 

	
(b)

	
payment from the Borrower of the fees in the amount of $25,000 as consideration for the assessment of this Agreement.

 

ARTICLE 5

GUARANTOR CONSENT

 

	
5.1

	
Guarantor Consent

 

The Guarantor consents and agrees to this Agreement, and further agrees that its Guaranty its obligations thereunder, guarantee and support the Borrower’s obligations under this Agreement and the Credit Agreement, shall be and remain in full force and effect and are hereby in all respects confirmed and ratified.

 

ARTICLE 6

MISCELLANEOUS

 

	
6.1

	
Further Assurances

 

Each of the parties hereto agrees to execute and deliver or cause to be executed and delivered all such instruments and to take all such action as the other party may reasonably request, and at the expense of such other party in order to more fully effectuate and accomplish the intent and purposes of and to carry out the terms of this Agreement.

 

  

  

  

- 5 -

 

	
6.2

	
Governing Law.

 

This Agreement shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable therein.

 

	
6.3

	
Time of the Essence

 

Time shall be of the essence in this Agreement in all respects.

 

	
6.4

	
Counterparts.

 

This Agreement may be executed and delivered in any number of counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. Counterparts may be executed and delivered in original, facsimile or electronic form to the other parties hereto and the parties hereto agree to accept any such executed counterparts as original signed versions of this Agreement.

 

[Intentionally Left Blank]

 

 

 

 

 

 

 

 

  

  

  

 

	  	  	
PNC BANK CANADA BRANCH, as Agent and as Lender

 

 

	
By:

	
/s/ Michael Etienne

	  	
Name:  Michael Etienne

	  	
Title:  Senior Vice President

	  	  	
ZOCHEM INC.

 

 

	
By:

	
/s/ Robert D. Scherich

	  	
Name:  Robert D. Scherich

	  	
Title:  Vice President and CFO

	  	  	
HORSEHEAD HOLDING CORP.

 

 

	
By:

	
/s/ Robert D. Scherich

	  	
Name:  Robert D. Scherich

	  	
Title:  Vice President and CFO

 

 

 

 

 

 

Amendment No. 1

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