-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MuER6MkwFPKJmwHRETJ303N90xVkqbuqYAPE9LRU6S639aC8M1a3iQcQUOF1cjhU XRvUfY7JiPl83riC+gep7Q== 0001108890-02-000379.txt : 20021202 0001108890-02-000379.hdr.sgml : 20021202 20021202150555 ACCESSION NUMBER: 0001108890-02-000379 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20021122 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20021202 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CASTLE A M & CO CENTRAL INDEX KEY: 0000018172 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-METALS SERVICE CENTERS & OFFICES [5051] IRS NUMBER: 360879160 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-05415 FILM NUMBER: 02845854 BUSINESS ADDRESS: STREET 1: 3400 N WOLF RD CITY: FRANKLIN PARK STATE: IL ZIP: 60131 BUSINESS PHONE: 7084557111 MAIL ADDRESS: STREET 1: 3400 N WOLF RD CITY: FRANKLIN PARK STATE: IL ZIP: 60131 8-K 1 amcastle8k112202.txt REPORTED 11-22-02 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): November 22, 2002 A.M. CASTLE & CO. ---------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Maryland 1-5415 36-0879160 --------------------------- ---------------------- ----------------- (State or Other Jurisdiction (Commission File Number) (IRS Employer of Incorporation) Identification No.) 3400 North Wolf Road, Franklin Park, Illinois 60131 -------------------------------------- -------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (847) 455-7111 -------------- Not Applicable ----------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 5. Other Events. ------------ On November 22, 2002, the Company completed its previously announced sale of 12,000 shares of its newly created Series A Cumulative Convertible Preferred Stock (the "Series A Preferred") for an aggregate purchase price of $12,000,000. Contemporaneously with the sale of the Series A Preferred, the Company also completed the renegotiations of its loan covenants with its major long-term lenders and its three bank lenders. The Company sold the Series A Preferred in a private placement to a number of current shareholders, who, in the aggregate, owned approximately 40% of the Company's common stock (the "Common Stock") prior to the transaction. The sale increased their aggregate holdings of Common Stock (on an as-converted basis) and voting power initially by approximately 5%. The Series A Preferred Stock has an initial conversion price of $6.69 per share of Common Stock. The Series A Preferred is entitled to a quarterly dividend equal to the greater of 8% per annum or the total dividends declared and paid on the Common Stock on an as-converted basis each year. For the other terms of the Series A Preferred, see Exhibit 3, filed herewith. In connection with the sale of the Series A Preferred, the Company entered into the Series A Cumulative Convertible Preferred Stock Purchase Agreement (filed herewith as Exhibit 10.1) and a Registration Rights Agreement (filed herewith as Exhibit 10.2). In conjunction with the sale of the Series A Preferred, the Company renegotiated its loan covenants (the "Debt Amendments") with its senior note holders (who hold approximately $96,000,000 aggregate principal amount of senior notes) and its two lender banks in the US (the senior note holders and lender banks being referred to collectively as the "Lenders"). The Debt Amendments expand certain financial covenants in order to provide greater financial and operating flexibility. In exchange for the Debt Amendments, the interest rate or other fees payable by the Company on the various senior debt instruments to the Lenders (the "Senior Debt") will increase, raising, at the current debt level, the Company's annual interest expense by approximately $2.1 million. Upon the Company's debt attaining investment grade status, the interest expense will decrease by approximately $1.6 million. As part of the Debt Amendments, certain of the Company's subsidiaries entered into guarantees with respect to the Senior Debt and, in addition, the Company and certain of its subsidiaries will grant the Lenders security interests in substantially all of their respective assets. As part of the negotiations, A. M. Castle & Co. (Canada), Inc. ("Castle Canada") also amended its credit agreement with its Canadian bank lender and will grant the bank a security interest in substantially all of its assets. Neither the Company or any other subsidiary has guaranteed the debt of Castle Canada, nor has Castle Canada guaranteed the debt of the Company or other subsidiary. Copies of the agreements, as amended, between the Company and its senior note holders are filed as exhibits hereto. Further, the Company has signed a commitment letter for a $60 million receivable securitization financing facility to replace its existing facility, which expires in March 2003. Item 7. Exhibits. -------- (c) Exhibits: --------- The exhibits accompanying this report are listed in the accompanying Exhibit Index. 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. A.M. CASTLE & CO. By: /s/ Edward F. Culliton ------------------------------- Edward F. Culliton Vice President and Chief Financial Officer Date: December 2, 2002 3 EXHIBIT INDEX The following exhibits are filed herewith: - ------------------------- ------------------------------------------------------ Exhibit No. Exhibit ----------- ------- - ------------------------- ------------------------------------------------------ 3 Articles Supplementary to the Company's Articles of Incorporation creating the Company's Series A Cumulative Convertible Preferred Stock, filed November 22, 2002 with the State Department of Assessments and Taxation of Maryland - ------------------------- ------------------------------------------------------ 4.1 Note Agreement dated as of April 1, 1996 between the Company and Nationwide Life Insurance Company - ------------------------- ------------------------------------------------------ 4.2 First Amendment and Waiver to Note Agreement dated as of December 1, 1998, to April 1, 1996 Note Agreement - ------------------------- ------------------------------------------------------ 4.3 Second Amendment dated as of November 22, 2002, to April 1, 1996 Note Agreement - ------------------------- ------------------------------------------------------ 4.4 Note Agreement dated as of May 15, 1997 among the Company, Massachusetts Mutual Life Insurance Company and United of Omaha Life Insurance Company - ------------------------- ------------------------------------------------------ 4.5 First Amendment and Waiver to Note Agreement dated as of December 1, 1998, to May 15, 1997 Note Agreement - ------------------------- ------------------------------------------------------ 4.6 Second Amendment dated as of November 22, 2002, to Note Agreement dated as of May 15, 1997 - ------------------------- ------------------------------------------------------ 4.7 Note Agreement dated as of March 1, 1998 among the Company, Allstate Life Insurance Company, The Northwestern Mutual Life Insurance Company, Massachusetts Mutual Life Insurance Company, Mutual of Omaha Insurance Company and United of Omaha Life Insurance Company - ------------------------- ------------------------------------------------------ 4.8 First Amendment and Waiver to Note Agreement dated as of December 1, 1998, to Note Agreement dated as of March 1, 1998 - ------------------------- ------------------------------------------------------ 4.9 Second Amendment dated as of November 22, 2002, to Note Agreement dated as of March 1, 1998 - ------------------------- ------------------------------------------------------ 10.1 Series A Cumulative Convertible Preferred Stock Purchase Agreement, dated as of November 22, 2002 among the Company, the investors named therein (the "Investors") and W.B. & Co, for itself, and as nominee and agent of the Investors - ------------------------- ------------------------------------------------------ 10.2 Registration Rights Agreement, dated as of November 22, 2002 among the Company, the investors named therein (the "Investors") and W.B. & Co, for itself, and as nominee and agent of the Investors relating to the Company's Series A Cumulative Convertible Preferred Stock - ------------------------- ------------------------------------------------------ 4 EX-3 3 amcastle8k112202exib3.txt ARTICLES SUPPLEMENTARY Exhibit 3 A.M. CASTLE & CO. ----------------- ARTICLES SUPPLEMENTARY SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK A.M. Castle & Co., a Maryland corporation (the "Corporation"), hereby certifies to the State Department of Assessments and Taxation of Maryland that: FIRST: Under a power contained in Article Fifth of the charter of the Corporation (the "Charter"), the Board of Directors of the Corporation (the "Board of Directors") adopted resolutions classifying and designating 12,000 shares of Preferred Stock (as defined in the Charter) as shares of Series A Cumulative Convertible Preferred Stock, with the preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends and other distributions, qualifications and terms and conditions of redemption set forth below. Upon any restatement of the Charter, Sections 1 through 8 of this Article First shall become part of Article Fifth of the Charter, with such changes in enumeration as are necessary to complete such restatement. Section 1. Designation of Amount. The shares of such series shall be designated as "Series A Cumulative Convertible Preferred Stock" (the "Series A Preferred") and the authorized number of shares constituting such series shall be 12,000. In accordance with the terms hereof, each share of Series A Preferred shall have the same relative rights as and be identical in all respects with each other share of Series A Preferred. Section 2. Dividends. When and as authorized by the Board of Directors and declared by the Corporation and to the extent permitted under the Maryland General Corporation Law, the Corporation shall pay dividends to the holders of the Series A Preferred as provided in this Section 2. (a) In the event that the Corporation fixes a record date for the making of any dividend or distribution on the Corporation's common stock, $.01 par value per share (the "Common Stock"), other than dividends payable solely in Common Stock, subject to the receipt of any required approval under Section 3(b)(iii), the holder of each share of Series A Preferred on such record date shall be entitled to receive an equivalent dividend or distribution on the number of shares of Common Stock into which such share of Series A Preferred is convertible as of the record date for such dividend or distribution. (b) The Series A Preferred shall pay, in respect of each Dividend Period, cumulative dividends in an amount per share equal to the excess (if any) of (i) 8% per annum (2% on a quarterly basis) on the Accreted Value of the Series A Preferred as of the immediately preceding Dividend Reference Date (or, for the initial Dividend Period, as of the date of issuance) over (ii) the amount of any cash dividends per share of Series A Preferred that have been paid or to be paid during such Dividend Period pursuant to Section 2(a). Dividends paid pursuant to this Section 2(b) shall be payable in arrears quarterly on March 30, June 30, September 30 and December 31 of each year (each such date being a "Dividend Reference Date" and each such quarterly period being a "Dividend Period"). Each such dividend shall be payable to the holders of record of shares of the Series A Preferred on the March 15, June 15, September 15 and December 15, respectively, as they appear on the stock records of the Corporation at the close of business on such record date. Subject to Section 2(c), an amount equal to any such dividends not paid with respect to any Dividend Period shall be added to the Accreted Value of the Series A Preferred. Such increased Accreted Value after each Dividend Period shall be used for purposes of calculating dividends for succeeding Dividend Periods (except to the extent any such dividends included in the Accreted Value are subsequently declared and paid). Such dividends shall accrue from and including the date of issuance of such share of Series A Preferred to and including the first to occur of (i) the date on which the Series A Liquidation Value of such share of Series A Preferred is paid to the holder in accordance with Section 4, (ii) the date on which such share of Series A Preferred is converted into shares of Common Stock in accordance with Section 5 or (iii) the date on which such share is otherwise acquired by the Corporation. Such dividends shall accrue whether or not such dividends have been authorized or declared and whether or not there are profits, surplus or other funds of the Corporation legally available for the payment of dividends, and such dividends shall be cumulative such that all accrued and unpaid dividends shall be fully paid or declared with funds irrevocably set apart for payment before any dividend or distribution may be declared or paid or set apart for payment with respect to any Junior Securities. The date on which the Corporation initially issues any share of Series A Preferred shall be deemed to be the "date of issuance" for such share of Series A Preferred, regardless of the number of times a transfer of such share is made on the stock records maintained by or for the Corporation and regardless of the number of certificates which may be issued to evidence such share of Series A Preferred. (c) Prior to the payment of any dividends pursuant to Section 2(a) or Section 2(b) in the last Dividend Period of any calendar year, the Corporation shall make the following "true-up" adjustment, if any: to the extent the total aggregate amount of dividends paid and to be paid pursuant to Section 2(a) and Section 2(b) on the Series A Preferred for that calendar year would exceed 8% per annum on the Accreted Value (such excess, the "Total Dividend Excess") then (i) to the extent dividends paid or payable pursuant to Section 2(a) for that calendar year are less than 8% per annum on the Accreted Value, (A) first, the aggregate amount of dividends to be paid pursuant to Section 2(a), if any, and Section 2(b) in the last Dividend Period of such calendar year shall be reduced by the Total Dividend Excess (but not below zero) and (B) second, the aggregate amount of dividends payable pursuant to Section 2(a), if any, and Section 2(b) in each succeeding Dividend Period shall be reduced (but not below zero) by the amount of any remaining Total Dividend Excess until the Total Dividend Excess is reduced to zero; and (ii) to the extent dividends paid or payable pursuant to Section 2(a) for that calendar year would equal or exceed 8% per annum on the Accreted Value, (A) first, no dividends shall be payable pursuant to Section 2(b) in the last Dividend Period of that calendar year, (B) second, any dividends to be paid pursuant to Section 2(a) in the last Dividend Period of such calendar year shall be reduced by the aggregate amount of dividends paid pursuant to Section 2(b) during the first three (3) Dividend Periods of such calendar year (such aggregate amount, the "Preferred Dividend Excess") (but not below zero) and (C) third, the aggregate amount of dividends payable pursuant to Section 2(a), if any, and Section 2(b) in each succeeding Dividend Period shall be reduced (but not below zero) by the amount of any remaining Preferred Dividend Excess until the Preferred Dividend Excess is reduced to zero. It is -2- understood that in applying the provisions of this paragraph to any calender year, any reductions in the amount of dividends actually paid in that calender year due to the carry-over of any Total Dividend Excess or Preferred Dividend Excess from a prior calender year shall be disregarded. (d) Dividends payable pursuant to Section 2(b) are payable in cash or, if the Corporation so elects and if agreed to by the holder of shares of Series A Preferred, Common Stock. If such dividends are paid in Common Stock to any consenting holder, the Current Market Price on the date the dividends are declared will be used in calculating the number of shares paid to such holder. (e) If a holder converts shares of Series A Preferred after the close of business on the record date for a dividend and before the opening of business on a Dividend Reference Date for such dividend, then, pursuant to Section 5(a)(vii), the holder will be required to pay to the Corporation at the time of such conversion the amount of such dividend. (f) Except as otherwise provided herein, if at any time the Corporation pays less than the total amount of dividends then accrued with respect to the Series A Preferred, such payment shall be distributed pro rata among the outstanding shares of Series A Preferred based upon the aggregate dividends accrued but unpaid on such outstanding shares of Series A Preferred. (g) Dividends payable on the shares of Series A Preferred for any period less than a full Dividend Period shall be computed on the basis of a 365-day year and the actual number of days elapsed in the period for which such dividend is payable. Section 3. Voting Rights. ------------- (a) Except as otherwise required by law, the holders of Series A Preferred will be entitled to vote on all matters to be voted upon or actions to be taken by the Corporation's shareholders, voting as a single class with the Common Stock, with each share of Series A Preferred having a number of votes equal to the number of votes possessed by the number of whole shares of Common Stock into which such share of Series A Preferred is convertible as of the record date for the determination of shareholders entitled to vote on such matter, or if no record date is specified, as of the date of such vote or date of any written consent, as the case may be. (b) In addition to the voting rights contained in Section 3(a), as long as any shares of Series A Preferred remain outstanding, the Corporation shall not, without the vote or written consent of the holders of a majority of the shares of Series A Preferred then outstanding (the "Majority Preferred Holders"): (i) amend, repeal, modify or supplement any provision of the Charter, these Articles Supplementary or the Corporation's bylaws, whether by merger, consolidation or otherwise, in a manner that adversely affects any of the rights, preferences or privileges of the Series A Preferred, including any increase in the number of authorized shares of Series A Preferred; (ii) create (by reclassification or otherwise) any new class or series of equity securities which by its terms has rights, preferences or privileges senior to or equal to the Series A Preferred in respect to dividends or upon liquidation; (iii) pay or declare dividends or make any distributions on any Junior Securities (other than dividends payable solely in Common Stock) unless the Corporation is current in -3- its payments of accumulated and unpaid dividends to the holders of the Series A Preferred shares, in which event the Corporation may pay cash dividends with respect to its Common Stock in an amount not to exceed $.50 per share per annum; (iv) repurchase, redeem or otherwise acquire any Junior Securities (other than (A) repurchases of odd-lot holdings of less than 100 shares of Common Stock from registered shareholders at market price and (B) in accordance with the terms of any Junior Securities, the creation and issuance of which was approved by the Majority Preferred Holders); or (v) agree to do any of the foregoing; provided, however, that the foregoing shall not limit the Corporation from granting options for stock issued to employees, directors or consultants of the Corporation pursuant to a stock option or equity incentive plan approved by the Board of Directors or from the authorization or issuance of shares of stock for which such options become exercisable. Section 4. Liquidation Rights. ------------------ (a) In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or otherwise, the holders of shares of Series A Preferred shall be entitled to receive, out of the assets of the Corporation available for distribution to its shareholders, for each share of Series A Preferred, an amount ("Series A Liquidation Value") equal to the greater of (i) the Accreted Value of such shares of Series A Preferred on the date of distribution, plus all dividends (whether or not declared) on such share accrued since the end of the previous Dividend Period, minus the amount of any then existing Total Dividend Excess or Preferred Dividend Excess, or (ii) the amount to which the holder of such share of Series A Preferred would be entitled if all Series A Preferred shares had been converted immediately prior to such time of liquidation, dissolution or winding up, before any distribution shall be made to the holders of any Junior Securities. If upon any liquidation, dissolution or winding up of the Corporation, the assets distributable among the holders of shares of Series A Preferred are insufficient to permit the payment in full to the holders of all such shares of all preferential amounts payable to such holders, then the entire assets of the Corporation so distributable shall be distributed ratably among the holders of the shares of Series A Preferred in proportion to the respective amounts that would be payable per share if such assets were sufficient to permit payment in full. (b) For purposes of this Section 4, a distribution of assets in any dissolution, winding up or liquidation shall not include (i) any consolidation or merger of the Corporation with or into any other entity, provided that, in each case, effective provision is made in the certificate or articles of incorporation or other governing documents of the resulting or surviving entity or otherwise for the protection of the rights of the holders of shares of Series A Preferred, or (ii) a sale or other disposition of all or substantially all of the Corporation's assets to another person or entity. (c) Whenever the distribution provided for in this Section 4 shall be payable or made in property other than cash, the value of such distribution shall be the fair market value of such property as determined jointly by the Corporation and the Majority Preferred Holders. If they are unable to reach agreement within a reasonable period of time, then either of the Company or the Majority Preferred Holders may require that such value be determined by an independent appraiser experienced in valuing such type of property jointly selected by the Corporation and the Majority Preferred Holders. The determination of such appraiser shall be final and binding upon the parties and the fees and expenses of such appraiser shall be split equally between the Corporation and the Majority Preferred Holders. -4- (d) After the payment of the full preferential amounts provided for in Section 4(a) to the holders of shares of Series A Preferred, such holders shall be entitled to no other or further participation in the distribution of the assets of the Corporation. Section 5. Conversion. ---------- (a) Conversion Procedure. -------------------- (i) At any time and from time to time, a holder of Series A Preferred shall have the right to convert any share(s) of Series A Preferred into the number of shares of Common Stock computed by dividing (X) the Accreted Value of such share of Series A Preferred to be converted on the date of conversion, plus all dividends (whether or not declared) accrued since the end of the previous Dividend Period, minus the amount of any then existing Total Dividend Excess or Preferred Dividend Excess, by (Y) the Conversion Price then in effect for such share of Series A Preferred, subject to the limitations set forth in Section 5(b). (ii) Each conversion of Series A Preferred pursuant to Section 5(a) shall be effected by delivery, to the office of the Corporation or to any transfer agent for such shares, of duly endorsed certificates for the shares being converted and of written notice to the Corporation that the holder elects to convert such shares. Unless the shares issuable on conversion are to be issued in the same name as the name in which such shares of Series A Preferred are registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form reasonably satisfactory to the Corporation, duly executed by the holder or the holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax pursuant to Section 5(a)(viii). Conversion pursuant to Section 5(a) shall be deemed to occur immediately prior to the close of business on the date the certificates and notice are delivered. At the time any such conversion has been effected, the rights of the holders of shares of Series A Preferred so converted shall cease with respect to such shares of Series A Preferred, and such holders entitled to receive Common Stock upon conversion of such Series A Preferred shall be treated for all purposes as the record holders of such shares of Common Stock on the date conversion is deemed to have been effected. (iii) As soon as practicable after (x) a conversion has been effected and (y) the certificate(s) representing the converted shares of Series A Preferred have been surrendered to the principal office of the Corporation or to any transfer agent for such shares, the Corporation shall deliver to the converting holder: (A) a certificate or certificates representing the number of shares of Common Stock issuable by reason of such conversion in such name or names and such denomination or denominations as the converting holder has specified; -5- (B) a certificate representing any shares of Series A Preferred which were represented by the certificate or certificates delivered to the Corporation in connection with such conversion but which were not converted; and (C) any amount payable under Section 5(a)(vi) with respect to such conversion. (iv) The Corporation shall not close its books against the transfer of Series A Preferred or of Common Stock issued or issuable upon conversion of Series A Preferred in any manner that interferes with the timely conversion of Series A Preferred. At any time that conversion of shares of Series A Preferred pursuant to this Section 5(a) has occurred, the shares of Series A Preferred so converted shall not thereafter be reissued, sold or transferred or deemed to be issued and outstanding for any purpose and the number of shares of Series A Preferred authorized to be issued by the Corporation shall be reduced by the number of shares of Series A Preferred so converted. (v) The Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of issuance upon the conversion of shares of the Series A Preferred, such number of shares of Common Stock as are issuable upon the conversion of all outstanding Series A Preferred. All shares of Common Stock which are so issuable shall, when issued in accordance with the terms hereof, be duly and validly issued, fully paid and nonassessable. The Corporation shall not take any action that would cause the number of authorized but unissued shares of Common Stock to be less than the number of such shares required to be reserved hereunder for issuance upon conversion of the Series A Preferred. (vi) If any fractional interest in a share of Common Stock would, except for the provisions of this subparagraph, be delivered upon any conversion of the Series A Preferred, the Corporation, in lieu of delivering the fractional share therefor, may pay an amount to the holder thereof equal to the Current Market Price of such fractional interest as of the date of conversion. The determination as to the amount of any cash payment in lieu of the issuance of fractional shares shall be based upon the total number of shares of Series A Preferred being converted at any one time by the holder thereof, not upon each share of Series A Preferred being converted. (vii) If any holder surrenders shares of Series A Preferred for conversion after the close of business on the record date for the payment of a dividend and prior to the opening of business on the Dividend Reference Date for such dividend, then, notwithstanding such conversion, the dividend payable on such Dividend Reference Date will be paid to the registered holder of such shares on such record date. In such event, such shares, when surrendered for conversion, must be accompanied by payment of an amount equal to the dividend payable on such Dividend Reference Date on the shares so converted. -6- (viii) If a holder converts shares of Series A Preferred, the Corporation shall pay any documentary, stamp or similar issue or transfer tax due on the issue of Common Stock upon the conversion. The holder, however, shall pay to the Corporation the amount of any tax which is due (or shall establish to the satisfaction of the Corporation the payment thereof or that no such payment is due) if the shares are to be issued in a name other than the name of such holder and shall pay to the Corporation any amount required by the last sentence of Section 5(a)(vii). (b) Conversion Price. ---------------- (i) The "Conversion Price" of each share of Series A Preferred shall be $6.69, subject to adjustment from time to time pursuant to this Section 5, provided, however, that in no event shall the Conversion Price be adjusted below $4.00. (ii) If and whenever after the date of the original issuance of Series A Preferred shares (the "Series A Original Issuance Date") the Corporation issues or sells or, in accordance with this Section 5, is deemed to have issued or sold, any shares of Common Stock for a consideration per share less than the Conversion Price in effect immediately prior to the time of such issuance or sale or deemed issuance or sale, then immediately upon such issuance or sale or deemed issuance or sale the Conversion Price shall be reduced to the Conversion Price determined by dividing (A) the sum of (1) the product derived by multiplying the Conversion Price in effect immediately prior to such issuance or sale or deemed issuance or sale by the number of shares of Common Stock Deemed Outstanding immediately prior to such issuance or sale or deemed issuance or sale, plus (2) the consideration, if any, received by the Corporation upon such issuance or sale, by (B) -- the number of shares of Common Stock Deemed Outstanding immediately after such issue or sale or deemed issuance or sale. (iii) Notwithstanding the foregoing, there shall be no adjustment in the Conversion Price as a result of any issuance or sale (or deemed issuance or sale) of (a) shares of Common Stock issued upon conversion of the Series A Preferred, (b) securities for which an adjustment is already made pursuant to Section 5(c)(vii), (c) shares of stock, or options to purchase stock, issued to employees, directors or consultants of the Corporation pursuant to a stock option or equity incentive plan approved by the Board of Directors, (d) securities issued in connection with the acquisition of any business that is a bona fide, arms' length transaction (as determined in good faith by the Board of Directors) which has been approved by the Board of Directors, (e) securities issued pursuant to or in connection with any strategic alliance, joint venture or corporate partnership that is a bona fide arms' length transaction (as determined in good faith by the Board of Directors) which has been approved by the Board of Directors, (f) securities issued to banks, equipment lessors or similar financial institutions in connection with a bank financing, equipment lease or other comparable transaction approved by the Board of Directors, (g) the Blair Shares, or (h) the issuance of securities for which the Majority Preferred Holders have elected (by vote or written consent) to exclude from the provisions of this Section 5(b). -7- (c) Effect on Conversion Price of Certain Events. For purposes of determining the Conversion Price under Section 5(b), the following shall be applicable: (i) Issuance of Options. Except as provided in Section 5(b)(iii), if the Corporation in any manner grants, issues or sells any Options and the price per share for which Common Stock is issuable upon the exercise of such Options, or upon conversion or exchange of any Convertible Securities issuable upon exercise of such Options, is less than the Conversion Price in effect immediately prior to the time of the granting, issuance or sale of such Options, then the total maximum number of shares of Common Stock issuable upon the exercise of such Options or upon conversion or exchange of the total maximum amount of such Convertible Securities issuable upon the exercise of such Options shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the granting, issuance or sale of such Options for such price per share. For purposes of this paragraph, the "price per share for which Common Stock is issuable" shall be determined by dividing (A) the sum of (1) the total amount, if any, received or receivable by the Corporation as consideration for the granting, issuance or sale of such Options, plus (2) the minimum aggregate amount of additional consideration payable to the Corporation upon exercise of all such Options, plus (3) in the case of such Options which relate to Convertible Securities, the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the issuance or sale of such Convertible Securities and the conversion or exchange thereof, by (B) the total maximum number of shares of Common Stock -- issuable upon the exercise of such Options or upon the conversion or exchange of all such Convertible Securities issuable upon the exercise of such Options. No further adjustment of the Conversion Price shall be made when Convertible Securities are actually issued upon the exercise of such Options or when Common Stock is actually issued upon the exercise of such Options or the conversion or exchange of such Convertible Securities. (ii) Issuance of Convertible Securities. Except as provided in Section 5(b)(iii), if the Corporation in any manner issues or sells any Convertible Securities and the price per share for which Common Stock is issuable upon conversion or exchange thereof is less than the Conversion Price in effect immediately prior to the time of such issuance or sale, then the maximum number of shares of Common Stock issuable upon conversion or exchange of such Convertible Securities shall be deemed to be outstanding and to have been issued and sold by the Corporation at the time of the issuance or sale of such Convertible Securities for such price per share. For the purposes of this paragraph, the "price per share for which Common Stock is issuable" shall be determined by dividing (A) the sum of (1) the total amount received or receivable by the Corporation as consideration for the issue or sale of such Convertible Securities, plus (2) the minimum aggregate amount of additional consideration, if any, payable to the Corporation upon the conversion or exchange thereof, by (B) the total -8- maximum number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment of the Conversion Price shall be made when Common Stock is actually issued upon the conversion or exchange of such Convertible Securities, and if any such issuance or sale of such Convertible Securities is made upon exercise of any Options for which adjustments of the Conversion Price had been made pursuant to other provisions of this Section 5, no further adjustment of the conversion price shall be made by reason of such issue or sale. (iii) Change in Option Price or Conversion Rate. If the purchase price provided for in any Options, the additional consideration, if any, payable upon the conversion or exchange of any Convertible Securities or the rate at which any Convertible Securities are convertible into or exchangeable for Common Stock changes at any time, the Conversion Price in effect at the time of such change shall be immediately adjusted to the Conversion Price that would have been in effect at such time had such Options or Convertible Securities still outstanding provided for such changed purchase price, additional consideration or conversion rate, as the case may be, at the time initially granted, issued or sold, provided that if such adjustment would result in an increase of the Conversion Price then in effect, such adjustment shall not be effective until 30 days after written notice thereof has been given by the Corporation to all holders of the Series A Preferred. For purposes of this Section 5(c)(iii), if the terms of any Option or Convertible Security that was outstanding as of the Series A Original Issuance Date are changed in the manner described in the immediately preceding sentence, then such Option or Convertible Security and the Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed to have been issued as of the date of such change. (iv) Treatment of Expired Options and Unexercised Convertible Securities. Upon the expiration of any Option or the termination of any right to convert or exchange any Convertible Security without the exercise of any such Option or right, the Conversion Price then in effect hereunder shall be adjusted immediately to the Conversion Price that would have been in effect at the time of such expiration or termination had such Option or Convertible Security, to the extent outstanding immediately prior to such expiration or termination, never been issued, provided, that if such expiration or termination would result in an increase in the Conversion Price then in effect, such increase shall not be effective until 30 days after written notice thereof has been given to all holders of the Series A Preferred. For purposes of this Section 5(c)(iv), the expiration or termination of any Option or Convertible Security that was outstanding as of the Series A Original Issuance Date shall not cause the Conversion Price hereunder to be adjusted unless, and only to the extent that, a change in the terms of such Option or Convertible Security caused it to be deemed to have been issued after the Series A Original Issuance Date. (v) Calculation of Consideration Received. If any Common Stock, Option or Convertible Security is issued or sold or deemed to have been issued or sold for cash, the consideration received therefor -9- shall be deemed to be the amount received by the Corporation therefor. If any Common Stock, Option or Convertible Security is issued or sold for a consideration other than cash, the amount of the consideration other than cash received by the Corporation shall be the fair market value of such consideration. If any Common Stock, Option or Convertible Security is issued to the owners of the non-surviving entity in connection with any merger in which the Corporation is the surviving corporation, the amount of consideration therefor shall be deemed to be the fair market value of such portion of the net assets and business of the non-surviving entity as is attributable to such Common Stock, Option or Convertible Security, as the case may be. For purposes of this Section 5(c)(v), fair market value shall be determined jointly by the Corporation and the Majority Preferred Holders. If they are unable to reach agreement within a reasonable period of time, then either of the Company or the Majority Preferred Holders may require that such value be determined by an independent appraiser experienced in valuing such type of property jointly selected by the Corporation and the Majority Preferred Holders. The determination of such appraiser shall be final and binding upon the parties and the fees and expenses of such appraiser shall be split equally between the Corporation and the Majority Preferred Holders. (vi) Record Date. If the Corporation fixes a record date for the holders of Common Stock for the purpose of entitling them (A) to receive a dividend or other distribution payable in Common Stock, Options or in Convertible Securities or (B) to subscribe for or purchase Common Stock, Options or Convertible Securities, then such record date shall be deemed to be the date of the issue or sale of the shares of Common Stock deemed to have been issued or sold upon the declaration of such dividend or upon the making of such other distribution or the date of the granting of such right of subscription or purchase, as the case may be. (vii) Subdivisions or Combinations of Common Stock. If the Corporation at any time subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Conversion Price in effect immediately prior to such subdivision shall be reduced proportionately, and if the Corporation at any time combines (by combination, reverse stock split, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior to such combination shall be increased proportionately. (viii) Increase in Conversion Price. Except as provided in subsections (iii), (iv) and (vii) of this Section 5(c), in no event shall the Conversion Price in effect at any time be increased pursuant to any adjustment under Section 5(b) or Section 5(c). (ix) Notices. As soon as practicable after any adjustment of the Conversion Price, the Corporation shall give written notice thereof to all holders of Series A Preferred, setting forth in reasonable detail and certifying the calculation of such adjustment. -10- (x) Minimum Adjustment. No adjustment in the Conversion Price shall be required unless such adjustment would require an increase or decrease of at least one percent in such price; provided that any adjustments which by reason of this Section 5(c)(x) are not required to be made shall be carried forward and taken into account at such time when such adjustments would in the aggregate require an increase or decrease of at least one percent in such price. All calculations under this Section 5(c) shall be made to the nearest two decimal points. (d) Mandatory Conversion. If on any date after the fifth anniversary of the Series A Original Issuance Date, the Current Market Price equals or exceeds 200% of the then applicable Conversion Price, as adjusted pursuant to the anti-dilution provisions described above, the Corporation may elect, by written notice delivered to the Transfer Agent (with a copy to each holder of Series A Preferred), no later than five business days after such date, to cause all (but not less than all) of the outstanding shares of Series A Preferred be converted into shares of Common Stock. Any such conversion shall be deemed to have been effected, without further action by any party, immediately prior to the close of business on the fifth business day after such notice is received by the Transfer Agent. The number of shares of Common Stock deliverable upon conversion of one share of Series A Preferred shall be equal to (i) the Accreted Value of such share on the date of conversion, plus all dividends (whether or not declared) accrued since the end of the previous Dividend Period, divided by (ii) the Conversion Price. At the time of such conversion, the rights of the holders of shares of Series A Preferred shall cease with respect to such shares of Series A Preferred, and such holders shall be treated for all purposes as the record holders of such shares of Common Stock issuable upon conversion. The provisions of Section 5(a) (other than Section 5(a)(ii)) shall apply to any mandatory conversion under this Section 5(d). Section 6. Purchase Rights. If at any time the Corporation distributes, grants, issues or sells Purchase Rights, then each holder of shares of Series A Preferred will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such holder could have acquired if such holder had held the number of whole shares of Common Stock acquirable upon conversion of such holder's shares of Series A Preferred immediately before the record date for the grant, issuance or sale of such Purchase Rights, or, if no record date is fixed, the date as of which the record holders of Common Stock are to be determined for the distribution, issue or sale of such Purchase Rights. Section 7. General. ------- (a) The Corporation shall keep at its principal office a register for the registration of Common Stock and Series A Preferred. Upon the surrender of any certificate representing Common Stock or Series A Preferred at such place, the Corporation shall, at the request of the record holder of such certificate, execute and deliver a new certificate or certificates in exchange therefor representing in the aggregate the number of shares represented by the surrendered certificate. Each such new certificate shall be registered in such name and shall represent such number of shares as is requested by the holder of the surrendered certificate and shall be substantially identical in form to the surrendered certificate. -11- (b) Upon receipt of evidence reasonably satisfactory to the Corporation (an affidavit of the registered holder shall be satisfactory) of the ownership and the loss, theft, destruction or mutilation of any certificate evidencing shares of Common Stock or Series A Preferred, and in the case of any such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Corporation (provided that if the holder is a financial institution or other institutional investor, including W.B. & Co., its own agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such certificate, the Corporation shall execute and deliver in lieu of such certificate a new certificate of like kind representing the number of shares of such class represented by such lost, stolen, destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated certificate. (c) Except as otherwise expressly provided hereunder, all notices referred to herein shall be in writing and shall be delivered by registered or certified mail, return receipt requested and postage prepaid, by reputable overnight courier service, charges prepaid, or by personal delivery, and shall be deemed to have been given (i) three (3) business days after being sent by registered or certified mail, (ii) one (1) business day after being deposited with such an overnight courier service, and (iii) upon delivery, if by personal delivery, if mailed or delivered (A) to the Corporation, at its principal executive offices, or (B) to any stockholder, at such holder's address as it appears in the stock records of the Corporation (unless otherwise indicated by any such holder). Section 8. Definitions. ----------- "Accreted Value" equals, with respect to one share of Series A Preferred, $1,000.00, plus the amount of any dividends added to such Accreted Value in accordance with Section 2, minus the amount of any dividends included in Accreted Value that are subsequently declared and paid (which aggregate amount shall be subject to adjustment whenever there shall occur a stock dividend, stock split, combination, subdivision or other similar event). "Blair Shares" means 17,937 shares of Common Stock issued to William Blair & Company, LLC. "Board of Directors" has the meaning specified in the FIRST paragraph of these Articles Supplementary. "Charter" has the meaning specified in the FIRST paragraph of these Articles Supplementary. "Common Stock" has the meaning specified in Section 2(a). "Common Stock Deemed Outstanding" means, at any given time, the fully-diluted number of shares of Common Stock outstanding at such time, including, without duplication, all shares of Common Stock that are directly or indirectly issuable upon exercise, conversion or exchange of outstanding securities which by their terms are directly or indirectly convertible or exercisable into or exchangeable for Common Stock (regardless of whether such securities are actually exercisable, convertible or exchangeable at such time). -12- "Conversion Price" has the meaning specified in Section 5(b)(i). "Convertible Securities" means any stock or securities directly or indirectly convertible into or exchangeable for Common Stock. "Corporation" has the meaning specified in the introductory paragraph of these Articles Supplementary. "Current Market Price" means the average of the closing prices of the Common Stock's sales on all securities exchanges on which such security may at the time be listed or traded, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such security is not so listed or traded, the average of the representative bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is not quoted in the NASDAQ System, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any similar successor organization, in each such case averaged over a period of 11 trading days consisting of the day as of which Current Market Price is being determined and the 10 consecutive trading days prior to such day. If at any time such security is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, the Current Market Price will be the fair value thereof determined in good faith by the Board of Directors. "Dividend Period" has the meaning specified in Section 2(b). "Dividend Reference Date" has the meaning specified in Section 2(b). "Junior Securities" means any of the Corporation's equity securities other than the Series A Preferred. "Majority Preferred Holders" has the meaning specified in Section 3(b). "Options" means any rights, warrants or options to subscribe for or purchase Common Stock or Convertible Securities. "Preferred Dividend Excess" has the meaning specified in Section 2(c). "Purchase Rights" means any Options, Convertible Securities or rights to purchase stock, warrants, securities or other property which are distributed, issued, granted or sold to all record holders of any class of Common Stock. "Series A Liquidation Value" has the meaning specified in Section 4(a). "Series A Original Issuance Date" has the meaning specified in Section 5(b)(ii). "Series A Preferred" has the meaning specified in Section 1. "Total Dividend Excess" has the meaning specified in Section 2(c). -13- "Transfer Agent" means the transfer agent for the Series A Preferred appointed by the Corporation (which may be the Corporation). SECOND: The shares of Series A Preferred have been classified and designated by the Board of Directors under the authority contained in the Charter. THIRD: These Articles Supplementary have been approved by the Board of Directors in the manner and by the vote required by law. FOURTH: The undersigned officer of the Corporation acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned officer acknowledges that to the best of such officer's knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties for perjury. -14- IN WITNESS WHEREOF, the Corporation has caused these Articles Supplementary to be executed under seal in its name and on behalf by the undersigned officer and attested to by its Secretary on this 22nd of November, 2002. A.M. CASTLE & CO. By: /s/ G. Thomas McKane -------------------------------- Name: G. Thomas McKane Title: President and Chief Executive Officer Attested: By: /s/ Jerry M. Aufox -------------------------- Name: Jerry M. Aufox Title: Secretary -15- EX-4.1 4 castle41.txt NOTE AGREEMENT DATED 04-01-96 Exhibit 4.1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A.M. CASTLE & CO. NOTE AGREEMENT Dated as of April 1, 1996 $20,000,000 Principal Amount 6.49% Senior Notes Due April 15, 2008 - -------------------------------------------------------------------------------- PPN 148411 B@9 - -------------------------------------------------------------------------------- TABLE OF CONTENTS Section 1. DESCRIPTION OF NOTES AND COMMITMENT COMMITMENT ...............1 1.1. Description of Notes ..........................................1 1.2. Commitment; Closing Date ......................................1 Section 2. PREPAYMENT OF NOTES ..........................................2 2.1. Required Prepayments ..........................................2 2.2. Optional Prepayments ..........................................2 2.3. Notice of Prepayments .........................................2 2.4. Surrender of Notes on Prepayment or Exchange ..................3 2.5. Direct Payment and Deemed Date of Receipt .....................3 2.6. Allocation of Payments ........................................3 2.7. Payments Due on Saturdays, Sundays and Holidays ...............3 Section 3. REPRESENTATIONS ..............................................3 3.1. Representations of the Company ................................3 3.2. Representations of the Purchaser .............................10 Section 4. CLOSING CONDITIONS ..........................................11 4.1. Representations and Warranties ...............................11 4.2. Legal Opinions ...............................................11 4.3. Events of Default ............................................11 4.4. Payment of Fees and Expenses .................................12 4.5. Legality of Investment .......................................12 4.6. Private Placement Number .................................... 12 4.7. Proceedings and Documents ....................................12 Section 5. INTERPRETATION OF AGREEMENT .................................12 5.1. Certain Terms Defined ........................................12 5.2. Accounting Principles ........................................19 5.3. Valuation Principles .........................................19 5.4. Direct or Indirect Actions ...................................20 Section 6. AFFIRMATIVE COVENANTS .......................................20 6.1. Corporate Existence ..........................................20 6.2. Insurance ....................................................20 6.3. Taxes, Claims for Labor and Materials ........................20 6.4. Maintenance of Properties ....................................20 i 6.5. Maintenance of Records .......................................21 6.6. Financial Information and Reports ............................21 6.7. Inspection of Properties and Records .........................23 6.8. ERISA ........................................................23 6.9. Compliance with Laws .........................................24 6.10. Acquisition of Notes .........................................24 6.11. Private Placement Number .....................................25 Section 7. NEGATIVE COVENANTS ..........................................25 7.1. Adjusted Consolidated Net Worth ..............................25 7.2. Consolidated Debt ............................................25 7.3. Net Working Capital ..........................................25 7.4. Liens ........................................................25 7.5. Merger or Consolidation ......................................26 7.6. Sale of Assets ...............................................26 7.7. Disposition of Stock of Subsidiaries .........................27 7.8. Leases .......................................................27 7.9. Transactions with Affiliates .................................27 7.10. Nature of Business ...........................................27 Section 8. EVENTS OF DEFAULT AND REMEDIES THEREFOR .....................28 8.1. Nature of Events .............................................28 8.2. Remedies on Default ..........................................29 8.3. Annulment of Acceleration of Notes ...........................30 8.4. Other Remedies ...............................................30 8.5. Conduct No Waiver; Collection Expenses .......................30 8.6. Remedies Cumulative ..........................................30 8.7. Notice of Default ............................................30 Section 9. AMENDMENTS, WAIVERS AND CONSENTS ............................31 9.1. Matters Subject to Modification ..............................31 9.2. Solicitation 0f Holders of Notes .............................31 9.3. Binding Effect ...............................................32 Section 10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT .............................................32 10.1. Form of Notes ................................................32 10.2. Note Register ................................................32 10.3. Issuance of New Notes upon Exchange or Transfer ..............32 10.4. Replacement of Notes .........................................32 ii Section 11. MISCELLANEOUS ...............................................33 11.1. Expenses .....................................................33 11.2. Notices ......................................................33 11.3. Reproduction of Documents ....................................33 11.4. Successors and Assigns .......................................34 11.5. Law Governing ................................................34 11.6. Headings .....................................................34 11.7. Counterparts .................................................34 11.8. Reliance on and Survival of Provisions .......................34 11.9. Integration and Severability .................................34 iii A. M. CASTLE & CO. NOTE AGREEMENT Dated as of April 1, 1996 To the Purchaser Named in the Attached Schedule I Ladies and Gentlemen: A. M, CASTLE & CO, a Delaware corporation (the "Company"), agrees with you as ss. 1. DESCRIPTION OF NOTES AND COMMITMENT 1.1. Description. The Company has authorized the issuance and sale of $20,000,000 aggregate principal amount of its Senior Notes (the "Notes"), to be dated the date of bear interest from such date (computed on the basis of a 360-day year comprised of twelve 30-day months), payable semi-annually in arrears on April 15 and October 15 of each year, October 15, 1996, and at maturity, at the rate of 6.49% per annum prior to maturity and to bear interest on any overdue principal (including any overdue optional or required prepayment. on any overdue Make-Whole Amount (to the extent legally enforceable), and on any overdue installment of interest (to the extent legally enforceable) at a per annum rate equal to the greater of (a) 8.49% and (b) the sum of the reference rate announced by Bank of America Illinois from time to time as its "prime rate" for United States domestic loans in United States dollars plus 2%. The Notes shall be expressed to mature on April 15, 2008 and shall be substantially in the form attached as Exhibit A. The term "Notes" as used herein shall include each Note delivered pursuant to this Note Agreement (the "Agreement") and each Note delivered in substitution or exchange therefor and, where applicable, shall include the singular number as well as the plural. Any reference to you in this Agreement shall in all instances be deemed to include any nominee of yours or any separate account or other person on whose behalf you are purchasing Notes. You are sometimes referred to herein as the "Purchaser." 1.2. Commitment; Closing Date. Subject to the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth, the Company agrees to issue and sell to you, and you agree to purchase from the Company, Notes in the aggregate principal amount set forth opposite your name in the attached Schedule I at a price of 100% of the principal amount thereof. Deliver 0f and payment for the Notes shall be made at the offices of Gardner, Carton & Douglas, 321 North Clark Street, Quaker Tower, Chicago, Illinois 60610, at 9:00 a.m., Chicago time, on April 15, 1996 or at such later time or on such later date, not later than 11:00 am., Chicago time, April 16, 1996, as may be mutually agreed upon by the Company and the Purchaser (the Closing Date"). The Notes shall be delivered to you in the form of one or more Notes in fully registered form, issued in your name or in the name of your nominee. Delivery of the Notes to you on the Closing Date shall be against payment of the purchase price thereof in Federal funds or other funds in U.S. dollars immediately available at Bank of America, Chicago, Illinois, ABA 17l-0000-39 for the account of A. M. Castle & Co., Account #72-04248, Attention: Assistant Treasurer. If on the Closing Date the Company shall fail to tender the Notes to you, you shall be relieved of all remaining obligations under this Agreement. Nothing in the preceding sentence shall relieve the Company of any liability occasioned by such failure to deliver the Notes. ss.2. PREPAYMENT OF NOTES 2.1. Required Prepayments. In addition to payment of all outstanding principal of the Notes at maturity and except as provided below in Section 2.2, regardless of the amount of Notes which may be outstanding from time to time, the Company shall prepay and there shall become due and payable on April 15 in each year $4,000,000 of the principal amount of the Notes or such lesser amounts as would constitute payment in full on the Notes, commencing April 15, 2004 and ending April 15, 2007, inclusive, with the remaining principal payable on April 15, 2008. Each such prepayment shall be at a price of 100% of the principal amount prepaid, together with interest accrued thereon to the date of prepayment, without a Make-Whole Amount or other premium or penalty. 2.2. Optional Prepayments. -------------------- (a) Upon notice as provided in Section 23(a) and (b), the Company may prepay the Notes, in whole or in part, on any interest payment date, in an aggregate principal amount not less than $1,000,000, and in integral multiples of $100,000 in excess thereof or such lesser amount as shall constitute payment in full of the Notes. Each such prepayment shall be at a price of 100% of the principal amount to be prepaid, plus interest accrued thereon to the date of prepayment, plus the Make-Whole Amount. (b) Any optional prepayment of less than all of the Notes outstanding pursuant to Section 2.2(a) and Section 7.6 shall be applied to reduce, pro rata, the prepayments and payment at maturity required by Section 2.1. (c) Except as provided in Section 2.1, Section 7.6 and in this Section 22, the Notes shall not be prepayab1e in whole or in part. 2.3. Notice of Prepayments. --------------------- (a) The Company shall give notice of any optional prepayment of the Notes pursuant to Section 2.2(a) to each holder of the Notes not less than 30 days nor more than 60 days before the date fixed for prepayment, specifying (i) such date, (ii) the principal amount of the holder's Notes to he prepaid on such date, (iii) the Determination Date for calculating the Make-Whole Amount, (iv) a calculation of the estimated amount of the Make-Whole Amount, showing in reasonable detail the method of calculation, and (v) the accrued interest applicable to the prepayment. Notice of prepayment having been so given, the aggregate principal amount of the Notes specified in such notice, together with the actual Make-Whole Amount, if any, and the accrued interest thereon shall become due and payable on the prepayment date. -2- (b) The Company also shall give notice to each holder of the Notes to be prepaid pursuant to Section 2.2(a) by telecopy, telegram, telex or other same-day written communication, two Business Days prior to the prepayment date, of the actual Make-Whole Amount applicable to such prepayment and the details of the calculations used to determine the amount of such Make-Whole Amount. 2.4. Surrender of Notes on Prepayment or Exchange. Subject to Section 2.5, upon any partial prepayment of a Note pursuant to this Section 2 or partial exchange of a Note pursuant to Section lO.3, such Note may, at the option of the holder thereof, (i) be surrendered to the Company pursuant to Section 10.3 in exchange for a new Note or Notes equal to the principal amount remaining unpaid on the surrendered Note, or (ii) be made available to the Company, at the Company's principal office, for notation thereon of the portion of the principal so prepaid or exchanged. In case the entire principal amount of any Note is prepaid, such Note shall be surrendered to the Company following such prepayment for cancellation and shall not be reissued. No Note shall be issued in lieu of a Note the entire principal amount of which has been prepaid. 2.5. Direct Payment and Deemed Date of Receipt. Notwithstanding any other provision contained in the Notes or this Agreement, the Company will pay all sums becoming due on each Note held by you or any subsequent Institutional Holder by wire transfer of immediately available hinds to such account as you have designated in Schedule I, or as you or such subsequent Institutional Holder may otherwise designate by notice to the Company, in each case without presentment and, subject to Section 2,4(ii) above, without notations being made thereon, except that any such Note so paid or prepaid in frill shall be surrendered to the Company, upon its written request, for cancellation. Any wire transfer shall identify such payment in the manner set forth in Schedule I and shall identify the payment as principal, Make-Whole Amount, if any, and/or interest. Any payment made pursuant to this Section 2.5 shall be deemed received on the payment date only if received before noon, Chicago time. Payments received after noon Chicago time, shall be deemed received on the next succeeding Business Day, with the Make-Whole Amount, if any, and/or interest payable to such Business Day. 2.6. Allocation of Payments. In the case of a prepayment pursuant to Section 2.2(a), if less than the entire principal amount of all of the Notes outstanding is to be paid, the Company will prorate the aggregate principal amount to be prepaid among the outstanding Notes in proportion to the unpaid principal amounts thereof. 2.7. Payments Due on Saturday, Sundays and Holidays. If any interest payment date on the Notes or the date fixed for any other payment of any Note or exchange of any Note is a day other than a Business Day, then such payment or exchange need not be made on such date but may be made on the next succeeding Business Day, with the Make-Whole Amount, if any, and/or interest payable to the actual date of payment. ss.3. REPRESENTATIONS 3.1 Representations of the Company. As an inducement to, and as part of the consideration for, your purchase of the Notes pursuant to this Agreement, the Company represents arid warrants to you as follows: -3- (a) Corporate Organization and Authority. The Company is a solvent corporation duly organized, valid1y existing and in good standing under the laws of the State of Delaware, has all requisite corporate power and authority to own and operate its properties, to carry on its business as now conducted and as presently proposed to be conducted, to enter into and perform under the Agreement and to issue and sell the Notes as contemplated in the Agreement. (b) Qualification to Do Business. The Company is duly qualified or licensed and in good standing as a foreign corporation authorized to do business in each jurisdiction where the nature of the business transacted by it or the character of its properties owned or leased makes such qualification or licensing necessary, except for jurisdictions, individually or in the aggregate, where the failure to be so licensed or qualified would not have a Material Adverse Effect. (c) Subsidiaries. The Company has no Subsidiaries except those listed in the attached Annex I, which correctly sets forth the jurisdiction of incorporation or formation and the percentage of the outstanding Voting Stock or other equity interests of each Subsidiary which is owned, of record or beneficially, by the Company and/or one or more Subsidiaries. Each Subsidiary has been duly organized and is validly existing and in good standing under the laws of its jurisdiction of incorporation or organization and is duly licensed or qualified and in good standing as a foreign corporation or other organization in each other jurisdiction where the nature of the business transacted by it or the character of its properties owned or leased makes such qualification or licensing necessary, except for jurisdictions, individually or in the aggregate, where the failure to be so licensed or qualified would not have a Material Adverse Effect. Each Subsidiary has or corporate or other power and authority to own and operate its properties and to carry on its business as now conducted and as presently proposed to be conducted. The Company and each Subsidiary have good and transferable title to all of the shares of capital stock, or all of the equity interests, they purport to own of each Subsidiary, free and clear in each case of any Lieu, except as otherwise described in Annex I, and all such shares or interests have been duly issued and are fully paid and nonassessable. (d) Financial Statements. The consolidated balance sheets of the Company and its Subsidiaries as of December 31, 1995, 1994, 1993, 1992 and 1991, and the related consolidated statements of income, reinvested earnings and cash flows for each of the years ended on such dates, accompanied by the reports and unqualified opinions of Arthur Andersen LLP, independent public accountants, copies of which have heretofore been delivered to you, were prepared in accordance with GAAP consistently applied throughout the periods involved (except as otherwise noted therein) and present fairly the consolidated financial position of the Company and its Subsidiaries on such dates and the consolidated results of their operations and their cash flows for the years then ended. (e) No Contingent Liabilities or Adverse Changes. Neither the Company nor any of its Subsidiaries has any contingent liabilities which, individually or in the aggregate, are material to the Company and its Subsidiaries, taken as a whole, other than as indicated in the most recent audited financial statements described in Section 3.1(d), and except as indicated as aforesaid, since December 31, 1995, there have been no changes in the condition, financial or otherwise, of the Company and its Subsidiaries on a consolidated basis except changes occurring in the ordinary course of business, none of which, individually or in the aggregate, have had a Material Adverse Effect. -4- (f) No Pending Litigation or Proceedings. Except as described in Annex II, there are no actions, suits or proceedings pending or, to the Company's knowledge, threatened against or affecting the Company or any of its Subsidiaries, at law or in equity or before or by any Federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which would have, individually or in the aggregate, a Material Adverse Effect. (g) Compliance with Law. ------------------- (i) Neither the Company nor any of its Subsidiaries is: (x) in default wIth respect to any order, writ, injunction or decree of any court to which it is a named party; or (y) in default under any law, rule, regulation, ordinance or order relating to its or their or their respective businesses, the sanctions and penalties resulting from which defaults described in clauses (x) and (y) would have, individually or in the aggregate, a Material Adverse Effect. (ii) None of the Company, any Subsidiary or any Affiliate of the Company is an entity defined as a "designated national" within the meaning of the Foreign Assets Control Regulations, 31 C.F.R. Chapter V (other than Castle de Mexico, S.A. de C.V.), or is in violation of any Federal statute or Presidential Executive Order, or any rules or regulations of any department, agency or administrative body promulgated under any such statute or Order, concerning trade or other relations with any foreign country or any citizen or national thereof or the ownership or operation of any property, and no restriction or prohibition applicable to the Company or any Subsidiary under any such statute, Order, rule or regulation has, or would have, individually or in the aggregate Material Adverse Effect.. (h) ERISA. ------ (i) The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws, except for such instances of noncomp1iance as have not resulted in and would not result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA (other than benefit liabilities pursuant to Plan terms) or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in Section 3 of ERISA), and no event, transaction or condition has occurred or exists that would result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than such liabilities or Liens as would not be individually or in the aggregate material. -5- (ii) The present value of the aggregate benefit liabilities under each of the Plans subject to Title IV of ERISA (other than multiemployer plans), determined as of the end of such Plan's most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Plan's most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities by more than $__________ in the case of a single Plan and by more than $___________ in the aggregate for all such Plans. The term "benefit liabilities" has the meaning specified in Section 4001 of ER1SA and the terms "current value and "present value" have the meanings specified in Section 3 of ERISA. (iii) The Company and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under Section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are material. (iv) The expected postretirement benefit obligation (determined as of the last day of the Company's most recently ended fiscal year in accordance with Financial Accounting Standards Board Statement No. 106, without regard to liabilities attibutable to continuation coverage mandated by Section 4980B of the Code) of the Company and its Subsidiaries, is not material. (v) The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed pursuant to Section 4975(c)(l)(A)-(D) of the Code. The representation by the Company in the first sentence of this clause (v) is made in reliance upon and subject to the accuracy of your representation in Section 3.2(b) as to the sources of the funds used to pay the purchase price of the Notes to be purchased by you. (i) Title to Properties. Except as disclosed on the most recent audited consolidated balance sheet described in the foregoing paragraph (d) of this Section 3.1, the Company and each Subsidiary have (x) good and marketable title in fee simple or its equivalent under applicable law to all the real property owned by them and (y) good and marketable title to all of the other property reflected in such balance sheet as owned by them or subsequently acquired by the Company or the Subsidiary (except as sold or otherwise disposed of in the ordinary course of business), in each case free from all Liens or defects in title except those permitted by Section 7.4 (j) Leases. The Company and each Subsidiary enjoy peaceful and undisturbed possession under all leases under which the Company or such Subsidiary is a lessee or is operating, except for leases the termination of which, individually or in the aggregate, would not have a Material Adverse Effect. (k) Franchises, Patents, Trademarks and Other Rights. The Company and each Subsidiary have all franchises, permits, licenses and other authority necessary to carry on or used in their business as now being conducted, except for franchises, permits, licenses or other authority the 1ack or loss of which, individually or in the aggregate, would not have a Material Adverse Effect, and -6- none are in default under any of such franchises, permits, licenses, or other authority for defaults, individually or in the aggregate, which would not have a Material Adverse Effect The Company and each Subsidiary own or possess all patents, trademarks, service marks, trade names, copyrights, and licenses, or rights with respect to the foregoing, necessary for or used by them in, the present conduct of their businesses, without any known conflict with the rights of others. (1) Authorization. This Agreement and the Notes have been duly authorized on the part of the Company and the Agreement does, and the Notes when issued will, constitute the legal, valid and binding obligations of the Company, enforceable in accordance with their terms, except to the extent that enforcement of this Agreement or the Notes may be limited by applicable bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or similar laws of genera1 application relating to or affecting the enforcement of the rights of creditors or by equitable principles, regardless of whether enforcement is sought in equity or at law. The sale of the Notes, the execution and delivery of the Agreement and compliance by the Company with all of the provisions of this Agreement and of the Notes (i) are within the corporate powers of the Company, (ii) have been duly authorized by proper corporate action, (iii) are legal and will not violate any provisions of any law or regulation or order of any court, governmental authority or agency, and (iv) wi11 not result in any breach of any of the provisions of, constitute a default under, or result in the creation of any Lien on any property of the Company or any Subsidiary under the provisions of any charter document, by-law, loan agreement or other agreement or instrument to which the Company or any Subsidiary is a party or by which any of them or their property may be bound. (m) No Defaults. No event has occurred and no condition exists which, upon the issuance of the Notes, would constitute a Default or an Event of Default under this Agreement. Neither the Company nor any Subsidiary is in default under any charter document, by-law, loan agreement or other material agreement or material instrument to which it is a party or by which it or its property may be bound. (n) Governmental Consent. None of the nature of the Company or any of its Subsidiaries, their respective businesses or properties, any relationship between the Company or any of its Subsidiaries and any other Person, or any circumstances relative to the offer, issuance, sale or delivery of the Notes or execution and delivery of this Agreement is such as to require a consent, approval or authorization of, withholding of objection on the part of, or filing, registration or qualification with, any governmental authority on the part of the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement or the offer, issuance, sale de1ivery of the Notes. (o) Taxes. All tax or information returns required to be filed by the Company or any Subsidiary in any jurisdiction have been timely flied, and all taxes, assessments, fees and other governmental charges or levies upon the Company or any Subsidiary, or upon any of their respective properties, assets, income or franchises, which are due and payable, have been paid timely or contested in good faith by appropriate proceedings that stay the collection thereof by the applicable governmental authority during the period of the contest and as to which adequate reserves are maintained in accordance with GAAP. The Company does not know of any proposed additional tax assessment -7- against it or any Subsidiary for which adequate provision has not been made on its books in accordance with GAAP. The United States Federal income tax liability of (i) the Company and. its Subsidiaries for all taxable years up to and including the taxable year ended December 31, _____ , has been finally determined, and no material controversy in respect of additional taxes due by the Company or any Subsidiary since such date is pending or, to the Company's knowledge, threatened. The provisions for taxes on the books of the Company and each Subsidiary are adequate for all open years and for the current fiscal period. (p) Status under Certain Statutes. Neither the Company nor any Subsidiary is: (i) a "public utility company" or a "holding company," or an "affiliate" or a "subsidiary company" of a "holding company," or an "affiliate" of such a "subsidiary company," as such terms are defined in the Public Utility Holding Company Act of 1935, as amended, (ii) a "public utility" as defined in the Federal Power Act, as amended, or (iii) an "investment company" or an "affiliated person" thereof or an "affiliated person" of any such "affiliated person," as such terms are defined in the Investment Company Act of 1940, as amended. (q) Private Offering. Neither the Company, nor BA Securities, Inc., the only Person authorized or employed by the Company as agent, broker, dealer or otherwise in connection with the offering of the Notes or any similar security of the Company, has offered any of the Notes or any similar security of the Company for sale to, or solicited offers to buy any thereof from, or otherwise approached or negotiated with respect thereto with, any prospective purchaser, other than ___ institutional investors, including the Purchaser, each of whom was offered all or a portion of the Notes at private sale for investment. Neither the Company nor anyone acting on its authorization will offer the Notes or any part thereof or any similar security for issuance or sale to, or solicit any offer to acquire any of the same from, anyone so as to cause the issuance and sale of the Notes to be subject to the provisions of Section 5 of the Securities Act. (r) Effect of Other Instruments. Neither the Company nor any Subsidiary is bound by any agreement or instrument or subject to any charter or other corporate restriction which in any way restricts any Subsidiary's ability to pay dividends or make advances to the Company or which has a Material Adverse Effect. (s) Use of Proceeds. The Company will use the net proceeds from the sale of the Notes for general corporate purposes. None of the transactions contemplated in this Agreement (including without limitation thereof, the use of the proceeds from the sale of the Notes) will violate or result in a violation of Section 7 of the Exchange Act, or any regulations issued pursuant thereto, including, without limitation, Regulations G, T, U and X of the Board of Governors of the Federal Reserve System (12 C.F.R., Chapter II). Neither the Company nor any Subsidiary owns nor does the Company or any Subsidiary intend to carry or purchase any "margin stock" within the meaning of Regulation G, and none of the proceeds from the sale of the Notes will be used to purchase or carry or refinance any borrowing the proceeds of which were Used to purchase or carry any "margin stock" or "margin security" in violation of Regulations G, T, U or X. -8- (t) Condition of Property. All of the facilities of the Company and its Subsidiaries are in good Operating condition and repair, except for facilities being repaired in the ordinary of course of business or facilities which, individually or in the aggregate, are not material to the Company and its Subsidiaries, on a consolidated basis. (u) Books and Records. The Company and each of its Subsidiaries (i) maintain books, records and accounts in reasonable detail which accurately and fairly reflect their respective transactions and business affairs, and (ii) maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions are executed in accordance with management's general or specific authorization and to permit preparation of financial statements in accordance with GAAP. (v) Environmental Compliance. Except as disclosed in the attached Annex II, the Company and each Subsidiary (including their operations and the conditions at or in their Facilities) comply with all Environmental Laws except for violations which, individually or in the aggregate, would not have a Material Adverse Effect; the Company and each Subsidiary have obtained all permits under Environmental Laws necessary to their respective operations, all such permits are in full force and effect, and the Company and each Subsidiary are in compliance with all material terns and conditions of such permits except for permits, individually or in the aggregate, the lack of which or noncompliance with which would not have a Material Adverse Effect; and except as disclosed in the attached Annex II, neither the Company nor any of its Subsidiaries has any liability (contingent or otherwise) in connection with any Release of any Hazardous Material or the existence of any Hazardous Material on, under or about any Facility that could give rise to an Environmental Claim that would have a Material Adverse Effect. (w) Debt. Annex III sets forth a list of all outstanding Debt of the Company and its Subsidiaries as of the date of this Agreement, since which date there has been no material change in the amounts, interest rates, sinking funds, installment payments or maturities thereof. Neither the Company nor any Subsidiary is in default, and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of the Company or such Subsidiary and no event or condition exists with respect to any Debt of the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment Except as disclosed in Annex III, neither the Company nor any Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 7..4. (x) Full Disclosure. None of the financial statements referred to in Section 3.1(d), this Agreement, and any other written statement or document furnished by or on behalf of the Company to you in connection with the negotiation of the sale of the Notes and the execution and delivery of the Agreement, taken together, contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein or herein not misleading in light of the circumstances under which they were made. There is no fact (exclusive of general economic, political or social conditions or trends) particular to the Company and known by the Company that the Company has not disclosed to you in writing and that has a Material Adverse Effect or, to the Company's best knowledge, will have, individually or in the aggregate, a Material Adverse Effect. -9- 3.2. Representations of the Purchaser. --------------------------------- (a) You represent, and in entering into this Agreement the Company understands, that you are acquiring the Notes for your own account and not with a view to any distribution thereof, provided that the disposition of your property shall at all times be and remain within your control; subject, however, to compliance with Federal securities laws. You acknowledge that the Notes have not been registered under the Securities Act and you understand that the Notes must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. You have been advised that the Company does not contemplate registering, and is not legally required to register, the Notes under the Securities Act. (b) You further represent that, as of the date of this Agreement, at least one of the following statements is an accurate representation as to each source of funds (a "Source") to be used by you to pay the purchase price of the Notes to be purchased by you hereunder: (i) if you are an insurance company, the Source does not include assets allocated to any separate account maintained by you in which any employee benefit plan (or its related trust) has any interest, other than a separate account that is maintained solely in connection with your fixed contractual obligations under which the amounts payable, or credited, to such plan and to any participant or beneficiary of such plan (including any annuitant) are not affected in any manner by the investment performance of the separate account; (ii) the Source is either (x) an insurance company pooled separate account within the meaning of Prohibited Transaction Exemption ("PTE") 90-1 (issued January 9, 1990), or (y) a bank collective investment fund, within the meaning of PTE 91-38 (issued July 12, 1991) and, except as you have disclosed to the Company in writing pursuant to this paragraph (b), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; (iii) the Source constitutes assets of an "investment fund" (within the meaning of Part V of the QPAM Exemption) managed by a "qualified professional asset manages' or "QPAM" (within the meaning of Part V of the QPAM Exemption), no employee benefit plan's assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM (applying the definition of "control" in Section V(e) of the QPAM Exemption) owns a 5% or more interest in the Company and (x) the identity of such QPAM and (y) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Company in writing pursuant to this clause (iii); -10- (iv) the Source is a governmental plan; (v) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this paragraph (b)(v); (vi) the Source does not include assets of any employee benefit plan, ether than a plan exempt from the coverage of ERISA; or (vii) if you are an insurance company and the Source includes assets of your general account, (A) your purchase of Notes is entitled to the exemption afforded by PTE. 95-60 (issued July 12, 1995), provided the Company is not an affiliate (within the meaning of Section v(a) of PTE 95-60) of you, or (B) there is no Plan with respect to which the assets of your general account's reserves (as determined under Section 807(d) of the Code) for all contracts held by or on behalf of such Plan and all other Plans maintained by the same employer or its affiliates (as so defined) or by the same employee organization exceeds 10% of the liabilities of your general account. As used in this Section 3.2(b), the terms "employee benefit plan," "governmental plan," "party in interest" and "separate account" shall have the respective meanings assigned to such terms in Section 3 of ERISA. ss.4. CLOSING CONDITIONS Your obligation to purchase the Notes on the Closing Date shall be subject to the performance by the Company of its agreements hereunder, which are to be performed at or prior to the time of delivery of the Notes, and to the following conditions to be satisfied on or before the Closing Date: 4.1 Representations and Warranties. The representations and warranties of the Company contained in this Agreement, in the certificates delivered pursuant to this Section 4 or otherwise made in connection herewith shall be true and correct on or as of the Closing Date and the Company shall have delivered to you a certificate to such effect, dated the Closing Date and executed by the president, the chief financial officer, the chief accounting officer or the Treasurer of the Company. 4.2. Legal Opinions. You shall have received from Gardner, Carton & Douglas, who is acting as your special counsel in this transaction, and from Jerry M. Aufox, corporate counsel to the Company, his opinions, dated such Closing Date, in form and substance satisfactory to you and covering substantially the matters set forth or provided in the attached Exhibits B and C, respectively. 4.3. Events of Default. No Default or Event of Default shall have occurred and be continuing on the Closing Date, and the Company shall have delivered to you a certificate to such effect, dated the Closing Date and executed by the president, the chief financial officer, the chief financial officer or the Treasurer of the Company. -11- 4.4. Payment of Fees and Expenses. The Company shall have paid all of the fees and expenses of Gardner, Carton & Douglas, your special counsel, through the Closing Date. 4.5. Legality of Investment. Your acquisition of the Notes shall constitute a legal investment as of the Closing Date under the laws and regulations of each jurisdiction to which you may be subject (without resort to any "basket" or "leeway" provision which permits the making of an investment without restrictions as to the character of the particular investment being made), and such acquisition shall not subject you to any penalty or other onerous condition in or pursuant to any such law or regulation; and you shall have received such certificates or other evidence as you may reasonably request to establish compliance with this condition. 4.6. A private placement number with respect to the Notes shall have been issued by S&P. 4.7. Proceedings and Documents. All proceedings taken in connection with the transactions contemplated by this Agreement, and all documents necessary to the consummation of such transactions shall be satisfactory in form and substance to you and your special counsel, and you and your special counsel shall have received copies (executed or certified as may be appropriate) of all legal documents or proceedings which you and they may reasonably request. ss.5. INTERPRETATION OF AGREEMENT 5.1. Certain Terms Defined. The terms hereinafter set forth when used in this Agreement shall have the following meanings: Adjusted Conso1idated Net Worth - Consolidated Stockholder' Equity less all Restricted Investments that exceed, in the aggregate, 10% of Consolidated Stockholders' Equity. Affiliate - Any Person (other than a Subsidiary or an original Purchaser) (i) who is a director or executive officer of the Company or any Subsidiary, (ii) which directly or indirectly through the or more intermediaries controls, or is controlled by, or is under common control with the Company, (iii) which beneficially owns or holds securities representing 10% or more of the combined voting power of the Voting Stock of the Company, or (iv) of which securities representing 10% or more of the combined voting power of its Voting Stock (or in the case of a Person not a corporation, 10% or more of its equity) is beneficially owned or held by the Company or any Subsidiary. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Agreement. As defined in Section 1.1. Business Day - Any day, other than Saturday, Sunday or a legal holiday or any other day on which banking institutions in Chicago, Illinois generally are authorized by law to close. -12- Capitalized Lease - Any lease the obligation for Rentals with respect to which, in accordance with GAAP, would be required to be capitalized on a balance sheet of the lessee or for which the amount of the asset and liability thereunder, as if so capitalized, would be required to be disclosed in a note to such balance sheet. Capitalized Lease Obligations - Any amounts required to be capitalized under any Capitalized Lease. Closing Date - As defined in Section 1.2. Code - The Internal Revenue Code of 1986, as amended. Commission - The Securities and Exchange Commission. Consolidated. Debt - Debt of the Company and its Subsidiaries consolidated in accordance with GAAP. Consolidated Indebtedness - Indebtedness of the Company and its Subsidiaries consolidated in accordance with GAAP. Consolidated Net Income - For any period, the net income (or deficit) of the Company and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. Consolidated Stockholders' Equity - The stockholders' equity of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP. Consolidated Total Assets - The assets of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP. Consolidated Total Capitalization - The sum of (i) Consolidated Stockholders' Equity, (ii) 50% the LIPO Reserve, and (iii) Consolidated Debt, less Restricted Investments in excess of 10% of consolidated Stockholders' Equity. Debt - The sum of (i) all Indebtedness (excluding obligations with respect to bankers' acceptances and trade acceptance financings to the extent such obligations, in the aggregate, are less then $,O00,000, but including any such obligations, in the aggregate, in excess of such amount), and (ii) the Total Investment. Default - Any event which, with the lapse of time or the giving of notice, or both, would become an Event of Default. Determination Date - Two Business Days before the date fixed for a prepayment pursuant to Section 2.2(a), Section 7.6 or the date of declaration pursuant to Section 8.2. Environmental Claim - Any notice of violation, claim, demand, abatement order or other order by any Person for any damage, including personal injury (including sickness, disease or death), tangible or intangible property damage, contribution, indemnity, indirect or consequential damages, damage to the -13- environment, nuisance, pollution, contamination or other adverse effects on the environment, or for fines, penalties or restrictions, resulting from or based upon (i) the existence of a Release (whether sudden or non-sudden or accidental or non-accidental) of, or exposure to, any Hazardous Material in, into or onto the environment at, in, by, from or related to any Facility, (ii) the use, handling, transportation, storage, treatment or disposal of Hazardous Material$ in connection with the operation of any Facility, or (iii) the violation, or alleged violation, of any statute, rule, regulation, ordinance, order, permit, license or authorization of or from any governmental authority, agency or court relating to environmental matters pertaining to the Facilities. Environmental Laws - All laws relating to environmental matters, including those relating to (i) fines, orders, injunctions, penalties, damages, contribution, cost recovery compensation, losses or injuries resulting from the Release or threatened Release of Hazardous Materials and to the generation, use, storage, transportation, or disposal of Hazardous Materials, in any manner applicable to the Company or any of its Subsidiaries or any of their respective properties, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.ss.9601 et seq.), the Hazardous Material Transportation Act (49 U.S.C.ss.1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.ss.6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.ss.1251 et seq.), the Safe Drinking Water Act (42 U.S.C.ss.300f et seq.), the Clean Air Act (42 U.S.C.ss.7401 et seq.), the Toxic Substances Control Act (15 U.S.C.ss.2601 et seq.), the Occupational Safety and Health Act (2(degree)U.S.C.ss.651 et seq.), and the Emergency Planning and Community Right-to-Know Act (42 U.S.C.ss.11001 et seq.), and (ii) environmental protection, including the National Environmental Policy Act (42 U.S.C.ss.4321 et seq.), and comparable state and foreign laws, each as amended or supplemented, and any similar or analogous local, state, federal and foreign statutes the regulations promulgated pursuant thereto, each as in effect as of the date of determination. ERISA - The Employee Retirement Income Act of 1974, as amended from time to time and any successor statute. ERISA Affiliate - The Company and (1) any corporation that is a member of a controlled group of corporations within the meaning of Section 414(b) of the Code of which the Company is a member, (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Code of which the Company is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Code of which the Company, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. Event of Default - As defined in Section 8.1. Exchange Act. The Securities Exchange Act of 1934, as amended. Facilities - Any and all real property (including all buildings, fixtures or other improvements located thereon) now or heretofore or hereafter owned, leased, operated or used (under permit or otherwise) by the Company or any of its Subsidiaries. -14- GAAP - Generally accepted accounting principles in effect from time to time in the United States. Guaranties - All obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) of a Person guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including, without limitation, all obligations incurred through an agreement, contingent or otherwise, by such Person: (i) to purchase such Indebtedness or obligation or any property or assets constituting security therefor; (ii) to advance or supply funds (x) for the purchase or payment of such Indebtedness or obligation, (y) to maintain working capital or other balance sheet condition, or (z) otherwise to advance or make available funds for the purchase or payment of such Indebtedness or obligation; (iii) to lease property or to purchase securities or other property or services primarily for the purpose of assuring the owner of such Indebtedness or obligation against loss in respect thereof; or (iv) otherwise to assure the owner of the Indebtedness or obligation against loss in respect thereof. For the purposes of all computations made under this Agreement, Guaranties in respect of any Indebtedness for borrowed money shall be deemed to be Indebtedness equal to the principal amount of such Indebtedness for borrowed money which has been guaranteed, and Guaranties in respect of any other o1igation or liability or any dividend shall be deemed to be Indebtedness equal to the maximum aggregate amount of such obligation, liability or dividend. Hazardous Materials - (i) Any chemical, material or substance defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous waste," "restricted hazardous waste," or "toxic substances" or "pollutant" or words of similar import under any Environmental Laws; (ii) any oil, petroleum or petroleum derived substance, any drilling fluid, produced water or other waste associated with the exploration, development or production of crude oil, any flammable substance or explosive, any radioactive material, any hazardous waste or substance, any toxic waste or substance or any other material or pollutant that (x) poses a hazard to any property of the Company or any of its Subsidiaries or to Persons on or about such property, or (y) causes such property to be in violation of any Environmental Law; (iii) any friable asbestos, urea formaidehyde foam insulation, electrical equipment which contains any oil or dielectric fluid with levels of polychiorinated biphenyls in excess of fifty parts per million; and (iv) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority. Indebtedness. For any Person, without duplication, all (i) obligations for borrowed money or to pay the deferred purchase price of property or assets (except trade account payable, (ii) obligations secured by any Lien upon property or assets owned by such Person, whether or not such Person has assumed or become liable for the payment of such ob1igations, (iii) obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired, notwithstanding the fact that the rights and remedies of the seller, lender or lessor under such agreement in the event of default are limited to repossession or sale of property, (iv) Capitalized Lease Obligations, and (v) Guaranties of obligations of others of the character referred to in the foregoing clauses (i) through (iv), but excluding from Indebtedness the Total Investment. -15- Institutional Holder - Any bank, trust company, insurance company, pension fund, Mutual fund or other similar financial institution, including, without limiting the foregoing, any "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act, which is or becomes a holder of any Note. Investments - All investments made, in cash or by delivery of property, directly or indirectly, in any other Person, whether by acquisition of shares of capital stock, equity interests, indebtedness or other obligations or securities or by loan advance, capital contribution or otherwise; provided, however, that "Investments" shall not mean or include routine investments in property to be used or consumed in the ordinary course of business. Lien - Any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including any agreement to grant any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature tbereof, including a Capitalized Lease, and the filing of or agreement to file any financing statement under the Uniform Commercial Code of any jurisdiction in connection with any of the foregoing. LIFO Reserve - The difference between the cost of inventory using the last-in, first-out ("LIFO") method of valuing inventory under GAAP and the cost of inventory using the rep1acement cost method under GAAP, so long as the Company and its Subsidiaries are reporting the value of their inventory under the LIFO method for purposes of GAAP. Make-Whole Amount - As of any Determination Date, to the extent that the Reinvestment Yield on such Determination Date is lower than the interest rate payable on or in respect of the Notes the excess of (a) the present value of the principal and interest payments to be foregone by any prepayment (exclusive of accrued interest on such Notes through the date of prepayment) on such Notes (taking into account the manner of application of such prepayment required by Section 1.2(b)), determined by discounting (semi-annually on the basis of a 360-day year composed of twelve 30-day months), such payments at a rate that is equal to the Reinvestment Yield over (b) the aggregate principal amount of such Notes then to be prepaid or paid. To the extent that the Reinvestment Yield on any Determination Date is equal to or higher than the interest rate payable on or in respect of such Notes, the Make-Whole Amount is zero. Material Adverse Effect - (i) A material adverse effect on the business, assets, properties, profits, prospects, operations or condition, financial or otherwise, of the Company and its Subsidiaries, on a consolidated basis, (ii) the impairment of the ability of the Company to perform its obligations under this Agreement or the Notes, or (iii) the impairment of the ability of the holders of the Notes to enforce the Company's obligations under this Agreement of the Notes. Moody's - Investor Service, Inc. Net Working Capital - The sum of (i) the current assets of the Company and its Subsidiaries determined in accordance with GAAP and (ii)75% of the LIPO Reserve, less the current liabilities of the Company and its Subsidiaries determined in accordance with GAAP. Notes - As defined in Section 1.1. -16- PBGC - The Pension Benefit Guaranty Corporation or any successor thereto. Person - Any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or government or any governmental authority, agency or political subdivision. Plan - Any employee pension benefit plan, as defined in Section 3(2) of ERISA, that has been estab1ished by, or contributed to, or is maintained by the Company, any Subsidiary or any ERISA Affiliate. Purchaser - As defined in Section 1.1. Receivables Purchase Agreement - The Receivables Purchase Agreement dated as of March I. 1995, among the Company, various financial institutions named therein, Bank of America Illinois, as administrative agent, and PNC Bank, National Association, as managing agent and documentation agent. Reinvestment Yield - The sum of (i) 0.50% plus (ii) the yield reported, as of 10:00 AM. (New York City time) on the Determination Date, on the Cantor-Fitzgerald Brokerage Screen available on the Bloomberg and Knight Ridder Information System (or, if not available, any other nationally recognized trading screen reporting on-line intraday trading in United States government securities) for actively traded U.S. Treasury securities having a maturity equal to the Weighted Average Life to Maturity of the Notes then being prepaid or paid as of the date of prepayment or payment, rounded to the nearest month, or if such yields shall not be reported as of such time or the yields reported as of such time are not ascertainable in accordance with the preceding clause, then the arithmetic mean of the yields published in the statistical release designated H.15(519) (or any successor publication) of the Board of Governors of the Federal Reserve System under the caption "U.S. Government Securities--Treasury Constant Maturities" (the statistical release") for the maturity corresponding to the remaining Weighted Average Life to Maturity of the Notes as of the date of such prepayment or payment rounded to the nearest month For purposes of calculating the Reinvestment Yield, the most recent weekly statistical release published prior to the applicable Determination Date shall be used. In the event the statistical release is not published, the arithmetic mean of such reasonably comparable index, as may be designated by the holders of at least 51% in aggregate principal amount of the Notes, for the maturity corresponding to the remaining Weighted Average Life to Maturity of the Notes as of the date of prepayment or payment, as the case may be, rounded to the nearest month shall be used. If no maturity exactly corresponding to such rounded Weighted Average Life to Maturity shall appear therein, yields for the two most closely corresponding published maturities (one of which occurs prior and the other subsequent to the Weighted Average Life to Maturity) shall be calculated pursuant to the foregoing sentence and the Reinvestment Yield shall be interpolated from such yields on a straight-line basis (rounding, in each of such relevant periods, to the nearest month). Release - Any release, spill, emission, leaking, pumping, pouring, emptying, dumping, injection, escaping, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment (including the abandonment or disposal of any barrel, container or other c1osed receptacle containing any Hazardous Material), or into or out of any Facility, including -17- the movement of any Hazardous Material through the air, soil, surface water, groundwater or property. Rentals - As of the date of any determination thereof, all fixed payments (including all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by the Company or a Subsidiary, as lessee or sublessee under a lease or real or personal property, but exclusive of any amounts required to be paid by the Company or a Subsidiary (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes, assessments, amortization and similar charges. Fixed rents under any so-called "percentage leases" shall be computed on the basis of the minimum rents, if any, required to be paid by the lessee, regardless of sales volume or gross revenues. Restricted Investments - Any Investments of the Company and its Subsidiaries other than: (i) Investments in existing and hereafter created or designated Subsidiaries and any Person that concurrently with such Investment becomes a Subsidiary; (ii) Investments in (A) commercial paper of a domestic issuer maturing in 270 days or less from the date of issuance which is rated P-2 or better by Moody's or A-2 or better by S&P, (B) certificates of deposit or banker's acceptances issued by commercial banks or trust companies located in the United States of America and organized under its laws or the laws of any state thereof each having a combined capital, surplus and undivided profits of $100,000,000 or more, (C) obligations of or fully guaranteed by the United States of America or an agency thereof maturing within three tears from the date of acquisition, (D) municipal securities maturing within three years from the date of acquisition which are rated in one of the top two rating classifications by at least one national rating agency, or (B) money market instrument programs which are classified as current assets in accordance with (GAAP; (iii) Extensions of credit in the nature of accounts receivable or notes receivable arising from the sale of goods and services in the ordinary course of business; (iv) Shares of stock, obligations or other securities received in settlement of claims arising in the ordinary course of business; (v) Participations in notes maturing within 60 days which are rated P-2 or better by Moody's or A-2 or better by S&P. (vi) Advances to officers, employees, subcontractors or suppliers not exeeding $5,000,000 in the aggregate; and (vii) Investments existing as of the date of this Agreement and described in the attached Annex IV. S&P - Standard & Poor's Corporation. -18- Securities Act - The Securities Act of 1933, as amended. Subsidiary - Any Person a majority or more of the shares of Voting Stock of which, or in the case of a Person which is not a corporation a majority or more of the equity of which, is owned or controlled, directly or indirectly, by the Company. Total Investment - As defined in the Receivables Purchase Agreement as in effect on the date of this Agreement. Voting Stock - Capital stock of any class of a corporation having power under ordinary circumstances to vote for the election of members of the board of directors of such corporation, or persons performing similar functions. Weighted Average Life to Maturity - As applied to any prepayment of principal of the Notes at any date, the number of years obtained by dividing (a) the then outstanding principal amount of the Notes to be prepaid into (b) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity, or other required payment, including payment at final maturity, foregone by virtue of such prepayment of the Notes, by (ii) the number of years (calculated to the nearest 1/12th) which would have elapsed between such date and the making of such payment. Wholly Owned - When applied to a Subsidiary, any Subsidiary 100% of the Voting Stock or other equity interests of which is owned by the Company and/or its Wholly-Owned Subsidiaries, other than directors' qualifying shares or, in the case of Subsidiaries organized under the laws of a jurisdiction other than the United States or a state thereof, nominal shares held by foreign nationals in accordance with local law. Terms which are not defined in this Section and are defined in other Sections of this Agreement shall have the meanings specified therein. 5.2. Accounting Principles. Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, the same shall be done in accordance with GAAP, except where such principles are inconsistent with the requirements of this Agreement. 5.3. Valuation Principles. Except where indicated expressly to the contrary by the use of terms such as "fair value," "fair market value" or "market value," each asset, each liability and each capital item of any Person, and any quantity derivable by a computation involving any of such assets, liabilities or capital items, shall be taken at the net book value thereof for all purposes of this Agreement. "Net book value" with respect to any asset, liability or capital item of any Person shall mean the amount at which the same is recorded or, in accordance with GAAP should have been recorded, in the books of account of such Person, as reduced by any reserves which have been or, in accordance with GAAP should have been, set aside with respect thereto, but in every case (whether or not permitted in accordance with GAAP) without giving effect to any write-up, write-down or write-off (other than any write-down or write-off the entire -19- amount of which was charged to Consolidated Net Income or to a reserve which was a charge to Consolidated Net Income) relating thereto which wag made after the date of this Agreement. 5.4. Direct or Indirect Actions. Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether the action in question is taken directly or indirectly by such Person. ss.6. AFFIRMATIVE COVENANTS The Company agrees that, for so long as any amount remains unpaid on any Note: 6.1. Corporate Existence. The Company will maintain and preserve, and will cause each Subsidiary to maintain and preserve, its corporate or partnership existence and right to carry on its business and maintain, preserve, renew and extend all of its rights, powers, privileges and franchises necessary to the proper conduct of its business; provided, however, that the foregoing shall not prevent any transaction permitted by Section 7.5, Section 7.6 or Section 7.7, or the termination of the corporate or partnership existence of any Subsidiary or of any right, power, privilege or franchise of any Subsidiary if, in the reasonable good faith opinion of the Board of Directors of the Company, such termination is in the best interests of the Company, is not disadvantageous to the holders of the Notes, and is not otherwise prohibited by this Agreement. 6.2. Insurance, The Company will, arid will cause each Subsidiary to, maintain insurance coverage with financially sound and reputable insurers in such forms and amounts, with such deductibles and against such risks as are required by law or sound business practice and are customary for corporations engaged in the same or similar businesses and owning and operating similar properties as the Company and its Subsidiaries. 6.3. Taxes, Claims for Labor and Materials. The Company will, and will cause each Subsidiary to, file timely all tax returns required to be filed in any jurisdiction and pay and discharge all taxes, assessments, fees and other governmental charges or levies imposed upon the Company or any Subsidiary or upon any of their respective properties, including leased properties (but only to the extent required to do so by the applicable lease), assets, income or franchises, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid. might become a Lien upon any of their respective properties or assets not permitted by Section 7.4, provided that neither the Company nor any Subsidiary shall be required to pay any such tax, assessment, fee, charge, levy or claim, the payment of which is being contested in good faith and by proper proceedings that will stay the collection thereof or the forfeiture or sale of any property and with respect to which adequate reserves are maintained in accordance with GAAP. 6.4. Maintenance of Properties. The Company will maintain, preserve and keep, and will cause each Subsidiary to maintain, preserve and keep, its properties (whether owned in fee or a leasehold interest), other than any property which is obsolete or, in the good faith judgment of the Company, no longer necessary for the operation of the business of the Company or any Subsidiary, in good repair and working order, ordinary wear and tear excepted, and from time to time will make all necessary repairs, replacements, renewals and additions thereto so that the business carried on in connection therewith may be properly conducted. -20- 6.5. Maintenance of Records. The Company will keep, and will cause each Subsidiary to keep, at all times proper books of record and account in which full, true and correct entries will be made of a.l1 dealings or transactions of or in relation to the business and affairs of the Company or such Subsidiary in accordance with GAAP consistently applied throughout the period involved (except for such changes as are disclosed in such financial statements or in the notes thereto and concurred in by the Company's independent certified public accountants), and the Company will and will cause each Subsidiary to, provide reasonable protection against loss or damage to such books of record and account. 6.6. Financial Information and Reports. The Company will furnish to you and to any other Institutional Holder (in duplicate if you or such other holder so request) the following: (a) As soon as available and in any event within 45 days after the end of each of the first three quarterly accounting periods of each fiscal year of the Company, a consolidated balance sheet of the Company and its Subsidiaries as of the end of such period and consolidated statements of income and cash. flows of the Company and its Subsidiaries for the periods beginning on the first day of such fiscal year and the first day of such quarterly accounting period (for the statements of income) and ending on the date of such balance sheet, setting forth in comparative form the corresponding consolidated figures for the corresponding periods of the preceding fiscal year. all in reasonable detail1 prepared in accordance with GAAP consistently applied throughout the periods involved and certified by the chief financial officer or chief accounting officer of the Company (i) outlining the basis of presentation, and (ii) stating that the information presented in such financial statements contains all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company and its Subsidiaries as of such dates and the consolidated results of their operations and cash flows for the periods then ended, except that such financial statements condense or omit certain footnotes pursuant to the rules and regulations of the Commission. Delivery within the time period specified above of copies of the Company's Quarterly Reports on Form lO-Q prepared in compliance with the requirements therefor and filed with the Commission shall be deemed to satisfy the requirements of this Section 6.6(a). (b) As soon as available and in any event within 90 days after the last day of each fiscal year, a consolidated balance sheet of the Company and its Subsidiaries as of the end of such fiscal year and the related consolidated statements of income, reinvested earnings and cash flows for such fiscal year, in each case setting forth in comparative form figures for the preceding fiscal year, all in reasonable detail, prepared in accordance with GAAP consistently applied throughout the period involved (except for changes disclosed in such financial statements or in the notes thereto and concurred in by the Company's independent certified public accountants) and accompanied by a report as to the consolidated balance sheet end the related consolidated statements of income, reinvested earnings and cash flows unqualified as to scope of audit and unqualified as to going concern by Arthur Andersen LLP, or any other firm of independent public accountants of recognized national standing selected by the Company, to the effect that such financial statements gave been prepared in conformity with GAAP and present fairly, in all materiel respects, the consolidated financial position and results of operations and cash flows of the Company and its Subsidiaries and that the examination of such financial statements by such accounting firm has been made in accordance with generally accepted auditing standards. -21- Delivery within the time period specified above of the Company's Annual Report on Form 10-K for such fiscal year (together with the Company's annual report to shareholders prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in compliance with the requirements therefor and filed with the Commission, together with the accountants certificate described in this Section 6.6(b), shall be deemed to satisfy the requirements of this Section 6.6(b). (c) Together with the consolidated financial statements delivered pursuant to paragraphs (a) and (b) of this Section 6.6, a certificate of the chief financial officer, chief accounting officer or Treasurer of the Company, (I) to the effect that such officer has reexamined the terms and provisions of this Agreement and that on the date such calculations were made, during the periods covered by such financial reports and as of the end of such periods the Company is not, or was not, in default in the fulfillment of any of the terms, covenants, provisions and conditions of this Agreement and that no Default or Event of Default is occurring or has occurred as of the date of such certificate, during the periods covered by such financial statements and as of the end of such periods, or if such officer is aware of any Default or Event of Default, such officer shall disclose in such statement the nature thereof, its period of existence and what action, if any, the Company has taken or proposes to take with respect thereto, and (ii) stating whether the Company is in compliance with Sections 7.I through 7.10 and setting forth, in sufficient detail, the information and computations required to establish whether or not the Company was in compliance with the requirements of Sections 7.1 through 7.8 during the periods covered by the financial stateme~1ts then being furnished and as of the end of such periods. (d) Together with the financial reports delivered pursuant to paragraph (I,) of this Section 6.6, a letter of the Company's independent certified public accountants stating that they have reviewed this Agreement and stating whether, in making their audit, they have become aware of any condition or event that then constitutes a Default or an Event of Default, end, if they are aware that any such condition or event then exists, specifying the nature and period of the existence thereof (it being understood that such accountants shall not be liable, directly or indirectly, for any failure to obtain knowledge of any Default or Event of Default unless such accountants should be obtained knowledge thereof in making an audit in accordance with generally accepted auditing standards or did not make such an audit). (e) Concurrently with notice flied with the Commission, notice of (1) the filing of any suit, action, claim or counterclaim against the Company or any Subsidiary in which the amount claimed as damages against the Company or any Subsidiary exceeds $5,000,000 after deducting the amount which the Company reasonably believes is covered by insurance, and (ii) the entering of any judgment or decree against the Company or any Subsidiary if the aggregate amount of all judgments and decrees then outstanding against the Company and all Subsidiaries exceeds $2,500,000 after deducting the amount the Company or any Subsidiary (x) is insured therefor and with respect to which the insurer has assumed responsibility in writing, and (y) is otherwise indemnified therefor if the terms of such indemnification are satisfactory to holders of 55% or inert in aggregate principal amount of the Notes then outstanding. (f) As soon as available, copies of each financial statement, notice, report and proxy statement which the Company furnishes to its shareholders generally; within 15 days of filing, -22- copies of each registration statement and periodic report (without exhibits and other than registration statements relating to employee benefit plans) which the Company files with the Commission, and any similar or successor agency of the Federal government administering the securities Act, the Exchange Act or the Trust Indenture Act of 1939, as amended; without duplication, within 15 days of filing, copies of each report (other than reports relating solely to the issuance of, or transactions by others involving, its securities) relating to the Company or its securities which the Company files with any securities exchange on which any of the Company's securities may be registered; copies of any orders applicable to the Company or a Subsidiary in any material proceedings to which the Company or any Subsidiary is a party, issued by any governmental agency, Federal or state, having jurisdiction over the Company or any Subsidiary and, at any time as the Company is not a reporting company under Section 13 or 15(d) of the Exchange Act or has not complied with the requirements for the exemption from registration under the Exchange Act set forth in Rule 12g-3-2(b), such financial or other information as any holder of the Notes or prospective purchaser of the Notes may reasonably request. (g) As soon as available, a copy of each other report submitted to the Company or any Subsidiary by independent accountants retained by the Company or any Subsidiary in connection with any special audit made by them of the books of the Company or any Subsidiary. (h) Promptly following any change in the composition of the Company's Subsidiaries from that set forth in Annex I, as theretofore updated pursuant to this paragraph, arid also at the time of delivery of the financial statements referred to in Section 6.6(b), an updated list setting forth the information specified in Annex I. (i) Such additional information as you or such other Institutional Holder of the Notes may reasonably request concerning the Company and its Subsidiaries. 6.7. Inspection of Properties and Records. The Company will allow, and will cause each Subsidiary to allow, any representative of you or any other Institutional Holder, so long as you or such other Institutional Holder holds any Note, to visit and inspect any of its properties, to examine (and, if at the time thereof any Default or Event of Default has occurred and is continuing, make copies and extracts of) its books of record and account and to discuss its affairs, finances and accounts with its officers and its present and former public accountants (and by this provision the Company authorizes such accountants to discuss with you or such Institutional Holder the Company's and any Subsidiary's affairs, finances and accounts), all at such reasonable times and upon such reasonable notice and as often as you or such Institutional Holder may reasonably request and, if at the time thereof any Default or Event of Default has occurred and is continuing, at the Company's expense. 6.8. ERISA. (a) All assumptions and methods used to determine the actuarial valuation of employee benefits, both vested and unvested, under any Plan subject to Title IV of ERISA, and each such Plan, whether now existing or adopted after the date hereof, will comply in all material respects with ERISA. (b) The Company will not at any time permit any Plan to: -23- (i) engage in any "prohibited transaction" as such term is defined in Section 4975 of the Code or in Section 406 of ERISA; (ii) incur any "accumulated funding deficiency" as such term is defined in Section 302 of ERISA, whether or not waived; or (iii) be terminated under circumstances which are likely to result in the imposition of a Lien on the property of the Company or any ERISA Affiliate pursuant to Section 4068 of ERISA; if the event or condition described in clauses (i), (ii) or (iii) above is likely to subject the Company or an ERISA Affiliate to liabilities which, individually or in the aggregate, would have a Material Adverse Effect. (c) Upon the request of you or any subsequent Institutional Holder, the Company will furnish a copy of the annual report of each Plan (Form 5500) required to be filed with the Internal Revenue Service. (d) Within 5 days after obtaining knowledge of any event specified in clauses (i) through (vi) below that would result in a Material Adverse Effect, the Company will give you and any subsequent Institutional Holder written notice of: (i) a reportable event with respect to any Plan; (ii) the institution of any steps by any of the Company, any ERISA Affiliate or the PBGC to terminate any Plan; (iii) the institution of any steps by any of the Company or any ERISA Affiliate to withdraw from any Plan; (iv) a prohibited transaction in connection with any Plan; (v) any material increase in the contingent liability of the Company or any Subsidiary with respect to any post-retirement welfare liability; or (vi) the taking of any action by the Internal Revenue Service, the Department of Labor or the PBGC with respect to any of the foregoing. 6.9. Compliance with Laws. -------------------- (a) The Company will comply, and will cause each Subsidiary to comply, with all laws, rules and regulations, including Environmental Laws, relating to its or their respective businesses, other than laws, rules and regulations the failure to comply with which or the sanctions and penalties resulting therefrom, individually or in the aggregate, would not have Material Adverse Effect. (b) Promptly upon the occurrence thereof, the Company will give you and each other Institutional Holder notice of the institution of any proceedings against, or the receipt of written notice of potential liability or responsibility of, the Company or any Subsidiary for violation, or the alleged violation, of any Environmental Law which violation would give rise to a Material Adverse Effect. 6.10. Acquisition of Notes. Neither the Company nor any Subsidiary nor any Affiliate them, directly or indirectly, will repurchase, redeem, prepay or otherwise acquire, directly or indirectly, any Notes except upon payment or prepayment of the Notes pursuant to Section 2 or Section 7.6. The Company will forthwith cancel any Notes in any manner or at any time acquired by the Company -24- or any Subsidiary or Affiliate of any of them, and such Notes shall not be deemed to be outstanding for any of the purposes of this Agreement or the Notes. 6.11. Private Placement Number. The Company consents to the filing by your special counsel of copies of this Agreement with S&P to obtain a private placement number. ss.7. NEGATIVE COVENANTS The Company agrees that, for so long as any amount remains unpaid on any Note: 7.1. Adjusted Consolidated Net Worth. The Company will not permit its Adjusted Consolidated Net Worth (calculated on the last day of each fiscal quarter) to be less than $74,296,000 plus the cumulative sum of 40% of its Consolidated Net Income (but only if a positive number) for (i) each completed fiscal year of the Company ending after December 31, 1994, and (ii) the period from the beginning of the fiscal year of which the fiscal quarter being measured is a part to the last day of such fiscal quarter. 7.2. Consolidated Debt. The Company will not permit the ratio (calculated on the last day of each fiscal quarter) of Consolidated Debt to Consolidated Total Capitalization to exceed the ratio of .55 to 1.0. 7.3. Net Working Capital. The Company will not permit the ratio (calculated on the last day of each fiscal quarter) of Net Working Capital to Consolidated Debt to be less than 1.2 to 1.0. 7.4. Lien. The Company will not, and will not permit any Subsidiary to, permit to exist, create, assume or incur, directly or indirectly, any Lien on its properties or assets, whether now owned or hereafter acquired, except: (a) Liens on property created substantially contemporaneously or within 180 days of the acquisition thereof to secure or provide for all or a portion of the purchase price of such property, provided that (i) such Liens do not extend to other property of the Company or any Subsidiary, (ii) the aggregate principal amount of Indebtedness secured by each such Lien does not exceed 80% of the purchase price at the time of acquisition of the property subject to such Lien, and (iii) the Indebtedness secured by such Liens is otherwise permitted by Section 7.2 and Section 73 of this Agreement; (b) Liens for taxes, assessments or governmental charges not then due and delinquent or the validity of which is being contested in good faith by appropriate proceedings and as to which the Company has established adequate reserves therefor on its books in accordance with GAAP; (c) Liens arising in connection with court proceedings, provided the execution of such Liens is effectively stayed, such Liens are being contested in good faith by appropriate proceedings and the Company has established adequate reserves therefor on its books in accordance with GAAP; -25- (d) Liens arising in the ordinary course of business arid not incurred in connection with the borrowing of money (including mechanic's and materialmen's liens arid minor survey exceptions on real property) that in the aggregate do not materially interfere with the conduct of the business of the Company or any Subsidiary or materially impair the value of the property or assets subject to such Liens; (e) Liens in connection with workers' compensation, unemployment insurance or other social security laws to secure the public or statutory obligations of the Company or any Subsidiary; (f) Liens securing Indebtedness of a Subsidiary to the Company; (g) Liens permitted by and arising under the Receivables Purchase Agreement; (h) Liens existing on property or assets of the Company or any Subsidiary as of the date of this Agreement that are described in the attached Annex V; (i) Liens not otherwise permitted by paragraphs (a) through (h) of this Section 7.4 created, assumed or incurred subsequent to the Closing Date to secure Indebtedness, provided that at the time of creating, assuming or incurring such additional Indebtedness and after giving effect thereto and to the application of the proceeds therefrom the sum (without duplication) of the aggregate principal amount of outstanding Consolidated Indebtedness secured by Liens permitted by this Section 7.4(1) does not exceed 10% of Adjusted Consolidated Net Worth. 7.5. Merger or Consolidation. The Company will not, and will not permit any Subsidiary to, merge or consolidate with, or convey, transfer or lease all or substantially all of its assets in a single transaction or series of transactions to, any Person, except that: (a) The Company may merge into or consolidate with, or sell all or substantially all of its assets to, any Person or permit any Person to merge into or consolidate with it, provided that immediately after giving effect thereto, (i) the Company is the successor corporation or, if the Company is not the successor corporation, the successor corporation is a solvent corporation organized under the laws of a state of the United States of America or the District of Columbia and expressly assumes in writing the Company's obligations under the Notes and this Agreement; and (ii) there shall exist no Default or Event of Default. (b) Any Subsidiary may (i) merge into the Company or a Wholly-Owned Subsidiary, (ii) convey, transfer or lease all or any part of its assets to the Company or a Wholly-Owned Subsidiary, and (iii) merge with any Person which, as a result of such merger, becomes a Wholly-Owned Subsidiary; provided in each instance set forth in clauses (i) through (iii) that immediately before and after giving effect thereto, there shall exist no Default or Event of Default. 7.6. Sa1e of Assets. The Company will not, and will not permit any Subsidiary to, sell lease, transfer or otherwise dispose of, including by way of merger (collectively a "Disposition"), any assets, inc1uding capital stock or equity interests of Subsidiaries, in one or a series of transactions, other than in the ordinary course of business, to any Person, except to the Company -26- or a Wholly-Owned Subsidiary~ (i) if, in any fiscal year, after giving effect to such Disposition, the aggregate net book value of assets subject to Dispositions during such fiscal year would exceed 15% of Consolidated Total Assets as of the end of the immediately preceding fiscal year or (ii) if a Default or Event of Default exists or would exist. Notwithstanding the foregoing, the Company may, or may permit a Subsidiary to, make a Disposition and the assets subject to such Disposition shall not be subject to or included in the foregoing limitation and computation contained in clause (i) of the preceding sentence to the extent that (x) such assets are leased back by the Company or such Subsidiary, as lessee, within 180 days following the date of the Disposition, or (y) the net proceeds from such Disposition are (1) reinvested in productive assets of the Company or a Subsidiary of at least equivalent value within 180 days of the date of such Disposition, or (2) applied to the payment or prepayment of outstanding senior Indebtedness. Any repayment of Notes pursuant to this Section 7.6 shall be in accordance with Section 2.2(a). 7.7. Disposition of Stock of Subsidiaries, The Company will not permit any Subsidiary to issue its capital stock or other equity interests, or any warrants, rights or options to purchase, or securities convertible into or exchangeable for, such capital stock or other equity interests, to any Person other than the Company or a Wholly-Owned Subsidiary. The Company will not, and will not permit any Subsidiary to, sell, transfer or otherwise dispose of (other than to the Company or a Wholly-Owned Subsidiary) any capital stock or other equity interests (including any warrants, rights or options to purchase, or securities convertible into or exchangeable for, capital stock or other equity interests) or Indebtedness of any Subsidiary, unless: (a) simultaneously therewith all Investments in such Subsidiary owned by the Company and every other Subsidiary are disposed of as an entirety; (b) such Subsidiary does not have any continuing Investment in the Company or any other Subsidiary not being simultaneously disposed of; and (c) such sale, transfer or other disposition is permitted by Section 7.6. 7.8. Leases. The Company will not, and will not permit any Subsidiary to, enter into or permit to exist any Capitalized Lease which requires the payment daring the remaining term thereof by the. Company or any Subsidiary of Capitalized Lease Obligations which, after giving effect thereto, and to any other Capitalized Lease Obligations of the Company and its Subsidiaries on a consolidated basis, exceed in the aggregate 10% of Consolidated Total Capitalization. 7.9. Transactions with Affiliates. The Company will not, and will not permit any Subsidiary to, enter into any transaction (including the furnishing of goods or services) with an Affiliate, except on terms and conditions no less favorable to the Company or such Subsidiary than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate, except for (i) the transfer pricing between the Company and its joint venture, Castle Metals de Mexico, S.A. de C.V., and (ii) benefit and compensation plans and arrangements approved by a majority of the disinterested members of the Board of Directors of the Company or any Subsidiary. -27- 7.10. Nature of Business - The Company will not permit any Subsidiary to, engage in any business if, as a result thereof, the business then to be conducted by the Company and its Subsidiaries, taken as a whole, would be substantially changed from the business conducted on the Closing Date. ss.8. EVENTS OF DEFAULT AND REMEDIES THEREFOR 8.1. Nature of Events. An "Event of Default" shall exist if any one or more of the following occurs: (a) Any default in the payment of interest when due on any of the Notes and continuance of such default for a period of five Business Days; (b) Any default in the payment of the principal of any of the Notes or the Make-Whole Amount thereon, if any, at maturity, upon acce1eration of maturity or at any date fixed for prepayment; (c) (i) Any default in the payment of the principal of, or interest or premium on, any other Debt of the Company and its Subsidiaries aggregating in excess of 53,000,000 as and whet due and payable (whether by lapse of time, declaration, call for redemption or otherwise) and the continuation of such, default beyond the period of grace, if any, allowed with respect thereto, or (ii) any default (other than a payment default) under any mortgages, agreements or other instruments of the Company and its Subsidiaries under or pursuant to which Debt aggregating in excess of $3,000,000 is issued and the continuation of such default beyond the period of grace, i: any, allowed with respect thereto; (d) Any default in the observance or performance of Sections 7.1 through 7.10 or in Section 8.7; (e) Any default in the observance or performance of any other covenant or provision of this Agreement which is not remedied within 30 days after the date on which the Company learns of such default; (f) Any representation or warranty made by the Company in this Agreement, or mad' by the Company in airy written statement or certificate furnished by the Company in connection with the issuance and sale of the Notes or furnished by the Company pursuant to this Agreement proves incorrect in any material receipt as of the date of the making or issuance thereof; (g) Any judgment, decree, writ or warrant of attachment or any similar process in an aggregate amount in excess of $5,000,000 shall be entered or filed against the Company or any Subsidiary or against any property or assets of either and remain unpaid, unvacated, unbonded or unstayed (through appeal or otherwise) for a period of 60 days after the Company or any Subsidiary receives notice thereof, except for any judgment, decree, writ or warrant of attachment or any similar process to the extent that the Company or any Subsidiary (i) is insured therefor and with respect to which the insurer has assumed responsibility in writing, or (ii) is indemnified therefor, provided the terms of such indemnification are satisfactory to holders of 55% or more in aggregate principal amount of the Notes then outstanding; -28- (h) The Company or any Subsidiary shall (i) generally not pay its debts as they become due or admit in writing its inability to pay its debts generally as they become due; (ii) file a petition in bankruptcy or for reorganization or for the adoption of an arrangement under the Federal Bankruptcy Code, or any similar applicable bankruptcy or insolvency law, as now or in the future amended (herein collectively called "Bankruptcy Laws"); file an answer or other pleading admitting or failing to deny the material allegations of such a petition; fail to obtain the dismissal of such a petition within 60 days of its filing or be subject to an order for relief or a decree approving such a petition; or file an answer or other pleading seeking, consenting to or acquiescing in relief provided for under the Bankruptcy Laws; (iii) make an assignment of all or a substantial part of its property for the benefit of its creditors; (iv) seek or consent to or acquiesce in the appointment of a receiver, liquidator, custodian or trustee of it or for all or a substantial part of its property; (v) be finally adjudicated bankrupt or insolvent; (vi) be subject to the entry of a court order which shall not be vacated, set aside or stayed within 60 days of the date of entry, (A) appointing a receiver, liquidator, custodian or trustee of it or for all or a substantial part of its property, (B) for relief pursuant to an involuntary case brought under, or effecting an arrangement in, bankruptcy, (C) for a reorganization pursuant to the Bankruptcy Laws, or (D) for any other judicial modification or alteration of the rights of creditors; or (vii) be subject to the assumption of custody or sequestration by a court of competent jurisdiction of all or a substantial part of its property, which custody or sequestration shall not be suspended or terminated within 60 days from its inception. 8.2. Remedies of Default. When any Event of Default described in paragraphs (a) through (g) of Section 8.1 has occurred and is continuing, the holders of 33% or more in aggregate principal amount of the Notes then outstanding may, by notice to the Company, declare the entire principal, together with the Make-Whole Amount (to the extent permitted by law) and all interest accrued on all Notes to be, and such Notes shall thereupon become, forthwith due and payable, without any presentment, demand, protest or other notice of any kind, all of which are expressly waived. Notwithstanding the foregoing, (i) when any Event of Default described in paragraph (a) or (b) of Section 8.1 has occurred and is continuing, any holder may by notice to the Company declare the entire principal, together with the Make-Whole Amount (to the extent permitted by law) and all interest accrued on the Notes then held by such holder to be, and such Notes shall thereupon become, forthwith due and payable, without any presentment, demand, protest or other notice of any kind, all of which are expressly waived, and (ii) when any Event of Default described in paragraph (h) of Section 8.1 has occurred, then the entire principaL together with the Make-Whole Amount (to the extent permitted by law) and all interest accrued -29- on all outstanding Notes shall immediately become due and payable without presentment, demand or notice of any kind. Upon the Notes or any of them becoming due and payable as aforesaid, the Company will forthwith pay to the holders of such Notes the entire principal of and interest accrued on such Notes, plus the Make-Whole Amount (to the extent permitted by law) which shall be calculated on the Determination Date. 8.3. Annulment of Acceleration of Notes. The provisions of Section 8..2 are subject to the condition that if the principal of, the Make-Whole Amount and accrued interest on the Notes have been declared immediately due and payable by reason of the occurrence of any Event of Default described in paragraphs (a) through (g), inclusive, of Section 8.1, the holder or holders of 68% or more in aggregate principal amount of the Notes then outstanding may, by written instrument filed with the Company, rescind and annul such declaration and the consequences thereof, provided that (i) at the time such declaration is annulled and rescinded no judgment or decree has been entered for the payment of any monies due pursuant to the Notes or this Agreement, (ii) all arrears of interest upon all the Notes and all other sums payable under the Notes arid under this Agreement (except any principal, Make-Whole Amount or interest on the Notes which has become due and payable solely by reason of such declaration under Section 8.2) shall have been duly paid, and (iii) each and every Default or Event of Default shall have been cured or waived; and provided further, that no such rescission and annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereto. 8.4. Other Remedies. If any Event of Default shall be continuing, any holder of Notes may enforce its rights by suit in equity, by action at law, or by any other appropriate proceedings, whether for the specific performance (to the extent permitted by law) of any covenant or agreement contained in this Agreement or in the Notes or in aid of the exercise of any power granted in thIs Agreement, and may enforce the payment of any Note held by such holder and any of its other legal or equitable rights. 8.5. Conduct No Waiver. Collection Expenses. No course of dealing on the part of any holder of Notes, nor any delay or failure on the part of any holder of Notes to exercise any of its rights, shall operate as a waiver of such rights or otherwise prejudice such holder's rights, powers and remedies. If the Company fails to pay, when due, the principal of, the Make-Whole Amount, or the interest on, any Note, or fails to comply with any other provision of this Agreement, the Company will pay to each holder, to the extent permitted by law, on demand, such further amounts as shall be sufficient to cover the cost and expenses, including but not limited to attorneys' fees, incurred by such holders of the Notes in collecting any sums due on the Notes or in otherwise enforcing any of their rights. 8.6. Remedies Cumulative. No right or remedy conferred upon or reserved to any holder of Notes under this Agreement is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to every other right or remedy given under this Agreement or now or hereafter existing under any applicable law. Every right and remedy given by this Agreement or by applicable law to any holder of Notes may be exercised from time to time and as often as may be deemed expedient by such holder, as the case may be. -30- 8.7. Notice of Default. With respect to Defaults, Events of Default or claimed defaults, the Company will give the following notices: (a) The Company promptly will furnish to each holder of a Note written notice of the occurrence of a Default or an Event of Default. Such notice shall specify the nature of such default, the period of existence thereof and what action the Company has taken or is taking or proposes to take with respect thereto, (b) If the bolder of any Note or of any other evidence of Debt of the Company or any Subsidiary gives any notice or takes any other action with respect to a claimed default, the Company will forthwith give written notice thereof to each holder of the then outstanding Notes, describing the notice or action and the nature of the claimed default. ss.9. AMENDMENTS, WAIVERS AND CONSENTS 9.1. Matters Subject to Modification. Any term, covenant, agreement or condition of this Agreement may, with the written consent of the Company, be amended, or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), if the Company shall have obtained the consent in writing of the holder or holders of 51% or more in aggregate principal amount of outstanding Notes; provided, however, that, without the written consent of the holder or holders of all of the Notes then outstanding, no such amendment, waiver, modification or alteration shall be effective which will (i) change army of the provisions, including definitions, relating to payment (including any required prepayment or optional prepayment) of the principal of, Make-Whole Amount or interest on any Note, (ii) change the amount of any payment or prepayment of principal or Make-Whole Amount, or change the rate of interest thereon, or (iii) change any of the provisions of Section 8.1, Section 8.2, Section 8.3 or this Section 9. For the purpose of determining whether holders of the requisite principal amount of Notes have made or concurred in any amendment, waiver, consent, approval, notice or other communication under this Agreement, Notes held in the name of, or owned beneficially by, the Company, any Subsidiary or any Affiliate thereof, shall not be deemed outstanding. 9.2. Solicitation of Holders of Notes. Neither the Company nor any Person acting on the Company's behalf will solicit, request or negotiate for or with respect to any proposed waiver or amendment of any of the provisions of this Agreement or the Notes unless each holder of the Notes (irrespective of the amount of Notes then owned by it) shall concurrently be informed thereof by the Company and shall be afforded the opportunity of considering the same and shall be supplied by the Company with sufficient information to enable it to make an informed decision with respect thereto. Executed or true and correct copies of any waiver or consent effected pursuant to the provisions of this Section 9 shall be delivered by the Company to each holder of outstanding Notes forthwith following the date on which the same shall have been executed and delivered by the bolder or holders of the requisite percentage of outstanding Notes, The Company will not, directly or indirectly, pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, to any holder of the Notes as consideration for or as an inducement to the entering into by any bolder of the Notes of any waiver or amendment of any of the terms and provisions of this Agreement unless such remuneration is -31- concurrently paid, on the same terms, ratably to each holder of the then outstanding Notes. Any consent made by a holder of Notes that has transferred or has agreed to transfer its Notes to the Company, any Subsidiary, or any Affiliate thereof arid has provided or has agreed to provide such written consent as a condition to such transfer shall be void and of no force and effect except solely as to such holder, and any amendments effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no force and effect retroactive to the date such amendment or waiver initially took or takes effect, except solely as to such holder. 9.3. Binding Effect. Any such amendment, consent or waiver shall apply equally to all the holders of the Notes and shall be binding upon them, upon each future holder of any Note and upon the Company whether or not such Note shall have been marked to indicate such amendment, consent or waiver and whether or not such holder approved of such amendment, consent or waiver. No such amendment, consent or waiver shall extend to or affect any obligation not expressly amended, consented to or waived or impair any right related thereto, ss.10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT 10.1. Form of Notes. Each Note initially delivered under this Agreement will be in the form of one fully registered Note in the form attached as Exhibit A. The Notes are issuable only in fully registered form and in denominations of at least $1,000,000 (or the remaining outstanding balance thereof, if less than $1,000,000). 10.2. Note Register. The Company shall cause to be kept at its principal office a register (the "Note Register") for the registration and transfer of the Notes. The names and addresses of the holders of Notes, the transfer thereof and the names and addresses of the transferees of the Notes shall be registered in the Note Register. The Company may deem and treat the person in whose name a Note is so registered as the holder and owner thereof for all purposes (subject to the provisions of Section 2.5) and shall not be affected by any notice to the contrary, until due presentment of such Note for registration of transfer as provided in this Section 10. 10.3. Issuance of New Notes upon Exchange or Transfer. Upon surrender for exchange or registration of transfer of any Note at the office of the Company designated for notices in accordance with Section 11.2, the Company shall execute and deliver, at its expense, one or more new Notes of any authorized denominations requested by the holder of the surrendered Note, each dated the date to which interest has been paid on the Notes so surrendered (or, if no interest has been paid, the date of such surrendered Note), but in the same aggregate unpaid principal amount as such surrendered Note, and registered in the name of such person or persons as shall be designated in writing by such holder. Every Note surrendered for registration of transfer shall be duly endorsed, or be accompanied by a written instrument of transfer duly executed, by the holder of such Note or by his attorney duly authorized in writing. 10.4. Replacement of Notes. Upon receipt of evidence satisfactory to the Company of the ownership of and loss, theft, mutilation or destruction of any Note, and in the case of any such loss, theft or destruction upon delivery -32- of a bond of indemnity in such form and amount as shall be reasonably satisfactory to the Company or in the event of such mutilation upon surrender and cancellation of the Note, the Company, without charge to the holder thereof, will make and deliver a new Note of like tenor in lieu of such lost, stolen, destroyed or mutilated Note. If any such lost, stolen or destroyed Note is owned by you or any other Institutional Holder, then the affidavit of an authorized officer of such owner setting forth the fact of such loss, theft or destruction and of its ownership of the Note at the time of such loss, theft or destruction shall be accepted as satisfactory evidence thereof, arid no further indemnity shall be required as a condition to the execution and delivery of a new Note, other than a written agreement of such owner (in form reasonably satisfactory to the Company) to indemnify the Company for any losses directly suffered by the Company relating to the lost, stolen, destroyed or mutilated Note and the issuance by the Company of a new Note. ss.11. MISCELLANEOUS 11.1. Expenses. Whether or not the purchase of Notes herein contemplated shall be consummated, the Company agrees to pay directly all expenses (including fees and expenses of counsel) in connection with the preparation, execution and delivery of this Agreement and the transactions contemplated by this Agreement, including, but not limited to, out-of-pocket expenses, filing fees of S&P in connection with obtaining a private placement number, fees, charges and disbursements of special counsel, photocopying and printing costs and charges for shipping the Notes, adequately insured, to you at your home office or at such other address as you may designate, and all similar expenses (including the fees and expenses of counsel, and the fees and expenses of a financial advisor, but only in connection with any work-out, renegotiation or restructuring in the case of a financial advisor) relating to any amendments, waivers or consents in connection with this Agreement or the Notes (whether or not any such amendments, waivers or consents become effective), including, but not limited to, any such amendments, waivers or consents resulting from any Default, Event of Default, work-out, renegotiation or restructuring relating to the performance by the Company of its obligations under this Agreement or the Notes. The Company also agrees that it will pay and save you harmless against any and all liability with respect to stamp and other documentary taxes, if any, which may be payable, or which may be determined to be payable in connection with the execution and delivery of this Agreement or the Notes (but not in connection with a transfer or replacement of any Notes), whether or not any Notes are then outstanding. The obligations of the Company under this Section 11.1. shall survive the retirement of the Notes. 11.2. Notices. Except as otherwise expressly provided herein, all communications provided for in this Agreement shall be in writing and delivered or sent by registered or certified mail, return receipt requested, or by overnight courier (i) if to you, to the address set forth below your name in Schedule I, or to such other address as you may in writing designate, (ii) if to any other holder of the Notes, to such address as the holder may designate in writing to the Company, and (iii) if to the Company, to A. M. Castle & Co.., 3400 North Wolf Road, Franklin Park, Illinois 60131, Attention: Treasurer, or to such other address as the Company may in writing designate. -33- 11.3. Reproduction of Documents. This Agreement and all documents relating hereto, including, without limitation, (1) consents, waivers and modifications which may hereafter be executed, (ii) documents received by you at the closing of the purchase of the Notes (except the Notes themselves), and (iii) financial statements, certificates and other information previously or hereafter furnished to you, may be reproduced by you by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process, and you may destroy any original document so reproduced. The Company agrees and stipulates that any such reproduction which is legible shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by you in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence; provided that nothing herein contained shall preclude the Company from objecting to the admission of any reproduction on the basis that such reproduction is not accurate, has been altered or is otherwise incomplete. 11.4. Successors and Assigns. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. 11.5. Law Govening. This Agreement shall be governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. 11.6. Headings, The headings of the sections and subsections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 11.7. Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all such counterparts shall together constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement-to produce or account for more than one such counterpart or reproduction thereof permitted by Section 11.3. 11.8. Reliance on and Survival of Provisions. All covenants, representations and warranties made by the Company herein and in any certificates delivered pursuant to this Agreement, whether or not in connection with a closing, (i) shall be presumed to have been relied upon by you, notwithstanding any investigation heretofore or hereafter made by you or on your behalf, and (ii) shall survive the delivery of this Agreement and the Notes. 11.9. Integration and Severability. This Agreement embodies the entire agreement and understanding between you and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof. In case any one or more of the provisions contained in this Agreement or in any Note, or application thereof, shall be invalid, illegal or unenforceable in any respect, the validity, legality arid enforceability of the remaining provisions contained in this Agreement and in any Note, and any other application thereof, shall not in any way be affected or impaired thereby. * * * * -34- IN WITNESS WHEREOF, the Company and the Purchaser have caused this Note Agreement to be executed and delivered by their respective officer or officers thereunto duly authorized. A. M. CASTLE & CO. By: /s/ Edward F. Culliton ----------------------------------- Title: Vice President & CFO NATIONWIDE LIFE INSURANCE COMPANY By: /s/ Michael D. Groseclose ------------------------------------ Title: Associate Vice President Corporate Fixed-Income Securities -35- EX-4.2 5 castle4-2.txt 1ST AMEND AND WAIVER TO NOTE AGREE 12-01-98 EXHIBIT 4.2 A.M. CASTLE & CO. FIRST AMENDMENT AND WAIVER TO NOTE AGREEMENT $20,000,000 6.49% Senior Notes Due April 15, 2008 Dated as of December 1, 1998 Nationwide Life Insurance Company One Nationwide Plaza Columbus, Ohio 43215 Ladies and Gentlemen: Reference is made to the Note Agreement dated as of April 1, 1996 (the "Note Agreement") between A.M. Castle & Co. (the "Company") and you, pursuant to which the Company issued $20,000,000 principal amount of its 6.49% Senior Notes (the "Notes"). You are referred to herein as the "Holder," Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Note Agreement The Company was in breach of the Net Working Capital Covenant contained in Section 7.3 of the Note Agreement as of September 3O, l998. Consequently, the Company has requested the waiver and modification of that covenant of the Note Agreement. The Holder is willing to grant an amendment and waiver on the terms and conditions hereinafter set forth. In consideration of the premises and for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Company and the Holder agree as follows: SECTION 1. AMENDMENTS 1.1. Amendment of Section 7.3. Section 7.3 of the Note Agreement is amended to read in its entirety as fo11ows: "7.3. Net Working Capital. The Company will not permit the ratio (calculated on the last day of each fiscal quarter) of Net Working Capital to Consolidated Debt to be less than 1.0 to 1.0." SECTION 2. WAIVER AND CONSENT 2.1. Waiver. The Holder waives compliance by the Company with the provisions of Section 7.3 of the Note Agreement for the quarter ending September 30, 1998. 2.2 Limitation on Waiver. The waiver under Section 2.1 hereof is limited precisely to its terms and shall not constitute a waiver generally or in any other instance. Nothing contained herein shall be deemed a waiver of (or otherwise affect the Holder's ability to enforce) any Default or Event of Default other than as expressly set forth herein. SECTION 3. REAFFIRMATION; REPRESENTATIONS AND WARRANTIES 3.1. Reaffirmation of Note Agreement. The Company reaffirms its agreement to comply with each of the covenants, agreements and other provisions of the Note Agreement and the Notes, including the additions and amendments of such provisions effected by this First Amendment and Waiver. 3.2. Note Agreement The Company represents and warrants that, subject to the effectiveness of this First Amendment and Waiver, the representations and warranties contained in the Note Agreement are true and correct as of the date hereof, except for such changes, facts, transactions and occurrences that have arisen since April 1, 1996 in the ordinary course of business and such other matters as have been previously disclosed in writing by the Company to the Holder. 3.3. No Default or Event of Default. After giving effect to the transactions contemplated hereby, no Default or Event of Default will exist. 3.4. Authorization. The execution, delivery and performance by the Company of this First Amendment and Waiver have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of; notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceab1e. Each of the Note Agreement and this First Amendment and Waiver constitutes the legal, valid and binding obligations of the Company, enforceable against it in accordance with its respective terms, without defense, counterclaim or offset. SECTION 4. EFFECTIVE DATE This First Amendment and Waiver shall become effective upon: (i) execution by the Holder of a counterpart of this First Amendment and Waiver and (ii) receipt by the Holder of payment of the amendment fee required by Section 5(a) hereof. 2 SECTION 5. AMENDMENT FEE; EXPENSES (a) Amendment Fee. As consideration for the approval by the Holder of this First Amendment and Waiver, the Company will pay to the Holder an amendment fee equal to 0.15% of the principal amount of the outstanding Notes. Such fee shall be paid in accordance with the instructions set forth in the Note Agreement. (b) Expenses. The Company shall pay (within two business days of receipt of a detailed statement therefor) all reasonab1e fees and expenses of special counsel to the Holder. SECTION 6. MISCELLANEOUS 6.1. Ratification. Except to the extent amended, modified, deleted or added to hereby, the terms and provisions of the Note Agreement, including the representations and warranties contained therein, shall remain in full force and effect and are ratified, confirmed, remade and approved in all respects as of the date hereof. 6.2. Reference to and Effect on the Note Agreement. Upon the final effectiveness of this First Amendment and Waiver, each reference in the Note Agreement and in other documents describing or referencing the Note Agreement to the "Agreement," "Note Agreement," "hereunder," "hereof," "herein," or words of like import referring to the Note Agreement, shall mean and be a reference to the Note Agreement, as amended hereby. 6.3. Binding Effect. This First Amendment and Waiver shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto. 6.4. Governing Law. This First Amendment and Waiver shall be governed by and construed in accordance with Illinois law. 6.5. Counterparts. This First Amendment and Waiver may be executed in any number of counterparts, each executed counterpart constituting an original, but altogether only one instrument. 3 IN WITNESS WHEREOF, the Company and the Holder have caused this First Amendment and Waiver to be executed and delivered by their respective officer or officers thereunto duly authorized. A.M. CASTLE & CO. By: /s/ James A. Podojil Name: James A. Podojil Title: Treasurer NATIONWIDE LIFE INSURANCE COMPANY By: /s/ Mark W. Poeppleman Name: Mark W. Poeppleman Title: Authorized Signatory 4 EX-4.3 6 amcastle8k112202exib4-3.txt 2ND AMEND TO NOTE AGREE 11-22-02 ================================================================================ Exhibit 4.3 A. M. CASTLE & CO. -------------------------------------------------------- SECOND AMENDMENT TO NOTE AGREEMENT -------------------------------------------------------- Dated as of November 22, 2002 $20,000,000 RESET RATE SENIOR SECURED NOTES DUE 2008 ================================================================================ As of November 22, 2002 To each of the Current Holders Named in Annex 1 hereto Ladies and Gentlemen: A. M. CASTLE & CO., a Maryland corporation (together with any successors and assigns, the "Company"), hereby agrees with each of you as follows: 1. PRIOR ISSUANCE OF NOTES, ETC. The Company issued and sold (i) twenty million dollars ($20,000,000) in aggregate principal amount of its 6.49% Senior Notes due April 15, 2008 (the "Existing Notes," and, as amended by this Agreement and as may be further amended, restated or otherwise modified from time to time, the "Notes) pursuant to a Note Agreement, dated as of April 1, 1996, between the Company and Nationwide Life Insurance Company (the "Original Note Agreement). The Original Note Agreement was amended by the First Amendment and Waiver to Note Agreement dated as of December 1, 1998 (the Original Note Agreement, as amended by the foregoing and as in effect immediately prior to giving effect to the amendments provided for by this Agreement, is referred to herein as the "Existing Note Agreement" and, as may be amended pursuant to this Agreement and as may be further amended, restated or otherwise modified from time to time, the "Note Agreement"). The register kept by the Company for the registration and transfer of the Notes indicates that each of the Persons named in Annex 1 hereto (collectively, the "Current Holders") is currently a holder of the aggregate principal amount of the Notes indicated in such Annex. 2. REQUEST FOR CONSENT TO AMENDMENTS The Company requests that each of the Current Holders consent to the amendments (collectively, the "Amendments") to the Existing Note Agreement provided for by this Agreement. 3. WARRANTIES AND REPRESENTATIONS To induce the Current Holders to enter into this Agreement and to consent to the Amendments, the Company warrants and represents to each of the Current Holders as follows (it being agreed, however, that nothing in this Section 3 shall affect any of the warranties and representations previously made by the Company in or pursuant to the Existing Note Agreement, and that all of such other warranties and representations, as well as the warranties and representations in this Section 3, shall survive the effectiveness of the Amendments): 3.1. No Material Adverse Change. Except for matters publicly disclosed in the Company's most recent reports to the Commission under the Exchange Act, since December 31, 2001, there has been no change in the business operations, profits, financial condition, properties or business prospects of the Company except changes that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 3.2. Corporate Authority; Authorization. The Company is a corporation duly organized and existing in good standing under the laws of the State of Maryland and has the requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations under the Note Agreement. This Agreement has been duly authorized by all necessary corporate action on the part of the Company, and this Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, reorganization, arrangement, insolvency, moratorium or other similar laws affecting the enforceability of creditors' rights generally, and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3.3. Full Disclosure. Neither the financial statements and other certificates previously provided to each of the Current Holders pursuant to the provisions of the Existing Note Agreement nor the statements made in this Agreement nor any other written statements furnished to each of the Current Holders by or on behalf of the Company in connection with the proposal and negotiation of the transactions contemplated hereby (other than pro forma financial information or financial or other projections or any forward-looking statements), or disclosed in the Company's report on Form 10-Q filed with the Commission on November 14, 2002 or report on Form 10-K filed with the Commission on March 14, 2002, taken as a whole, contained any untrue statement of a material fact or omitted a material fact necessary to make the statements contained therein and herein not misleading, in each case as of the time such financial statements or certificates were provided or such statements were made or furnished. There is no fact known to the Company relating to any event or circumstance that has occurred or arisen since the Closing Date that the Company has not disclosed to each of the Current Holders in writing or disclosed in the Company's report on Form 10-Q filed with the Commission on November 14, 2002 or report on Form 10-K filed with the Commission on March 14, 2002, that has had or, so far as the Company can now reasonably foresee, could reasonably be expected to have, a Material Adverse Effect. All pro forma financial information, financial or other projections and forward-looking statements delivered to the Current Holders has been prepared in good faith by the Company based on reasonable assumptions. 2 3.4. Ownership of Subsidiaries. (a) Annex 2 contains a complete and correct description of the Company's Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary. The Subsidiary Side Letter contains a complete and correct description of the Company's Subsidiaries, showing, as to each Subsidiary, the book value of its assets as of September 30, 2002 and its contribution to Consolidated EBITDA for the four quarter period ended on September 30, 2002. (b) Each Subsidiary identified in Annex 2 is a corporation or other legal entity duly organized, validly existing and, except as set forth in Annex 2, in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact. 3.5. Title to Properties. The Company and its Subsidiaries have good and sufficient title to or the legal right to use their respective properties that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet of the Company delivered pursuant to the provisions of Section 6.6 of the Existing Note Agreement (except as sold or otherwise disposed of in the ordinary course of business) or purported to have been acquired by the Company or any Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear from Liens not permitted by the Note Agreement. 3.6. Solvency. The fair value of the business and assets of each of the Company and each Subsidiary, exceeds, as of the Effective Date, the amount that will be required to pay the probable liabilities of such Person (including subordinated, contingent, unmatured and unliquidated liabilities), on existing debts as they may become absolute and matured. No such Person, after the Effective Date, will be engaged in any business or transaction, or be about to engage in any business or transaction, for which such Person has unreasonably small assets or capital, and no such Person has incurred, or has any intent to, incur debts that would be beyond such Person's ability to pay as they mature. 3 3.7. Intent. Neither the Company nor any Subsidiary is entering into this Agreement with any intent to hinder, delay, or defraud either current creditors or future creditors of the Company or any Subsidiary. 3.8. No Defaults. No event has occurred and no condition exists that, upon the execution and delivery of this Agreement and the effectiveness of the Amendments, would constitute a Default or an Event of Default. 3.9. Financial Statements. The quarterly and annual financial statements most recently delivered to each of the Current Holders pursuant to Section 6.6 of the Existing Note Agreement have been prepared in accordance with GAAP consistently applied and present fairly, in all material respects, the consolidated financial position of the Company and its consolidated subsidiaries as of such dates and the results of their operations and cash flows for the periods specified therein. 3.10. Litigation; Observance of Agreements. (a) Other than as disclosed in the footnotes to the financial statements in the Company's most recent report on Form 10-Q and Form 10-K filed with the Commission on November 14 2002 and March 14, 2002, there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any property of the Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (b) Neither the Company nor any Subsidiary is in default under any term of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation (including, without limitation, Environmental Laws) of any Governmental Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 4 3.11. Charter Instruments; Other Agreements. Neither the Company nor any Subsidiary is in violation in any respect of any term of any charter instrument or bylaw. Upon the execution and delivery hereof and the effectiveness of the Amendments as provided herein, neither the Company nor any Subsidiary is in violation or default in any material respect of any term in any agreement or other instrument to which it is a party or by which it or any of its material property may be bound or affected. The execution, delivery and performance by the Company of this Agreement will not conflict with or result in the breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or violate any provision of any statute or other rule or regulation of any Government Authority applicable to the Company or any Subsidiary. 3.12. Taxes. The Company and the Subsidiaries have filed all tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (a) the amount of which is not individually or in the aggregate Material or (b) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The Company knows of no basis for any other tax or assessment that could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and the Subsidiaries in respect of federal, state or other taxes for all fiscal periods are adequate. The federal income tax liabilities of the Company and the Subsidiaries have been determined by the Internal Revenue Service and paid for all fiscal years up to and including the fiscal year ended December 31, 1997. 3.13. Certain Laws. The execution and delivery of this Agreement by the Company: (a) is not subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, the Transportation Acts, as amended, or the Federal Power Act, as amended, and (b) does not violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary. 5 3.14. Guarantee Representations. All of the representations and warranties of the Company and each Guarantor set forth in the Guarantee Agreement are true and correct. 3.15. Debt; Liens. Annex 3(a) to this Agreement correctly describes all Debt of the Company and its Subsidiaries as of the date hereof. Annex 3(b) to this Agreement correctly describes all outstanding Liens securing Debt in an amount greater than $1,000,000 and all other material Liens on property of the Company or its Subsidiaries as of the date hereof. Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of the Company or such Subsidiary listed on Annex 3(a) hereto and no event or condition exists with respect to any Debt of the Company or any Subsidiary listed on Annex 3(a) that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment. 3.16. Transaction is Legal andAuthorized; Obligations are Enforceable. (a) Transaction is Legal and Authorized. Each of the execution and delivery of this Agreement and the Guarantee Agreement by the Company and each Guarantor and compliance by the Company and each of the Guarantors with all of their respective obligations thereunder: (i) is within the corporate powers of the Company and each Guarantor, as the case may be; (ii) is legal and, except as set forth on Annex 4, does not conflict with, result in any material breach in any of the provisions of, constitute a material default under, or result in the creation of any Lien upon any material property of the Company or any Guarantor under the provisions of, any agreement, charter instrument, bylaw or other instrument to which it is a party or by which it or any of its property may be bound; and (iii) does not give rise to a right or option of any other Person under any agreement or other instrument, which right or option could reasonably be expected to have a Material Adverse Effect. (b) Obligations are Enforceable. Each of this Agreement and the Guarantee Agreement have been duly authorized by all necessary action on the part of the Company and each of the Guarantors, as the case may be, and has been executed and delivered by one or more duly authorized officers of 6 the Company and each of the Guarantors party thereto, and each constitutes a legal, valid and binding obligation of the Company and each of the Guarantors party thereto, enforceable in accordance with its terms, except that such enforceability may be: (i) limited by applicable bankruptcy, reorganization, arrangement, insolvency, moratorium or other similar laws affecting the enforceability of creditors' rights generally; and (ii) subject to the availability of equitable remedies. 3.17. Governmental Consent. Neither the nature of the Company or any Guarantor thereof, or of any of their respective businesses or properties, nor any relationship between the Company or any such Guarantor and any other Person, nor any circumstance in connection with the execution and delivery of this Agreement or the Guarantee Agreement is such as to require a consent, approval or authorization of, or filing, registration or qualification with, any Governmental Authority on the part of the Company or any Guarantor as a condition to the execution and delivery of this Agreement or the Guarantee Agreement. 4. AMENDMENTS; WAIVERS; ACKNOWLEDGMENTS. 4.1. Amendments to Existing Note Agreement and Existing Notes. (a) Subject to the provisions of Section 4.2, the Existing Note Agreement is hereby amended in the manner specified in Exhibit A to this Agreement. (b) Subject to the provisions of Section 4.2, the Existing Notes are hereby amended in the manner specified in Exhibit B1 to this Agreement. 4.2. Effectiveness of Amendments and Waivers. The Amendments contemplated by Section 4.1(a) and 4.1(b) shall become effective (the date of such effectiveness herein referred to as the "Effective Date"), if at all, at such time as the Company and each Current Holder shall have consented in writing to such Amendments by executing and delivering the applicable counterparts of this Agreement. It is understood that any Current Holder may withhold its consent for any reason or for no reason, and that, without limitation of the foregoing, any Current Holder hereby makes the granting of its consent contingent upon its receipt of each of the following: (a) a certificate of the Secretary or Assistant Secretary of the Company certifying as to resolutions of its Board of Directors and other constitutive documents which authorize and permit the Company to execute and deliver this Agreement and to consummate the transactions contemplated hereby; 7 (b) closing opinions from (i) Sidley Austin Brown & Wood LLP, special counsel to the Company, (ii) Ballard Spahr, special Maryland counsel to the Company, and (iii) Jerry Aufox, Corporate Counsel of the Company, dated as of the Effective Date, covering the matters set forth on Exhibit C to this Agreement. This Section 4.2(b) shall constitute direction by the Company and each Guarantor to such counsel to deliver such closing opinions to the Current Holders; (c) confirmation from your special counsel that its fees and disbursements reflected on a statement delivered in connection with the execution and delivery of this Agreement pursuant to Section 7 have been paid in full; (d) if required by applicable regulations, a Private Placement Number issued by Standard & Poor's CUSIP Service Bureau reflecting the amendment to the interest rate on the Notes contemplated by this Agreement; (e) a Guarantee Agreement, dated as of November 22, 2002 (as may be amended, restated or otherwise modified from time to time, the "Guarantee Agreement"), duly executed by each Guarantor in substantially the form of Exhibit D to this Agreement, and (ii) a certificate of the Secretary or Assistant Secretary of each such Guarantor certifying as to the resolutions of their Board of Directors and other constitutive documents which authorize and permit such Guarantors to execute and deliver the Guarantee Agreement and to consummate the transactions contemplated hereby; (f) the Company shall have received at least $10,000,000 in gross proceeds from the issuance and sale of its convertible preferred stock (in one or more transactions) substantially in accordance with the economic terms set forth on the term sheet dated as of October 24, 2002; (g) copies of one or more agreements reasonably satisfactory to such Current Holder providing for amendments to certain covenants of the Company contained in agreements of the Company with The Bank of Nova Scotia, Bank of America, N.A. and The Northern Trust Company; and (h) the Subsidiary Side Letter. 4.3. No Other Amendments; Confirmation. Except as expressly provided herein, (a) no terms or provisions of any agreement are modified or changed by this Agreement, (b) the terms of this Agreement shall not operate as a waiver by you of, or otherwise prejudice any of your rights, remedies or powers under, the Existing Note Agreement, the Existing Notes or any other instrument or agreement executed in connection therewith or 8 under any applicable law, and (c) the terms and provisions of the Existing Note Agreement, the Existing Notes and each other instrument or agreement executed in connection therewith shall continue in full force and effect. 5. COLLATERAL COVENANT (a) The Company hereby agrees and covenants that it will, and will cause each Significant Subsidiary to, on or before December 23, 2002, enter into, or cause to be delivered, such agreements, documents or instruments of any kind (including, without limitation, security agreements, mortgages, deeds of trust, UCC financing statements and opinions of nationally recognized counsel as to the enforceability, Lien perfection, no conflicts with agreements and other customary matters), acceptable in all respects to the Required Holders, to grant Liens in favor of a Collateral Agent on all personal property of the Company and Significant Subsidiaries whether now held or hereafter acquired by the Company or any such Significant Subsidiary (other than Excluded Receivables and Excluded Collateral), in each case to secure the obligations of the Company and each Guarantor under the Note Agreement, the Notes and the Guarantee Agreement; provided, that the Company's obligation to grant such Liens on or before December 23, 2002 shall be conditioned upon the execution by the holders of Notes and the Other Senior Creditors of an Acceptable Intercreditor Agreement. The Company further agrees and covenants that it will, and will cause each Significant Subsidiary to, as soon as reasonably practicable after the Effective Date and in any event on or before February 15, 2003, enter into, or cause to be delivered, such agreements, documents or instruments of any kind (including, without limitation, security agreements, mortgages, deeds of trust, UCC financing statements and opinions of nationally recognized counsel as to the enforceability, Lien perfection, no conflicts with agreements and other customary matters) acceptable in all respects to the Required Holders, to grant Liens in favor of the Collateral Agent on all real property owned by the Company or any Significant Subsidiary, whether now held or hereafter acquired by the Company or any such Significant Subsidiary (other than Excluded Collateral), in each case to secure the Obligations of the Company and each Guarantor under the Agreement and the Guarantee Agreement; provided, that the Company's obligation to grant such Liens by February 15, 2003 shall be conditioned upon the execution by the holders of the Notes and the Other Senior Creditors of an Acceptable Intercreditor Agreement. Such collateral may be shared on a pari passu basis with the Other Senior Creditors pursuant to an Acceptable Intercreditor Agreement. Notwithstanding anything to the contrary in this Agreement or the Note Agreement, the failure to comply with this Section 5(a) despite the exercise by the Company of all commercially reasonable efforts to effect such compliance shall not constitute a Default or Event of Default under this Agreement or the Note Agreement and the sole and exclusive remedy for any breach of this Section 5(a) shall be the adjustments set forth in the definitions of "Applicable Base," "First Year Ratio" and "Second Year Ratio" as they relate to Section 7.1 or 7.2 of the Note Agreement, as applicable. 9 (b) Each of the holders of the Notes agrees (i) to use commercially reasonable efforts to negotiate the terms of, and, contemporaneously with the grant of such Liens to enter into, an Acceptable Intercreditor Agreement with a bank or trust company to act as Collateral Agent and each of the Other Senior Creditors (which Acceptable Intercreditor Agreement will provide that the Collateral Agent may enter into an intercreditor agreement with the lender(s) or purchaser(s) under any Receivables Purchase Agreement); and (ii) that at such time the Company enters into an Acceptable Revolving Credit Facility to replace the Existing Receivables Purchase Agreement (or any replacement thereof) and the Company's unsecured debt obligations are Investment Grade, it will promptly take such action requested by the Company to instruct the Collateral Agent to release the Liens granted pursuant to the Security Documents as of the time such Acceptable Revolving Credit Facility is entered into and becomes effective. 6. DEFINED TERMS Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Existing Note Agreement as contemplated to be amended by the Amendments. 7. EXPENSES Whether or not any of the Amendments becomes effective, the Company will promptly (and in any event within thirty (30) days of receiving any statement or invoice therefor) pay all fees, expenses and costs relating to this Agreement, including, but not limited to, (a) the cost of reproducing this Agreement and the other documents delivered in connection herewith and (b) the reasonable fees and disbursements of the Current Holders' special counsel, Bingham McCutchen LLP, incurred in connection with the preparation, negotiation and delivery of this Agreement. This Section 7 shall not be construed to limit the Company's obligations under Section 11.1 of the Note Agreement. 8. MISCELLANEOUS 8.1. Part of Note Agreement, Future References, etc. The Agreement shall be construed in connection with and as a part of each of the Existing Note Agreement and the Existing Notes and, except as expressly amended by this Agreement, all terms, conditions and covenants contained in the Existing Note Agreement, the Existing Notes and the other documents executed and/or delivered in connection therewith are hereby ratified and shall be and remain in full force and effect. Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Agreement may refer to the Note Agreement without making specific reference to this Agreement, but nevertheless all such references shall include this Agreement unless the context otherwise requires. 10 8.2. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS, UNITED STATES OF AMERICA, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. 8.3. Duplicate Originals, Execution in Counterpart. Two (2) or more duplicate originals hereof may be signed by the parties, each of which shall be an original but all of which together shall constitute one and the same instrument. This Agreement may be executed in one or more counterparts and shall become effective at the time provided in Section 4.2 hereof, and each set of counterparts that, collectively, show execution by the Company and each consenting Current Holder shall constitute one duplicate original. 8.4. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the Company and you and your respective successors and assigns. [Remainder of page intentionally left blank. Next page is signature page.] 11 If this Agreement is satisfactory to you, please so indicate by signing the applicable acceptance on a counterpart hereof and returning such counterpart to the Company, whereupon this Agreement shall become binding among the Company and you in accordance with its terms. Very truly yours, A. M. CASTLE & CO. By: /s/ G. Thomas McKane -------------------------------- Name: G. Thomas McKane Title: President and Chief Executive Officer [Signature Page to Second Amendment to Note Agreement] Accepted: NATIONWIDE LIFE INSURANCE COMPANY By: /s/ Mark W. Poeppelman ---------------------------------------------- Name: Mark W. Poeppelman Title: Vice President Fixed Income Securities [Signature Page to Second Amendment to Note Agreement] The undersigned Guarantors of the company hereby acknowledge and agree to the terms and provisions contained herein and consent to the Company's execution hereof: KEYSTONE TUBE COMPANY, LLC By: /s/ Jerry M. Aufox -------------------------- Name: Jerry M. Aufox Title: Secretary TOTAL PLASTICS, INC. By: /s/ Jerry M. Aufox -------------------------- Name: Jerry M. Aufox Title: Secretary PARAMONT MACHINE COMPANY LLC By: /s/ Jerry M. Aufox -------------------------- Name: Jerry M. Aufox Title: Secretary ADVANCED FABRICATING TECHNOLOGY, LLC By: /s/ Jerry M. Aufox -------------------------- Name: Jerry M. Aufox Title: Secretary [Signature Page to Second Amendment to Note Agreement] OLIVER STEEL PLATE CO. By: /s/ Jerry M. Aufox -------------------------- Name: Jerry M. Aufox Title: Secretary METAL MART, LLC By: /s/ Jerry M. Aufox -------------------------- Name: Jerry M. Aufox Title: Secretary DATAMET, INC. By: /s/ Jerry M. Aufox -------------------------- Name: Jerry M. Aufox Title: Secretary [Signature Page to Second Amendment to Note Agreement] EXHIBIT A 1. Section 1.1 of the Existing Note Agreement is hereby amended by deleting the phrase "rate of 6.49% per annum" and substituting "Reset Rate" in lieu thereof. 2. Section 1.1 of the Existing Note Agreement is hereby amended by deleting the phrase "8.49%" and substituting "Reset Rate plus two percent (2%) per annum" in lieu thereof. 3. The definition of "Net Working Capital" appearing in Section 5.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "Net Working Capital - the sum of (i) the consolidated current assets of the Company and its Subsidiaries determined in accordance with GAAP and (ii) 75% of the LIFO Reserve, less the consolidated current liabilities (excluding Current Debt and Current Maturities of Funded Debt) of the Company and its Subsidiaries determined in accordance with GAAP." 4. The definition of "Debt" appearing in Section 5.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "Debt - All Indebtedness (excluding obligations with respect to bankers' acceptances and trade acceptance financings to the extent such obligations, in the aggregate, are less than $5,000,000, but including any such obligations, in the aggregate, in excess of such amount) of the Company or any Subsidiary, but excluding the aggregate outstanding investment or claim held by purchasers, assignees or other transferees of Receivables of the Company and its Subsidiaries in connection with Securitization Transactions." 5. The definition of "Indebtedness appearing in Section 5.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "Indebtedness - means for any Person, without duplication, all (i) obligations for borrowed money or to pay the deferred purchase price of property or assets (except trade account payables), (ii) obligations secured by any Lien upon property or assets owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligations, (iii) obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired, notwithstanding the fact that the rights and remedies of the seller, lender or lessor under such agreement in the event of default are limited to repossession or sale of property, (iv) Capitalized Lease Obligations, and (v) Guaranties of obligations of others of the character referred to in the foregoing clauses (i) through (iv), but excluding from Indebtedness the aggregate outstanding investment or claim held by purchasers, assignees or other transferees of Receivables of the Company and its Subsidiaries in connection with Securitization Transactions." 6. The definition of "Receivables Purchase Agreement" appearing in Section 5.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: Receivables Purchase Agreement - means the Existing Receivables Purchase Agreement and any other similar agreement pursuant to which any one or more of the Company or any Subsidiary sells its accounts receivable as a means of providing it working capital for its business operations. 7. The definition of "Consolidated Total Assets" appearing in Section 5.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "Consolidated Total Assets - means, at any time, all assets of the Company and its Subsidiaries which would be reflected on a consolidated balance sheet of such Persons at such time prepared in accordance with GAAP." 8. The following definitions are hereby added to Section 5.1 of the Existing Note Agreement in their proper alphabetical order: "Applicable Base - means (a) prior to February 15, 2003, $100,000,000 and (b) on or after February 15, 2003 either (i) $100,000,000 if the Notes are Secured or (ii) $115,901,000 if the Notes are not Secured. "Acceptable Intercreditor Agreement - means an intercreditor and collateral agency agreement, in form and substance reasonably satisfactory to the Required Holders of the Notes, by and among an independent bank or trust company selected by the Company and reasonably satisfactory to the Required Holders but not affiliated with any of such holders or the Exhibit A-2 Other Senior Creditors, the Institutional Holders which are or may become a party to this Agreement, the Other Senior Creditors and the Company which shall provide, among other things, that any future Indebtedness of the Company owing to one or more of the Other Senior Creditors or the Institutional Holders party hereto which is incurred in compliance with Section 7.2 hereof, may be secured on an equal and ratable basis by the Liens which are granted pursuant to the terms of the Security Documents. Acceptable Revolving Credit Facility - means a loan agreement or similar facility pursuant to which a lender or lenders provides revolving loans to the Company or any Subsidiary for the primary purpose of financing such Person's ongoing business operations so long as such agreement or facility (a) is not secured by Liens on the property of the Company or any Subsidiary and (b) provides for interest rates, fees and other pricing terms similar to those generally available to borrowers whose unsecured long term debt is rated Investment Grade. For the avoidance of doubt, no Receivables Purchase Agreement shall constitute a Revolving Loan Facility. A. M. Castle Canada - means A. M. Castle & Co. (Canada), Inc. and any successor thereto. Collateral Agent - means an independent bank or trust company selected by the Company and reasonably satisfactory to the Required Holders but not affiliated with any of such holders or the Other Senior Creditors acting as collateral agent or trustee for the benefit of the holders of the Notes and the Other Senior Creditors pursuant to the provisions of the Security Documents. Consolidated EBITDA - means, for any period, the sum of (a) Consolidated Net Income for such period; plus (b) to the extent, and only to the extent, that such aggregate amount was deducted in the computation of such Consolidated Net Income, the aggregate amount of (i) income tax expense of the Company and its Subsidiaries for such period, plus (ii) charges for depreciation, amortization and other non-cash charges of the Company and its Subsidiaries for such period, plus (iii) Interest Charges for such period. Exhibit A-3 Current Debt - means, at any time and with respect to any Person, all Indebtedness of such Person outstanding at such time other than Funded Debt of such Person. Current Maturities of Funded Debt - means (without duplication), at any time and with respect to any item of Funded Debt, the portion of such Funded Debt outstanding at such time which by the terms of such Funded Debt or the terms of any instrument or agreement relating thereto is (a) due on demand or within 365 days from such time (whether by sinking fund, other required prepayment or final payment at maturity) and (b)(i) is not directly or indirectly renewable, extendible or refundable at the option of the obligor under an agreement or firm commitment in effect at such time to a date 365 days or more from such time or (ii) if so renewable, extendible or refundable at the option of the obligor, the obligor shall have agreed that it will not renew, extend or refund to a date 365 days or more from such time. Effective Date - means the "Effective Date" as defined in the Second Amendment. Excluded Collateral - means (i) any property (whether currently existing or subsequently acquired) subject to a Lien permitted under Section 7.4 of this Agreement, to the extent the agreement creating such Lien prohibits additional Liens on such property; (ii) cash sufficient to secure the Company's (or any of its Subsidiaries') obligations to pay its workmen's compensation benefits, including obligations to any Person providing surety, insurance, letters of credit or other credit support so long as such cash does not secure any other obligation for any other purpose; (iii) all property purchased with proceeds of the note issued pursuant to the Loan Agreement dated as of November 1, 1994 between the Company and the City of Hammond, Indiana; (iv) all properties and assets of A. M. Castle Canada, and any successor holder of such assets; (v) other property with a deminumus fair market value that, individually or in the aggregate with all other such property, is not material to the continued business operations of the Company or any Subsidiary which owns such property; and (vi) any leasehold interest in any real property leased by the Company or any Subsidiary the termination of which would not result in a Material Adverse Effect. Exhibit A-4 Excluded Receivables - means, at any time, outstanding Receivables and Related Security arising out of the ordinary course of business of the Company or its Subsidiaries which shall have been sold to generate funds for working capital purposes pursuant to the provisions of a Receivables Purchase Agreement which makes funds available to the Company or any Subsidiary in an aggregate amount not exceeding $65,000,000 at any time and covering Receivables not exceeding, in the aggregate, $90,000,000 at any time. Existing Receivables Purchase Agreement - means that certain Receivables Purchase Agreement dated as of September 27, 2001 among Castle Funding Corp. as seller, the Company as servicer, Market Street Funding Corporation as issuer and PNC Bank, National Association as administrator (as in effect on the Effective Date). Financial Covenant - means any covenant (or substantially equivalent default provision) which requires the Company to attain or maintain a prescribed level of financial condition, financial achievement or results of operations or cash flow or prohibits the Company from taking specified actions (such as incurring Debt, selling assets, making distributions or making investments) unless it will be in compliance with such a prescribed level immediately thereafter, including, without limitation, covenants of the type contained in Section 7 of this Agreement. First Year Ratio - means (a) prior to February 15, 2003, .65 to 1.0; and (b) on or after February 15, 2003 either (i) .65 to 1.0 if the Notes are Secured or (ii) .55 to 1.0 if the Notes are not Secured. Funded Debt - means with respect to any Person, all Debt which would, in accordance with GAAP, be required to be classified as a long term liability on the balance sheet of such Person prepared in accordance with GAAP, and without limiting the generality of the foregoing shall also include, without limitation (i) any Indebtedness which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, more than 365 days from the date of creation thereof, (ii) any Indebtedness outstanding under a revolving credit or similar agreement providing for borrowings (and renewals and extensions thereof) which would, in accordance with GAAP, be required to be Exhibit A-5 classified as a long term liability of such Person, and (iii) any Guaranties of such Person with respect to Funded Debt of another Person. Governmental Authority - means (a) the government of (i) the United States of America or any State or other political subdivision thereof, or (ii) any jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Subsidiary, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. Guarantee Agreement - means that certain Guarantee Agreement entered into by each of the Guarantors, substantially in the form of Exhibit C to the Second Amendment, as amended, restated or otherwise modified from time to time. Guarantors - means any Subsidiary that is a party to the Guarantee Agreement as of the Effective Date and each other Person which delivers a Guarantee Agreement or a joinder agreement to the Guarantee Agreement pursuant to Section 6.13 hereof, together with the respective successors and assigns of each of the foregoing entities unless and until released in accordance with the terms of this Agreement or the Guarantee Agreement. Interest Charges - means, with respect to any period, the sum (without duplication) of the following (in each case, eliminating all offsetting debits and credits between the Company and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Company and its Subsidiaries in accordance with GAAP): (a) all interest in respect of Debt of the Company and its Subsidiaries (including, without limitation, imputed interest on Capitalized Lease Obligations) deducted in determining Consolidated Net Income for such period, together with all interest capitalized or deferred during such period and not deducted in determining Consolidated Net Income for such period, and (b) all debt discount and expense amortized or required to be amortized in the determination of Consolidated Net Income for such period. Investment Grade - means in respect of any obligation that such obligation (i) has a rating of Baa3 or greater by Moody's Investor Service or a rating BBB- or greater by Standard & Exhibit A-6 Poor's; or (ii) has a rating of NAIC 1 or NAIC 2 from the National Association of Insurance Commissioners; or (iii) in the judgment of the Required Holders and the Other Senior Creditors, has a credit quality equal to or better than one which would be afforded either of the ratings described in clause (i) or clause (ii) of this definition. Keystone Guarantee - means that certain Guarantee Agreement, dated as of November 22, 2002, by the Company in favor of Bank of America, N.A. pursuant to which the Company guarantees (i) the payment to Bank of America by the City of LaPorte, Indiana (the "Keystone Issuer") of all principal, interest and any other amounts payable by the Keystone Issuer in respect of the Keystone Issuer's Economic Development Revenue Bonds, Series 1998 (Keystone Services, Inc. Project), and (ii) the payment and performance by Keystone Service, Inc. of all of its covenants, agreements, obligations and liabilities under that certain Loan Agreement, dated as of April 1, 1998, between the Keystone Issuer and Keystone Service, Inc. Kreher Steel Letter of Credit Agreement - means the Application and Agreement for Standby Letter of Credit, dated March 15, 2002, as amended, pursuant to which Bank of America issued its Irrevocable Standby Letter of Credit No. 7409195 in the stated amount of $5,000,000. Material - means material in relation to the business, operations, affairs, financial condition, assets, properties or prospects of the Company and its Subsidiaries taken as a whole. Mecklenburg Guaranty - means that certain Guarantee Agreement, dated as of November 22, 2002, by the Company in favor of Bank of America, N.A. pursuant to which the Company guarantees the payment to Bank of America by The Mecklenburg County Industrial Facilities and Pollution Control Financing Authority (the "Mecklenburg Issuer") of all principal, interest and any other amounts payable by the Mecklenburg Issuer in respect to the Mecklenburg Issuer's Tax-Exempt Industrial Revenue Bonds (A. M. Castle & Co. Project) Series 1996. Other Senior Creditors - means the following parties or their permitted successor and/or assigns: (i) Bank of America N.A., (ii) Nationwide Life Insurance Company, (iii) The Northern Exhibit A-7 Trust Company and (iv) any other holders of Debt of the Company incurred after the Effective Date in compliance with Section 7.2 hereof. Other Senior Debt - Debt of the Company and/or its Subsidiaries (i) owed to the Bank of America N.A. pursuant to the terms of a Reimbursement Agreement, dated as of June 1, 1994 by the Company in favor of NBD Bank, N.A., as assigned and amended pursuant to an Assignment and Amendment of Reimbursement Agreement, dated as of June 12, 2001, by and among the Company, Bank One, N.A. (successor to NBD Bank, N.A.) and Bank of America, N.A., as further amended pursuant to the Second Amendment to Reimbursement Agreement dated as of November 22, 2002, (ii) owed to Bank of America, N.A. pursuant to the terms of a Reimbursement Agreement dated as of November 1, 1994 by the Company in favor of NBD Bank, N.A., as assigned an amended pursuant to the terms of an Assignment and Amendment of Reimbursement Agreement, dated as of November 1, 2001, by and among the Company, Bank One, N.A. and Bank of America, N.A. and further amended pursuant to the terms of a Second Amendment to Reimbursement Agreement, dated as of November 1, 2001 and a Third Amendment to Reimbursement Agreement dated as of November 22, 2002, (iii) owed to Bank of America, N.A. pursuant to the terms of the Keystone Guarantee, (iv) owed to Bank of America, N.A. pursuant to the terms of the Mecklenburg Guaranty, (v) owed to Bank of America, N.A. as reimbursement for payments under the terms of the Kreher Steel Letter of Credit Agreement, as amended, (vi) owed pursuant to a Note Agreement dated as of March 1, 1998 among the Company and Allstate Insurance Company, The Northwestern Mutual Life Insurance Company, Massachusetts Mutual Life Insurance Company, Mutual of Omaha Insurance Company and United of Omaha Life Insurance Company as amended by First Amendment and Waiver to Note Agreement dated hereof December 1, 1998 and a Second Amendment to Note Agreement dated as of November 22, 2002; (vii) owed pursuant to a Trade Acceptance Purchase Agreement dated as of August 13, 2001 between the Company and The Northern Trust Company in an aggregate amount not in excess of $10,000,000, as amended by the First Amendment thereto dated as of April 29, 2002, the Second Amendment thereto dated as of June 30, 2002 and the Third Amendment thereto dated as of November 22, 2002, (viii) owed pursuant to a Note Agreement dated as of May 15, 1997 among the Company, Massachusetts Mutual Life Insurance Company and United of Exhibit A-8 Omaha Life Insurance Company as amended by First Amendment and Waiver to Note Agreement dated as of December 1, 1998 and a Second Amendment to Note Agreement dated as of November 22, 2002, and (ix) Debt of the Company incurred after the Effective Date in compliance with Section 7.2 hereof. Receivable - means a payment owing to a Person (whether constituting an account, chattel paper, document, instrument, letter-of-credit right, letter of credit, investment property or general intangible) arising from the provision of merchandise, goods or services by such Person, including the right to payment of any interest or finance charges and other obligations owing to such Person with respect thereto. Related Security - means with respect to any Receivable: (a) all supporting obligations, security interests or Liens and property subject thereto from time to time securing or purporting to secure the payment of such Receivable by the Person obligated thereon (b) all guaranties, indemnities and warranties, insurance policies, financing statements and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable, (c) all right, title and interest of the Company or any Subsidiary in and to any goods (including returned, repossessed or foreclosed goods) the sale of which gave rise to such Receivable; provided, that Related Security will not include returned goods only to the extent that all amounts required to be paid pursuant to the transactions involving the transfer of such Receivable in respect of such goods have been paid, (d) all collections with respect to any of the foregoing, (e) all records with respect to any of the foregoing, and (f) all proceeds of such Receivable or with respect to any of the foregoing. Required Holders - means, at any time, the holders of at least 51% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company, any Subsidiary or any Affiliate). Reset Rate - means an annual interest rate equal to 8.49%, provided, however, that in the event the Company shall have replaced the Existing Receivables Purchase Agreement (or any replacement thereof) in its entirety with a Revolving Loan Facility satisfactory to the Required Holders AND so long as neither the Company nor any Subsidiary is a party to any other Receivables Purchase Agreement, then upon execution of such Exhibit A-9 Revolving Loan Facility (and so long as neither the Company nor any Subsidiary is a party to a Receivables Purchase Agreement), the Reset Rate means an annual interest rate equal to 6.99% Revolving Loan Facility - means a loan agreement or similar facility pursuant to which a lender or lenders provides revolving loans to the Company or any Subsidiary for the primary purpose of financing such Person's ongoing business operations, whether such agreement or facility is secured or unsecured. For the avoidance of doubt, no Receivables Purchase Agreement shall constitute a Revolving Loan Facility. Second Amendment - means the Second Amendment to the Note Agreement dated as of November 22, 2002 amending this Agreement. Second Year Ratio - means on or after December 31, 2003 either (i) .60 to 1.0 if the Notes are Secured, or (ii) .55 to 1.0 if the Notes are not Secured. Secured - means the Notes are secured by Liens on property representing (in the aggregate) 95% of the book value (measured as of the Effective Date) of all the real and personal property of the Company and Significant Subsidiaries required to be secured (excluding from such calculation, property that the Required Holders or any Other Senior Creditor in good faith has determined to be unsuitable as collateral for environmental concerns) pursuant to the terms and conditions of Section 5 of the Second Amendment including, without limitation, any condition that an Acceptable Intercreditor Agreement be executed prior to the grant of any Liens or security interests. Securitization Transactions - means one or more transactions involving the transfer by the Company or any of its Subsidiaries of Receivables and Related Security including, without limitation, the sale or granting of a Lien in such Receivables and Related Security, (not including a Revolving Loan Facility) to an SPV as a contribution to the capital of such SPV or for consideration in the form of cash or advances under a subordinated note due from such SPV, provided such transactions are entered into in good faith to provide working capital to the Company and its Subsidiaries, and provided further that the aggregate outstanding amount of the obligations incurred under all such transactions by all such Exhibit A-10 Persons that would be characterized as principal if such transaction or transactions were structured as a secured lending facility rather than as purchase transaction or transactions does not exceed $65,000,000 in the aggregate at any one time outstanding, and provided, further that the aggregate amount of Receivables and Related Security sold, pledged or otherwise transferred to the SPV does not exceed $90,000,000 in the aggregate at any one time outstanding. Security Documents - means each of the security agreements, mortgages, deeds of trust, collateral assignments and other similar documents granting Liens to secure, directly or indirectly, the obligations of the Company under this Agreement or the Notes or any of the Guarantors under the Guarantee Agreement. Senior Financial Officer - means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company. Significant Subsidiary - means all Subsidiaries of the Company other than: (i) A. M. Castle Canada, (ii) any SPV and (iii) any Subsidiary of the Company which is not required to be a Guarantor pursuant to the provisions of the first sentence of Section 6.13 of this Agreement so long as such Subsidiary described in the foregoing has not guaranteed any Debt of the Company or any other Subsidiary (other than the Debt outstanding under this Agreement and the Other Senior Debt). SPV - means an entity in which the Company or any of its Subsidiaries owns an equity interest and a substantial economic interest created and maintained for the sole purpose of purchasing or otherwise acquiring interests in Receivables and Related Security from the Company or any of its Subsidiaries. Subsidiary Side Letter - means a letter from the Company dated as of the Effective Date to the holders of the Notes setting forth a description of the Company's Subsidiaries showing, as to each Subsidiary, the book value of its assets as of September 30, 2002 and its contribution to Consolidated EBITDA for the fourth quarter period ended on September 30, 2002. 9. Section 6.6 of the Existing Note Agreement is hereby amended by adding the following new paragraph (j) at the end of Section 6.6: "(j) To the extent not otherwise provided herein, all information required to be delivered by the Company or any of its Subsidiaries to the Other Senior Creditors pursuant to Exhibit A-11 the terms of any one or more agreements between or among any one or more of them and the Company or any Subsidiary at the same time and in the same manner as delivered to such Persons." 10. Section 6 of the Existing Note Agreement is hereby amended by adding the following new Section 6.12 to read as follows: "6.12 Maintenance of Most Favored Lender Status. The Company hereby acknowledges and agrees that if the Company or any Subsidiary shall enter into or be a party to a Revolving Loan Facility which contains for the benefit of any lender or other Person any Financial Covenants or events of default in respect thereof that are more favorable to such lender than the Financial Covenants and Events of Default in respect of such Financial Covenants contained in this Agreement then, and in each and any such event, the Financial Covenants and Events of Default in this Agreement shall be and shall be deemed to be, notwithstanding Section 9.1 and without any further action on the part of the Company or any other Person being necessary or required, amended to permanently afford (until so amended or waived pursuant to Section 9.1) the holders of the Notes the same benefits and rights as so afforded to any such lender or Person (such deemed amendment may be the addition of one or more new Financial Covenants and Events of Default with respect thereto addressing matters not addressed by the then existing Financial Covenants and Events of Default with respect thereto set forth herein, as well as modifications to such Financial Covenants and Events of Default with respect thereto that are more favorable to such lender or Person). The Company will promptly deliver to each holder of Notes a copy of each Revolving Loan Facility entered into after the Effective Date. Without limiting the effectiveness of the first sentence of this Section 6.12, the Company agrees, no later than forty-five (45) days following the date the Company or any Subsidiary shall have granted any such lender or Person any such benefits or rights, to enter into such documentation as the Required Holders may reasonably request to evidence the amendments provided for in this Section 6.12." Exhibit A-12 11. Section 6 of the Existing Note Agreement is hereby amended by adding the following new Section 6.13: "6.13 Subsequent Guarantors. The Company covenants that at all times the assets of the Company and all Guarantors shall constitute at least 95% of Consolidated Total Assets (excluding for purposes of this calculation, the assets of A. M. Castle Canada and any SPV) and the Company and the Guarantors shall have contributed at least 95% of Consolidated EBITDA (excluding for purposes of this calculation, the EBITDA of A. M. Castle Canada and any SPV) for the four quarters then most recently ended. To the extent necessary to permit the Company to comply with the foregoing the Company will cause one or more Significant Subsidiaries to become Guarantors and the Company will cause each such Subsidiary to deliver to the holders of the Notes (a) a joinder agreement to the Guarantee Agreement, which joinder agreement is to be in the form of Exhibit A to the Guarantee Agreement; (b) an opinion of counsel for such Person with respect to the Guarantee Agreement and such joinder agreement which is in form and substance reasonably acceptable to the Required Holders; and (c) all applicable Security Documents and any other documents as may be necessary or appropriate to permit the Company to be in compliance with its obligations set forth in Section 6.14. The Guarantors shall be permitted to guaranty all Other Senior Debt." 12. Section 6 of the Existing Note Agreement is hereby amended by adding the following new Section 6.14: "6.14 Collateral Covenant. At any time on or after the Effective Date (as such term is defined in the Second Amendment), at the Company's expense: (a) The Company will, and will cause each Guarantor to, execute and deliver, within forty-five (45) days after any request therefor by the Required Holders, all further instruments and documents and take all further action that may be necessary, in order to give effect to, and to aid in the exercise and enforcement of the Liens, rights and remedies of the holders of the Notes and the Collateral Agent under, the Note Agreement, the Notes, the Security Documents and each other instrument and agreement executed in connection with any of the foregoing. (b) The Company will, and will cause each Guarantor to, take any and all steps, and execute and deliver one or more Security Documents to insure that all property of the Company and its Significant Subsidiaries (other than Excluded Exhibit A-13 Receivables and Excluded Collateral) will be subject to Liens in favor of the Collateral Agent pursuant to one or more Security Documents in form reasonably satisfactory to the Required Holders." 13. Section 6 of the Existing Note Agreement is hereby amended by adding the following new Section 6.15: "6.15 Receivables Purchase Agreement. At such time as any Receivables Purchase Agreement is replaced with a Revolving Loan Facility satisfactory to the Required Holders, neither the Company nor any of its Subsidiaries or SPVs will enter into, or be a party to, any Receivables Purchase Agreement." 14. Section 7.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "7.1 Adjusted Consolidated Net Worth. The Company will not permit its Adjusted Consolidated Net Worth (calculated on the last day of each fiscal quarter) to be less than the Applicable Base plus the cumulative sum of 40% of Consolidated Net Income (but only if a positive number) for (i) each completed fiscal year of the Company ending after December 31, 2001, and (ii) the period from the beginning of the then current fiscal year through the end of the then most recently ended fiscal quarter which shall have been completed (if any shall have been completed) in such then current fiscal year; provided, that at any time the Company or any Subsidiary incurs additional Indebtedness, immediately following and after giving effect to the incurrence of such additional Indebtedness, the Adjusted Consolidated Net Worth shall not be less than the minimum Adjusted Consolidated Net Worth that would have been permitted as of the last day of the then most recently ended fiscal quarter." 15. Section 7.2 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "7.2 Consolidated Debt. The Company will not permit the ratio (calculated on the last day of each fiscal quarter) of Consolidated Debt to Consolidated Total Capitalization to exceed the applicable ratio set forth opposite such quarter end in the table below; provided, that at any time the Company or any Subsidiary incurs additional Indebtedness, immediately following and after giving effect to the Exhibit A-14 incurrence of such additional Indebtedness, the ration of Consolidated Debt to Consolidated Total Capitalization shall not exceed the applicable ratio as of the then most recently ended fiscal quarter: - ------------------------------------ ------------------------ Each Fiscal Quarter End The applicable ratio is: - ------------------------------------ ------------------------ Before December 31, 2003 First Year Ratio - ------------------------------------ ------------------------ On or after December 31, 2003 and Second Year Ratio prior to March 31, 2004 - ------------------------------------ ------------------------ On or after March 31, 2004 .55 to 1.0" - ------------------------------------ ------------------------ 16. Section 7.4 of the Existing Note Agreement is hereby amended by deleting paragraph (i) and adding new paragraphs (i), (j) and (k) to follow paragraph (h): "(i) Liens in favor of the Collateral Agent to secure the Notes and the Other Senior Debt as provided in the Security Documents and an Acceptable Intercreditor Agreement; and (j) Liens attaching solely to the property and assets of A. M. Castle Canada to secure Debt of A. M. Castle Canada and no other Debt; and (k) Liens not otherwise permitted by paragraphs (a) through (j) of this Section 7.4 created, assumed or incurred subsequent to the Closing Date to secure Indebtedness, provided that at the time of creating, assuming or incurring such additional Indebtedness and after giving effect thereto and to the application of the proceeds therefrom the sum (without duplication) of the aggregate principal amount of outstanding Consolidated Indebtedness secured by Liens permitted by this Section 7.4(k) does not exceed 10% of Adjusted Consolidated Net Worth." 17. section 7.5 of the Existing Note Agreement is hereby amended by (i) adding the phrase "(other than A. M. Castle Canada)" after the word "Subsidiary" in the second line and (ii) deleting the "." at the end of clause (b), substituting a ";" in lieu thereof and adding the following new language: "provided, however, that if any Subsidiary merges into any other Person in compliance with the terms hereof or conveys or transfers all or any part of its assets in compliance with the terms hereof and following such conveyance or transfer Exhibit A-15 such Subsidiary no longer constitutes a Significant Subsidiary, then the Required Holders, pursuant to the terms of the Acceptable Intercreditor Agreement, will promptly take all necessary action to cause such Guarantor to be released from the Guarantee Agreement as of the time of such sale, conveyance or transfer." 18. Section 7.6 of the Existing Note Agreement is hereby amended by (i) inserting the phrase "(other than A. M. Castle Canada)" after the word "Subsidiary" in the first sentence and (ii) adding the following new paragraph at the end of the section to read as follows: "If the Company or any Significant Subsidiary gives notice that it intends to sell, lease, transfer or otherwise dispose of any assets in compliance with the terms of this Section 7.6, the holders of the Notes, pursuant to the terms of the Acceptable Intercreditor Agreement, will promptly take such action reasonably requested by the Company to instruct the Collateral Agent to release such assets from the Liens granted pursuant to the Security Documents as of the time of any sale, lease, transfer or other disposition made in compliance with the terms of said Section 7.6." 19. Section 7.7 of the Existing Note Agreement is hereby amended by (i) adding the phrase "(other than A. M. Castle Canada)" after the word "Subsidiary" in the first sentence and (ii) deleting the "." at the end of clause (c), substituting a ";" in lieu thereof and adding the following new paragraph: "provided, however, that if the Company gives notice that it intends to sell, transfer or otherwise dispose of the capital stock of a Guarantor in compliance with the terms of this Section 7.7, the holders of the Notes will promptly take all necessary action to cause such Guarantor to be released from the Guarantee Agreement and shall instruct the Collateral Agent to release the assets of such Guarantor from the Liens granted pursuant to the Security Documents, in each case, as of the time of any sale, transfer or other disposition made in compliance with the terms of said Section 7.7." 20. Section 7.9 of the Existing Note Agreement is hereby amended by adding the phrase "and (iii) other than the sale of equity securities to an Affiliate on November 22, 2002" at the end thereof. Exhibit A-16 21. Section 8.1 of the Existing Note Agreement is hereby amended by deleting the "." at the end of paragraph (h); subparagraph (vii) thereof and inserting ";" in lieu thereof and adding new paragraphs (i), (j), (k) and (l), to follow paragraph (h) (vii): "(i) except as otherwise specifically permitted and provided for in this Note Agreement, including, without limitation, Section 6.13, Section 7.6, Section 7.7 and paragraph 5(b) of the Second Amendment to this Agreement (i) the obligations of any Guarantor contained in the Guarantee Agreement or any of the Security Documents shall cease to be in full force and effect or shall be declared by a court or Governmental Authority of competent jurisdiction to be void, voidable or unenforceable against any such Guarantor; (ii) the Company or any Guarantor shall contest the validity or enforceability of the Guarantee Agreement or any of the Security Documents against any such Guarantor, or (iii) the Company or any Guarantor shall deny that such Guarantor has any further liability or obligation under the Guarantee Agreement or any of the Security Documents; (j) any representation or warranty made in writing by or on behalf of the Company or any Guarantor or by any officer of the Company or any Guarantor in any amendment to this Agreement (including, without limitation, the Second Amendment), the Guarantee Agreement or any Security Document or in any writing furnished in connection therewith or pursuant to the terms thereof proves to have been false or incorrect in any material respect on the date as of which made; (k) except as otherwise specifically permitted and provided for in this Note Agreement, including, without limitation, Section 6.13, Section 7.6, Section 7.7 and paragraph 5(b) of the Second Amendment to this Agreement (i) any Security Document shall cease to be in full force and effect (other than in accordance with its terms) or shall be declared by any court or Governmental Authority of competent jurisdiction to be void, voidable or unenforceable against the grantor thereunder; (ii) the validity or enforceability of any Security Document against the grantor thereof shall be contested by such grantor; or (iii) the Company or any Guarantor shall default in the performance or observance of any covenant or provisions under the Guarantee Agreement or any Security Document; or (l) the Company or any Subsidiary shall enter into a Receivables Purchase Agreement after the termination of the Existing Receivables Purchase Agreement (or any replacement thereof) and its replacement with a Revolving Credit Facility satisfactory to the Required Holders." Exhibit A-17 EXHIBIT B1 AMENDMENTS TO EXISTING NOTES The Existing Notes outstanding on the Effective Date are hereby, without any further action required on the part of any other Person, deemed to be automatically amended to conform to and have the terms provided in Attachment I hereto (except that the principal amount and the payee of each Note shall remain unchanged). Any Note issued on or after the Effective Date shall be in the form of Attachment I hereto. Exhibit B1-1 ATTACHMENT 1 A. M. CASTLE & CO. RESET RATE SENIOR SECURED NOTE Due April 15, 2008 _______________ Registered Note No. R-____ __________________ $_________________________ A. M. CASTLE & CO., a Maryland corporation (the "Company"), for value received, promises to pay to ______________ or registered assigns, on April 15, 2008, the principal amount of _________________ ($__________) and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the principal amount from time to time remaining unpaid hereon at the Reset Rate specified in the Note Agreement referred to below from the date hereof until maturity, payable in arrears on April 15 and October 15, in each year, commencing October 15, 1996, and at maturity, and to pay interest on any overdue principal, on any overdue Make-Whole Amount and (to the extent legally enforceable) on any overdue installment of interest at a per annum rate equal to the greater of (a) 10.49% and (b) the sum of the reference rate announced by Bank of America NT&SA from time to time as its "prime rate" for United States domestic loans in United States dollars, plus 2%, until paid. Payments of the principal of, the Make-Whole Amount, if any, and the interest on this Note shall be made in lawful money of the United States of America in the manner and at the principal office of the Company. This Note is issued under and pursuant to the terms and provisions of the Note Agreement, dated as of April 1, 1996, entered into by the Company with the Purchasers named in Schedule I thereto (as may be amended from time to time, the "Note Agreement"), and this Note and any holder hereof are entitled to all of the benefits provided for by such Note Agreement or referred to therein. Reference is made to the Note Agreement for a statement of such benefits and for the terms governing this Note. Capitalized terms used herein shall have the meanings ascribed to them in the Note Agreement unless provided otherwise herein. As provided in the Note Agreement, upon surrender of this Note for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder hereof or its attorney duly authorized in writing, a new Note for a like unpaid principal amount will be issued to, and registered in the name of, the transferee upon the payment of the taxes or other governmental charges, if any, that may be imposed in connection therewith. The Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary. This Note may be declared due prior to its expressed maturity date, voluntary prepayments may be made hereon and certain prepayments are required to be made hereon all in the events, on the terms and in the manner as provided in the Note Agreement. Such prepayments include certain required prepayments on Exhibit B1-2 April 15 of each year beginning April 15, 2001 through April 15, 2007, inclusive, with the remaining principal payable on March 1, 2008, and certain optional prepayments with a Make-Whole Amount. Should the indebtedness represented by this Note or any part thereof be collected in any proceeding provided for in the Note Agreement or be placed in the hands of attorneys for collection, the Company agrees to pay, in addition to the principal, Make-Whole Amount, if any, and interest due and payable hereon, all costs of collecting this Note, including attorneys' fees and expenses. This Note and the Note Agreement are governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. A. M. CASTLE & CO. By:______________________________ Title: Exhibit B1-3 EXHIBIT D [Form of Guarantee] This GUARANTEE AGREEMENT (as the same may hereafter be amended, supplemented or otherwise modified, this "Guarantee"), dated as of November 22, 2002, is by Datamet, Inc., an Illinois Corporation, Keystone Tube Company, LLC, a Delaware limited liability company, Total Plastics, Inc., a Michigan corporation, Paramont Machine Company, LLC, a Delaware limited liability company, Advanced Fabricating Technology, LLC, a Delaware limited liability company, Oliver Steel Plate Co., a Delaware corporation and Metal Mart, LLC, a Delaware limited liability company (each of whom, together with each other Person which from time to time becomes a Guarantor pursuant to Section 5 hereof, is referred to herein, individually, as a "Guarantor" and, collectively, as the "Guarantors"), in favor of Nationwide Life Insurance Company (together with its successors and assigns including, without limitation, future holders of the Notes (defined below), herein collectively referred to as the "Noteholders"). RECITALS: WHEREAS, each of the Guarantors is a direct or indirect Subsidiary of A. M. Castle & Co., a Maryland corporation (together with its successors and assigns, the "Company"); WHEREAS, the Guarantors' obligations under this Guarantee (and the Guarantors' obligations under guarantees to the Other Senior Creditors) shall be secured by Liens granted on certain property of the Guarantors pursuant to the terms of certain of the security documents to be entered into by the Guarantors (collectively, the "Security Documents"); WHEREAS, the Company entered into a Note Agreement, dated as of April 1, 1996 (as amended by the First Amendment (as defined below), and as may be further as amended, modified, restated or replaced from time to time, the "Note Agreement"), with the purchasers identified on Schedule 1 thereto (the "Purchasers"), pursuant to which the Company, among other things, issued to the Purchasers $20,000,000 of its 6.49% Senior Notes due April 15, 2008 (the "Notes"). WHEREAS, the Noteholders agreed to the amendments to the Note Agreement and the Notes as set forth in that certain First Amendment to Note Agreement, dated of even date herewith (the "First Amendment") conditioned upon, among other things, the execution and delivery by the Guarantors of this Guarantee; WHEREAS, each Guarantor will receive substantial direct and indirect economic, financial and other benefits as a result of the amendments set forth in the First Amendment. Exhibit D-1 NOW THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Guarantor hereby agrees as follows: 1. DEFINITIONS. All capitalized terms used herein and not defined herein have the respective meanings given them in the Note Agreement. 2. GUARANTEE. 2.1. Guarantee of Payment and Performance. Each Guarantor hereby absolutely, unconditionally and irrevocably, on a joint and several basis with each other Guarantor, guarantees to the Noteholders: (a) the full and punctual payment by the Company of the principal of, and interest and Make-Whole Amount, if any, on, the Notes at any time outstanding and the due and punctual payment of all other amounts payable, and all other indebtedness owing, by the Company to the Noteholders under the Note Agreement, the Notes, the Security Documents to be entered into by the Guarantors and each of the other instruments and agreements executed or to be executed in connection with the foregoing (collectively, the "Financing Documents") in each case when and as the same shall become due and payable, whether at maturity, pursuant to mandatory or optional prepayment, by acceleration or otherwise, all in accordance with the terms and provisions of this Guarantee, the Note Agreement, the Notes and the other Financing Documents, including, without limitation, overdue interest, post-petition interest, indemnification payments and all of such obligations which would become due but for the operation of the automatic stay pursuant to Section 362(a) of the United States Bankruptcy Code and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code; and (b) the full and punctual performance by the Company of all duties, agreements, covenants and obligations of the Company contained in the Note Agreement, the Notes and the other Financing Documents, and the full and prompt payment, on demand, of all reasonable costs and expenses incurred by (x) the Noteholders in connection with the negotiation, preparation, execution and delivery of this Guarantee and (y) any one or more of the Noteholders or any trustee or agent acting on behalf of the Noteholders in enforcing any of their respective rights and remedies under this Guarantee, the Note Agreement, the Notes or any of the other Financing Documents, including, but not limited to, all reasonable attorney's fees and expenses (whether or not there is litigation), court costs and all costs in connection with any proceedings under the United States Bankruptcy Code (collectively, the "Guarantied Obligations"), provided that the Guarantor shall not be liable for the reasonable fees and expenses of more than one separate firm of attorneys representing the Noteholders. Exhibit D-2 2.2. Nature of Guarantee. This is a continuing, absolute and unconditional Guarantee of payment and performance and not merely of collection, and shall continue in full force and effect until such time as the Guarantied Obligations have been fully and irrevocably paid. 2.3. Binding Nature of Certain Adjudications. Each Guarantor shall be conclusively bound by the final adjudication in any action or proceeding, legal or otherwise to which the Company is a party, involving any controversy arising under, in connection with, or in any way related to, any of the Guarantied Obligations, and by a final judgment, award or decree entered therein. 2.4. No Duty to Pursue Others. Upon any default with respect to the Guarantied Obligations, the Note Agreement or the Notes, and after the expiration of any notice or cure periods, any one or more of the Noteholders or any trustee or agent acting on the Noteholders' behalf may proceed to enforce its rights and remedies directly against any one or more of the Guarantors without first proceeding against the Company or any other Person liable for the Guarantied Obligations or any security for the Guarantied Obligations. 2.5. No Release of Guarantors. Each Guarantor's liability under this Guarantee shall not be limited, diminished or extinguished by, and each Guarantor shall not be entitled to raise as a defense, any: (a) invalidity, irregularity or unenforceability of the Guarantied Obligations or of such Guarantor's obligations hereunder; (b) failure of such Guarantor to be given notice of default by the Company; (c) reorganization, merger or consolidation of the Company or any Guarantor into or with any other Person; (d) waiver of the Company's defaults or extensions of due dates for payments or other accommodations, indulgences or forbearance granted to the Company; (e) release of or non-perfection with respect to part or all of any security for the Guarantied Obligations or the Notes; (f) taking or accepting of any other security, collateral or guaranty of payment of any or all of the Guarantied Obligations or the Notes; (g) release of or settlement or compromise with any one or more Persons who constitute guarantors or the release of or settlement or compromise with any one or more Persons who are otherwise liable for the payment or performance of all or any portion of the Guarantied Obligations or the Notes and who are not primary obligors thereon; (h) any loss or impairment of any right of any Guarantor for subrogation, reimbursement or contributions; Exhibit D-3 (i) assignment or other transfer by the Noteholders (or any trustee or agent acting on the behalf of the Noteholders, as the case may be) of any part of the Guarantied Obligations or the Notes, or any collateral or security securing any portion of the Guarantied Obligations or the Notes; (j) illegality or impossibility of performance on the part of the Company or the Guarantors under the Note Agreement, the Notes or this Guarantee; or (k) other acts or omissions of the Noteholders which, in the absence of this Section, would operate so as to impair, diminish or extinguish any Guarantor's liability under this Guarantee. 2.6. Certain Waivers. (a) Waiver of Notice. Each Guarantor hereby waives notice of (i) acceptance of this Guarantee, (ii) any amendment, extension or other modification of the Note Agreement, the Notes and/or any of the other Financing Documents, (iii) any loans or advances made by any one or more of the Noteholders to the Company, (iv) the occurrence of a Default or Event of Default under the Note Agreement or the Notes, (v) any transfer or other disposition of the Guarantied Obligations or the Notes pursuant to Section 10 of the Note Agreement, and (vi) any other action at any time taken or omitted by the Noteholders or by any trustee or agent acting on behalf of any one or more Noteholder, and generally, all demands and notices of every kind in connection with this Guarantee, the Note Agreement, the Notes and the other Financing Documents, except as provided herein and in the Note Agreement. (b) Certain Other Waivers. Each Guarantor hereby waives (i) diligence, presentment, demand for payment, protest or notice, whether of nonpayment, dishonor, protest or otherwise, (ii) all setoffs, counterclaims and claims of recoupment against, the Guarantied Obligations or the Notes that may be available to the Company or any other guarantor of the Guarantied Obligations or the Notes (it being understood that the waivers set forth anywhere in this Guarantee shall not preclude any action by such Guarantor, after payment in full of its obligations hereunder, to recover for any tortious action which resulted in injury to such Guarantor), (iii) any defense based upon or in any way related to any claim that any election of remedies by any one or more of the Noteholders (or by any trustee or agent acting on behalf of the Noteholders) impaired, reduced, released or otherwise extinguished any rights such Guarantor might otherwise have had against the Company or any security, (iv) any claim based upon or in any way related to any of the matters referred to in Section 2.5, and (v) any claim that this Guarantee should be strictly construed against the Noteholders. 2.7. Bankruptcy; Other Matters. In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law, or any judgment, order or decision thereunder, or for any other reason any Noteholder must rescind or restore any payment received by such Noteholder in connection with the Guarantied Obligations, the Note Agreement, the Notes or any Exhibit D-4 other Financing Documents, or the Company ceases to be liable to any Noteholder for any of the Notes (other than by the full and irrevocable payment in full thereof), then any prior release or discharge from this Guarantee shall be without effect and this Guarantee and the obligations of Guarantor hereunder shall remain in full force and effect. 2.8. Payments by Guarantors. If all or any part of the Guarantied Obligations or the Notes are not paid when due, whether at maturity, by reason of acceleration, or otherwise, and remain unpaid until the expiration of any applicable grace or cure period, or otherwise upon the occurrence and continuance of any Event of Default, the Guarantors shall, immediately upon demand by any Noteholder (or any trustee or agent acting on behalf of the Noteholders), and without presentment, protest, notice of protest, notice of nonpayment, notice of intention to accelerate or acceleration or any other notice whatsoever, pay in immediately available funds, the amount due on the Guarantied Obligations for distribution to such Noteholder. All obligations of the Guarantors under this Guarantee shall be performable and payable to each Noteholder at its offices at the addresses set forth in Schedule A of the Note Agreement. 2.9. Failure to Pay Guarantied Obligations. If any Guarantor fails to pay the Guarantied Obligations as required by this Guarantee, then each of the Guarantors, as the principal obligor and not as a guarantor only, shall jointly and severally pay, on demand, all out-of-pocket costs and expenses incurred or expended by any one or more of the Noteholders (and any trustee or agent acting on behalf of the Noteholders) in connection with the enforcement of, and the preservation of the Noteholders' rights under and with respect to, this Guarantee, including, but not limited to, all reasonable attorney's fees and expenses (whether or not there is litigation), court costs and all costs incurred in connection with any proceedings under the United States Bankruptcy Code, provided that the Guarantor shall not be liable for the reasonable fees and expenses of more than one separate firm of attorneys representing the Noteholders. Until paid, all such amounts recoverable under this Section 2.9 shall bear interest from the time when such amounts become due until payment in full thereof at the rate for overdue principal set forth in the Note Agreement. 2.10. Subordination of Affiliate Obligations. Each of the Guarantors agrees that all Affiliate Obligations (as defined below), interest thereon, and all other amounts due with respect thereto, are hereby subordinated as to time of payment and in all other respects to all the Guarantied Obligations. Each Guarantor agrees that at all times during the existence of an Event of Default, such Guarantor shall not be entitled to enforce or receive any payment in respect thereof until all sums then due and owing to any one or more of the Noteholders in respect of the Guarantied Obligations shall have been paid in full. If any payment shall have been made to any Guarantor by the Company or such indebted Person on any such Affiliate Obligation during any time that an Event of Default exists and there are Guarantied Obligations outstanding, such Guarantor shall collect and receive all such payments as trustee for the Noteholders, to the extent of all amounts owing with respect to this Guarantee, and such amounts shall be immediately paid over to the Noteholders (or any trustee or agent acting on behalf of the Noteholders), without affecting in any manner the liability of the Guarantors under the other provisions of this Guarantee. For purposes of this Section 2.10, "Affiliate Obligation" means any indebtedness of any kind of the Company, or any Person obligated in respect of the Guarantied Obligations to Guarantor. Exhibit D-5 2.11. Postponement of Subrogation Rights. No Guarantor will exercise any Subrogation Rights (as defined below) which it may acquire with respect to this Guarantee, until the prior and indefeasible payment, in full and in cash, of all Guarantied Obligations. Any amount paid to a Guarantor by or on behalf of the Company or any other guarantor of the Guarantied Obligations on account of any such Subrogation Rights prior to the payment in full of all Guarantied Obligations shall immediately be paid over to the Noteholders and credited and applied against the Guarantied Obligations whether matured or unmatured, in accordance with the terms of the Note Agreement. In furtherance of the foregoing, for so long as any Guarantied Obligations remain outstanding, no Guarantor shall take any action or commence any proceeding against the Company or any other guarantor of the Guarantied Obligation, (or any of their respective successors or assigns, whether in connection with a bankruptcy proceeding or otherwise) to recover any amounts in the respect of payments made under this Guarantee to the Noteholders and each Guarantor hereby forbears realizing any benefit of and any right to participate in any security which may be held by the Noteholders or any agent or trustee acting on their behalf. For purposes of this Section 2.11, "Subrogation Right" means any right of contribution, subrogation, reimbursement, indemnity, or repayment, and any other "claim", as that term is defined in the United States Bankruptcy Code, which any Guarantor might now have or hereafter acquire against the Company or any other guarantor of the Guarantied Obligations that arises from the existence or performance of such Guarantor's obligations under this Guarantee, and any right to participate in any security for the Guarantied Obligations. 2.12. Notices in Respect of Payments. If any Guarantor shall pay to any holder of the Notes from time to time any amount in respect of the Guarantied Obligations, such Guarantor shall, within five (5) Business Days after making such payment, provide notice of such payment to each other holder of the Notes at such time. 2.13. Limitation on Guarantied Obligations. Notwithstanding anything in Section 2.1 or elsewhere in this Guarantee or any other Financing Document to the contrary, the obligations of the Guarantors under this Guarantee shall at each point in time be limited to an aggregate amount equal to the greatest amount that would not result in such obligations being subject to avoidance, or otherwise result in such obligations being unenforceable, at such time under applicable law (including, without limitation, to the extent, and only to the extent, applicable to the Guarantors, Section 548 of the United States Bankruptcy Code and any comparable provisions of the law of any other jurisdiction, any capital preservation law of any jurisdiction and any other law of any jurisdiction that at such time limits the enforceability of the obligations of the Guarantors under this Guarantee). This Section 2.13 is intended solely to preserve the rights of the Noteholders hereunder to the maximum extent permitted by applicable law, and neither the Guarantors nor any other Person shall have any rights under this Section 2.13 that it would not otherwise have under applicable law. 2.14. Separate Action; Other Enforcement Rights. Each of the rights and remedies granted under this Guarantee to any Noteholder in respect of the Notes held by such Noteholder may be exercised by such Noteholder without notice by such Noteholder to, or the consent of or any other action by, any other holder of the Notes from time to time. Any one or more of the Noteholders may proceed to protect and enforce this Guarantee by suit or suits or proceedings in equity, at law or in bankruptcy, and whether for the specific performance of any Exhibit D-6 covenant or agreement contained herein or in execution or aid of any power herein granted or for the recovery of judgment for the obligations hereby guaranteed or for the enforcement of any other proper legal or equitable remedy available under applicable law. 2.15. Security. The Guarantied Obligations and the obligations of each Guarantor set forth herein will be secured pursuant to certain of the Security Documents to which such Guarantor is a party and each agent or trustee acting on behalf of the Noteholders, shall be entitled to all of the rights, remedies and benefits of the Security Documents to which such Guarantor is a party. 3. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby represents and warrants to the Noteholders that: 3.1. Organization and Existence. The Guarantor is duly organized and existing in good standing under the laws of its jurisdiction of organization, is duly qualified to do business and is in good standing where the nature or extent of its businesses or properties requires it to be qualified to do business except where the failure to so qualify will not have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents. The Guarantor has the power and authority to own its properties and carry on its business as now being conducted. 3.2. Authorization. The Guarantor is duly authorized to execute and perform this Guarantee and this Guarantee has been properly authorized by all requisite action of such Guarantor. No consent, approval or authorization of, or declaration or filing with, any Governmental Authority or any other Person, is required in connection with the execution, delivery or performance of this Guarantee, except for those already duly obtained. 3.3. Due Execution. This Guarantee has been executed on behalf of such Guarantor by a Person duly authorized to do so. 3.4. Enforceability. This Guarantee constitutes the legal, valid and binding obligation of the Guarantor, enforceable against such Guarantor in accordance with its terms, except to the extent that the enforceability thereof against such Guarantor may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally or by equitable principles of general application (regardless of whether such enforceability is considered in a proceeding in equity or at law). Exhibit D-7 3.5. Legal Restraints. The execution of this Guarantee by the Guarantor and the performance by such Guarantor of its obligations under this Guarantee, will not (i) violate or constitute a default under the certificate or articles of incorporation, bylaws or other organizational documents of such Guarantor as applicable, (ii) except as contemplated by the Security Documents and the granting of Liens to secure Other Senior Debt, result in any Lien being imposed on any of such Guarantor's property, or (iii) violate or constitute a default under any agreement to which the Guarantor is a party or any law, ordinance, governmental rule or regulation to which it is subject, except where such violation or default could not reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents. 3.6. No Material Proceedings. There are no proceedings, actions or investigations pending or, to the knowledge of the Guarantor, threatened against such Guarantor that, in the aggregate for all such proceedings, actions and investigations, could reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents. 3.7. Compliance with Laws. The Guarantor is in compliance with all laws, ordinances, governmental rules and regulations to which it is subject, except for such failures to comply that, in the aggregate for all such failures, could not reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents. 3.8. Other Names. Except for the trade names set forth in Schedule 3.8, the Guarantor has not used, and does not use, any name other than the full name which identifies such Guarantor in this Guarantee. 3.9. No Defaults. The Guarantor has not breached or violated, or is not in default under, any agreement to which it is a party, and is not in default with respect to any of its obligations, except for such breaches, violations and defaults that, in the aggregate for all such breaches, violations and defaults, could not reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents. 3.10. Independent Credit Evaluation. The Guarantor has independently, and without reliance on any information supplied by any one or more of the Noteholders, taken, and will continue to take, whatever steps such Guarantor deems necessary to evaluate the financial condition and affairs of the Company, and the Noteholders shall have no duty to advise the Guarantor of information at any time known to the Noteholders regarding such financial condition or affairs. 3.11. No Representation By Agent. None of the Noteholders nor any trustee or agent acting on their behalf has made any representation, warranty or statement to the Guarantor to induce such Guarantor to execute this Guarantee. Exhibit D-8 3.12. Survival. All representations and warranties made by the Guarantor herein shall survive the execution hereof and may be relied upon by the Noteholders as being true and accurate until the Guarantied Obligations are fully and irrevocably paid. 4. COVENANTS. 4.1 Corporate Existence; Scope of Business; Compliance with Law; Preservation of Enforceability. Each Guarantor covenants that from the date hereof and until the Guarantied Obligations and the Notes are fully and irrevocably paid, such Guarantor shall (a) preserve and maintain its existence in good standing and its right to transact business in those states in which it is now or hereafter doing business and obtain and maintain all licenses, except where the failure to obtain and maintain such licenses that, in the aggregate for all such failures, could not reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents; (b) comply, with all applicable laws, ordinances, governmental rules and regulations to which it is subject, except where such failure to comply could not reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor; or on its ability to perform its obligations hereunder and under the other Financing Documents; and (c) take all action and obtain all consents and governmental approvals required so that its obligations under this Guarantee will at all times be legal, valid and binding and enforceable in accordance with the terms hereof. Exhibit D-9 5. ADDITIONAL GUARANTORS. In accordance with Section 6.13 of the Note Agreement, additional Persons may from time to time after the date of this Guarantee become Guarantors under this Guarantee by executing and delivering to the Noteholders a joinder agreement (a "Joinder Agreement") to this Guarantee in substantially the form attached as Exhibit A to this Guarantee. Effective from and after the date of the execution and delivery by any Person to the Noteholders of a Joinder Agreement, such Person shall be, and shall be deemed for all purposes to be, a Guarantor under this Guarantee with the same force and effect, and subject to the same agreements, representations, guarantees, indemnities, liabilities and obligations, as if such Person were, effective as of such date, an original signatory to this Guarantee as a Guarantor. The execution and delivery of a Joinder Agreement by any Person shall not require the consent of any other Guarantor and all of the Guarantied Obligations of each Guarantor under this Guarantee shall remain in force and effect notwithstanding the addition of any additional Guarantor to this Guarantee. 6. SUCCESSORS AND ASSIGNS. This Guarantee shall bind the successors, assignees, trustees, and administrators of the Guarantor and shall inure to the benefit of each of the Noteholders, and each of its successors, transferees, participants and assignees. 7. CONTINUANCE OF GUARANTEE. Each Guarantor is liable under this Guarantee for the full amount of the Guarantied Obligations. Any holder of the Notes from time to time may release, settle with or compromise with any one or more Persons who are otherwise liable for the payment or performance of all or any portion of the Guarantied Obligations without impairing, diminishing or releasing the rights of any other holders of the Notes hereunder against any Guarantor or any other Person liable for the Guarantied Obligations. This Guarantee shall continue in full force and effect and shall bind Guarantor notwithstanding the death or release of any other Person who is otherwise liable for the payment or performance of all or any portion of the Guarantied Obligations. 8. AMENDMENTS AND WAIVERS. No amendment to, waiver of, or departure from full compliance with any provision of this Guarantee, or consent to any departure by any Guarantor herefrom, shall be effective unless it is in writing and signed by authorized officers of each Guarantor directly affected thereby and the Noteholders; provided, however, that any such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No failure by any Noteholder to exercise, and no delay by any Noteholder in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by any Noteholder of any right, remedy, power or privilege hereunder preclude any other exercise thereof, or the exercise of any other right, remedy, power or privilege. Exhibit D-10 9. RIGHTS CUMULATIVE. Each of the rights and remedies of the Noteholders under this Guarantee shall be in addition to all of their other rights and remedies under applicable law, and nothing in this Guarantee shall be construed as limiting any such rights or remedies. 10. SERVICE OF PROCESS. EACH GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO IT AT ITS ADDRESS SET FORTH IN ANNEX 1 HERETO. SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED AS OF THE DATE THAT SUCH GUARANTOR SIGNS THE RETURN RECEIPT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE NOTEHOLDERS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. 11. WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS GUARANTEE. 12. SEVERABILITY. Any provision of this Guarantee which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction unless the ineffectiveness of such provision would result in such a material change as to cause completion of the transactions contemplated hereby to be unreasonable. 13. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS. 14. SECTION HEADINGS. Section headings are for convenience only and shall not affect the interpretation of this Guarantee. Exhibit D-11 15. LIMITATION OF LIABILITY. THE NOTEHOLDERS SHALL NOT HAVE ANY LIABILITY WITH RESPECT TO, AND EACH OF THE GUARANTORS HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE FOR, (a) ANY LOSS OR DAMAGE SUSTAINED BY ANY GUARANTOR THAT MAY OCCUR AS A RESULT OF, IN CONNECTION WITH, OR THAT IS IN ANY WAY RELATED TO, ANY ACT OR FAILURE TO ACT REFERRED TO IN SECTION 2.5 OR (b) ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES SUFFERED BY ANY GUARANTOR IN CONNECTION WITH ANY CLAIM RELATED TO THIS GUARANTEE. 16. ENTIRE AGREEMENT. This Guarantee embodies the entire agreement among Guarantors and the Noteholders relating to the subject matter hereof and supersedes all prior agreements, representations and understandings, if any, relating to the subject matter hereof. 17. COMMUNICATIONS. All notices and other communications to the Noteholders or Guarantors hereunder shall be in writing, shall be delivered in the manner and with the effect, as provided by the Note Agreement, and shall be addressed to the Guarantors as set forth in Annex 1 hereto and to the Noteholders as set forth in the Note Agreement. 18. DUPLICATE ORIGINALS. Two or more duplicate counterpart originals hereof may be signed by the parties, each of which shall be an original but all of which together shall constitute one and the same instrument. Delivery of any executed signature page to this Guarantee by any Guarantor by facsimile transmission shall be as effective as delivery of a manually executed copy of this Guarantee by such Guarantor. 19. NOTICES. Nothing in this Guarantee shall void or abrogate any obligation of the Company, any Guarantor or any Noteholder to give any notice specifically required to be given by such Person in any provision of any Financing Document. 20. TERMINATION. Subject to Section 2.7, this Guarantee shall terminate and have no further force or effect upon payment in full of the Guarantied Obligations. [Remainder of page intentionally left blank. Next page is signature page.] Exhibit D-12 IN WITNESS WHEREOF, each Guarantor has caused this Guarantee to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. KEYSTONE TUBE COMPANY, LLC By:_____________________________ Name: Title: TOTAL PLASTICS, INC. By:_____________________________ Name: Title: PARAMONT MACHINE COMPANY LLC By:_____________________________ Name: Title: ADVANCED FABRICATING TECHNOLOGY, LLC By:_____________________________ Name: Title: OLIVER STEEL PLATE CO. By:_____________________________ Name: Title: Annex 1-1 METAL MART, LLC By:_____________________________ Name: Title: DATAMET, INC. By:_____________________________ Name: Title: Annex 1-2 EXHIBIT A [FORM OF JOINDER AGREEMENT] JOINDER AGREEMENT NO. ___ TO GUARANTEE AGREEMENT Re: A. M. CASTLE & CO. This Joinder Agreement is made as of ________________, in favor of the Noteholders (as such terms are defined in the Castle Guaranty, as hereinafter defined). A. Reference is made to the Guarantee Agreement made as of November 22, 2002 (as such Guaranty may be supplemented, amended, restated or consolidated from time to time, the "Castle Guaranty") by certain Persons in favor of the holders from time to time of the Notes (as defined in the Castle Guaranty), under which such Persons have guaranteed to the Noteholders the due payment and performance by A. M. Castle & Co. ("Castle") of all its present and future indebtedness, liabilities and obligations to the Noteholders in connection with the Note Agreement. B. Capitalized terms used but not otherwise defined in this Joinder Agreement have the respective meanings given to such terms in the Castle Guaranty, including the definitions of terms incorporated in the Castle Guaranty by reference to other agreements. C. Section 5 of the Castle Guaranty provides that additional Persons may from time to time after the date of the Castle Guaranty become Guarantors under the Castle Guaranty by executing and delivering to the Noteholders a supplemental agreement to the Castle Guaranty in the form of this Joinder Agreement. For valuable consideration, each of the undersigned (each a "New Guarantor") severally (and not jointly, or jointly and severally) agrees as follows: 1. Each of the New Guarantors has received a copy of, and has reviewed, the Castle Guaranty and the Note Agreement in existence on the date of this Joinder Agreement and is executing and delivering this Joinder Agreement to the Noteholders pursuant to Section 5 of the Castle Guaranty. 2. Effective from and after the date this Joinder Agreement is executed and delivered to the Noteholders by any one of the New Guarantors (and irrespective of whether this Joinder Agreement has been executed and delivered by any other Person), such New Guarantor is, and shall be deemed for all purposes to be, a Guarantor under the Castle Guaranty with the same force and effect, and subject to the same agreements, representations, guarantees, indemnities, liabilities and obligations, as if such New Guarantor was, effective as of the date of this Joinder Agreement, an original signatory to the Castle Guaranty as a Guarantor. In furtherance of the foregoing, each of the New Guarantors jointly and severally guarantees to the Noteholders in accordance with the provisions of the Castle Guaranty the due and punctual payment and performance in full of each of the Guarantied Obligations as each such Guarantied Obligation becomes due from Exhibit A-1 time to time (whether because of maturity, default, demand, acceleration or otherwise) and understands, agrees and confirms that the Noteholders may enforce the Castle Guaranty and this Joinder Agreement against such New Guarantor for the benefit of the Noteholders up to the full amount of the Guarantied Obligations without proceeding against any other Guarantor, Castle, any other Person or any collateral securing the Guarantied Obligations. The terms and provisions of the Castle Guaranty are incorporated by reference in this Joinder Agreement. 3. Upon this Joinder Agreement bearing the signature of any Person claiming to have authority to bind any New Guarantor coming into the hands of the Noteholders, and irrespective of whether this Joinder Agreement or the Castle Guaranty has been executed by any other Person, this Joinder Agreement will be deemed to be finally and irrevocably executed and delivered by, and be effective and binding on, and enforceable against, such New Guarantor free from any promise or condition affecting or limiting the liabilities of such New Guarantor and such New Guarantor shall be, and shall be deemed for all purposes to be, a Guarantor under the Castle Guaranty. No statement, representation, agreement or promise by any officer, employee or agent of any one or more of the Noteholders, forms any part of this Joinder Agreement or the Castle Guaranty or has induced the making of this Joinder Agreement or the Castle Guaranty by any of the New Guarantors or in any way affects any of the obligations or liabilities of any of the New Guarantors in respect of the Guarantied Obligations. 4. This Joinder Agreement may be executed in counterparts. Each executed counterpart shall be deemed to be an original and all counterparts taken together shall constitute one and the same Joinder Agreement. Delivery of an executed signature page to this Joinder Agreement by any New Guarantor by facsimile transmission shall be as effective as delivery of a manually executed copy of this Joinder Agreement by such New Guarantor. 5. This Joinder Agreement is a contract made under, and will for all purposes be governed by and interpreted and enforced according to, the internal laws of the State of Illinois excluding any conflict of laws rule or principle which might refer these matters to the laws of another jurisdiction. 6. This Joinder Agreement and the Castle Guaranty shall be binding upon each of the New Guarantors and the successors of each of the New Guarantors. None of the New Guarantors may assign any of its obligations or liabilities in respect of the Guarantied Obligations. IN WITNESS OF WHICH this Joinder Agreement has been duly executed and delivered by each of the New Guarantors as of the date indicated on the first page of this Joinder Agreement. [NEW GUARANTOR] By: _______________________ Name: Title: Exhibit A-2 EX-4.4 7 amcastle8k112202exib4-4.txt NOTE AGREEMENT DATED 05-15-97 Exhibit 4.4 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A.M. CASTLE & CO. NOTE AGREEMENT Dated as of May 15, 1997 $25,000,000 Principal Amount 7.54% Senior Notes Due May 30, 2009 - -------------------------------------------------------------------------------- PPN 148411 C*0 - -------------------------------------------------------------------------------- TABLE OF CONTENTS ss.1. DESCRIPTION OF NOTES AND COMMITMENT COMMITMENT .......................1 1.1. Description of Notes ............................................1 1.2. Commitment; Closing Date ........................................1 ss.2. PREPAYMENT OF NOTES ..................................................2 2.1. Required Prepayments ............................................2 2.2. Optional Prepayments ............................................2 2.3. Notice of Prepayments ...........................................3 2.4. Surrender of Notes on Prepayment or Exchange ....................3 2.5. Direct Payment and Deemed Date of Receipt .......................3 2.6. Allocation of Payments ..........................................3 2.7. Payments Due on Saturdays, Sundays and Holidays .................4 ss.3. REPRESENTATIONS ......................................................4 3.1. Representations of the Company ..................................4 3.2. Representations of the Purchaser ...............................10 ss.4. CLOSING CONDITIONS ..................................................12 4.1. Representations and Warranties .................................12 4.2. Legal Opinions .................................................12 4.3. Events of Default ..............................................12 4.4. Payment of Fees and Expenses ...................................12 4.5. Legality of Investment .........................................12 4.6. Private Placement Number ...................................... 12 4.7. Proceedings and Documents ......................................12 ss.5. INTERPRETATION OF AGREEMENT .........................................13 5.1. Certain Terms Defined ..........................................13 5.2. Accounting Principles ..........................................20 5.3. Valuation Principles ...........................................20 5.4. Direct or Indirect Actions .....................................20 ss.6. AFFIRMATIVE COVENANTS ...............................................21 6.1. Corporate Existence ............................................21 6.2. Insurance ......................................................21 6.3. Taxes, Claims for Labor and Materials ..........................21 6.4. Maintenance of Properties ......................................21 i 6.5. Maintenance of Records ........................................21 6.6. Financial Information and Reports .............................22 6.7. Inspection of Properties and Records ..........................24 6.8. ERISA .........................................................24 6.9. Compliance with Laws ..........................................25 6.10. Acquisition of Notes ..........................................25 6.11. Private Placement Number ......................................26 ss.7. NEGATIVE COVENANTS ..................................................26 7.1. Adjusted Consolidated Net Worth ...............................26 7.2. Consolidated Debt .............................................26 7.3. Net Working Capital ...........................................26 7.4. Liens .........................................................26 7.5. Merger or Consolidation .......................................27 7.6. Sale of Assets ................................................27 7.7. Disposition of Stock of Subsidiaries ..........................28 7.8. Leases ........................................................28 7.9. Transactions with Affiliates ..................................28 7.10. Nature of Business ............................................29 ss.8. EVENTS OF DEFAULT AND REMEDIES THEREFOR .............................29 8.1. Nature of Events ..............................................29 8.2. Remedies on Default ...........................................30 8.3. Annulment of Acceleration of Notes ............................31 8.4. Other Remedies ................................................31 8.5. Conduct No Waiver; Collection Expenses ........................31 8.6. Remedies Cumulative ...........................................31 8.7. Notice of Default .............................................32 ss.9. AMENDMENTS, WAIVERS AND CONSENTS ....................................32 9.1. Matters Subject to Modification ...............................32 9.2. Solicitation 0f Holders of Notes ..............................32 9.3. Binding Effect ................................................33 ss.10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT .....................................................33 10.1. Form of Notes .................................................33 10.2. Note Register .................................................33 10.3. Issuance of New Notes upon Exchange or Transfer ...............33 10.4. Replacement of Notes ..........................................34 ii ss.11. MISCELLANEOUS .......................................................34 11.1. Expenses ......................................................35 11.2. Notices .......................................................35 11.3. Reproduction of Documents .....................................35 11.4. Successors and Assigns ........................................35 11.5. Law Governing .................................................35 11.6. Headings ......................................................35 11.7. Counterparts ..................................................35 11.8. Reliance on and Survival of Provisions ........................35 11.9. Integration and Severability ..................................36 iii A. M. CASTLE & CO. NOTE AGREEMENT Dated as of May 15, 1997 To the Purchasers Named in the Attached Schedule I Ladies and Gentlemen: A. M. CASTLE & CO., a Delaware corporation (the "Company"), agrees with you as follows: ss.1. DESCRIPTION OF NOTES AND COMMITMENT 1.1, Description of Notes. The Company has authorized the issuance end sale of $25,000O00 aggregate principal amount of its Senior Notes (the "Notes"), to be dated the date of issuance, to bear interest from such date (computed on the basis of a 360-day year comprised of twelve 30-day months), payable semi-annually in arrears on May 30 and November 30 of each year, commencing November 30, 1997, and at maturity, at the rate of 7.54% per annum prior to maturity and to bear interest on any overdue principal (including any overdue optional or required prepayment), on any overdue Make-Whole Amount (to the extent legally enforceable), and on any overdue installment of interest (to the extent legally enforceable) at a per annum rate equal to the greater of (a) 9.54% and (b) the sum of the reference rate announced by Bank of America Illinois from time to time as its "prime rate" for United States domestic loans in United States dollars plus 2%. The Notes shall be expressed to mature on May 30, 2009 and shall be substantially in the form attached as Exhibit A The term "Notes" as used herein shall include each Note delivered pursuant to this Note Agreement (the "Agreement") and each Note delivered in substitution or exchange therefor and, where applicable, shall include the singular number as well as the plural. Any reference to you in this Agreement shall in all instances be deemed to include any nominee of yours or any separate account or other person on whose behalf you are purchasing Notes. You and the other purchasers are sometimes referred to herein individually as a "Purchaser" and collectively as the "Purchasers." 1.2. Commitment: Closing Date. Subject to the terms and conditions hereof and on the basis representations and warranties hereinafter set forth, the Company agrees to issue and sell to you and you agree to purchase from the Company, Notes in the aggregate principal amount set forth opposite your name in the attached Schedule I at a price of 100% of the principal amount thereof. Delivery of and payment for the Notes shall be made at the offices of Gardner, Carton & Doug1as, 321 North Clark Street, Quaker Tower, Chicago, Illinois 60610, at 9:00 am. Chicago time, on May 30, 1997 or at such later time or on such later date, not later than Noon, Chicago time, on May 30, 1997, as may be mutually agreed upon by the Company and the Purchasers (the "Closing Date"). The Notes shall be delivered to you in the form of one or more Notes in fully registered form, issued in your name or in the name of your nominee. Delivery of the Notes to you on time Closing Date shall be against payment of the purchase price thereof in Federal funds or other funds in U.S. dollars immediately available at The Northern Trust Chicago, Illinois. ABA #O7lO 0015 2 for time account of A. M. Castle & Co.. Account #82171. If on the Closing Date the Company shall fail to tender the Notes to you, you shall be relieved of all remaining obligations under this Agreement. Nothing in the preceding sentence shall relieve the Company of any liability occasioned by such failure to deliver the Notes. ss.2. PREPAYMENT OF NOTES 2.1. Required Prepayments. addition to payment of all outstanding principal of the Notes at maturity and except as provided below in Section 2.2, regardless of the amount of Notes which may be outstanding from time to time, the Company shall prepay and there shall become due and payable on May 30 in each year $5,000,000 of the principal amount of the Notes or such lesser amount as would constitute payment in full on the Notes, commencing May 3O, 2005 and ending May 30, 2008, inclusive, with the remaining principal payable on May 30, 2009. Each such prepayment shall be at a price of 100% of the principal amount prepaid, together with interest accrued thereon to the date of prepayment, without a Make-Whole Amount or other premium or penalty. 2.2 Optional Prepayments (a) Upon notice as provided in Section 2.3(a) and (b), the Company may prepay the Notes, in whole or in part, on any interest payment date, in an aggregate principal amount not less than $1,O0O,0O0, and in integral multiples of $100,000 in excess thereof or such lesser amount as shall constitute payment in fill of the Notes. Each such prepayment shall be at a price of 100% of the principal amount to be prepaid, plus interest accrued thereon to the date of prepayment, plus the Make-Whole Amount. (b) Any optional prepayment of less than all of the Notes outstanding pursuant to Section 2.2(a) and Section 7.6 shall be applied to reduce, pro rata, the prepayments and payment at maturity required by Section 2.1. (c) Except as provided in Section 2.1, Section 7.6 and in this Section 2.2, the Notes shall not be prepayable in whole or in part. -2- 2.3. Notice of Prepayments (a) The Company shall give notice of any optional prepayment of the Notes pursuant to Section 2.2(a) to each holder of the Notes not less than 30 days nor more than 60 days before the date fixed for prepayment, specifying (i) such date, (ii) the principal amount of the holder's Notes to be prepaid on such date, (iii) the Determination Date for calculating the Make-Whole Amount, (iv) a calculation of the estimated amount of the Make-Whole Amount, showing in reasonable detail the method of calculation, and (v) the accrued interest applicable to the prepayment. Notice of prepayment having been so given, the aggregate principal amount of the Notes specified in such notice, together with the actual Make-Whole Amount, if any, and the accrued interest thereon shall become due and payable on the prepayment date. (b) The Company also shall give notice to each holder of the Notes to be prepaid pursuant to Section 2.2(a) by telecopy, telegram, telex or other same-day written communication, two Business Days prior to the prepayment date, of the actual Make-Whole Amount applicable to such prepayment and the details of the calculations used to determine the amount of such Make-Whole Amount. 2.4. Surrender of Notes on Prepayment or Exchange. Subject to Section 2.5, upon any partial prepayment of a Note pursuant to this Section 2 or partial exchange of a Note pursuant to Section 10.3, such Note may, at the option of the holder thereof, (i) be surrendered to the Company pursuant to Section 10.3 in exchange for a new Note or Notes equal to the principal amount remaining unpaid on the surrendered Note, or (ii) be made available to the Company, at the Company's principal office, for notation thereon of the portion of the principal so prepaid or exchanged. In case the entire principal amount of any Note is prepaid, such Note shall be surrendered to the Company following such prepayment for cancellation and shall not be reissued. No Note shall be issued in lieu of a Note the entire principal amount of which has been prepaid. 2.5. Direct Payment and Deemed Date of Receipt. Notwithstanding any other provision contained in the Notes or this Agreement, the Company will pay all sums becoming due on each Note held by you or any subsequent Institutional Holder by wire transfer of immediately available funds to such account as you have designated in Schedule I, or as you or such subsequent Institutional Holder may otherwise designate by notice to the Company, in each case without presentment and, subject to Section 2.4(ii) above, without notations being made thereon, except that any such Note so paid or prepaid in full shall be surrendered to the Company, upon its written request, for cancellation. Any wire transfer shall identify such payment in the manner set forth in Schedule I and shall identify the payment as principal, Make-Whole Amount, if any, and/or interest. Any payment made pursuant to this Section 2.5 shall be deemed received on the payment date only if received before Noon, Chicago time. Payments received after Noon. Chicago time, shall be deemed received on the next succeeding Business Day,, with the Make-Whole Amount, if any, and/or interest payable to such Business Day. 2.6. Allocation of Payments. In the case of a prepayment pursuant to Section 2.2(a), if less than the entire principal amount of all of the Notes outstanding is to be paid, the Company will prorate the aggregate prncipal amount to be prepaid among the outstandina Notes in proport to the unpaid principal amounts thereof. -3- 2.7. Payment Due on Saturdays, Sundays and Holidays. If any interest payment date on the Notes or the date fixed for any other payment of any Note or exchange of any Note is a day other than a Business Days, then such payment or exchange need not be made on such date but may be made on the next succeeding Business Day, with the Make~Whole Amount, if any, and/or interest payable to the actual date of payment. ss.3. REPRESENTATIONS 3.1. Representations of the Company. As an inducement to, and as part of the consideration for, your purchase of the Notes pursuant to this Agreement, the Company represents and warrants to you as follows: (a) Corporate Organization and Authority. The Company is a solvent corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. has all requisite corporate power and authority to own and operate its properties, to carry on its business as now conducted and as presently proposed to be conducted, to enter into and perform under the Agreement and to issue and sell the Notes as contemplated in the Agreement. (b) Qualification to Do Business. The Company is duly qualified or licensed and in good standing as a foreign corporation authorized to do business in each jurisdiction where the nature of the business transacted by it or the character of its properties owned or leased makes such qualification or 1icensing necessary, except for jurisdictions, individually or in the aggregate, where the failure to be so licensed or qualified would not have a Material Adverse Effect. (c) Subsidiaries. The Company has no Subsidiaries except those listed in the attached Annex I, which correctly sets forth the jurisdiction of incorporation or formation and the percentage of the outstanding Voting Stock or other equity interests of each Subsidiary which is owned, of record or beneficially, by the Company and/or one or more Subsidiaries. Each Subsidiary has been, duly organized and is validly existing and in good standing under the laws of its jurisdiction of incorporation or organization and is duly licensed or qualified and in good standing as a foreign corporation or other organization in each other jurisdiction where the nature of the business transacted by it or the character of its properties owned or leased makes such qualification or licensing necessary, except for jurisdictions, individually or in the aggregate, where the failure to be so licensed or qualified would not have a Material Adverse Effect. Each Subsidiary has full corporate or other power and authority to own and operate its properties and to carry on its business as now conducted and as presently proposed to be conducted. The Company and each Subsidiary have good and transferable title to all of the shares of capital stock, or all of the equity interests, they purport to own of each Subsidiary, free and clear in each case of any Lien, except as otherwise described in Annex I, and all such shares or interests have been duly issued and are fully paid and nonassessable. -4- (d) Financial Statements. The consolidated balance sheets of the Company and its Subsidiaries as of December 31, 1996, 1995, 1994, 1993 and 1992, and the related consolidated statements of income7 reinvested earnings and cash flows for each of the years ended on such dates, accompanied by the reports and unqualified opinions of Arthur Andersen LLP, independent public accountants, copies of which have heretofore bean delivered to you, were prepared in accordance with GAAP consistently applied throughout the periods involved (except as otherwise rioted therein) and present fairly the consolidated financial position of the Company and its Subsidiaries on such dates and the consolidated results of their operations and their cash flows for the years then. ended. (e) No Contingent Liabilities or Adverse Changes. Neither the Company nor any of its Subsidiaries has any contingent liabilities which, individually or in the aggregate, are material to the Company and its Subsidiaries, taken as a whole, other than as indicated in the most recent audited financial statements described in Section 3.1(d), and except as indicated as aforesaid, since December 31, 1996. there have been no changes in the condition, financial or otherwise, of the Company and its Subsidiaries on a consolidated basis except changes occurring in the ordinary course of business, none of which, individually or in the aggregate, have had a Material Adverse Effect. (f) No Pending Litigation or Proceedings. Except as described in Annex II, there are no actions, suits or proceedings pending or, to the Company's knowledge, threatened against or affecting the Company or any of its Subsidiaries, at law or in equity or before or by any Federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which would have individually or in the aggregate, a Material Adverse Effect. (g) Compliance with Law. (i) Neither the Company nor any of its Subsidiaries is: (x) in default with respect to any order, writ, injunction or decree of any court to which it is a named party; or (y) in default under any law, rule, regulation, ordinance or order relating to its or their respective businesses, the sanctions and penalties resulting from such defaults described in clauses (x) and (y) would have, individually or in the aggregate, a Material Adverse Effect. (ii) None of the Company, any Subsidiary or any Affiliate of the Company is an entity defined as a "designated national" within the meaning of the Foreign Assets Control Regulations, 31 C.F.R. Chapter V (other than Castle de Mexico. S.A. de C.V.), or is in violation of any Federal statute or Presidential Executive Order, or any rules or regulations of any department, agency or administrative body promulgated under any such statute or Order, concerning trade or other relations with any foreign country or any citizen or national thereof or the ownership or operation of any property, and no restriction or prohibition applicable to the Company or any Subsidiary under any such statute, Order, rule or regulation has or would have, individually or in the aggregate, a Material Adverse Effect. -5- (h) ERISA. (i) The Company and each ERJSA Affiliate have operated and administered each Plan in compliance with all applicable laws, except for such instances of noncompliance as have not resulted in and would not result in a Material Adverse Effect. Neither the Company nor any EIUSA. Affiliate has incurred any liability pursuant to Tide I or IV of EPJSA (other than benefit liabilities pursuant to Plan terms) or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in Section 3 of ERJSA), and no event, transaction or condition has occurred or exists that would result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to Section 401 (a)(29) or 412 of the Code, other than such liabilities or Liens as would not be individually or in the aggregate material. (ii) The present value of the aggregate benefit liabilities under each of the Plans subject to Title IV of EIUSA (other than multiemployer plans), determined as of the end of such Plan's most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Plan's most recent actuarial valuations report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities. The term "benefit liabilities" has the meaning specified in Section 4001 of ERISA and the terms "current value" and "present value" have the meanings specified in Section 3 of ERISA. (iii) The Company arid its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under Section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are material. (iv) The expected postretirement benefit obligation (determined as of the last day of the Company's most recently ended fIscal year in accordance with Financial Accounting Standards Board Statement No. 106, without regard to liabilities attributable to continuation coverage mandated by Section 4980B of the Code) of the Company and its Subsidiaries, is not material. (v) The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code. The representation by the Company in the first sentence of this clause (v) is made in reliance upon and subject to the accuracy of your representation in Section 3.2(b) as to the sources of the funds used to pay the purchase price of the Notes to be purchased by you. (i) Title to Properties. Except as disclosed on the most recent audited consolidated balance sheet described in the foregoing paragraph (d) of this Section 11, the Company and each Subsidiary have (x) good and -6- marketable title in fee simple or its equivalent under applicable law to all the real property owned by them and (y) good and marketable title to all of the other property reflected in such balance sheet as owned by them or subsequently acquired by the CompanY or any Subsidiary (except as sold or otherwise disposed of in the ordinary course of business), in each case free from all Liens or defects in title except those permitted by Section 7.4. (j) Leases. The Company and each Subsidiary enjoy peaceful and undisturbed possession under all leases under which the Company or such Subsidiary is a lessee or is operating, except for leases the termination of which, individually or in the aggregate, would not have a Material Adverse Effect. (k) Franchises, Patents, Trademarks and Other Rights. The Company and each Subsidiary have all franchises, permits, licenses and other authority necessary to carry on or used in their business as now being conducted, except for franchises, permits, licenses or other authority the 1ack or loss of which, individually or in the aggregate, would not have a Material Adverse Effect, and none are in default under any of such franchises, permits, licenses, or other authority for defaults, individually or in the aggregate, which would not have a Material Adverse Effect The Company and each Subsidiary own or possess all patents, trademarks, service marks, trade names, copyrights, and licenses, or rights with respect to the foregoing, necessary for or used by them in, the present conduct of their businesses, without any known conflict with the rights of others. (1) Authorization. This Agreement and the Notes have been duly authorized on the part of the Company and the Agreement does, and the Notes when issued will, constitute the legal, valid and binding obligations of the Company, enforceable in accordance with their terms, except to the extent that enforcement of this Agreement or the Notes may be limited by applicable bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or similar laws of genera1 application relating to or affecting the enforcement of the rights of creditors or by equitable principles, regardless of whether enforcement is sought in equity or at law. The sale of the Notes, the execution and delivery of the Agreement and compliance by the Company with all of the provisions of this Agreement and of the Notes (i) are within the corporate powers of the Company, (ii) have been duly authorized by proper corporate action, (iii) are legal and will not violate any provisions of any law or regulation or order of any court, governmental authority or agency, and (iv) wi11 not result in any breach of any of the provisions of, constitute a default under, or result in the creation of any Lien on any property of the Company or any Subsidiary under the provisions of any charter document, by-law, loan agreement or other agreement or instrument to which the Company or any Subsidiary is a party or by which any of them or their property may be bound. (m) No Defaults. No event has occurred and no condition exists which, upon the issuance of the Notes, would constitute a Default or an Event of Default under this Agreement. Neither the Company nor any Subsidiary is in default under any charter document, by-law, loan agreement or other material agreement or material instrument to which it is a party or by which it or its property may be bound. -7- (n) Governmental Consent. None of the nature of the Company or any of its Subsidiaries, their respective businesses or properties, any relationship between the Company or any of its Subsidiaries and any other Person, or any circumstances relative to the offer, issuance, sale or delivery of the Notes or execution and delivery of this Agreement is such as to require a consent, approval or authorization of, withholding of objection on the part of, or filing, registration or qualification with, any governmental authority on the part of the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement or the offer, issuance, sale de1ivery of the Notes. (o) Taxes. All tax or information returns required to be filed by the Company or any Subsidiary in any jurisdiction have been timely flied, and all taxes, assessments, fees and other governmental charges or levies upon the Company or any Subsidiary, or upon any of their respective properties, assets, income or franchises, which are due and payable, have been paid timely or contested in good faith by appropriate proceedings that stay the collection thereof by the applicable governmental authority during the period of the contest and as to which adequate reserves are maintained in accordance with GAAP. The Company does not know of any proposed additional tax assessment against it or any Subsidiary for which adequate provision has not been made on its books in accordance with GAAP. The United States Federal income tax liability of (i) the Company and. its Subsidiaries for all taxable years up to and including the taxable year ended December 31, _____ , has been finally determined, and no material controversy in respect of additional taxes due by the Company or any Subsidiary since such date is pending or, to the Company's knowledge, threatened. The provisions for taxes on the books of the Company and each Subsidiary are adequate for all open years and for the current fiscal period. (p) Status under Certain Statutes. Neither the Company nor any Subsidiary is: (i) a "public utility company" or a "holding company," or an "affiliate" or a "subsidiary company" of a "holding company," or an "affiliate" of such a "subsidiary company," as such terms are defined in the Public Utility Holding Company Act of 1935, as amended, (ii) a "public utility" as defined in the Federal Power Act, as amended, or (iii) an "investment company" or an "affiliated person" thereof or an "affiliated person" of any such "affiliated person," as such terms are defined in the Investment Company Act of 1940, as amended. (q) Private Offering. Neither the Company, nor BA Securities, Inc., the only Person authorized or employed by the Company as agent, broker, dealer or otherwise in connection with the offering of the Notes or any similar security of the Company, has offered any of the Notes or any similar security of the Company for sale to, or solicited offers to buy any thereof from, or otherwise approached or negotiated with respect thereto with, any prospective purchaser, other than ___ institutional investors, including the Purchaser, each of whom was offered all or a portion of the Notes at private sale for investment. Neither the Company nor anyone acting on its authorization will offer the Notes or any part thereof or any similar security for issuance or sale to, or solicit any offer to acquire any of the same from, anyone so as to cause the issuance and sale of the Notes to be subject to the provisions of Section 5 of the Securities Act. -8- (r) Effect of Other Instruments. Neither the Company nor any Subsidiary is bound by any agreement or instrument or subject to any charter or other corporate restriction which in any way restricts any Subsidiary's ability to pay dividends or make advances to the Company or which has a Material Adverse Effect. (s) Use of Proceeds. The Company will use the net proceeds from the sale of the Notes for general corporate purposes. None of the transactions contemplated in this Agreement (including without limitation thereof, the use of the proceeds from the sale of the Notes) will violate or result in a violation of Section 7 of the Exchange Act, or any regulations issued pursuant thereto, including, without limitation, Regulations G, T, U and X of the Board of Governors of the Federal Reserve System (12 C.F.R., Chapter II). Neither the Company nor any Subsidiary owns nor does the Company or any Subsidiary intend to carry or purchase any "margin stock" within the meaning of Regulation G, and none of the proceeds from the sale of the Notes will be used to purchase or carry or refinance any borrowing the proceeds of which were Used to purchase or carry any "margin stock" or "margin security" in violation of Regulations G, T, U or X. (t) Condition of Property. All of the facilities of the Company and its Subsidiaries are in good Operating condition and repair, except for facilities being repaired in the ordinary of course of business or facilities which, individually or in the aggregate, are not material to the Company and its Subsidiaries, on a consolidated basis. (u) Books and Records. The Company and each of its Subsidiaries (i) maintain books, records and accounts in reasonable detail which accurately and fairly reflect their respective transactions and business affairs, and (ii) maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions are executed in accordance with management's general or specific authorization and to permit preparation of financial statements in accordance with GAAP. (v) Environmental Compliance. Except as disclosed in the attached Annex II, the Company and each Subsidiary (including their operations and the conditions at or in their Facilities) comply with all Environmental Laws except for violations which, individually or in the aggregate, would not have a Material Adverse Effect; the Company and each Subsidiary have obtained all permits under Environmental Laws necessary to their respective operations, all such permits are in full force and effect, and the Company and each Subsidiary are in compliance with all material terns and conditions of such permits except for permits, individually or in the aggregate, the lack of which or noncompliance with which would not have a Material Adverse Effect; and except as disclosed in the attached Annex II, neither the Company nor any of its Subsidiaries has any liability (contingent or otherwise) in connection with any Release of any Hazardous Material or the existence of any Hazardous Material on, under or about any Facility that could give rise to an Environmental Claim that would have a Material Adverse Effect. (w) Debt. Annex III sets forth a list of all outstanding Debt of the Company and its Subsidiaries as of the date of this Agreement, since which date there has been no material change in the amounts, interest rates, sinking funds, installment payments or maturities thereof. Neither the Company nor any -9- Subsidiary is in default, and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of the Company or such Subsidiary and no event or condition exists with respect to any Debt of the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment Except as disclosed in Annex III, neither the Company nor any Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 7..4. (x) Full Disclosure. None of the financial statements referred to in Section 3.1(d), this Agreement, and any other written statement or document furnished by or on behalf of the Company to you in connection with the negotiation of the sale of the Notes and the execution and delivery of the Agreement, taken together, contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein or herein not misleading in light of the circumstances under which they were made. There is no fact (exclusive of general economic, political or social conditions or trends) particular to the Company and known by the Company that the Company has not disclosed to you in writing and that has a Material Adverse Effect or, to the Company's best knowledge, will have, individually or in the aggregate, a Material Adverse Effect. 3.2. Representations of the Purchaser. --------------------------------- (a) You represent, and in entering into this Agreement the Company understands, that you are acquiring the Notes for your own account and not with a view to any distribution thereof, provided that the disposition of your property shall at all times be and remain within your control; subject, however, to compliance with Federal securities laws. You acknowledge that the Notes have not been registered under the Securities Act and you understand that the Notes must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. You have been advised that the Company does not contemplate registering, and is not legally required to register, the Notes under the Securities Act. (b) You further represent that, as of the date of this Agreement, at least one of the following statements is an accurate representation as to each source of funds (a "Source") to be used by you to pay the purchase price of the Notes to be purchased by you hereunder: (i) if you are an insurance company, the Source does not include assets allocated to any separate account maintained by you in which any employee benefit plan (or its related trust) has any interest, other than a separate account that is maintained solely in connection with your fixed contractual obligations under which the amounts payable, or credited, to such plan and to any participant or beneficiary of such plan (including any annuitant) are not affected in any manner by the investment performance of the separate account; -10- (ii) the Source is either (x) an insurance company pooled separate account within the meaning of Prohibited Transaction Exemption ("PTE") 90-1 (issued January 9, 1990), or (y) a bank collective investment fund, within the meaning of PTE 91-38 (issued July 12, 1991) and, except as you have disclosed to the Company in writing pursuant to this paragraph (b), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; (iii) the Source constitutes assets of an "investment fund" (within the meaning of Part V of the QPAM Exemption) managed by a "qualified professional asset manages' or "QPAM" (within the meaning of Part V of the QPAM Exemption), no employee benefit plan's assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM (applying the definition of "control" in Section V(e) of the QPAM Exemption) owns a 5% or more interest in the Company and (x) the identity of such QPAM and (y) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Company in writing pursuant to this clause (iii); (iv) the Source is a governmental plan; (v) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this paragraph (b)(v); (vi) the Source does not include assets of any employee benefit plan, ether than a plan exempt from the coverage of ERISA; or (vii) if you are an insurance company and the Source includes assets of your general account, (A) your purchase of Notes is entitled to the exemption afforded by PTE. 95-60 (issued July 12, 1995), provided the Company is not an affiliate (within the meaning of Section v(a) of PTE 95-60) of you, or (B) there is no Plan with respect to which the assets of your general account's reserves (as determined under Section 807(d) of the Code) for all contracts held by or on behalf of such Plan and all other Plans maintained by the same employer or its affiliates (as so defined) or by the same employee organization exceeds 10% of the liabilities of your general account. As used in this Section 3.2(b), the terms "employee benefit plan," "governmental plan," "party in interest" and "separate account" shall have the respective meanings assigned to such terms in Section 3 of ERISA. -11- ss.4. CLOSING CONDITIONS Your obligation to purchase the Notes on the Closing Date shall be subject to the performance by the Company of its agreements hereunder, which are to be performed at or prior to the time of delivery of the Notes, and to the following conditions to be satisfied on or before the Closing Date: 4.1 Representations and Warranties. The representations and warranties of the Company contained in this Agreement, in the certificates delivered pursuant to this Section 4 or otherwise made in connection herewith shall be true and correct on or as of the Closing Date and the Company shall have delivered to you a certificate to such effect, dated the Closing Date and executed by the president, the chief financial officer, the chief accounting officer or the Treasurer of the Company. 4.2. Legal Opinions. You shall have received from Gardner, Carton & Douglas, who is acting as your special counsel in this transaction, and from Jerry M. Aufox, corporate counsel to the Company, his opinions, dated such Closing Date, in form and substance satisfactory to you and covering substantially the matters set forth or provided in the attached Exhibits B and C, respectively. 4.3. Events of Default. No Default or Event of Default shall have occurred and be continuing on the Closing Date, and the Company shall have delivered to you a certificate to such effect, dated the Closing Date and executed by the president, the chief financial officer, the chief financial officer or the Treasurer of the Company. 4.4. Payment of Fees and Expenses. The Company shall have paid all of the fees and expenses of Gardner, Carton & Douglas, your special counsel, through the Closing Date. 4.5. Legality of Investment. Your acquisition of the Notes shall constitute a legal investment as of the Closing Date under the laws and regulations of each jurisdiction to which you may be subject (without resort to any "basket" or "leeway" provision which permits the making of an investment without restrictions as to the character of the particular investment being made), and such acquisition shall not subject you to any penalty or other onerous condition in or pursuant to any such law or regulation; and you shall have received such certificates or other evidence as you may reasonably request to establish compliance with this condition. 4.6. A private placement number with respect to the Notes shall have been issued by S&P. 4.7. Proceedings and Documents. All proceedings taken in connection with the transactions contemplated by this Agreement, and all documents necessary to the consummation of such transactions shall be satisfactory in form and substance to you and your special counsel, and you and your special counsel shall have received copies (executed or certified as may be appropriate) of all legal documents or proceedings which you and they may reasonably request. -12- ss.5. INTERPRETATION OF AGREEMENT 5.1. Certain Terms Defined. The terms hereinafter set forth when used in this Agreement shall have the following meanings: Adjusted Conso1idated Net Worth - Consolidated Stockholder' Equity less all Restricted Investments that exceed, in the aggregate, 10% of Consolidated Stockholders' Equity. Affiliate - Any Person (other than a Subsidiary or an original Purchaser) (i) who is a director or executive officer of the Company or any Subsidiary, (ii) which directly or indirectly through the or more intermediaries controls, or is controlled by, or is under common control with the Company, (iii) which beneficially owns or holds securities representing 10% or more of the combined voting power of the Voting Stock of the Company, or (iv) of which securities representing 10% or more of the combined voting power of its Voting Stock (or in the case of a Person not a corporation, 10% or more of its equity) is beneficially owned or held by the Company or any Subsidiary. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. Agreement - As defined in Section 1.1. Business Day - Any day, other than Saturday, Sunday or a legal holiday or any other day on which banking institutions in Chicago, Illinois generally are authorized by law to close. Capitalized Lease - Any lease the obligation for Rentals with respect to which, in accordance with GAAP, would be required to be capitalized on a balance sheet of the lessee or for which the amount of the asset and liability thereunder, as if so capitalized, would be required to be disclosed in a note to such balance sheet. Capitalized Lease Obligations - Any amounts required to be capitalized under any Capitalized Lease. Closing Date - As defined in Section 1.2. Code - The Internal Revenue Code of 1986, as amended. Commission - The Securities and Exchange Commission. Consolidated - Debt - Debt of the Company and its Subsidiaries consolidated in accordance with GAAP. Consolidated Indebtedness - Indebtedness of the Company and its Subsidiaries consolidated in accordance with GAAP. Consolidated Net Income - For any period, the net income (or deficit) of the Company and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. -13- Consolidated Stockholders' Equity - The stockholders' equity of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP. Consolidated Total Assets - The assets of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP. Consolidated Total Capitalization - The sum of (i) Consolidated Stockholders' Equity, (ii) 50% the LIPO Reserve, and (iii) Consolidated Debt, less Restricted Investments in excess of 10% of consolidated Stockholders' Equity. Debt - The sum of (i) all Indebtedness (excluding obligations with respect to bankers' acceptances and trade acceptance financings to the extent such obligations, in the aggregate, are less then $,O00,000, but including any such obligations, in the aggregate, in excess of such amount), and (ii) the Total Investment. Default - Any event which, with the lapse of time or the giving of notice, or both, would become an Event of Default. Determination Date - Two Business Days before the date fixed for a prepayment pursuant to Section 2.2(a), Section 7.6 or the date of declaration pursuant to Section 8.2. Environmental Claim - Any notice of violation, claim, demand, abatement order or other order by any Person for any damage, including personal injury (including sickness, disease or death), tangible or intangible property damage, contribution, indemnity, indirect or consequential damages, damage to the environment, nuisance, pollution, contamination or other adverse effects on the environment, or for fines, penalties or restrictions, resulting from or based upon (i) the existence of a Release (whether sudden or non-sudden or accidental or non-accidental) of, or exposure to, any Hazardous Material in, into or onto the environment at, in, by, from or related to any Facility, (ii) the use, handling, transportation, storage, treatment or disposal of Hazardous Material$ in connection with the operation of any Facility, or (iii) the violation, or alleged violation, of any statute, rule, regulation, ordinance, order, permit, license or authorization of or from any governmental authority, agency or court relating to environmental matters pertaining to the Facilities. Environmental Laws - All laws relating to environmental matters, including those relating to (i) fines, orders, injunctions, penalties, damages, contribution, cost recovery compensation, losses or injuries resulting from the Release or threatened Release of Hazardous Materials and to the generation, use, storage, transportation, or disposal of Hazardous Materials, in any manner applicable to the Company or any of its Subsidiaries or any of their respective properties, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.ss.9601 et seq.), the Hazardous Material Transportation Act (49 U.S.C.ss.1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.ss.6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.ss.1251 et seq.), the Safe Drinking Water Act (42 U.S.C.ss.300f et seq.), the Clean Air Act (42 U.S.C.ss.7401 et seq.), the Toxic Substances Control Act (15 U.S.C.ss.2601 et seq.), the Occupational Safety and Health Act (2(degree)U.S.C.ss.651 et seq.), and the Emergency Planning and -14- Community Right-to-Know Act (42 U.S.C.ss.11001 et seq.), and (ii) environmental protection, including the National Environmental Policy Act (42 U.S.C.ss.4321 et seq.), and comparable state and foreign laws, each as amended or supplemented, and any similar or analogous local, state, federal and foreign statutes the regulations promulgated pursuant thereto, each as in effect as of the date of determination. ERISA - The Employee Retirement Income Act of 1974, as amended from time to time and any successor statute. ERISA Affiliate - The Company and (1) any corporation that is a member of a controlled group of corporations within the meaning of Section 414(b) of the Code of which the Company is a member, (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Code of which the Company is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Code of which the Company, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. Event of Default - As defined in Section 8.1. Exchange Act - The Securities Exchange Act of 1934, as amended. Facilities - Any and all real property (including all buildings, fixtures or other improvements located thereon) now or heretofore or hereafter owned, leased, operated or used (under permit or otherwise) by the Company or any of its Subsidiaries. GAAP - Generally accepted accounting principles in effect from time to time in the United States. Guaranties - All obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) of a Person guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including, without limitation, all obligations incurred through an agreement, contingent or otherwise, by such Person: (i) to purchase such Indebtedness or obligation or any property or assets constituting security therefor; (ii) to advance or supply funds (x) for the purchase or payment of such Indebtedness or obligation, (y) to maintain working capital or other balance sheet condition, or (z) otherwise to advance or make available funds for the purchase or payment of such Indebtedness or obligation; (iii) to lease property or to purchase securities or other property or services primarily for the purpose of assuring the owner of such Indebtedness or obligation against loss in respect thereof; or (iv) otherwise to assure the owner of the Indebtedness or obligation against loss in respect thereof. For the purposes of all computations made under this Agreement, Guaranties in respect of any Indebtedness for borrowed money shall be deemed to be Indebtedness equal to the principal amount of such Indebtedness for borrowed money which has been guaranteed, and Guaranties in respect of any other o1igation or liability or any dividend shall be deemed to be Indebtedness equal to the maximum aggregate amount of such obligation, liability or dividend. -15- Hazardous Materials - (i) Any chemical, material or substance defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous waste," "restricted hazardous waste," or "toxic substances" or "pollutant" or words of similar import under any Environmental Laws; (ii) any oil, petroleum or petroleum derived substance, any drilling fluid, produced water or other waste associated with the exploration, development or production of crude oil, any flammable substance or explosive, any radioactive material, any hazardous waste or substance, any toxic waste or substance or any other material or pollutant that (x) poses a hazard to any property of the Company or any of its Subsidiaries or to Persons on or about such property, or (y) causes such property to be in violation of any Environmental Law; (iii) any friable asbestos, urea formaidehyde foam insulation, electrical equipment which contains any oil or dielectric fluid with levels of polychiorinated biphenyls in excess of fifty parts per million; and (iv) any other chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority. Indebtedness - For any Person, without duplication, all (i) obligations for borrowed money or to pay the deferred purchase price of property or assets (except trade account payable, (ii) obligations secured by any Lien upon property or assets owned by such Person, whether or not such Person has assumed or become liable for the payment of such ob1igations, (iii) obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired, notwithstanding the fact that the rights and remedies of the seller, lender or lessor under such agreement in the event of default are limited to repossession or sale of property, (iv) Capitalized Lease Obligations, and (v) Guaranties of obligations of others of the character referred to in the foregoing clauses (i) through (iv), but excluding from Indebtedness the Total Investment. Institutional Holder - Any bank, trust company, insurance company, pension fund, Mutual fund or other similar financial institution, including, without limiting the foregoing, any "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act, which is or becomes a holder of any Note. Investments - All investments made, in cash or by delivery of property, directly or indirectly, in any other Person, whether by acquisition of shares of capital stock, equity interests, indebtedness or other obligations or securities or by loan advance, capital contribution or otherwise; provided, however, that "Investments" shall not mean or include routine investments in property to be used or consumed in the ordinary course of business. Lien - Any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including any agreement to grant any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature tbereof, including a Capitalized Lease, and the filing of or agreement to file any financing statement under the Uniform Commercial Code of any jurisdiction in connection with any of the foregoing. LIFO Reserve - The difference between the cost of inventory using the last-in, first-out ("LIFO") method of valuing inventory under GAAP and the cost of inventory using the rep1acement cost method under GAAP, so long as the Company and its Subsidiaries are reporting the value of their inventory under the LIFO method for purposes of GAAP. -16- Make-Whole Amount - As of any Determination Date, to the extent that the Reinvestment Yield on such Determination Date is lower than the interest rate payable on or in respect of the Notes the excess of (a) the present value of the principal and interest payments to be foregone by any prepayment (exclusive of accrued interest on such Notes through the date of prepayment) on such Notes (taking into account the manner of application of such prepayment required by Section 1.2(b)), determined by discounting (semi-annually on the basis of a 360-day year composed of twelve 30-day months), such payments at a rate that is equal to the Reinvestment Yield over (b) the aggregate principal amount of such Notes then to be prepaid or paid. To the extent that the Reinvestment Yield on any Determination Date is equal to or higher than the interest rate payable on or in respect of such Notes, the Make-Whole Amount is zero. Material Adverse Effect - (i) A material adverse effect on the business, assets, properties, profits, prospects, operations or condition, financial or otherwise, of the Company and its Subsidiaries, on a consolidated basis, (ii) the impairment of the ability of the Company to perform its obligations under this Agreement or the Notes, or (iii) the impairment of the ability of the holders of the Notes to enforce the Company's obligations under this Agreement of the Notes. Moody's - Investor Service, Inc. Net Working Capital - The sum of (i) the current assets of the Company and its Subsidiaries determined in accordance with GAAP and (ii)75% of the LIPO Reserve, less the current liabilities of the Company and its Subsidiaries determined in accordance with GAAP. Notes - As defined in Section 1.1. PBGC - The Pension Benefit Guaranty Corporation or any successor thereto. Person - Any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or government or any governmental authority, agency or political subdivision. Plan - Any employee pension benefit plan, as defined in Section 3(2) of ERISA, that has been estab1ished by, or contributed to, or is maintained by the Company, any Subsidiary or any ERISA Affiliate. Purchaser - As defined in Section 1.1. Receivables Purchase Agreement - The Receivables Purchase Agreement dated as of March I. 1995, among the Company, various financial institutions named therein, Bank of America Illinois, as administrative agent, and PNC Bank, National Association, as managing agent and documentation agent. -17- Reinvestment Yield - The sum of (i) 0.50% plus (ii) the yield reported, as of 10:00 AM. (New York City time) on the Determination Date, on the Cantor-Fitzgerald Brokerage Screen available on the Bloomberg and Knight Ridder Information System (or, if not available, any other nationally recognized trading screen reporting on-line intraday trading in United States government securities) for actively traded U.S. Treasury securities having a maturity equal to the Weighted Average Life to Maturity of the Notes then being prepaid or paid as of the date of prepayment or payment, rounded to the nearest month, or if such yields shall not be reported as of such time or the yields reported as of such time are not ascertainable in accordance with the preceding clause, then the arithmetic mean of the yields published in the statistical release designated H.15(519) (or any successor publication) of the Board of Governors of the Federal Reserve System under the caption "U.S. Government Securities--Treasury Constant Maturities" (the statistical release") for the maturity corresponding to the remaining Weighted Average Life to Maturity of the Notes as of the date of such prepayment or payment rounded to the nearest month For purposes of calculating the Reinvestment Yield, the most recent weekly statistical release published prior to the applicable Determination Date shall be used. In the event the statistical release is not published, the arithmetic mean of such reasonably comparable index, as may be designated by the holders of at least 51% in aggregate principal amount of the Notes, for the maturity corresponding to the remaining Weighted Average Life to Maturity of the Notes as of the date of prepayment or payment, as the case may be, rounded to the nearest month shall be used. If no maturity exactly corresponding to such rounded Weighted Average Life to Maturity shall appear therein, yields for the two most closely corresponding published maturities (one of which occurs prior and the other subsequent to the Weighted Average Life to Maturity) shall be calculated pursuant to the foregoing sentence and the Reinvestment Yield shall be interpolated from such yields on a straight-line basis (rounding, in each of such relevant periods, to the nearest month). Release - Any release, spill, emission, leaking, pumping, pouring, emptying, dumping, injection, escaping, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment (including the abandonment or disposal of any barrel, container or other c1osed receptacle containing any Hazardous Material), or into or out of any Facility, including the movement of any Hazardous Material through the air, soil, surface water, groundwater or property. Rentals - As of the date of any determination thereof, all fixed payments (including all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by the Company or a Subsidiary, as lessee or sublessee under a lease or real or personal property, but exclusive of any amounts required to be paid by the Company or a Subsidiary (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes, assessments, amortization and similar charges. Fixed rents under any so-called "percentage leases" shall be computed on the basis of the minimum rents, if any, required to be paid by the lessee, regardless of sales volume or gross revenues. -18- Restricted Investments - Any Investments of the Company and its Subsidiaries other than: (i) Investments in existing and hereafter created or designated Subsidiaries and any Person that concurrently with such Investment becomes a Subsidiary; (ii) Investments in (A) commercial paper of a domestic issuer maturing in 270 days or less from the date of issuance which is rated P-2 or better by Moody's or A-2 or better by S&P, (B) certificates of deposit or banker's acceptances issued by commercial banks or trust companies located in the United States of America and organized under its laws or the laws of any state thereof each having a combined capital, surplus and undivided profits of $100,000,000 or more, (C) obligations of or fully guaranteed by the United States of America or an agency thereof maturing within three tears from the date of acquisition, (D) municipal securities maturing within three years from the date of acquisition which are rated in one of the top two rating classifications by at least one national rating agency, or (B) money market instrument programs which are classified as current assets in accordance with (GAAP; (iii) Extensions of credit in the nature of accounts receivable or notes receivable arising from the sale of goods and services in the ordinary course of business; (iv) Shares of stock, obligations or other securities received in settlement of claims arising in the ordinary course of business; (v) Participations in notes maturing within 60 days which are rated P-2 or better by Moody's or A-2 or better by S&P. (vi) Advances to officers, employees, subcontractors or suppliers not exeeding $5,000,000 in the aggregate; and (vii) Investments existing as of the date of this Agreement and described in the attached Annex IV. S&P - Standard & Poor's Corporation. Securities Act - The Securities Act of 1933, as amended. Subsidiary - Any Person a majority or more of the shares of Voting Stock of which, or in the case of a Person which is not a corporation a majority or more of the equity of which, is owned or controlled, directly or indirectly, by the Company. Total Investment - As defined in the Receivables Purchase Agreement as in effect on the date of this Agreement. -19- Voting Stock - Capital stock of any class of a corporation having power under ordinary circumstances to vote for the election of members of the board of directors of such corporation, or persons performing similar functions. Weighted Average Life to Maturity - As applied to any prepayment of principal of the Notes at any date, the number of years obtained by dividing (a) the then outstanding principal amount of the Notes to be prepaid into (b) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity, or other required payment, including payment at final maturity, foregone by virtue of such prepayment of the Notes, by (ii) the number of years (calculated to the nearest 1/12th) which would have elapsed between such date and the making of such payment. Wholly Owned - When applied to a Subsidiary, any Subsidiary 100% of the Voting Stock or other equity interests of which is owned by the Company and/or its Wholly-Owned Subsidiaries, other than directors' qualifying shares or, in the case of Subsidiaries organized under the laws of a jurisdiction other than the United States or a state thereof, nominal shares held by foreign nationals in accordance with local law. Terms which are not defined in this Section and are defined in other Sections of this Agreement shall have the meanings specified therein. 5.2. Accounting Principles. Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, the same shall be done in accordance with GAAP, except where such principles are inconsistent with the requirements of this Agreement. 5.3. Valuation Principles. Except where indicated expressly to the contrary by the use of terms such as "fair value," "fair market value" or "market value," each asset, each liability and each capital item of any Person, and any quantity derivable by a computation involving any of such assets, liabilities or capital items, shall be taken at the net book value thereof for all purposes of this Agreement. "Net book value" with respect to any asset, liability or capital item of any Person shall mean the amount at which the same is recorded or, in accordance with GAAP should have been recorded, in the books of account of such Person, as reduced by any reserves which have been or, in accordance with GAAP should have been, set aside with respect thereto, but in every case (whether or not permitted in accordance with GAAP) without giving effect to any write-up, write-down or write-off (other than any write-down or write-off the entire amount of which was charged to Consolidated Net Income or to a reserve which was a charge to Consolidated Net Income) relating thereto which wag made after the date of this Agreement. 5.4. Direct or Indirect Actions. Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether the action in question is taken directly or indirectly by such Person. -20- ss.6. AFFIRMATIVE COVENANTS The Company agrees that, for so long as any amount remains unpaid on any Note: 6.1. Corporate Existence. The Company will maintain and preserve, and will cause each Subsidiary to maintain and preserve, its corporate or partnership existence and right to carry on its business and maintain, preserve, renew and extend all of its rights, powers, privileges and franchises necessary to the proper conduct of its business; provided, however, that the foregoing shall not prevent any transaction permitted by Section 7.5, Section 7.6 or Section 7.7, or the termination of the corporate or partnership existence of any Subsidiary or of any right, power, privilege or franchise of any Subsidiary if, in the reasonable good faith opinion of the Board of Directors of the Company, such termination is in the best interests of the Company, is not disadvantageous to the holders of the Notes, and is not otherwise prohibited by this Agreement. 6.2. Insurance, The Company will, arid will cause each Subsidiary to, maintain insurance coverage with financially sound and reputable insurers in such forms and amounts, with such deductibles and against such risks as are required by law or sound business practice and are customary for corporations engaged in the same or similar businesses and owning and operating similar properties as the Company and its Subsidiaries. 6.3. Taxes, Claims for Labor and Materials. The Company will, and will cause each Subsidiary to, file timely all tax returns required to be filed in any jurisdiction and pay and discharge all taxes, assessments, fees and other governmental charges or levies imposed upon the Company or any Subsidiary or upon any of their respective properties, including leased properties (but only to the extent required to do so by the applicable lease), assets, income or franchises, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid. might become a Lien upon any of their respective properties or assets not permitted by Section 7.4, provided that neither the Company nor any Subsidiary shall be required to pay any such tax, assessment, fee, charge, levy or claim, the payment of which is being contested in good faith and by proper proceedings that will stay the collection thereof or the forfeiture or sale of any property and with respect to which adequate reserves are maintained in accordance with GAAP. 6.4. Maintenance of Properties. The Company will maintain, preserve and keep, and will cause each Subsidiary to maintain, preserve and keep, its properties (whether owned in fee or a leasehold interest), other than any property which is obsolete or, in the good faith judgment of the Company, no longer necessary for the operation of the business of the Company or any Subsidiary, in good repair and working order, ordinary wear and tear excepted, and from time to time will make all necessary repairs, replacements, renewals and additions thereto so that the business carried on in connection therewith may be properly conducted. 6.5. Maintenance of Records. The Company will keep, and will cause each Subsidiary to keep, at all times proper books of record and account in which full, true and correct entries will be made of a.l1 dealings or transactions of or in relation to the business and affairs of the Company or such Subsidiary in accordance with GAAP consistently applied throughout the period involved (except for such changes as are disclosed in such financial statements or in the notes -21- thereto and concurred in by the Company's independent certified public accountants), and the Company will and will cause each Subsidiary to, provide reasonable protection against loss or damage to such books of record and account. 6.6. Financial Information and Reports. The Company will furnish to you and to any other Institutional Holder (in duplicate if you or such other holder so request) the following; (a) As soon as available and in any event within 45 days after the end of each of the first three quarterly accounting periods of each fiscal year of the Company, a consolidated balance sheet of the Company and its Subsidiaries as of the end of such period and consolidated statements of income and cash. flows of the Company and its Subsidiaries for the periods beginning on the first day of such fiscal year and the first day of such quarterly accounting period (for the statements of income) and ending on the date of such balance sheet, setting forth in comparative form the corresponding consolidated figures for the corresponding periods of the preceding fiscal year. all in reasonable detail1 prepared in accordance with GAAP consistently applied throughout the periods involved and certified by the chief financial officer or chief accounting officer of the Company (i) outlining the basis of presentation, and (ii) stating that the information presented in such financial statements contains all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company and its Subsidiaries as of such dates and the consolidated results of their operations and cash flows for the periods then ended, except that such financial statements condense or omit certain footnotes pursuant to the rules and regulations of the Commission. Delivery within the time period specified above of copies of the Company's Quarterly Reports on Form lO-Q prepared in compliance with the requirements therefor and filed with the Commission shall be deemed to satisfy the requirements of this Section 6.6(a). (b) As soon as available and in any event within 90 days after the last day of each fiscal year, a consolidated balance sheet of the Company and its Subsidiaries as of the end of such fiscal year and the related consolidated statements of income, reinvested earnings and cash flows for such fiscal year, in each case setting forth in comparative form figures for the preceding fiscal year, all in reasonable detail, prepared in accordance with GAAP consistently applied throughout the period involved (except for changes disclosed in such financial statements or in the notes thereto and concurred in by the Company's independent certified public accountants) and accompanied by a report as to the consolidated balance sheet end the related consolidated statements of income, reinvested earnings and cash flows unqualified as to scope of audit and unqualified as to going concern by Arthur Andersen LLP, or any other firm of independent public accountants of recognized national standing selected by the Company, to the effect that such financial statements gave been prepared in conformity with GAAP and present fairly, in all materiel respects, the consolidated financial position and results of operations and cash flows of the Company and its Subsidiaries and that the examination of such financial statements by such accounting firm has been made in accordance with generally accepted auditing standards. Delivery within the time period specified above of the Company's Annual Report on Form 10-K for such fiscal year (together with the Company's annual report to shareholders prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in compliance with the requirements therefor and -22- filed with the Commission, together with the accountants certificate described in this Section 6.6(b), shall be deemed to satisfy the requirements of this Section 6.6(b). (c) Together with the consolidated financial statements delivered pursuant to paragraphs (a) and (b) of this Section 6.6, a certificate of the chief financial officer, chief accounting officer or Treasurer of the Company, (I) to the effect that such officer has reexamined the terms and provisions of this Agreement and that on the date such calculations were made, during the periods covered by such financial reports and as of the end of such periods the Company is not, or was not, in default in the fulfillment of any of the terms, covenants, provisions and conditions of this Agreement and that no Default or Event of Default is occurring or has occurred as of the date of such certificate, during the periods covered by such financial statements and as of the end of such periods, or if such officer is aware of any Default or Event of Default, such officer shall disclose in such statement the nature thereof, its period of existence and what action, if any, the Company has taken or proposes to take with respect thereto, and (ii) stating whether the Company is in compliance with Sections 7.I through 7.10 and setting forth, in sufficient detail, the information and computations required to establish whether or not the Company was in compliance with the requirements of Sections 7.1 through 7.8 during the periods covered by the financial stateme~1ts then being furnished and as of the end of such periods. (d) Together with the financial reports delivered pursuant to paragraph (I,) of this Section 6.6, a letter of the Company's independent certified public accountants stating that they have reviewed this Agreement and stating whether, in making their audit, they have become aware of any condition or event that then constitutes a Default or an Event of Default, end, if they are aware that any such condition or event then exists, specifying the nature and period of the existence thereof (it being understood that such accountants shall not be liable, directly or indirectly, for any failure to obtain knowledge of any Default or Event of Default unless such accountants should be obtained knowledge thereof in making an audit in accordance with generally accepted auditing standards or did not make such an audit). (e) Concurrently with notice flied with the Commission, notice of (1) the filing of any suit, action, claim or counterclaim against the Company or any Subsidiary in which the amount claimed as damages against the Company or any Subsidiary exceeds $5,000,000 after deducting the amount which the Company reasonably believes is covered by insurance, and (ii) the entering of any judgment or decree against the Company or any Subsidiary if the aggregate amount of all judgments and decrees then outstanding against the Company and all Subsidiaries exceeds $2,500,000 after deducting the amount the Company or any Subsidiary (x) is insured therefor and with respect to which the insurer has assumed responsibility in writing, and (y) is otherwise indemnified therefor if the terms of such indemnification are satisfactory to holders of 55% or inert in aggregate principal amount of the Notes then outstanding. (f) As soon as available, copies of each financial statement, notice, report and proxy statement which the Company furnishes to its shareholders generally; within 15 days of filing, copies of each registration statement and periodic report (without exhibits and other than registration statements relating to employee benefit plans) which the Company files with the Commission, -23- and any similar or successor agency of the Federal government administering the securities Act, the Exchange Act or the Trust Indenture Act of 1939, as amended; without duplication, within 15 days of filing, copies of each report (other than reports relating solely to the issuance of, or transactions by others involving, its securities) relating to the Company or its securities which the Company files with any securities exchange on which any of the Company's securities may be registered; copies of any orders applicable to the Company or a Subsidiary in any material proceedings to which the Company or any Subsidiary is a party, issued by any governmental agency, Federal or state, having jurisdiction over the Company or any Subsidiary and, at any time as the Company is not a reporting company under Section 13 or 15(d) of the Exchange Act or has not complied with the requirements for the exemption from registration under the Exchange Act set forth in Rule 12g-3-2(b), such financial or other information as any holder of the Notes or prospective purchaser of the Notes may reasonably request. (g) As soon as available, a copy of each other report submitted to the Company or any Subsidiary by independent accountants retained by the Company or any Subsidiary in connection with any special audit made by them of the books of the Company or any Subsidiary. (h) Promptly following any change in the composition of the Company's Subsidiaries from that set forth in Annex I, as theretofore updated pursuant to this paragraph, arid also at the time of delivery of the financial statements referred to in Section 6.6(b), an updated list setting forth the information specified in Annex I. (i) Such additional information as you or such other Institutional Holder of the Notes may reasonably request concerning the Company and its Subsidiaries. 6.7. Inspection of Properties and Records. The Company will allow, and will cause each Subsidiary to allow, any representative of you or any other Institutional Holder, so long as you or such other Institutional Holder holds any Note, to visit and inspect any of its properties, to examine (and, if at the time thereof any Default or Event of Default has occurred and is continuing, make copies and extracts of) its books of record and account and to discuss its affairs, finances and accounts with its officers and its present and former public accountants (and by this provision the Company authorizes such accountants to discuss with you or such Institutional Holder the Company's and any Subsidiary's affairs, finances and accounts), all at such reasonable times and upon such reasonable notice and as often as you or such Institutional Holder may reasonably request and, if at the time thereof any Default or Event of Default has occurred and is continuing, at the Company's expense. 6.8. ERISA. (a) All assumptions and methods used to determine the actuarial valuation of employee benefits, both vested and unvested, under any Plan subject to Title IV of ERISA, and each such Plan, whether now existing or adopted after the date hereof, will comply in all material respects with ERISA. (b) The Company will not at any time permit any Plan to: (i) engage in any "prohibited transaction" as such term is defined in Section 4975 of the Code or in Section 406 of ERISA; -24- (ii) incur any "accumulated funding deficiency" as such term is defined in Section 302 of ERISA, whether or not waived; or (iii) be terminated under circumstances which are likely to result in the imposition of a Lien on the property of the Company or any ERISA Affiliate pursuant to Section 4068 of ERISA; if the event or condition described in clauses (i), (ii) or (iii) above is likely to subject the Company or an ERISA Affiliate to liabilities which, individually or in the aggregate, would have a Material Adverse Effect. (c) Upon the request of you or any subsequent Institutional Holder, the Company will furnish a copy of the annual report of each Plan (Form 5500) required to be filed with the Internal Revenue Service. (d) Within 5 days after obtaining knowledge of any event specified in clauses (i) through (vi) below that would result in a Material Adverse Effect, the Company will give you and any subsequent Institutional Holder written notice of: (i) a reportable event with respect to any Plan; (ii) the institution of any steps by any of the Company, any ERISA Affiliate or the PBGC to terminate any Plan; (iii) the institution of any steps by any of the Company or any ERISA Affiliate to withdraw from any Plan; (iv) a prohibited transaction in connection with any Plan; (v) any material increase in the contingent liability of the Company or any Subsidiary with respect to any post-retirement welfare liability; or (vi) the taking of any action by the Internal Revenue Service, the Department of Labor or the PBGC with respect to any of the foregoing. 6.9. Compliance with Laws. -------------------- (a) The Company will comply, and will cause each Subsidiary to comply, with all laws, rules and regulations, including Environmental Laws, relating to its or their respective businesses, other than laws, rules and regulations the failure to comply with which or the sanctions and penalties resulting therefrom, individually or in the aggregate, would not have Material Adverse Effect. (b) Promptly upon the occurrence thereof, the Company will give you and each other Institutional Holder notice of the institution of any proceedings against, or the receipt of written notice of potential liability or responsibility of, the Company or any Subsidiary for violation, or the alleged violation, of any Environmental Law which violation would give rise to a Material Adverse Effect. 6.10. Acquisition of Notes. Neither the Company nor any Subsidiary nor any Affiliate them, directly or indirectly, will repurchase, redeem, prepay or otherwise acquire, directly or indirectly, any Notes except upon payment or prepayment of the Notes pursuant to Section 2 or Section 7.6. The Company will forthwith cancel any Notes in any manner or at any time acquired by the Company or any Subsidiary or Affiliate of any of them, and such Notes shall not be deemed to be outstanding for any of the purposes of this Agreement or the Notes. -25- 6.11. Private Placement Number. The Company consents to the filing by your special counsel of copies of this Agreement with S&P to obtain a private placement number. ss.7. NEGATIVE COVENANTS The Company agrees that, for so long as any amount remains unpaid on any Note: 7.1. Adjusted Consolidated Net Worth. The Company will not permit its Adjusted Consolidated Net Worth (calculated on the last day of each fiscal quarter) to be less than $74,296,000 plus the cumulative sum of 40% of its Consolidated Net Income (but only if a positive number) for (i) each completed fiscal year of the Company ending after December 31, 1994, and (ii) the period from the beginning of the fiscal year of which the fiscal quarter being measured is a part to the last day of such fiscal quarter. 7.2. Consolidated Debt. The Company will not permit the ratio (calculated on the last day of each fiscal quarter) of Consolidated Debt to Consolidated Total Capitalization to exceed the ratio of .55 to 1.0. 7.3. Net Working Capital. The Company will not permit the ratio (calculated on the last day of each fiscal quarter) of Net Working Capital to Consolidated Debt to be less than 1.2 to 1.0. 7.4. Lien. The Company will not, and will not permit any Subsidiary to, permit to exist, create, assume or incur, directly or indirectly, any Lien on its properties or assets, whether now owned or hereafter acquired, except: (a) Liens on property created substantially contemporaneously or within 180 days of the acquisition thereof to secure or provide for all or a portion of the purchase price of such property, provided that (i) such Liens do not extend to other property of the Company or any Subsidiary, (ii) the aggregate principal amount of Indebtedness secured by each such Lien does not exceed 80% of the purchase price at the time of acquisition of the property subject to such Lien, and (iii) the Indebtedness secured by such Liens is otherwise permitted by Section 7.2 and Section 73 of this Agreement; (b) Liens for taxes, assessments or governmental charges not then due and delinquent or the validity of which is being contested in good faith by appropriate proceedings and as to which the Company has established adequate reserves therefor on its books in accordance with GAAP; (c) Liens arising in connection with court proceedings, provided the execution of such Liens is effectively stayed, such Liens are being contested in good faith by appropriate proceedings and the Company has established adequate reserves therefor on its books in accordance with GAAP; (d) Liens arising in the ordinary course of business arid not incurred in connection with the borrowing of money (including mechanic's and materialmen's liens arid minor survey exceptions on real property) that in the aggregate do -26- not materially interfere with the conduct of the business of the Company or any Subsidiary or materially impair the value of the property or assets subject to such Liens; (e) Liens in connection with workers' compensation, unemployment insurance or other social security laws to secure the public or statutory obligations of the Company or any Subsidiary; (f) Liens securing Indebtedness of a Subsidiary to the Company; (g) Liens permitted by and arising under the Receivables Purchase Agreement; (h) Liens existing on property or assets of the Company or any Subsidiary as of the date of this Agreement that are described in the attached Annex V; (i) Liens not otherwise permitted by paragraphs (a) through (h) of this Section 7.4 created, assumed or incurred subsequent to the Closing Date to secure Indebtedness, provided that at the time of creating, assuming or incurring such additional Indebtedness and after giving effect thereto and to the application of the proceeds therefrom the sum (without duplication) of the aggregate principal amount of outstanding Consolidated Indebtedness secured by Liens permitted by this Section 7.4(1) does not exceed 10% of Adjusted Consolidated Net Worth. 7.5. Merger or Consolidation. The Company will not, and will not permit any Subsidiary to, merge or consolidate with, or convey, transfer or lease all or substantially all of its assets in a single transaction or series of transactions to, any Person, except that: (a) The Company may merge into or consolidate with, or sell all or substantially all of its assets to, any Person or permit any Person to merge into or consolidate with it, provided that immediately after giving effect thereto, (i) the Company is the successor corporation or, if the Company is not the successor corporation, the successor corporation is a solvent corporation organized under the laws of a state of the United States of America or the District of Columbia and expressly assumes in writing the Company's obligations under the Notes and this Agreement; and (ii) there shall exist no Default or Event of Default. (b) Any Subsidiary may (i) merge into the Company or a Wholly-Owned Subsidiary, (ii) convey, transfer or lease all or any part of its assets to the Company or a Wholly-Owned Subsidiary, and (iii) merge with any Person which, as a result of such merger, becomes a Wholly-Owned Subsidiary; provided in each instance set forth in clauses (i) through (iii) that immediately before and after giving effect thereto, there shall exist no Default or Event of Default. 7.6. Sa1e of Assets. The Company will not, and will not permit any Subsidiary to, sell lease, transfer or otherwise dispose of, including by way of merger (collectively a "Disposition"), any assets, inc1uding capital stock or equity interests of Subsidiaries, in one or a series of transactions, other than in the ordinary course of business, to any Person, except to the Company or a Wholly-Owned Subsidiary~ (i) if, in any fiscal year, after giving effect to such Disposition, the aggregate net book value of assets subject to Dispositions -27- during such fiscal year would exceed 15% of Consolidated Total Assets as of the end of the immediately preceding fiscal year or (ii) if a Default or Event of Default exists or would exist. Notwithstanding the foregoing, the Company may, or may permit a Subsidiary to, make a Disposition and the assets subject to such Disposition shall not be subject to or included in the foregoing limitation and computation contained in clause (i) of the preceding sentence to the extent that (x) such assets are leased back by the Company or such Subsidiary, as lessee, within 180 days following the date of the Disposition, or (y) the net proceeds from such Disposition are (1) reinvested in productive assets of the Company or a Subsidiary of at least equivalent value within 180 days of the date of such Disposition, or (2) applied to the payment or prepayment of outstanding senior Indebtedness. Any repayment of Notes pursuant to this Section 7.6 shall be in accordance with Section 2.2(a). 7.7. Disposition of Stock of Subsidiaries, The Company will not permit any Subsidiary to issue its capital stock or other equity interests, or any warrants, rights or options to purchase, or securities convertible into or exchangeable for, such capital stock or other equity interests, to any Person other than the Company or a Wholly-Owned Subsidiary. The Company will not, and will not permit any Subsidiary to, sell, transfer or otherwise dispose of (other than to the Company or a Wholly-Owned Subsidiary) any capital stock or other equity interests (including any warrants, rights or options to purchase, or securities convertible into or exchangeable for, capital stock or other equity interests) or Indebtedness of any Subsidiary, unless: (a) simultaneously therewith all Investments in such Subsidiary owned by the Company and every other Subsidiary are disposed of as an entirety; (b) such Subsidiary does not have any continuing Investment in the Company or any other Subsidiary not being simultaneously disposed of; and (c) such sale, transfer or other disposition is permitted by Section 7.6. 7.8. Leases. The Company will not, and will not permit any Subsidiary to, enter into or permit to exist any Capitalized Lease which requires the payment daring the remaining term thereof by the. Company or any Subsidiary of Capitalized Lease Obligations which, after giving effect thereto, and to any other Capitalized Lease Obligations of the Company and its Subsidiaries on a consolidated basis, exceed in the aggregate 10% of Consolidated Total Capitalization. 7.9. Transactions with Affiliates. The Company will not, and will not permit any Subsidiary to, enter into any transaction (including the furnishing of goods or services) with an Affiliate, except on terms and conditions no less favorable to the Company or such Subsidiary than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate, except for (i) the transfer pricing between the Company and its joint venture, Castle Metals de Mexico, S.A. de C.V., and (ii) benefit and compensation plans and arrangements approved by a majority of the disinterested members of the Board of Directors of the Company or any Subsidiary. -28- 7.10. Nature of Business - The Company will not permit any Subsidiary to, engage in any business if, as a result thereof, the business then to be conducted by the Company and its Subsidiaries, taken as a whole, would be substantially changed from the business conducted on the Closing Date. ss.8. EVENTS OF DEFAULT AND REMEDIES THEREFOR 8.1. Nature of Events. An "Event of Default" shall exist if any one or more of the following occurs: (a) Any default in the payment of interest when due on any of the Notes and continuance of such default for a period of five Business Days; (b) Any default in the payment of the principal of any of the Notes or the Make-Whole Amount thereon, if any, at maturity, upon acce1eration of maturity or at any date fixed for prepayment; (c) (i) Any default in the payment of the principal of, or interest or premium on, any other Debt of the Company and its Subsidiaries aggregating in excess of 53,000,000 as and whet due and payable (whether by lapse of time, declaration, call for redemption or otherwise) and the continuation of such, default beyond the period of grace, if any, allowed with respect thereto, or (ii) any default (other than a payment default) under any mortgages, agreements or other instruments of the Company and its Subsidiaries under or pursuant to which Debt aggregating in excess of $3,000,000 is issued and the continuation of such default beyond the period of grace, i: any, allowed with respect thereto; (d) Any default in the observance or performance of Sections 7.1 through 7.10 or in Section 8.7; (e) Any default in the observance or performance of any other covenant or provision of this Agreement which is not remedied within 30 days after the date on which the Company learns of such default; (f) Any representation or warranty made by the Company in this Agreement, or mad' by the Company in airy written statement or certificate furnished by the Company in connection with the issuance and sale of the Notes or furnished by the Company pursuant to this Agreement proves incorrect in any material receipt as of the date of the making or issuance thereof; (g) Any judgment, decree, writ or warrant of attachment or any similar process in an aggregate amount in excess of $5,000,000 shall be entered or filed against the Company or any Subsidiary or against any property or assets of either and remain unpaid, unvacated, unbonded or unstayed (through appeal or otherwise) for a period of 60 days after the Company or any Subsidiary receives notice thereof, except for any judgment, decree, writ or warrant of attachment or any similar process to the extent that the Company or any Subsidiary (i) is insured therefor and with respect to which the insurer has assumed responsibility in writing, or (ii) is indemnified therefor, provided the terms of such indemnification are satisfactory to holders of 55% or more in aggregate principal amount of the Notes then outstanding; -29- (h) The Company or any Subsidiary shall (i) generally not pay its debts as they become due or admit in writing its inability to pay its debts generally as they become due; (ii) file a petition in bankruptcy or for reorganization or for the adoption of an arrangement under the Federal Bankruptcy Code, or any similar applicable bankruptcy or insolvency law, as now or in the future amended (herein collectively called "Bankruptcy Laws"); file an answer or other pleading admitting or failing to deny the material allegations of such a petition; fail to obtain the dismissal of such a petition within 60 days of its filing or be subject to an order for relief or a decree approving such a petition; or file an answer or other pleading seeking, consenting to or acquiescing in relief provided for under the Bankruptcy Laws; (iii) make an assignment of all or a substantial part of its property for the benefit of its creditors; (iv) seek or consent to or acquiesce in the appointment of a receiver, liquidator, custodian or trustee of it or for all or a substantial part of its property; (v) be finally adjudicated bankrupt or insolvent; (vi) be subject to the entry of a court order which shall not be vacated, set aside or stayed within 60 days of the date of entry, (A) appointing a receiver, liquidator, custodian or trustee of it or for all or a substantial part of its property, (B) for relief pursuant to an involuntary case brought under, or effecting an arrangement in, bankruptcy, (C) for a reorganization pursuant to the Bankruptcy Laws, or (D) for any other judicial modification or alteration of the rights of creditors; or (vii) be subject to the assumption of custody or sequestration by a court of competent jurisdiction of all or a substantial part of its property, which custody or sequestration shall not be suspended or terminated within 60 days from its inception. 8.2. Remedies of Default. When any Event of Default described in paragraphs (a) through (g) of Section 8.1 has occurred and is continuing, the holders of 33% or more in aggregate principal amount of the Notes then outstanding may, by notice to the Company, declare the entire principal, together with the Make-Whole Amount (to the extent permitted by law) and all interest accrued on all Notes to be, and such Notes shall thereupon become, forthwith due and payable, without any presentment, demand, protest or other notice of any kind, all of which are expressly waived. Notwithstanding the foregoing, (i) when any Event of Default described in paragraph (a) or (b) of Section 8.1 has occurred and is continuing, any holder may by notice to the Company declare the entire principal, together with the Make-Whole Amount (to the extent permitted by law) and all interest accrued on the Notes then held by -30- such holder to be, and such Notes shall thereupon become, forthwith due and payable, without any presentment, demand, protest or other notice of any kind, all of which are expressly waived, and (ii) when any Event of Default described in paragraph (h) of Section 8.1 has occurred, then the entire principaL together with the Make-Whole Amount (to the extent permitted by law) and all interest accrued on all outstanding Notes shall immediately become due and payable without presentment, demand or notice of any kind. Upon the Notes or any of them becoming due and payable as aforesaid, the Company will forthwith pay to the holders of such Notes the entire principal of and interest accrued on such Notes, plus the Make-Whole Amount (to the extent permitted by law) which shall be calculated on the Determination Date. 8.3. Annulment of Acceleration of Notes. The provisions of Section 8..2 are subject to the condition that if the principal of, the Make-Whole Amount and accrued interest on the Notes have been declared immediately due and payable by reason of the occurrence of any Event of Default described in paragraphs (a) through (g), inclusive, of Section 8.1, the holder or holders of 68% or more in aggregate principal amount of the Notes then outstanding may, by written instrument filed with the Company, rescind and annul such declaration and the consequences thereof, provided that (i) at the time such declaration is annulled and rescinded no judgment or decree has been entered for the payment of any monies due pursuant to the Notes or this Agreement, (ii) all arrears of interest upon all the Notes and all other sums payable under the Notes arid under this Agreement (except any principal, Make-Whole Amount or interest on the Notes which has become due and payable solely by reason of such declaration under Section 8.2) shall have been duly paid, and (iii) each and every Default or Event of Default shall have been cured or waived; and provided further, that no such rescission and annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereto. 8.4. Other Remedies. If any Event of Default shall be continuing, any holder of Notes may enforce its rights by suit in equity, by action at law, or by any other appropriate proceedings, whether for the specific performance (to the extent permitted by law) of any covenant or agreement contained in this Agreement or in the Notes or in aid of the exercise of any power granted in thIs Agreement, and may enforce the payment of any Note held by such holder and any of its other legal or equitable rights. 8.5. Conduct No Waiver. Collection Expenses. No course of dealing on the part of any holder of Notes, nor any delay or failure on the part of any holder of Notes to exercise any of its rights, shall operate as a waiver of such rights or otherwise prejudice such holder's rights, powers and remedies. If the Company fails to pay, when due, the principal of, the Make-Whole Amount, or the interest on, any Note, or fails to comply with any other provision of this Agreement, the Company will pay to each holder, to the extent permitted by law, on demand, such further amounts as shall be sufficient to cover the cost and expenses, including but not limited to attorneys' fees, incurred by such holders of the Notes in collecting any sums due on the Notes or in otherwise enforcing any of their rights. 8.6. Remedies Cumulative. No right or remedy conferred upon or reserved to any holder of Notes under this Agreement is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to every other right or remedy given under this Agreement or now or -31- hereafter existing under any applicable law. Every right and remedy given by this Agreement or by applicable law to any holder of Notes may be exercised from time to time and as often as may be deemed expedient by such holder, as the case may be. 8.7. Notice of Default. With respect to Defaults, Events of Default or claimed defaults, the Company will give the following notices: (a) The Company promptly will furnish to each holder of a Note written notice of the occurrence of a Default or an Event of Default. Such notice shall specify the nature of such default, the period of existence thereof and what action the Company has taken or is taking or proposes to take with respect thereto, (b) If the bolder of any Note or of any other evidence of Debt of the Company or any Subsidiary gives any notice or takes any other action with respect to a claimed default, the Company will forthwith give written notice thereof to each holder of the then outstanding Notes, describing the notice or action and the nature of the claimed default. ss.9. AMENDMENTS, WAIVERS AND CONSENTS 9.1. Matters Subject to Modification. Any term, covenant, agreement or condition of this Agreement may, with the written consent of the Company, be amended, or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), if the Company shall have obtained the consent in writing of the holder or holders of 51% or more in aggregate principal amount of outstanding Notes; provided, however, that, without the written consent of the holder or holders of all of the Notes then outstanding, no such amendment, waiver, modification or alteration shall be effective which will (i) change army of the provisions, including definitions, relating to payment (including any required prepayment or optional prepayment) of the principal of, Make-Whole Amount or interest on any Note, (ii) change the amount of any payment or prepayment of principal or Make-Whole Amount, or change the rate of interest thereon, or (iii) change any of the provisions of Section 8.1, Section 8.2, Section 8.3 or this Section 9. For the purpose of determining whether holders of the requisite principal amount of Notes have made or concurred in any amendment, waiver, consent, approval, notice or other communication under this Agreement, Notes held in the name of, or owned beneficially by, the Company, any Subsidiary or any Affiliate thereof, shall not be deemed outstanding. 9.2. Solicitation of Holders of Notes. Neither the Company nor any Person acting on the Company's behalf will solicit, request or negotiate for or with respect to any proposed waiver or amendment of any of the provisions of this Agreement or the Notes unless each holder of the Notes (irrespective of the amount of Notes then owned by it) shall concurrently be informed thereof by the Company and shall be afforded the opportunity of considering the same and shall be supplied by the Company with sufficient information to enable it to make an informed decision with respect thereto. Executed or true and correct copies of any waiver or consent effected pursuant to the provisions of this Section 9 shall be delivered by the Company to each holder of outstanding Notes forthwith -32- following the date on which the same shall have been executed and delivered by the bolder or holders of the requisite percentage of outstanding Notes, The Company will not, directly or indirectly, pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, to any holder of the Notes as consideration for or as an inducement to the entering into by any bolder of the Notes of any waiver or amendment of any of the terms and provisions of this Agreement unless such remuneration is concurrently paid, on the same terms, ratably to each holder of the then outstanding Notes. Any consent made by a holder of Notes that has transferred or has agreed to transfer its Notes to the Company, any Subsidiary, or any Affiliate thereof arid has provided or has agreed to provide such written consent as a condition to such transfer shall be void and of no force and effect except solely as to such holder, and any amendments effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no force and effect retroactive to the date such amendment or waiver initially took or takes effect, except solely as to such holder. 9.3. Binding Effect. Any such amendment, consent or waiver shall apply equally to all the holders of the Notes and shall be binding upon them, upon each future holder of any Note and upon the Company whether or not such Note shall have been marked to indicate such amendment, consent or waiver and whether or not such holder approved of such amendment, consent or waiver. No such amendment, consent or waiver shall extend to or affect any obligation not expressly amended, consented to or waived or impair any right related thereto, ss.10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT 10.1. Form of Notes. Each Note initially delivered under this Agreement will be in the form of one fully registered Note in the form attached as Exhibit A. The Notes are issuable only in fully registered form and in denominations of at least $1,000,000 (or the remaining outstanding balance thereof, if less than $1,000,000). 10.2. Note Register. The Company shall cause to be kept at its principal office a register (the "Note Register") for the registration and transfer of the Notes. The names and addresses of the holders of Notes, the transfer thereof and the names and addresses of the transferees of the Notes shall be registered in the Note Register. The Company may deem and treat the person in whose name a Note is so registered as the holder and owner thereof for all purposes (subject to the provisions of Section 2.5) and shall not be affected by any notice to the contrary, until due presentment of such Note for registration of transfer as provided in this Section 10. 10.3. Issuance of New Notes upon Exchange or Transfer. Upon surrender for exchange or registration of transfer of any Note at the office of the Company designated for notices in accordance with Section 11.2, the Company shall execute and deliver, at its expense, one or more new Notes of any authorized denominations requested by the holder of the surrendered Note, each dated the date to which interest has been paid on the Notes so surrendered (or, if no -33- interest has been paid, the date of such surrendered Note), but in the same aggregate unpaid principal amount as such surrendered Note, and registered in the name of such person or persons as shall be designated in writing by such holder. Every Note surrendered for registration of transfer shall be duly endorsed, or be accompanied by a written instrument of transfer duly executed, by the holder of such Note or by his attorney duly authorized in writing. 10.4. Replacement of Notes. Upon receipt of evidence satisfactory to the Company of the ownership of and loss, theft, mutilation or destruction of any Note, and in the case of any such loss, theft or destruction upon delivery of a bond of indemnity in such form and amount as shall be reasonably satisfactory to the Company or in the event of such mutilation upon surrender and cancellation of the Note, the Company, without charge to the holder thereof, will make and deliver a new Note of like tenor in lieu of such lost, stolen, destroyed or mutilated Note. If any such lost, stolen or destroyed Note is owned by you or any other Institutional Holder, then the affidavit of an authorized officer of such owner setting forth the fact of such loss, theft or destruction and of its ownership of the Note at the time of such loss, theft or destruction shall be accepted as satisfactory evidence thereof, arid no further indemnity shall be required as a condition to the execution and delivery of a new Note, other than a written agreement of such owner (in form reasonably satisfactory to the Company) to indemnify the Company for any losses directly suffered by the Company relating to the lost, stolen, destroyed or mutilated Note and the issuance by the Company of a new Note. ss.11. MISCELLANEOUS 11.1. Expenses. Whether or not the purchase of Notes herein contemplated shall be consummated, the Company agrees to pay directly all expenses (including fees and expenses of counsel) in connection with the preparation, execution and delivery of this Agreement and the transactions contemplated by this Agreement, including, but not limited to, out-of-pocket expenses, filing fees of S&P in connection with obtaining a private placement number, fees, charges and disbursements of special counsel, photocopying and printing costs and charges for shipping the Notes, adequately insured, to you at your home office or at such other address as you may designate, and all similar expenses (including the fees and expenses of counsel, and the fees and expenses of a financial advisor, but only in connection with any work-out, renegotiation or restructuring in the case of a financial advisor) relating to any amendments, waivers or consents in connection with this Agreement or the Notes (whether or not any such amendments, waivers or consents become effective), including, but not limited to, any such amendments, waivers or consents resulting from any Default, Event of Default, work-out, renegotiation or restructuring relating to the performance by the Company of its obligations under this Agreement or the Notes. The Company also agrees that it will pay and save you harmless against any and all liability with respect to stamp and other documentary taxes, if any, which may be payable, or which may be determined to be payable in connection with the execution and delivery of this Agreement or the Notes (but not in connection with a transfer or replacement of any Notes), whether or not any Notes are then outstanding. The obligations of the Company under this Section 11.1. shall survive the retirement of the Notes. -34- 11.2. Notices. Except as otherwise expressly provided herein, all communications provided for in this Agreement shall be in writing and delivered or sent by registered or certified mail, return receipt requested, or by overnight courier (i) if to you, to the address set forth below your name in Schedule I, or to such other address as you may in writing designate, (ii) if to any other holder of the Notes, to such address as the holder may designate in writing to the Company, and (iii) if to the Company, to A. M. Castle & Co.., 3400 North Wolf Road, Franklin Park, Illinois 60131, Attention: Treasurer, or to such other address as the Company may in writing designate. 11.3. Reproduction of Documents. This Agreement and all documents relating hereto, including, without limitation, (1) consents, waivers and modifications which may hereafter be executed, (ii) documents received by you at the closing of the purchase of the Notes (except the Notes themselves), and (iii) financial statements, certificates and other information previously or hereafter furnished to you, may be reproduced by you by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process, and you may destroy any original document so reproduced. The Company agrees and stipulates that any such reproduction which is legible shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by you in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence; provided that nothing herein contained shall preclude the Company from objecting to the admission of any reproduction on the basis that such reproduction is not accurate, has been altered or is otherwise incomplete. 11.4. Successors and Assigns. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. 11.5. Law Govening. This Agreement shall be governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. 11.6. Headings, The headings of the sections and subsections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 11.7. Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all such counterparts shall together constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement-to produce or account for more than one such counterpart or reproduction thereof permitted by Section 11.3. 11.8. Reliance on and Survival of Provisions. All covenants, representations and warranties made by the Company herein and in any certificates delivered pursuant to this Agreement, whether or not in connection with a closing, (i) shall be presumed to have been relied upon by you, notwithstanding any investigation heretofore or hereafter made by you or on your behalf, and (ii) shall survive the delivery of this Agreement and the Notes. -35- 11.9. Integration and Severability. This Agreement embodies the entire agreement and understanding between you and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof. In case any one or more of the provisions contained in this Agreement or in any Note, or application thereof, shall be invalid, illegal or unenforceable in any respect, the validity, legality arid enforceability of the remaining provisions contained in this Agreement and in any Note, and any other application thereof, shall not in any way be affected or impaired thereby. * * * * -36- IN WITNESS WHEREOF, the Company and the Purchaser have caused this Note Agreement to be executed and delivered by their respective officer or officers thereunto duly authorized. A. M. CASTLE & CO. By: /s/ Richard G. Mork -------------------------------- Richard G. Mork Title: President and CEO MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: /s/ Richard C. Morrison -------------------------------- Richard C. Morrison Title: Managing Director UNITED OF OMAHA LIFE INSURANCE COMPANY BY: /s/ Edwin H. Garrison Jr. -------------------------------- Edwin H. Garrison Jr. Title: First Vice President -37- EX-4.5 8 castle45.txt 1ST AMEND AND WAIVER TO NOTE AGREE 12-01-98 EXHIBIT 4.5 A.M. CASTLE & CO. FIRST AMENDMENT AND WAIVER TO NOTE AGREEMENT $25,000,000 7.54% Senior Notes Due May 30, 2009 Dated as of December 1, 1998 Massachusetts Mutual Life Insurance Company 1295 State Street Springfield, MA 01111 United of Omaha Life Insurance Company Mutual of Omaha Plaza Omaha, NE 68175 Ladies and Gentlemen: Reference is made to the Note Agreement dated as of May 15, 1997 (the "Note Agreement") among A.M. Castle & Co. (the "Company"), Massachusetts Mutual Life Insurance Company and United of Omaha Life Insurance Company, pursuant to which the Company issued $25,000,000 principal amount of its 7.54% Senior Notes (the "Notes"). You are referred to herein individually as a "Holder" and collectively as the "Holders." Schedule I hereto indicates the original principal amount of Notes held by each of you. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Note Agreement. The Company was in breach of the Net Working Capital Covenant contained in Section 7.3 of the Note Agreement as of September 30, 1998. Consequently, the Company has requested the waiver and modification of that covenant of the Note Agreement. The Holders are willing to grant an amendment and waiver on the terms and conditions hereinafter set forth. In consideration of the premises and for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Company and the Holders agree as follows: SECTION 1. AMENDMENTS 1.1. Amendment of Section 7.3. Section 7.3 of the Note Agreement is amended to read in its entirety as fo11ows: "7.3. Net Working Capital. The Company will not permit the ratio (calculated on the last day of each fiscal quarter) of Net Working Capital to Consolidated Debt to be less than 1.0 to 1.0." SECTION 2. WAIVER AND CONSENT 2.1. Waiver. The Holder waives compliance by the Company with the provisions of Section 7.3 of the Note Agreement for the quarter ending September 30, 1998. 2.2 Limitation on Waiver. The waiver under Section 2.1 hereof is limited precisely to its terms and shall not constitute a waiver generally or in any other instance. Nothing contained herein shall be deemed a waiver of (or otherwise affect the Holders' ability to enforce) any Default or Event of Default other than as expressly set forth herein. SECTION 3. REAFFIRMATION; REPRESENTATIONS AND WARRANTIES 3.1. Reaffirmation of Note Agreement. The Company reaffirms its agreement to comply with each of the covenants, agreements and other provisions of the Note Agreement and the Notes, including the additions and amendments of such provisions effected by this First Amendment and Waiver. 3.2. Note Agreement The Company represents and warrants that, subject to the effectiveness of this First Amendment and Waiver, the representations and warranties contained in the Note Agreement are true and correct as of the date hereof, except for such changes, facts, transactions and occurrences that have arisen since May 15, 1997 in the ordinary course of business and such other matters as have been previously disclosed in writing by the Company to the Holders. 3.3. No Default or Event of Default. After giving effect to the transactions contemplated hereby, no Default or Event of Default will exist. 3.4. Authorization. The execution, delivery and performance by the Company of this First Amendment and Waiver have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of; notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceab1e. Each of the Note Agreement and this First Amendment and Waiver constitutes the legal, valid and binding obligations of the Company, enforceable against it in accordance with its respective terms, without defense, counterclaim or offset. SECTION 4. EFFECTIVE DATE This First Amendment and Waiver shall become effective upon: (i) execution by Holders of at least 51% of an aggregate principal amount of the Notes outstanding of counterparts of this First Amendment and Waiver and (ii) receipt by each Holder of payment of the amendment fee required by Section 5(a) hereof. 2 SECTION 5. AMENDMENT FEE; EXPENSES (a) Amendment Fee. As consideration for the approval by the Holders of this First Amendment and Waiver, the Company will pay to each Holder, whether or not such Holder executes this First Amendment and Waiver, an amendment fee equal to 0.15% of the principal amount of the outstanding Notes held by such Holder. Such fee shall be paid in accordance with the instructions set forth in the Note Agreement. (b) Expenses. The Company shall pay (within two business days of receipt of a detailed statement therefor) all reasonab1e fees and expenses of special counsel to the Holders. SECTION 6. MISCELLANEOUS 6.1. Ratification. Except to the extent amended, modified, deleted or added to hereby, the terms and provisions of the Note Agreement, including the representations and warranties contained therein, shall remain in full force and effect and are ratified, confirmed, remade and approved in all respects as of the date hereof. 6.2. Reference to and Effect on the Note Agreement. Upon the final effectiveness of this First Amendment and Waiver, each reference in the Note Agreement and in other documents describing or referencing the Note Agreement to the "Agreement," "Note Agreement," "hereunder," "hereof," "herein," or words of like import referring to the Note Agreement, shall mean and be a reference to the Note Agreement, as amended hereby. 6.3. Binding Effect. This First Amendment and Waiver shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto. 6.4. Governing Law. This First Amendment and Waiver shall be governed by and construed in accordance with Illinois law. 6.5. Counterparts. This First Amendment and Waiver may be executed in any number of counterparts, each executed counterpart constituting an original, but altogether only one instrument. 3 IN WITNESS WHEREOF, the Company and the Holders have caused this First Amendment and Waiver to be executed and delivered by their respective officer or officers thereunto duly authorized. A.M. CASTLE & CO. By: /s/ James A. Podojil Name: James A. Podojil Title: Treasurer MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: /s/ Lawrence Stillman Name: Lawrence Stillman Title: Managing Director UNITED OF OMAHA LIFE INSURANCE COMPANY By: /s/ Curtis R. Caldwell Name: Curtis R. Caldwell Title: First Vice President 4 SCHEDULE I Original Name of Purchaser Principal Amount - ----------------- ---------------- Massachusetts Mutual Life Insurance Company $18,000,000 United of Omaha Life Insurance Company 7,000,000 EX-4.6 9 amcastle8k112202exib4-6.txt 2ND AMEND TO NOTE AGREE 11-22-02 ================================================================================ Exhibit 4.6 A. M. CASTLE & CO. -------------------------------------------------------- SECOND AMENDMENT TO NOTE AGREEMENT -------------------------------------------------------- Dated as of November 22, 2002 $25,000,000 RESET RATE SENIOR SECURED NOTES DUE 2009 ================================================================================ As of November 22, 2002 To each of the Current Holders Named in Annex 1 hereto Ladies and Gentlemen: A. M. CASTLE & CO., a Maryland corporation (together with any successors and assigns, the "Company"), hereby agrees with each of you as follows: 1. PRIOR ISSUANCE OF NOTES, ETC. The Company issued and sold twenty-five million dollars ($25,000,000) in aggregate principal amount of its 7.54% Senior Notes due May 30, 2009 (the "Existing Notes" and, as amended by this Agreement and as may be further amended, restated or otherwise modified from time to time, the "Notes") pursuant to a Note Agreement, dated as of May 15, 1997, between the Company and the purchasers named in Schedule 1 thereto (the "Original Note Agreement"). The Original Note Agreement was amended by the First Amendment and Waiver to Note Agreement dated as of December 1, 1998 (the Original Note Agreement, as amended by the foregoing and as in effect immediately prior to giving effect to the amendments provided for by this Agreement, is referred to herein as the "Existing Note Agreement" and, as may be amended pursuant to this Agreement and as may be further amended, restated or otherwise modified from time to time, the "Note Agreement"). The register kept by the Company for the registration and transfer of the Notes indicates that each of the Persons named in Annex 1 hereto (collectively, the "Current Holders") is currently a holder of the aggregate principal amount of the Notes indicated in such Annex. 2. REQUEST FOR CONSENT TO AMENDMENTS The Company requests that each of the Current Holders consent to the amendments (collectively, the "Amendments") to the Existing Note Agreement provided for by this Agreement. 3. WARRANTIES AND REPRESENTATIONS To induce the Current Holders to enter into this Agreement and to consent to the Amendments, the Company warrants and represents to each of the Current Holders as follows (it being agreed, however, that nothing in this Section 3 shall affect any of the warranties and representations previously made by the Company in or pursuant to the Existing Note Agreement, and that all of such other warranties and representations, as well as the warranties and representations in this Section 3, shall survive the effectiveness of the Amendments): 3.1. No Material Adverse Change. Except for matters publicly disclosed in the Company's most recent reports to the Commission under the Exchange Act, since December 31, 2001, there has been no change in the business operations, profits, financial condition, properties or business prospects of the Company except changes that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 3.2. Corporate Authority; Authorization. The Company is a corporation duly organized and existing in good standing under the laws of the State of Maryland and has the requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations under the Note Agreement. This Agreement has been duly authorized by all necessary corporate action on the part of the Company, and this Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, reorganization, arrangement, insolvency, moratorium or other similar laws affecting the enforceability of creditors' rights generally, and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3.3. Full Disclosure. Neither the financial statements and other certificates previously provided to each of the Current Holders pursuant to the provisions of the Existing Note Agreement nor the statements made in this Agreement nor any other written statements furnished to each of the Current Holders by or on behalf of the Company in connection with the proposal and negotiation of the transactions contemplated hereby (other than pro forma financial information or financial or other projections or any forward-looking statements), or disclosed in the Company's report on Form 10-Q filed with the Commission on November 14, 2002 or report on Form 10-K filed with the Commission on March 14, 2002, taken as a whole, contained any untrue statement of a material fact or omitted a material fact necessary to make the statements contained therein and herein not misleading, in each case as of the time such financial statements or certificates were provided or such statements were made or furnished. There is no fact known to the Company relating to any event or circumstance that has occurred or arisen since the Closing Date that the Company has not disclosed to each of the Current Holders in writing or disclosed in the Company's report on Form 10-Q filed with the Commission on November 14, 2002 or report on Form 10-K filed with the Commission on March 14, 2002, that has had or, so far as the Company can now reasonably foresee, could reasonably be expected to have, a Material Adverse Effect. All pro forma financial information, financial or other projections and forward-looking statements delivered to the Current Holders has been prepared in good faith by the Company based on reasonable assumptions. 2 3.4. Ownership of Subsidiaries. (a) Annex 2 contains a complete and correct description of the Company's Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary. The Subsidiary Side Letter contains a complete and correct description of the Company's Subsidiaries, showing, as to each Subsidiary, the book value of its assets as of September 30, 2002 and its contribution to Consolidated EBITDA for the four quarter period ended on September 30, 2002. (b) Each Subsidiary identified in Annex 2 is a corporation or other legal entity duly organized, validly existing and, except as set forth in Annex 2, in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact. 3.5. Title to Properties. The Company and its Subsidiaries have good and sufficient title to or the legal right to use their respective properties that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet of the Company delivered pursuant to the provisions of Section 6.6 of the Existing Note Agreement (except as sold or otherwise disposed of in the ordinary course of business) or purported to have been acquired by the Company or any Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear from Liens not permitted by the Note Agreement. 3.6. Solvency. The fair value of the business and assets of each of the Company and each Subsidiary, exceeds, as of the Effective Date, the amount that will be required to pay the probable liabilities of such Person (including subordinated, contingent, unmatured and unliquidated liabilities), on existing debts as they may become absolute and matured. No such Person, after the Effective Date, will be engaged in any business or transaction, or be about to engage in any business or transaction, for which such Person has unreasonably small assets or capital, and no such Person has incurred, or has any intent to, incur debts that would be beyond such Person's ability to pay as they mature. 3 3.7. Intent. Neither the Company nor any Subsidiary is entering into this Agreement with any intent to hinder, delay, or defraud either current creditors or future creditors of the Company or any Subsidiary. 3.8. No Defaults. No event has occurred and no condition exists that, upon the execution and delivery of this Agreement and the effectiveness of the Amendments, would constitute a Default or an Event of Default. 3.9. Financial Statements. The quarterly and annual financial statements most recently delivered to each of the Current Holders pursuant to Section 6.6 of the Existing Note Agreement have been prepared in accordance with GAAP consistently applied and present fairly, in all material respects, the consolidated financial position of the Company and its consolidated subsidiaries as of such dates and the results of their operations and cash flows for the periods specified therein. 3.10. Litigation; Observance of Agreements. (a) Other than as disclosed in the footnotes to the financial statements in the Company's most recent report on Form 10-Q and Form 10-K filed with the Commission on November 14, 2002 and March 14, 2002, there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any property of the Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. (b) Neither the Company nor any Subsidiary is in default under any term of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation (including, without limitation, Environmental Laws) of any Governmental Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 4 3.11. Charter Instruments; Other Agreements. Neither the Company nor any Subsidiary is in violation in any respect of any term of any charter instrument or bylaw. Upon the execution and delivery hereof and the effectiveness of the Amendments as provided herein, neither the Company nor any Subsidiary is in violation or default in any material respect of any term in any agreement or other instrument to which it is a party or by which it or any of its material property may be bound or affected. The execution, delivery and performance by the Company of this Agreement will not conflict with or result in the breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or violate any provision of any statute or other rule or regulation of any Government Authority applicable to the Company or any Subsidiary. 3.12. Taxes. The Company and the Subsidiaries have filed all tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (a) the amount of which is not individually or in the aggregate Material or (b) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The Company knows of no basis for any other tax or assessment that could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and the Subsidiaries in respect of federal, state or other taxes for all fiscal periods are adequate. The federal income tax liabilities of the Company and the Subsidiaries have been determined by the Internal Revenue Service and paid for all fiscal years up to and including the fiscal year ended December 31, 1997. 3.13. Certain Laws. The execution and delivery of this Agreement by the Company: (a) is not subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, the Transportation Acts, as amended, or the Federal Power Act, as amended, and (b) does not violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary. 5 3.14. Guarantee Representations. All of the representations and warranties of the Company and each Guarantor set forth in the Guarantee Agreement are true and correct. 3.15. Debt; Liens. Annex 3(a) to this Agreement correctly describes all Debt of the Company and its Subsidiaries as of the date hereof. Annex 3(b) to this Agreement correctly describes all outstanding Liens securing Debt in an amount greater than $1,000,000 and all other material Liens on property of the Company or its Subsidiaries as of the date hereof. Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of the Company or such Subsidiary listed on Annex 3(a) hereto and no event or condition exists with respect to any Debt of the Company or any Subsidiary listed on Annex 3(a) that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment. 3.16. Transaction is Legal and Authorized; Obligations are Enforceable. (a) Transaction is Legal and Authorized. Each of the execution and delivery of this Agreement and the Guarantee Agreement by the Company and each Guarantor and compliance by the Company and each of the Guarantors with all of their respective obligations thereunder: (i) is within the corporate powers of the Company and each Guarantor, as the case may be; (ii) is legal and, except as set forth on Annex 4, does not conflict with, result in any material breach in any of the provisions of, constitute a material default under, or result in the creation of any Lien upon any material property of the Company or any Guarantor under the provisions of, any agreement, charter instrument, bylaw or other instrument to which it is a party or by which it or any of its property may be bound; and (iii) does not give rise to a right or option of any other Person under any agreement or other instrument, which right or option could reasonably be expected to have a Material Adverse Effect. (b) Obligations are Enforceable. Each of this Agreement and the Guarantee Agreement have been duly authorized by all necessary action on the part of the Company and each of the Guarantors, as the case may be, and has been executed and delivered by one or more duly authorized officers of 6 the Company and each of the Guarantors party thereto, and each constitutes a legal, valid and binding obligation of the Company and each of the Guarantors party thereto, enforceable in accordance with its terms, except that such enforceability may be: (i) limited by applicable bankruptcy, reorganization, arrangement, insolvency, moratorium or other similar laws affecting the enforceability of creditors' rights generally; and (ii) subject to the availability of equitable remedies. 3.17. Governmental Consent. Neither the nature of the Company or any Guarantor thereof, or of any of their respective businesses or properties, nor any relationship between the Company or any such Guarantor and any other Person, nor any circumstance in connection with the execution and delivery of this Agreement or the Guarantee Agreement is such as to require a consent, approval or authorization of, or filing, registration or qualification with, any Governmental Authority on the part of the Company or any Guarantor as a condition to the execution and delivery of this Agreement or the Guarantee Agreement. 4. AMENDMENTS; WAIVERS; ACKNOWLEDGMENTS. 4.1. Amendments to Existing Note Agreement and Existing Notes. (a) Subject to the provisions of Section 4.2, the Existing Note Agreement is hereby amended in the manner specified in Exhibit A to this Agreement. (b) Subject to the provisions of Section 4.2, the Existing Notes are hereby amended in the manner specified in Exhibit B1 to this Agreement. 4.2. Effectiveness of Amendments and Waivers. The Amendments contemplated by Section 4.1(a) and 4.1(b) shall become effective (the date of such effectiveness herein referred to as the "Effective Date"), if at all, at such time as the Company and each Current Holder shall have consented in writing to such Amendments by executing and delivering the applicable counterparts of this Agreement. It is understood that any Current Holder may withhold its consent for any reason or for no reason, and that, without limitation of the foregoing, any Current Holder hereby makes the granting of its consent contingent upon its receipt of each of the following: (a) a certificate of the Secretary or Assistant Secretary of the Company certifying as to resolutions of its Board of Directors and other constitutive documents which authorize and permit the Company to execute and deliver this Agreement and to consummate the transactions contemplated hereby; 7 (b) closing opinions from (i) Sidley Austin Brown & Wood LLP, special counsel to the Company, (ii) Ballard Spahr, special Maryland counsel to the Company, and (iii) Jerry Aufox, Corporate Counsel of the Company, dated as of the Effective Date, covering the matters set forth on Exhibit C to this Agreement. This Section 4.2(b) shall constitute direction by the Company and each Guarantor to such counsel to deliver such closing opinions to the Current Holders; (c) confirmation from your special counsel that its fees and disbursements reflected on a statement delivered in connection with the execution and delivery of this Agreement pursuant to Section 7 have been paid in full; (d) if required by applicable regulations, a Private Placement Number issued by Standard & Poor's CUSIP Service Bureau reflecting the amendment to the interest rate on the Notes contemplated by this Agreement; (e) a Guarantee Agreement, dated as of November 22, 2002 (as may be amended, restated or otherwise modified from time to time, the "Guarantee Agreement"), duly executed by each Guarantor in substantially the form of Exhibit D to this Agreement, and (ii) a certificate of the Secretary or Assistant Secretary of each such Guarantor certifying as to the resolutions of their Board of Directors and other constitutive documents which authorize and permit such Guarantors to execute and deliver the Guarantee Agreement and to consummate the transactions contemplated hereby; (f) the Company shall have received at least $10,000,000 in gross proceeds from the issuance and sale of its convertible preferred stock (in one or more transactions) substantially in accordance with the economic terms set forth on the term sheet dated as of October 24, 2002; (g) copies of one or more agreements reasonably satisfactory to such Current Holder providing for amendments to certain covenants of the Company contained in agreements of the Company with The Bank of Nova Scotia, Bank of America, N.A. and The Northern Trust Company; and (h) the Subsidiary Side Letter. 4.3. No Other Amendments; Confirmation. Except as expressly provided herein, (a) no terms or provisions of any agreement are modified or changed by this Agreement, (b) the terms of this Agreement shall not operate as a waiver by you of, or otherwise prejudice any of your rights, remedies or powers under, the Existing Note Agreement, the Existing Notes or any other instrument or agreement executed in connection therewith or 8 under any applicable law, and (c) the terms and provisions of the Existing Note Agreement, the Existing Notes and each other instrument or agreement executed in connection therewith shall continue in full force and effect. 5. COLLATERAL COVENANT (a) The Company hereby agrees and covenants that it will, and will cause each Significant Subsidiary to, on or before December 23, 2002, enter into, or cause to be delivered, such agreements, documents or instruments of any kind (including, without limitation, security agreements, mortgages, deeds of trust, UCC financing statements and opinions of nationally recognized counsel as to the enforceability, Lien perfection, no conflicts with agreements and other customary matters), acceptable in all respects to the Required Holders, to grant Liens in favor of a Collateral Agent on all personal property of the Company and Significant Subsidiaries whether now held or hereafter acquired by the Company or any such Significant Subsidiary (other than Excluded Receivables and Excluded Collateral), in each case to secure the obligations of the Company and each Guarantor under the Note Agreement, the Notes and the Guarantee Agreement; provided, that the Company's obligation to grant such Liens on or before December 23, 2002 shall be conditioned upon the execution by the holders of Notes and the Other Senior Creditors of an Acceptable Intercreditor Agreement. The Company further agrees and covenants that it will, and will cause each Significant Subsidiary to, as soon as reasonably practicable after the Effective Date and in any event on or before February 15, 2003, enter into, or cause to be delivered, such agreements, documents or instruments of any kind (including, without limitation, security agreements, mortgages, deeds of trust, UCC financing statements and opinions of nationally recognized counsel as to the enforceability, Lien perfection, no conflicts with agreements and other customary matters) acceptable in all respects to the Required Holders, to grant Liens in favor of the Collateral Agent on all real property owned by the Company or any Significant Subsidiary, whether now held or hereafter acquired by the Company or any such Significant Subsidiary (other than Excluded Collateral), in each case to secure the Obligations of the Company and each Guarantor under the Agreement and the Guarantee Agreement; provided, that the Company's obligation to grant such Liens by February 15, 2003 shall be conditioned upon the execution by the holders of the Notes and the Other Senior Creditors of an Acceptable Intercreditor Agreement. Such collateral may be shared on a pari passu basis with the Other Senior Creditors pursuant to an Acceptable Intercreditor Agreement. Notwithstanding anything to the contrary in this Agreement or the Note Agreement, the failure to comply with this Section 5(a) despite the exercise by the Company of all commercially reasonable efforts to effect such compliance shall not constitute a Default or Event of Default under this Agreement or the Note Agreement and the sole and exclusive remedy for any breach of this Section 5(a) shall be the adjustments set forth in the definitions of "Applicable Base," "First Year Ratio" and "Second Year Ratio" as they relate to Section 7.1 or 7.2 of the Note Agreement, as applicable. 9 (b) Each of the holders of the Notes agrees (i) to use commercially reasonable efforts to negotiate the terms of, and, contemporaneously with the grant of such Liens to enter into, an Acceptable Intercreditor Agreement with a bank or trust company to act as Collateral Agent and each of the Other Senior Creditors (which Acceptable Intercreditor Agreement will provide that the Collateral Agent may enter into an intercreditor agreement with the lender(s) or purchaser(s) under any Receivables Purchase Agreement); and (ii) that at such time the Company enters into an Acceptable Revolving Credit Facility to replace the Existing Receivables Purchase Agreement (or any replacement thereof) and the Company's unsecured debt obligations are Investment Grade, it will promptly take such action requested by the Company to instruct the Collateral Agent to release the Liens granted pursuant to the Security Documents as of the time such Acceptable Revolving Credit Facility is entered into and becomes effective. 6. DEFINED TERMS Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Existing Note Agreement as contemplated to be amended by the Amendments. 7. EXPENSES Whether or not any of the Amendments becomes effective, the Company will promptly (and in any event within thirty (30) days of receiving any statement or invoice therefor) pay all fees, expenses and costs relating to this Agreement, including, but not limited to, (a) the cost of reproducing this Agreement and the other documents delivered in connection herewith and (b) the reasonable fees and disbursements of the Current Holders' special counsel, Bingham McCutchen LLP, incurred in connection with the preparation, negotiation and delivery of this Agreement. This Section 7 shall not be construed to limit the Company's obligations under Section 11.1 of the Note Agreement. 8. MISCELLANEOUS 8.1. Part of Note Agreement, Future References, etc. The Agreement shall be construed in connection with and as a part of each of the Existing Note Agreement and the Existing Notes and, except as expressly amended by this Agreement, all terms, conditions and covenants contained in the Existing Note Agreement, the Existing Notes and the other documents executed and/or delivered in connection therewith are hereby ratified and shall be and remain in full force and effect. Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Agreement may refer to the Note Agreement without making specific reference to this Agreement, but nevertheless all such references shall include this Agreement unless the context otherwise requires. 10 8.2. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS, UNITED STATES OF AMERICA, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. 8.3. Duplicate Originals, Execution in Counterpart. Two (2) or more duplicate originals hereof may be signed by the parties, each of which shall be an original but all of which together shall constitute one and the same instrument. This Agreement may be executed in one or more counterparts and shall become effective at the time provided in Section 4.2 hereof, and each set of counterparts that, collectively, show execution by the Company and each consenting Current Holder shall constitute one duplicate original. 8.4. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the Company and you and your respective successors and assigns. [Remainder of page intentionally left blank. Next page is signature page.] 11 If this Agreement is satisfactory to you, please so indicate by signing the applicable acceptance on a counterpart hereof and returning such counterpart to the Company, whereupon this Agreement shall become binding among the Company and you in accordance with its terms. Very truly yours, A. M. CASTLE & CO. By: /s/ G. Thomas McKane -------------------------------- Name: G. Thomas McKane Title: President and Chief Executive Officer [Signature Page to Second Amendment to Note Agreement] Accepted: MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: David L. Babson & Company Inc., as Investment Adviser By: /s/ Emeka O. Onukwugna ------------------------------------ Name: Emeka O. Onukwugna Title: Managing Director UNITED OF OMAHA LIFE INSURANCE COMPANY By: /s/ Edwin H. Garrison, Jr. ------------------------------------ Name: Edwin H. Garrison, Jr. Title: First Vice President The undersigned Guarantors of the company hereby acknowledge and agree to the terms and provisions contained herein and consent to the Company's execution hereof: KEYSTONE TUBE COMPANY, LLC By: /s/ Jerry M. Aufox ------------------------------------ Name: Jerry M. Aufox Title: Secretary TOTAL PLASTICS, INC. By: /s/ Jerry M. Aufox ------------------------------------ Name: Jerry M. Aufox Title: Secretary [Signature Page to Second Amendment to Note Agreement] PARAMONT MACHINE COMPANY LLC By: /s/ Jerry M. Aufox ------------------------------------ Name: Jerry M. Aufox Title: Secretary ADVANCED FABRICATING TECHNOLOGY, LLC By: /s/ Jerry M. Aufox ------------------------------------ Name: Jerry M. Aufox Title: Secretary OLIVER STEEL PLATE CO. By: /s/ Jerry M. Aufox ------------------------------------ Name: Jerry M. Aufox Title: Secretary METAL MART, LLC By: /s/ Jerry M. Aufox ------------------------------------ Name: Jerry M. Aufox Title: Secretary DATAMET, INC. By: /s/ Jerry M. Aufox ------------------------------------ Name: Jerry M. Aufox Title: Secretary [Signature Page to Second Amendment to Note Agreement] EXHIBIT A 1. Section 1.1 of the Existing Note Agreement is hereby amended by deleting the phrase "rate of 7.54% per annum" and substituting "Reset Rate" in lieu thereof. 2. Section 1.1 of the Existing Note Agreement is hereby amended by deleting the phrase "9.54%" and substituting "the Reset Rate plus two percent (2%) per annum" in lieu thereof. 3. The definition of "Net Working Capital" appearing in Section 5.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "Net Working Capital - the sum of (i) the consolidated current assets of the Company and its Subsidiaries determined in accordance with GAAP and (ii) 75% of the LIFO Reserve, less the consolidated current liabilities (excluding Current Debt and Current Maturities of Funded Debt) of the Company and its Subsidiaries determined in accordance with GAAP." 4. The definition of "Debt" appearing in Section 5.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "Debt - All Indebtedness (excluding obligations with respect to bankers' acceptances and trade acceptance financings to the extent such obligations, in the aggregate, are less than $5,000,000, but including any such obligations, in the aggregate, in excess of such amount) of the Company or any Subsidiary, but excluding the aggregate outstanding investment or claim held by purchasers, assignees or other transferees of Receivables of the Company and its Subsidiaries in connection with Securitization Transactions." 5. The definition of "Indebtedness appearing in Section 5.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "Indebtedness - means for any Person, without duplication, all (i) obligations for borrowed money or to pay the deferred purchase price of property or assets (except trade account payables), (ii) obligations secured by any Lien upon property or assets owned by such Person, whether or not such Person has Exhibit A-1 assumed or become liable for the payment of such obligations, (iii) obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired, notwithstanding the fact that the rights and remedies of the seller, lender or lessor under such agreement in the event of default are limited to repossession or sale of property, (iv) Capitalized Lease Obligations, and (v) Guaranties of obligations of others of the character referred to in the foregoing clauses (i) through (iv), but excluding from Indebtedness the aggregate outstanding investment or claim held by purchasers, assignees or other transferees of Receivables of the Company and its Subsidiaries in connection with Securitization Transactions." 6. The definition of "Receivables Purchase Agreement" appearing in Section 5.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: Receivables Purchase Agreement - means the Existing Receivables Purchase Agreement and any other similar agreement pursuant to which any one or more of the Company or any Subsidiary sells its accounts receivable as a means of providing it working capital for its business operations. 7. The definition of "Consolidated Total Assets" appearing in Section 5.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "Consolidated Total Assets - means, at any time, all assets of the Company and its Subsidiaries which would be reflected on a consolidated balance sheet of such Persons at such time prepared in accordance with GAAP." 8. The following definitions are hereby added to Section 5.1 of the Existing Note Agreement in their proper alphabetical order: "Applicable Base - means (a) prior to February 15, 2003, $100,000,000 and (b) on or after February 15, 2003 either (i) $100,000,000 if the Notes are Secured or (ii) $115,901,000 if the Notes are not Secured. "Acceptable Intercreditor Agreement - means an intercreditor and collateral agency agreement, in form and substance reasonably satisfactory to the Required Holders of the Notes, by and among an independent bank or trust company selected by the Company and reasonably satisfactory to the Required Exhibit A-2 Holders but not affiliated with any of such holders or the Other Senior Creditors, the Institutional Holders which are or may become a party to this Agreement, the Other Senior Creditors and the Company which shall provide, among other things, that any future Indebtedness of the Company owing to one or more of the Other Senior Creditors or the Institutional Holders party hereto which is incurred in compliance with Section 7.2 hereof, may be secured on an equal and ratable basis by the Liens which are granted pursuant to the terms of the Security Documents. Acceptable Revolving Credit Facility - means a loan agreement or similar facility pursuant to which a lender or lenders provides revolving loans to the Company or any Subsidiary for the primary purpose of financing such Person's ongoing business operations so long as such agreement or facility (a) is not secured by Liens on the property of the Company or any Subsidiary and (b) provides for interest rates, fees and other pricing terms similar to those generally available to borrowers whose unsecured long term debt is rated Investment Grade. For the avoidance of doubt, no Receivables Purchase Agreement shall constitute a Revolving Loan Facility. A. M. Castle Canada - means A. M. Castle & Co. (Canada), Inc. and any successor thereto. Collateral Agent - means an independent bank or trust company selected by the Company and reasonably satisfactory to the Required Holders but not affiliated with any of such holders or the Other Senior Creditors acting as collateral agent or trustee for the benefit of the holders of the Notes and the Other Senior Creditors pursuant to the provisions of the Security Documents. Consolidated EBITDA - means, for any period, the sum of (a) Consolidated Net Income for such period; plus (b) to the extent, and only to the extent, that such aggregate amount was deducted in the computation of such Consolidated Net Income, the aggregate amount of (i) income tax expense of the Company and its Subsidiaries for such period, plus (ii) charges for depreciation, amortization and other non-cash charges of the Company and its Subsidiaries for such period, plus (iii) Interest Charges for such period. Exhibit A-3 Current Debt - means, at any time and with respect to any Person, all Indebtedness of such Person outstanding at such time other than Funded Debt of such Person. Current Maturities of Funded Debt - means (without duplication), at any time and with respect to any item of Funded Debt, the portion of such Funded Debt outstanding at such time which by the terms of such Funded Debt or the terms of any instrument or agreement relating thereto is (a) due on demand or within 365 days from such time (whether by sinking fund, other required prepayment or final payment at maturity) and (b)(i) is not directly or indirectly renewable, extendible or refundable at the option of the obligor under an agreement or firm commitment in effect at such time to a date 365 days or more from such time or (ii) if so renewable, extendible or refundable at the option of the obligor, the obligor shall have agreed that it will not renew, extend or refund to a date 365 days or more from such time. Effective Date - means the "Effective Date" as defined in the Second Amendment. Excluded Collateral - means (i) any property (whether currently existing or subsequently acquired) subject to a Lien permitted under Section 7.4 of this Agreement, to the extent the agreement creating such Lien prohibits additional Liens on such property; (ii) cash sufficient to secure the Company's (or any Subsidiaries') obligations to pay its workmen's compensation benefits, including obligations to any Person providing surety, insurance, letters of credit or other credit support so long as such cash does not secure any other obligation for any other purpose; (iii) all property purchased with proceeds of the note issued pursuant to the Loan Agreement dated as of November 1, 1994 between the Company and the City of Hammond, Indiana; (iv) all properties and assets of A. M. Castle Canada, and any successor holder of such assets; (v) other property with a deminumus fair market value that, individually or in the aggregate with all other such property, is not material to the continued business operations of the Company or any Subsidiary which owns such property; and (vi) any leasehold interest in any real property leased by the Company or any Subsidiary the termination of which would not result in a Material Adverse Effect. Exhibit A-4 Excluded Receivables - means, at any time, outstanding Receivables and Related Security arising out of the ordinary course of business of the Company or its Subsidiaries which shall have been sold to generate funds for working capital purposes pursuant to the provisions of a Receivables Purchase Agreement which makes funds available to the Company or any Subsidiary in an aggregate amount not exceeding $65,000,000 at any time and covering Receivables not exceeding, in the aggregate, $90,000,000 at any time. Existing Receivables Purchase Agreement - means that certain Receivables Purchase Agreement dated as of September 27, 2001 among Castle Funding Corp. as seller, the Company as servicer, Market Street Funding Corporation as issuer and PNC Bank, National Association as administrator (as in effect on the Effective Date). Financial Covenant - means any covenant (or substantially equivalent default provision) which requires the Company to attain or maintain a prescribed level of financial condition, financial achievement or results of operations or cash flow or prohibits the Company from taking specified actions (such as incurring Debt, selling assets, making distributions or making investments) unless it will be in compliance with such a prescribed level immediately thereafter, including, without limitation, covenants of the type contained in Section 7 of this Agreement. First Year Ratio - means (a) prior to February 15, 2003, .65 to 1.0; and (b) on or after February 15, 2003 either (i) .65 to 1.0 if the Notes are Secured or (ii) .55 to 1.0 if the Notes are not Secured. Funded Debt - means with respect to any Person, all Debt which would, in accordance with GAAP, be required to be classified as a long term liability on the balance sheet of such Person prepared in accordance with GAAP, and without limiting the generality of the foregoing shall also include, without limitation (i) any Indebtedness which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, more than 365 days from the date of creation thereof, (ii) any Indebtedness outstanding under a revolving credit or similar agreement providing for borrowings (and renewals and extensions thereof) which would, in accordance with GAAP, be required to be Exhibit A-5 classified as a long term liability of such Person, and (iii) any Guaranties of such Person with respect to Funded Debt of another Person. Governmental Authority - means (a) the government of (i) the United States of America or any State or other political subdivision thereof, or (ii) any jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Subsidiary, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. Guarantee Agreement - means that certain Guarantee Agreement entered into by each of the Guarantors, substantially in the form of Exhibit C to the Second Amendment, as amended, restated or otherwise modified from time to time. Guarantors - means any Subsidiary that is a party to the Guarantee Agreement as of the Effective Date and each other Person which delivers a Guarantee Agreement or a joinder agreement to the Guarantee Agreement pursuant to Section 6.13 hereof, together with the respective successors and assigns of each of the foregoing entities unless and until released in accordance with the terms of this Agreement or the Guarantee Agreement. Interest Charges - means, with respect to any period, the sum (without duplication) of the following (in each case, eliminating all offsetting debits and credits between the Company and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Company and its Subsidiaries in accordance with GAAP): (a) all interest in respect of Debt of the Company and its Subsidiaries (including, without limitation, imputed interest on Capitalized Lease Obligations) deducted in determining Consolidated Net Income for such period, together with all interest capitalized or deferred during such period and not deducted in determining Consolidated Net Income for such period, and (b) all debt discount and expense amortized or required to be amortized in the determination of Consolidated Net Income for such period. Investment Grade - means in respect of any obligation that such obligation (i) has a rating of Baa3 or greater by Moody's Investor Service or a rating BBB- or greater by Standard & Exhibit A-6 Poor's; or (ii) has a rating of NAIC 1 or NAIC 2 from the National Association of Insurance Commissioners; or (iii) in the judgment of the Required Holders and the Other Senior Creditors, has a credit quality equal to or better than one which would be afforded either of the ratings described in clause (i) or clause (ii) of this definition. Keystone Guarantee - means that certain Guarantee Agreement, dated as of November 22, 2002, by the Company in favor of Bank of America, N.A. pursuant to which the Company guarantees (i) the payment to Bank of America by the City of LaPorte, Indiana (the "Keystone Issuer") of all principal, interest and any other amounts payable by the Keystone Issuer in respect of the Keystone Issuer's Economic Development Revenue Bonds, Series 1998 (Keystone Services, Inc. Project), and (ii) the payment and performance by Keystone Service, Inc. of all of its covenants, agreements, obligations and liabilities under that certain Loan Agreement, dated as of April 1, 1998, between the Keystone Issuer and Keystone Service, Inc. Kreher Steel Letter of Credit Agreement - means the Application and Agreement for Standby Letter of Credit, dated March 15, 2002, as amended, pursuant to which Bank of America issued its Irrevocable Standby Letter of Credit No. 7409195 in the stated amount of $5,000,000. Material - means material in relation to the business, operations, affairs, financial condition, assets, properties or prospects of the Company and its Subsidiaries taken as a whole. Mecklenburg Guaranty - means that certain Guarantee Agreement, dated as of November 22, 2002, by the Company in favor of Bank of America, N.A. pursuant to which the Company guarantees the payment to Bank of America by The Mecklenburg County Industrial Facilities and Pollution Control Financing Authority (the "Mecklenburg Issuer") of all principal, interest and any other amounts payable by the Mecklenburg Issuer in respect to the Mecklenburg Issuer's Tax-Exempt Industrial Revenue Bonds (A. M. Castle & Co. Project) Series 1996. Other Senior Creditors - means the following parties or their permitted successor and/or assigns: (i) Bank of America N.A., (ii) Nationwide Life Insurance Company, (iii) The Northern Exhibit A-7 Trust Company and (iv) any other holders of Debt of the Company incurred after the Effective Date in compliance with Section 7.2 hereof. Other Senior Debt - Debt of the Company and/or its Subsidiaries (i) owed to the Bank of America N.A. pursuant to the terms of a Reimbursement Agreement, dated as of June 1, 1994 by the Company in favor of NBD Bank, N.A., as assigned and amended pursuant to an Assignment and Amendment of Reimbursement Agreement, dated as of June 12, 2001, by and among the Company, Bank One, N.A. (successor to NBD Bank, N.A.) and Bank of America, N.A., as further amended pursuant to the Second Amendment to Reimbursement Agreement dated as of November 22, 2002, (ii) owed to Bank of America, N.A. pursuant to the terms of a Reimbursement Agreement dated as of November 1, 1994 by the Company in favor of NBD Bank, N.A., as assigned an amended pursuant to the terms of an Assignment and Amendment of Reimbursement Agreement, dated as of November 1, 2001, by and among the Company, Bank One, N.A. and Bank of America, N.A. and further amended pursuant to the terms of a Second Amendment to Reimbursement Agreement, dated as of November 1, 2001 and a Third Amendment to Reimbursement Agreement dated as of November 22, 2002, (iii) owed to Bank of America, N.A. pursuant to the terms of the Keystone Guarantee, (iv) owed to Bank of America, N.A. pursuant to the terms of the Mecklenburg Guaranty, (v) owed to Bank of America, N.A. as reimbursement for payments under the terms of the Kreher Steel Letter of Credit Agreement, as amended, (vi) owed pursuant to a Note Agreement dated as of April 1, 1996 between the Company and Nationwide Life Insurance Company, as amended by a First Amendment and Waiver to Note Agreement, dated as of December 1, 1998 and a Second Amendment to Note Agreement dated as of November 22, 2002, (vii) owed pursuant to a Trade Acceptance Purchase Agreement dated as of August 13, 2001 between the Company and The Northern Trust Company, in an aggregate amount not in excess of $10,000,000, as amended by the First Amendment thereto dated as of April 29, 2002, the Second Amendment thereto dated as of June 30, 2002, and the Third Amendment thereto dated as of November 22, 2002 (viii) owed pursuant to a Note Agreement dated as of March 1, 1998 among the Company, Massachusetts Mutual Life Insurance Company, Mutual of Omaha Life Insurance Company, The Northwestern Mutual Life Insurance Company, United of Omaha Life Insurance Exhibit A-8 Company and Allstate Insurance Company, as amended by a First Amendment and Waiver to Note Agreement dated as of December 1, 1998 and a Second Amendment to Note Agreement dated as of November 22, 2002, (ix) Debt of the Company incurred after the Effective Date in compliance with Section 7.2 hereof. Receivable - means a payment owing to a Person (whether constituting an account, chattel paper, document, instrument, letter-of-credit right, letter of credit, investment property or general intangible) arising from the provision of merchandise, goods or services by such Person, including the right to payment of any interest or finance charges and other obligations owing to such Person with respect thereto. Related Security - means with respect to any Receivable: (a) all supporting obligations, security interests or Liens and property subject thereto from time to time securing or purporting to secure the payment of such Receivable by the Person obligated thereon (b) all guaranties, indemnities and warranties, insurance policies, financing statements and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable, (c) all right, title and interest of the Company or any Subsidiary in and to any goods (including returned, repossessed or foreclosed goods) the sale of which gave rise to such Receivable; provided, that Related Security will not include returned goods only to the extent that all amounts required to be paid pursuant to the transactions involving the transfer of such Receivable in respect of such goods have been paid, (d) all collections with respect to any of the foregoing, (e) all records with respect to any of the foregoing, and (f) all proceeds of such Receivable or with respect to any of the foregoing. Required Holders - means, at any time, the holders of at least 51% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company, any Subsidiary or any Affiliate). Reset Rate - means an annual interest rate equal to 9.54%, provided, however, that in the event the Company shall have replaced the Existing Receivables Purchase Agreement (or any replacement thereof) in its entirety with a Revolving Loan Facility satisfactory to the Required Holders AND so long as neither the Company nor any Subsidiary is a party to any other Receivables Purchase Agreement, then upon execution of such Exhibit A-9 Revolving Loan Facility (and so long as neither the Company nor any Subsidiary is a party to a Receivables Purchase Agreement), the Reset Rate means an annual interest rate equal to 8.04%. Revolving Loan Facility - means a loan agreement or similar facility pursuant to which a lender or lenders provides revolving loans to the Company or any Subsidiary for the primary purpose of financing such Person's ongoing business operations, whether such agreement or facility is secured or unsecured. For the avoidance of doubt, no Receivables Purchase Agreement shall constitute a Revolving Loan Facility. Second Amendment - means the Second Amendment to the Note Agreement dated as of November 22, 2002 amending this Agreement. Second Year Ratio - means on or after December 31, 2003 either (i) .60 to 1.0 if the Notes are Secured, or (ii) .55 to 1.0 if the Notes are not Secured. Secured - means the Notes are secured by Liens on property representing (in the aggregate) 95% of the book value (measured as of the Effective Date) of all the real and personal property of the Company and Significant Subsidiaries required to be secured (excluding from such calculation, property that the Required Holders or any Other Senior Creditor in good faith has determined to be unsuitable as collateral for environmental concerns) pursuant to the terms and conditions of Section 5 of the Second Amendment including, without limitation, any condition that an Acceptable Intercreditor Agreement be executed prior to the grant of any Liens or security interests. Securitization Transactions - means one or more transactions involving the transfer by the Company or any of its Subsidiaries of Receivables and Related Security including, without limitation, the sale or granting of a Lien in such Receivables and Related Security, (not including a Revolving Loan Facility) to an SPV as a contribution to the capital of such SPV or for consideration in the form of cash or advances under a subordinated note due from such SPV, provided such transactions are entered into in good faith to provide working capital to the Company and its Subsidiaries, and provided further that the aggregate outstanding amount of the obligations incurred under all such transactions by all such Persons that would be characterized as principal if such Exhibit A-10 transaction or transactions were structured as a secured lending facility rather than as purchase transaction or transactions does not exceed $65,000,000 in the aggregate at any one time outstanding, and provided, further that the aggregate amount of Receivables and Related Security sold, pledged or otherwise transferred to the SPV does not exceed $90,000,000 in the aggregate at any one time outstanding. Security Documents - means each of the security agreements, mortgages, deeds of trust, collateral assignments and other similar documents granting Liens to secure, directly or indirectly, the obligations of the Company under this Agreement or the Notes or any of the Guarantors under the Guarantee Agreement. Senior Financial Officer - means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company. Significant Subsidiary - means all Subsidiaries of the Company other than: (i) A. M. Castle Canada, (ii) any SPV and (iii) any Subsidiary of the Company which is not required to be a Guarantor pursuant to the provisions of the first sentence of Section 6.13 of this Agreement so long as such Subsidiary described in the foregoing has not guaranteed any Debt of the Company or any other Subsidiary (other than the Debt outstanding under this Agreement and the Other Senior Debt). SPV - means an entity in which the Company or any of its Subsidiaries owns an equity interest and a substantial economic interest created and maintained for the sole purpose of purchasing or otherwise acquiring interests in Receivables and Related Security from the Company or any of its Subsidiaries. Subsidiary Side Letter - means a letter from the Company dated as of the Effective Date to the holders of the Notes setting forth a description of the Company's Subsidiaries showing, as to each Subsidiary, the book value of its assets as of September 30, 2002 and its contribution to Consolidated EBITDA for the fourth quarter period ended on September 30, 2002. 9. Section 6.6 of the Existing Note Agreement is hereby amended by adding the following new paragraph (j) at the end of Section 6.6: "(j) To the extent not otherwise provided herein, all information required to be delivered by the Company or any of its Subsidiaries to the Other Senior Creditors pursuant to the Exhibit A-11 terms of any one or more agreements between or among any one or more of them and the Company or any Subsidiary at the same time and in the same manner as delivered to such Persons." 10. Section 6 of the Existing Note Agreement is hereby amended by adding the following new Section 6.12 to read as follows: "6.12 Maintenance of Most Favored Lender Status. The Company hereby acknowledges and agrees that if the Company or any Subsidiary shall enter into or be a party to a Revolving Loan Facility which contains for the benefit of any lender or other Person any Financial Covenants or events of default in respect thereof that are more favorable to such lender than the Financial Covenants and Events of Default in respect of such Financial Covenants contained in this Agreement then, and in each and any such event, the Financial Covenants and Events of Default in this Agreement shall be and shall be deemed to be, notwithstanding Section 9.1 and without any further action on the part of the Company or any other Person being necessary or required, amended to permanently afford (until so amended or waived pursuant to Section 9.1) the holders of the Notes the same benefits and rights as so afforded to any such lender or Person (such deemed amendment may be the addition of one or more new Financial Covenants and Events of Default with respect thereto addressing matters not addressed by the then existing Financial Covenants and Events of Default with respect thereto set forth herein, as well as modifications to such Financial Covenants and Events of Default with respect thereto that are more favorable to such lender or Person). The Company will promptly deliver to each holder of Notes a copy of each Revolving Loan Facility entered into after the Effective Date. Without limiting the effectiveness of the first sentence of this Section 6.12, the Company agrees, no later than forty-five (45) days following the date the Company or any Subsidiary shall have granted any such lender or Person any such benefits or rights, to enter into such documentation as the Required Holders may reasonably request to evidence the amendments provided for in this Section 6.12." Exhibit A-12 11. Section 6 of the Existing Note Agreement is hereby amended by adding the following new Section 6.13: "6.13 Subsequent Guarantors. The Company covenants that at all times the assets of the Company and all Guarantors shall constitute at least 95% of Consolidated Total Assets (excluding for purposes of this calculation, the assets of A. M. Castle Canada and any SPV) and the Company and the Guarantors shall have contributed at least 95% of Consolidated EBITDA (excluding for purposes of this calculation, the EBITDA of A. M. Castle Canada and any SPV) for the four quarters then most recently ended. To the extent necessary to permit the Company to comply with the foregoing the Company will cause one or more Significant Subsidiaries to become Guarantors and the Company will cause each such Subsidiary to deliver to the holders of the Notes (a) a joinder agreement to the Guarantee Agreement, which joinder agreement is to be in the form of Exhibit A to the Guarantee Agreement; (b) an opinion of counsel for such Person with respect to the Guarantee Agreement and such joinder agreement which is in form and substance reasonably acceptable to the Required Holders; and (c) all applicable Security Documents and any other documents as may be necessary or appropriate to permit the Company to be in compliance with its obligations set forth in Section 6.14. The Guarantors shall be permitted to guaranty all Other Senior Debt." 12. Section 6 of the Existing Note Agreement is hereby amended by adding the following new Section 6.14: "6.14 Collateral Covenant. At any time on or after the Effective Date (as such term is defined in the Second Amendment), at the Company's expense: (a) The Company will, and will cause each Guarantor to, execute and deliver, within forty-five (45) days after any request therefor by the Required Holders, all further instruments and documents and take all further action that may be necessary, in order to give effect to, and to aid in the exercise and enforcement of the Liens, rights and remedies of the holders of the Notes and the Collateral Agent under, the Note Agreement, the Notes, the Security Documents and each other instrument and agreement executed in connection with any of the foregoing. (b) The Company will, and will cause each Guarantor to, take any and all steps, and execute and deliver one or more Security Documents to insure that all property of the Company and its Significant Subsidiaries (other than Excluded Exhibit A-13 Receivables and Excluded Collateral) will be subject to Liens in favor of the Collateral Agent pursuant to one or more Security Documents in form reasonably satisfactory to the Required Holders." 13. Section 6 of the Existing Note Agreement is hereby amended by adding the following new Section 6.15: "6.15 Receivables Purchase Agreement. At such time as any Receivables Purchase Agreement is replaced with a Revolving Loan Facility satisfactory to the Required Holders, neither the Company nor any of its Subsidiaries or SPVs will enter into, or be a party to, any Receivables Purchase Agreement." 14. Section 7.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "7.1 Adjusted Consolidated Net Worth. The Company will not permit its Adjusted Consolidated Net Worth (calculated on the last day of each fiscal quarter) to be less than the Applicable Base plus the cumulative sum of 40% of Consolidated Net Income (but only if a positive number) for (i) each completed fiscal year of the Company ending after December 31, 2001, and (ii) the period from the beginning of the then current fiscal year through the end of the then most recently ended fiscal quarter which shall have been completed (if any shall have been completed) in such then current fiscal year; provided, that at any time the Company or any Subsidiary incurs additional Indebtedness, immediately following and after giving effect to the incurrence of such additional Indebtedness, the Adjusted Consolidated Net Worth shall not be less than the minimum Adjusted Consolidated Net Worth that would have been permitted as of the last day of the then most recently ended fiscal quarter." 15. Section 7.2 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "7.2 Consolidated Debt. The Company will not permit the ratio (calculated on the last day of each fiscal quarter) of Consolidated Debt to Consolidated Total Capitalization to exceed the applicable ratio set forth opposite such quarter end in the table below; provided, that at any time the Company or any Subsidiary incurs additional Indebtedness, immediately following and after giving effect to the Exhibit A-14 incurrence of such additional Indebtedness, the ratio of Consolidated Debt to Consolidated Total Capitalization shall not exceed the applicable ratio as of the then most recently ended fiscal quarter: - ------------------------------------ ------------------------ Each Fiscal Quarter End The applicable ratio is: - ------------------------------------ ------------------------ Before December 31, 2003 First Year Ratio - ------------------------------------ ------------------------ On or after December 31, 2003 and Second Year Ratio prior to March 31, 2004 - ------------------------------------ ------------------------ On or after March 31, 2004 .55 to 1.0" - ------------------------------------ ------------------------ 16. Section 7.4 of the Existing Note Agreement is hereby amended by deleting paragraph (i) and adding new paragraphs (i), (j) and (k) to follow paragraph (h): "(i) Liens in favor of the Collateral Agent to secure the Notes and the Other Senior Debt as provided in the Security Documents and an Acceptable Intercreditor Agreement; and (j) Liens attaching solely to the property and assets of A. M. Castle Canada to secure Debt of A. M. Castle Canada and no other Debt; and (k) Liens not otherwise permitted by paragraphs (a) through (j) of this Section 7.4 created, assumed or incurred subsequent to the Closing Date to secure Indebtedness, provided that at the time of creating, assuming or incurring such additional Indebtedness and after giving effect thereto and to the application of the proceeds therefrom the sum (without duplication) of the aggregate principal amount of outstanding Consolidated Indebtedness secured by Liens permitted by this Section 7.4(k) does not exceed 10% of Adjusted Consolidated Net Worth." 17. section 7.5 of the Existing Note Agreement is hereby amended by (i) adding the phrase "(other than A. M. Castle Canada)" after the word "Subsidiary" in the second line and (ii) deleting the "." at the end of clause (b), substituting a ";" in lieu thereof and adding the following new language: "provided, however, that if any Subsidiary merges into any other Person in compliance with the terms hereof or conveys or transfers all or any part of its assets in compliance with the terms hereof and following such conveyance or transfer Exhibit A-15 such Subsidiary no longer constitutes a Significant Subsidiary, then the Required Holders, pursuant to the terms of the Acceptable Intercreditor Agreement, will promptly take all necessary action to cause such Guarantor to be released from the Guarantee Agreement as of the time of such sale, conveyance or transfer." 18. Section 7.6 of the Existing Note Agreement is hereby amended by (i) inserting the phrase "(other than A. M. Castle Canada)" after the word "Subsidiary" in the first sentence and (ii) adding the following new paragraph at the end of the section to read as follows: "If the Company or any Significant Subsidiary gives notice that it intends to sell, lease, transfer or otherwise dispose of any assets in compliance with the terms of this Section 7.6, the holders of the Notes, pursuant to the terms of the Acceptable Intercreditor Agreement, will promptly take such action reasonably requested by the Company to instruct the Collateral Agent to release such assets from the Liens granted pursuant to the Security Documents as of the time of any sale, lease, transfer or other disposition made in compliance with the terms of said Section 7.6." 19. Section 7.7 of the Existing Note Agreement is hereby amended by (i) adding the phrase "(other than A. M. Castle Canada)" after the word "Subsidiary" in the first sentence and (ii) deleting the "." at the end of clause (c), substituting a ";" in lieu thereof and adding the following new paragraph: "provided, however, that if the Company gives notice that it intends to sell, transfer or otherwise dispose of the capital stock of a Guarantor in compliance with the terms of this Section 7.7, the holders of the Notes will promptly take all necessary action to cause such Guarantor to be released from the Guarantee Agreement and shall instruct the Collateral Agent to release the assets of such Guarantor from the Liens granted pursuant to the Security Documents, in each case, as of the time of any sale, transfer or other disposition made in compliance with the terms of said Section 7.7." 20. Section 7.9 of the Existing Note Agreement is hereby amended by adding the phrase "and (iii) other than the sale of equity securities to an Affiliate on November 22, 2002" at the end thereof. Exhibit A-16 21. Section 8.1 of the Existing Note Agreement is hereby amended by deleting the "." at the end of paragraph (h); subparagraph (vii) thereof and inserting ";" in lieu thereof and adding new paragraphs (i), (j), (k) and (l), to follow paragraph (h) (vii): "(i) except as otherwise specifically permitted and provided for in this Note Agreement, including, without limitation, Section 6.13, Section 7.6, Section 7.7 and paragraph 5(b) of the Second Amendment to this Agreement (i) the obligations of any Guarantor contained in the Guarantee Agreement or any of the Security Documents shall cease to be in full force and effect or shall be declared by a court or Governmental Authority of competent jurisdiction to be void, voidable or unenforceable against any such Guarantor; (ii) the Company or any Guarantor shall contest the validity or enforceability of the Guarantee Agreement or any of the Security Documents against any such Guarantor, or (iii) the Company or any Guarantor shall deny that such Guarantor has any further liability or obligation under the Guarantee Agreement or any of the Security Documents; (j) any representation or warranty made in writing by or on behalf of the Company or any Guarantor or by any officer of the Company or any Guarantor in any amendment to this Agreement (including, without limitation, the Second Amendment), the Guarantee Agreement or any Security Document or in any writing furnished in connection therewith or pursuant to the terms thereof proves to have been false or incorrect in any material respect on the date as of which made; (k) except as otherwise specifically permitted and provided for in this Note Agreement, including, without limitation, Section 6.13, Section 7.6, Section 7.7 and paragraph 5(b) of the Second Amendment to this Agreement (i) any Security Document shall cease to be in full force and effect (other than in accordance with its terms) or shall be declared by any court or Governmental Authority of competent jurisdiction to be void, voidable or unenforceable against the grantor thereunder; (ii) the validity or enforceability of any Security Document against the grantor thereof shall be contested by such grantor; or (iii) the Company or any Guarantor shall default in the performance or observance of any covenant or provisions under the Guarantee Agreement or any Security Document; or (l) the Company or any Subsidiary shall enter into a Receivables Purchase Agreement after the termination of the Existing Receivables Purchase Agreement (or any replacement thereof) and its replacement with a Revolving Credit Facility satisfactory to the Required Holders." Exhibit A-17 EXHIBIT B1 AMENDMENTS TO EXISTING NOTES The Existing Notes outstanding on the Effective Date are hereby, without any further action required on the part of any other Person, deemed to be automatically amended to conform to and have the terms provided in Attachment I hereto (except that the principal amount and the payee of each Note shall remain unchanged). Any Note issued on or after the Effective Date shall be in the form of Attachment I hereto. Exhibit B1-1 ATTACHMENT 1 A. M. CASTLE & CO. RESET RATE SENIOR SECURED NOTE Due May 30, 2009 _______________ Registered Note No. R-____ __________________ $_________________________ A. M. CASTLE & CO., a Maryland corporation (the "Company"), for value received, promises to pay to ______________ or registered assigns, on May 30, 2009, the principal amount of _________________ ($__________) and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the principal amount from time to time remaining unpaid hereon at the Reset Rate specified in the Note Agreement referred to below from the date hereof until maturity, payable in arrears on May 30 and November 30, in each year, commencing November 30, 1997, and at maturity, and to pay interest on any overdue principal, on any overdue Make-Whole Amount and (to the extent legally enforceable) on any overdue installment of interest at a per annum rate equal to the greater of (a) 11.54% and (b) the sum of the reference rate announced by Bank of America NT&SA from time to time as its "prime rate" for United States domestic loans in United States dollars, plus 2%, until paid. Payments of the principal of, the Make-Whole Amount, if any, and the interest on this Note shall be made in lawful money of the United States of America in the manner and at the principal office of the Company. This Note is issued under and pursuant to the terms and provisions of the Note Agreement, dated as of May 15, 1997, entered into by the Company with the Purchasers named in Schedule I thereto (as may be amended from time to time, the "Note Agreement"), and this Note and any holder hereof are entitled to all of the benefits provided for by such Note Agreement or referred to therein. Reference is made to the Note Agreement for a statement of such benefits and for the terms governing this Note. Capitalized terms used herein shall have the meanings ascribed to them in the Note Agreement unless provided otherwise herein. As provided in the Note Agreement, upon surrender of this Note for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder hereof or its attorney duly authorized in writing, a new Note for a like unpaid principal amount will be issued to, and registered in the name of, the transferee upon the payment of the taxes or other governmental charges, if any, that may be imposed in connection therewith. The Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary. This Note may be declared due prior to its expressed maturity date, voluntary prepayments may be made hereon and certain prepayments are required to be made hereon all in the events, on the terms and in the manner as provided in Exhibit B1-2 the Note Agreement. Such prepayments include certain required prepayments on May 30 of each year beginning May 30, 2005 through May 30, 2008, inclusive, with the remaining principal payable May 30, 2009, and certain optional prepayments with a Make-Whole Amount. Should the indebtedness represented by this Note or any part thereof be collected in any proceeding provided for in the Note Agreement or be placed in the hands of attorneys for collection, the Company agrees to pay, in addition to the principal, Make-Whole Amount, if any, and interest due and payable hereon, all costs of collecting this Note, including attorneys' fees and expenses. This Note and the Note Agreement are governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. A. M. CASTLE & CO. By:________________________________ Title: Exhibit B1-3 EXHIBIT D [Form of Guarantee] This GUARANTEE AGREEMENT (as the same may hereafter be amended, supplemented or otherwise modified, this "Guarantee"), dated as of November 22, 2002, is by Datamet, Inc., an Illinois Corporation, Keystone Tube Company, LLC, a Delaware limited liability company, Total Plastics, Inc., a Michigan corporation, Paramont Machine Company, LLC, a Delaware limited liability company, Advanced Fabricating Technology, LLC, a Delaware limited liability company, Oliver Steel Plate Co., a Delaware corporation and Metal Mart, LLC, a Delaware limited liability company (each of whom, together with each other Person which from time to time becomes a Guarantor pursuant to Section 5 hereof, is referred to herein, individually, as a "Guarantor" and, collectively, as the "Guarantors"), in favor of Massachusetts Mutual Life Insurance Company and United of Omaha Life Insurance Company (together with their successors and assigns including, without limitation, future holders of the Notes (defined below), herein collectively referred to as the "Noteholders"). RECITALS: WHEREAS, each of the Guarantors is a direct or indirect Subsidiary of A. M. Castle & Co., a Maryland corporation (together with its successors and assigns, the "Company"); WHEREAS, the Guarantors' obligations under this Guarantee (and the Guarantors' obligations under guarantees to the Other Senior Creditors) shall be secured by Liens granted on certain property of the Guarantors pursuant to the terms of certain of the security documents to be entered into by the Guarantors (collectively, the "Security Documents"); WHEREAS, the Company entered into a Note Agreement, dated as of May 15, 1997 (as amended by that certain First Amendment to Note Purchase Agreement dated December 1, 1998 and the Second Amendment (as defined below), and as may be further as amended, modified, restated or replaced from time to time, the "Note Agreement"), with the purchasers identified on Schedule 1 thereto (the "Purchasers"), pursuant to which the Company, among other things, issued to the Purchasers $25,000,000 of its 7.54% Senior Notes due May 30, 2009 (the "Notes"). WHEREAS, the Noteholders agreed to the amendments to the Note Agreement and the Notes as set forth in that certain Second Amendment to Note Agreement, dated of even date herewith (the "Second Amendment") conditioned upon, among other things, the execution and delivery by the Guarantors of this Guarantee; WHEREAS, each Guarantor will receive substantial direct and indirect economic, financial and other benefits as a result of the amendments set forth in the Second Amendment. NOW THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Guarantor hereby agrees as follows: Exhibit D-1 1. DEFINITIONS. All capitalized terms used herein and not defined herein have the respective meanings given them in the Note Agreement. 2. GUARANTEE. 2.1. Guarantee of Payment and Performance. Each Guarantor hereby absolutely, unconditionally and irrevocably, on a joint and several basis with each other Guarantor, guarantees to the Noteholders: (a) the full and punctual payment by the Company of the principal of, and interest and Make-Whole Amount, if any, on, the Notes at any time outstanding and the due and punctual payment of all other amounts payable, and all other indebtedness owing, by the Company to the Noteholders under the Note Agreement, the Notes, the Security Documents to be entered into by the Guarantors and each of the other instruments and agreements executed or to be executed in connection with the foregoing (collectively, the "Financing Documents") in each case when and as the same shall become due and payable, whether at maturity, pursuant to mandatory or optional prepayment, by acceleration or otherwise, all in accordance with the terms and provisions of this Guarantee, the Note Agreement, the Notes and the other Financing Documents, including, without limitation, overdue interest, post-petition interest, indemnification payments and all of such obligations which would become due but for the operation of the automatic stay pursuant to Section 362(a) of the United States Bankruptcy Code and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code; and (b) the full and punctual performance by the Company of all duties, agreements, covenants and obligations of the Company contained in the Note Agreement, the Notes and the other Financing Documents, and the full and prompt payment, on demand, of all reasonable costs and expenses incurred by (x) the Noteholders in connection with the negotiation, preparation, execution and delivery of this Guarantee and (y) any one or more of the Noteholders or any trustee or agent acting on behalf of the Noteholders in enforcing any of their respective rights and remedies under this Guarantee, the Note Agreement, the Notes or any of the other Financing Documents, including, but not limited to, all reasonable attorney's fees and expenses (whether or not there is litigation), court costs and all costs in connection with any proceedings under the United States Bankruptcy Code (collectively, the "Guarantied Obligations"), provided that the Guarantor shall not be liable for the reasonable fees and expenses of more than one separate firm of attorneys representing the Noteholders. 2.2. Nature of Guarantee. This is a continuing, absolute and unconditional Guarantee of payment and performance and not merely of collection, and shall continue in full force and effect until such time as the Guarantied Obligations have been fully and irrevocably paid. Exhibit D-2 2.3. Binding Nature of Certain Adjudications. Each Guarantor shall be conclusively bound by the final adjudication in any action or proceeding, legal or otherwise to which the Company is a party, involving any controversy arising under, in connection with, or in any way related to, any of the Guarantied Obligations, and by a final judgment, award or decree entered therein. 2.4. No Duty to Pursue Others. Upon any default with respect to the Guarantied Obligations, the Note Agreement or the Notes, and after the expiration of any notice or cure periods, any one or more of the Noteholders or any trustee or agent acting on the Noteholders' behalf may proceed to enforce its rights and remedies directly against any one or more of the Guarantors without first proceeding against the Company or any other Person liable for the Guarantied Obligations or any security for the Guarantied Obligations. 2.5. No Release of Guarantors. Each Guarantor's liability under this Guarantee shall not be limited, diminished or extinguished by, and each Guarantor shall not be entitled to raise as a defense, any: (a) invalidity, irregularity or unenforceability of the Guarantied Obligations or of such Guarantor's obligations hereunder; (b) failure of such Guarantor to be given notice of default by the Company; (c) reorganization, merger or consolidation of the Company or any Guarantor into or with any other Person; (d) waiver of the Company's defaults or extensions of due dates for payments or other accommodations, indulgences or forbearance granted to the Company; (e) release of or non-perfection with respect to part or all of any security for the Guarantied Obligations or the Notes; (f) taking or accepting of any other security, collateral or guaranty of payment of any or all of the Guarantied Obligations or the Notes; (g) release of or settlement or compromise with any one or more Persons who constitute guarantors or the release of or settlement or compromise with any one or more Persons who are otherwise liable for the payment or performance of all or any portion of the Guarantied Obligations or the Notes and who are not primary obligors thereon; (h) any loss or impairment of any right of any Guarantor for subrogation, reimbursement or contributions; (i) assignment or other transfer by the Noteholders (or any trustee or agent acting on the behalf of the Noteholders, as the case may be) of any part of the Guarantied Obligations or the Notes, or any collateral or security securing any portion of the Guarantied Obligations or the Notes; Exhibit D-3 (j) illegality or impossibility of performance on the part of the Company or the Guarantors under the Note Agreement, the Notes or this Guarantee; or (k) other acts or omissions of the Noteholders which, in the absence of this Section, would operate so as to impair, diminish or extinguish any Guarantor's liability under this Guarantee. 2.6. Certain Waivers. (a) Waiver of Notice. Each Guarantor hereby waives notice of (i) acceptance of this Guarantee, (ii) any amendment, extension or other modification of the Note Agreement, the Notes and/or any of the other Financing Documents, (iii) any loans or advances made by any one or more of the Noteholders to the Company, (iv) the occurrence of a Default or Event of Default under the Note Agreement or the Notes, (v) any transfer or other disposition of the Guarantied Obligations or the Notes pursuant to Section 10 of the Note Agreement, and (vi) any other action at any time taken or omitted by the Noteholders or by any trustee or agent acting on behalf of any one or more Noteholder, and generally, all demands and notices of every kind in connection with this Guarantee, the Note Agreement, the Notes and the other Financing Documents, except as provided herein and in the Note Agreement. (b) Certain Other Waivers. Each Guarantor hereby waives (i) diligence, presentment, demand for payment, protest or notice, whether of nonpayment, dishonor, protest or otherwise, (ii) all setoffs, counterclaims and claims of recoupment against, the Guarantied Obligations or the Notes that may be available to the Company or any other guarantor of the Guarantied Obligations or the Notes (it being understood that the waivers set forth anywhere in this Guarantee shall not preclude any action by such Guarantor, after payment in full of its obligations hereunder, to recover for any tortious action which resulted in injury to such Guarantor), (iii) any defense based upon or in any way related to any claim that any election of remedies by any one or more of the Noteholders (or by any trustee or agent acting on behalf of the Noteholders) impaired, reduced, released or otherwise extinguished any rights such Guarantor might otherwise have had against the Company or any security, (iv) any claim based upon or in any way related to any of the matters referred to in Section 2.5, and (v) any claim that this Guarantee should be strictly construed against the Noteholders. 2.7. Bankruptcy; Other Matters. In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law, or any judgment, order or decision thereunder, or for any other reason any Noteholder must rescind or restore any payment received by such Noteholder in connection with the Guarantied Obligations, the Note Agreement, the Notes or any other Financing Documents, or the Company ceases to be liable to any Noteholder for any of the Notes (other than by the full and irrevocable payment in full thereof), then any prior release or discharge from this Guarantee shall be without effect and this Guarantee and the obligations of Guarantor hereunder shall remain in full force and effect. Exhibit D-4 2.8. Payments by Guarantors. If all or any part of the Guarantied Obligations or the Notes are not paid when due, whether at maturity, by reason of acceleration, or otherwise, and remain unpaid until the expiration of any applicable grace or cure period, or otherwise upon the occurrence and continuance of any Event of Default, the Guarantors shall, immediately upon demand by any Noteholder (or any trustee or agent acting on behalf of the Noteholders), and without presentment, protest, notice of protest, notice of nonpayment, notice of intention to accelerate or acceleration or any other notice whatsoever, pay in immediately available funds, the amount due on the Guarantied Obligations for distribution to such Noteholder. All obligations of the Guarantors under this Guarantee shall be performable and payable to each Noteholder at its offices at the addresses set forth in Schedule A of the Note Agreement. 2.9. Failure to Pay Guarantied Obligations. If any Guarantor fails to pay the Guarantied Obligations as required by this Guarantee, then each of the Guarantors, as the principal obligor and not as a guarantor only, shall jointly and severally pay, on demand, all out-of-pocket costs and expenses incurred or expended by any one or more of the Noteholders (and any trustee or agent acting on behalf of the Noteholders) in connection with the enforcement of, and the preservation of the Noteholders' rights under and with respect to, this Guarantee, including, but not limited to, all reasonable attorney's fees and expenses (whether or not there is litigation), court costs and all costs incurred in connection with any proceedings under the United States Bankruptcy Code, provided that the Guarantor shall not be liable for the reasonable fees and expenses of more than one separate firm of attorneys representing the Noteholders. Until paid, all such amounts recoverable under this Section 2.9 shall bear interest from the time when such amounts become due until payment in full thereof at the rate for overdue principal set forth in the Note Agreement. 2.10. Subordination of Affiliate Obligations. Each of the Guarantors agrees that all Affiliate Obligations (as defined below), interest thereon, and all other amounts due with respect thereto, are hereby subordinated as to time of payment and in all other respects to all the Guarantied Obligations. Each Guarantor agrees that at all times during the existence of an Event of Default, such Guarantor shall not be entitled to enforce or receive any payment in respect thereof until all sums then due and owing to any one or more of the Noteholders in respect of the Guarantied Obligations shall have been paid in full. If any payment shall have been made to any Guarantor by the Company or such indebted Person on any such Affiliate Obligation during any time that an Event of Default exists and there are Guarantied Obligations outstanding, such Guarantor shall collect and receive all such payments as trustee for the Noteholders, to the extent of all amounts owing with respect to this Guarantee, and such amounts shall be immediately paid over to the Noteholders (or any trustee or agent acting on behalf of the Noteholders), without affecting in any manner the liability of the Guarantors under the other provisions of this Guarantee. For purposes of this Section 2.10, "Affiliate Obligation" means any indebtedness of any kind of the Company, or any Person obligated in respect of the Guarantied Obligations to Guarantor. 2.11. Postponement of Subrogation Rights. No Guarantor will exercise any Subrogation Rights (as defined below) which it may acquire with respect to this Guarantee, until the prior and indefeasible payment, in full and in cash, of all Guarantied Obligations. Any amount paid to a Guarantor by or on behalf of the Exhibit D-5 Company or any other guarantor of the Guarantied Obligations on account of any such Subrogation Rights prior to the payment in full of all Guarantied Obligations shall immediately be paid over to the Noteholders and credited and applied against the Guarantied Obligations whether matured or unmatured, in accordance with the terms of the Note Agreement. In furtherance of the foregoing, for so long as any Guarantied Obligations remain outstanding, no Guarantor shall take any action or commence any proceeding against the Company or any other guarantor of the Guarantied Obligation, (or any of their respective successors or assigns, whether in connection with a bankruptcy proceeding or otherwise) to recover any amounts in the respect of payments made under this Guarantee to the Noteholders and each Guarantor hereby forbears realizing any benefit of and any right to participate in any security which may be held by the Noteholders or any agent or trustee acting on their behalf. For purposes of this Section 2.11, "Subrogation Right" means any right of contribution, subrogation, reimbursement, indemnity, or repayment, and any other "claim", as that term is defined in the United States Bankruptcy Code, which any Guarantor might now have or hereafter acquire against the Company or any other guarantor of the Guarantied Obligations that arises from the existence or performance of such Guarantor's obligations under this Guarantee, and any right to participate in any security for the Guarantied Obligations. 2.12. Notices in Respect of Payments. If any Guarantor shall pay to any holder of the Notes from time to time any amount in respect of the Guarantied Obligations, such Guarantor shall, within five (5) Business Days after making such payment, provide notice of such payment to each other holder of the Notes at such time. 2.13. Limitation on Guarantied Obligations. Notwithstanding anything in Section 2.1 or elsewhere in this Guarantee or any other Financing Document to the contrary, the obligations of the Guarantors under this Guarantee shall at each point in time be limited to an aggregate amount equal to the greatest amount that would not result in such obligations being subject to avoidance, or otherwise result in such obligations being unenforceable, at such time under applicable law (including, without limitation, to the extent, and only to the extent, applicable to the Guarantors, Section 548 of the United States Bankruptcy Code and any comparable provisions of the law of any other jurisdiction, any capital preservation law of any jurisdiction and any other law of any jurisdiction that at such time limits the enforceability of the obligations of the Guarantors under this Guarantee). This Section 2.13 is intended solely to preserve the rights of the Noteholders hereunder to the maximum extent permitted by applicable law, and neither the Guarantors nor any other Person shall have any rights under this Section 2.13 that it would not otherwise have under applicable law. 2.14. Separate Action; Other Enforcement Rights. Each of the rights and remedies granted under this Guarantee to any Noteholder in respect of the Notes held by such Noteholder may be exercised by such Noteholder without notice by such Noteholder to, or the consent of or any other action by, any other holder of the Notes from time to time. Any one or more of the Noteholders may proceed to protect and enforce this Guarantee by suit or suits or proceedings in equity, at law or in bankruptcy, and whether for the specific performance of any covenant or agreement contained herein or in execution or aid of any power herein granted or for the recovery of judgment for the obligations hereby guaranteed or for the enforcement of any other proper legal or equitable remedy available under applicable law. Exhibit D-6 2.15. Security. The Guarantied Obligations and the obligations of each Guarantor set forth herein will be secured pursuant to certain of the Security Documents to which such Guarantor is a party and each agent or trustee acting on behalf of the Noteholders, shall be entitled to all of the rights, remedies and benefits of the Security Documents to which such Guarantor is a party. 3. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby represents and warrants to the Noteholders that: 3.1. Organization and Existence. The Guarantor is duly organized and existing in good standing under the laws of its jurisdiction of organization, is duly qualified to do business and is in good standing where the nature or extent of its businesses or properties requires it to be qualified to do business except where the failure to so qualify will not have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents. The Guarantor has the power and authority to own its properties and carry on its business as now being conducted. 3.2. Authorization. The Guarantor is duly authorized to execute and perform this Guarantee and this Guarantee has been properly authorized by all requisite action of such Guarantor. No consent, approval or authorization of, or declaration or filing with, any Governmental Authority or any other Person, is required in connection with the execution, delivery or performance of this Guarantee, except for those already duly obtained. 3.3. Due Execution. This Guarantee has been executed on behalf of such Guarantor by a Person duly authorized to do so. 3.4. Enforceability. This Guarantee constitutes the legal, valid and binding obligation of the Guarantor, enforceable against such Guarantor in accordance with its terms, except to the extent that the enforceability thereof against such Guarantor may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally or by equitable principles of general application (regardless of whether such enforceability is considered in a proceeding in equity or at law). Exhibit D-7 3.5. Legal Restraints. The execution of this Guarantee by the Guarantor and the performance by such Guarantor of its obligations under this Guarantee, will not (i) violate or constitute a default under the certificate or articles of incorporation, bylaws or other organizational documents of such Guarantor as applicable, (ii) except as contemplated by the Security Documents and the granting of Liens to secure Other Senior Debt, result in any Lien being imposed on any of such Guarantor's property, or (iii) violate or constitute a default under any agreement to which the Guarantor is a party or any law, ordinance, governmental rule or regulation to which it is subject, except where such violation or default could not reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents. 3.6. No Material Proceedings. There are no proceedings, actions or investigations pending or, to the knowledge of the Guarantor, threatened against such Guarantor that, in the aggregate for all such proceedings, actions and investigations, could reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents. 3.7. Compliance with Laws. The Guarantor is in compliance with all laws, ordinances, governmental rules and regulations to which it is subject, except for such failures to comply that, in the aggregate for all such failures, could not reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents. 3.8. Other Names. Except for the trade names set forth in Schedule 3.8, the Guarantor has not used, and does not use, any name other than the full name which identifies such Guarantor in this Guarantee. 3.9. No Defaults. The Guarantor has not breached or violated, or is not in default under, any agreement to which it is a party, and is not in default with respect to any of its obligations, except for such breaches, violations and defaults that, in the aggregate for all such breaches, violations and defaults, could not reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents. 3.10. Independent Credit Evaluation. The Guarantor has independently, and without reliance on any information supplied by any one or more of the Noteholders, taken, and will continue to take, whatever steps such Guarantor deems necessary to evaluate the financial condition and affairs of the Company, and the Noteholders shall have no duty to advise the Guarantor of information at any time known to the Noteholders regarding such financial condition or affairs. 3.11. No Representation By Agent. None of the Noteholders nor any trustee or agent acting on their behalf has made any representation, warranty or statement to the Guarantor to induce such Guarantor to execute this Guarantee. Exhibit D-8 3.12. Survival. All representations and warranties made by the Guarantor herein shall survive the execution hereof and may be relied upon by the Noteholders as being true and accurate until the Guarantied Obligations are fully and irrevocably paid. 4. COVENANTS. 4.1 Corporate Existence; Scope of Business; Compliance with Law; Preservation of Enforceability. Each Guarantor covenants that from the date hereof and until the Guarantied Obligations and the Notes are fully and irrevocably paid, such Guarantor shall (a) preserve and maintain its existence in good standing and its right to transact business in those states in which it is now or hereafter doing business and obtain and maintain all licenses, except where the failure to obtain and maintain such licenses that, in the aggregate for all such failures, could not reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents; (b) comply, with all applicable laws, ordinances, governmental rules and regulations to which it is subject, except where such failure to comply could not reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor; or on its ability to perform its obligations hereunder and under the other Financing Documents; and (c) take all action and obtain all consents and governmental approvals required so that its obligations under this Guarantee will at all times be legal, valid and binding and enforceable in accordance with the terms hereof. Exhibit D-9 5. ADDITIONAL GUARANTORS. In accordance with Section 6.13 of the Note Agreement, additional Persons may from time to time after the date of this Guarantee become Guarantors under this Guarantee by executing and delivering to the Noteholders a joinder agreement (a "Joinder Agreement") to this Guarantee in substantially the form attached as Exhibit A to this Guarantee. Effective from and after the date of the execution and delivery by any Person to the Noteholders of a Joinder Agreement, such Person shall be, and shall be deemed for all purposes to be, a Guarantor under this Guarantee with the same force and effect, and subject to the same agreements, representations, guarantees, indemnities, liabilities and obligations, as if such Person were, effective as of such date, an original signatory to this Guarantee as a Guarantor. The execution and delivery of a Joinder Agreement by any Person shall not require the consent of any other Guarantor and all of the Guarantied Obligations of each Guarantor under this Guarantee shall remain in force and effect notwithstanding the addition of any additional Guarantor to this Guarantee. 6. SUCCESSORS AND ASSIGNS. This Guarantee shall bind the successors, assignees, trustees, and administrators of the Guarantor and shall inure to the benefit of each of the Noteholders, and each of its successors, transferees, participants and assignees. 7. CONTINUANCE OF GUARANTEE. Each Guarantor is liable under this Guarantee for the full amount of the Guarantied Obligations. Any holder of the Notes from time to time may release, settle with or compromise with any one or more Persons who are otherwise liable for the payment or performance of all or any portion of the Guarantied Obligations without impairing, diminishing or releasing the rights of any other holders of the Notes hereunder against any Guarantor or any other Person liable for the Guarantied Obligations. This Guarantee shall continue in full force and effect and shall bind Guarantor notwithstanding the death or release of any other Person who is otherwise liable for the payment or performance of all or any portion of the Guarantied Obligations. 8. AMENDMENTS AND WAIVERS. No amendment to, waiver of, or departure from full compliance with any provision of this Guarantee, or consent to any departure by any Guarantor herefrom, shall be effective unless it is in writing and signed by authorized officers of each Guarantor directly affected thereby and the Noteholders; provided, however, that any such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No failure by any Noteholder to exercise, and no delay by any Noteholder in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by any Noteholder of any right, remedy, power or privilege hereunder preclude any other exercise thereof, or the exercise of any other right, remedy, power or privilege. Exhibit D-10 9. RIGHTS CUMULATIVE. Each of the rights and remedies of the Noteholders under this Guarantee shall be in addition to all of their other rights and remedies under applicable law, and nothing in this Guarantee shall be construed as limiting any such rights or remedies. 10. SERVICE OF PROCESS. EACH GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO IT AT ITS ADDRESS SET FORTH IN ANNEX 1 HERETO. SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED AS OF THE DATE THAT SUCH GUARANTOR SIGNS THE RETURN RECEIPT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE NOTEHOLDERS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. 11. WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS GUARANTEE. 12. SEVERABILITY. Any provision of this Guarantee which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction unless the ineffectiveness of such provision would result in such a material change as to cause completion of the transactions contemplated hereby to be unreasonable. 13. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS. 14. SECTION HEADINGS. Section headings are for convenience only and shall not affect the interpretation of this Guarantee. Exhibit D-11 15. LIMITATION OF LIABILITY. THE NOTEHOLDERS SHALL NOT HAVE ANY LIABILITY WITH RESPECT TO, AND EACH OF THE GUARANTORS HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE FOR, (a) ANY LOSS OR DAMAGE SUSTAINED BY ANY GUARANTOR THAT MAY OCCUR AS A RESULT OF, IN CONNECTION WITH, OR THAT IS IN ANY WAY RELATED TO, ANY ACT OR FAILURE TO ACT REFERRED TO IN SECTION 2.5 OR (b) ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES SUFFERED BY ANY GUARANTOR IN CONNECTION WITH ANY CLAIM RELATED TO THIS GUARANTEE. 16. ENTIRE AGREEMENT. This Guarantee embodies the entire agreement among Guarantors and the Noteholders relating to the subject matter hereof and supersedes all prior agreements, representations and understandings, if any, relating to the subject matter hereof. 17. COMMUNICATIONS. All notices and other communications to the Noteholders or Guarantors hereunder shall be in writing, shall be delivered in the manner and with the effect, as provided by the Note Agreement, and shall be addressed to the Guarantors as set forth in Annex 1 hereto and to the Noteholders as set forth in the Note Agreement. 18. DUPLICATE ORIGINALS. Two or more duplicate counterpart originals hereof may be signed by the parties, each of which shall be an original but all of which together shall constitute one and the same instrument. Delivery of any executed signature page to this Guarantee by any Guarantor by facsimile transmission shall be as effective as delivery of a manually executed copy of this Guarantee by such Guarantor. 19. NOTICES. Nothing in this Guarantee shall void or abrogate any obligation of the Company, any Guarantor or any Noteholder to give any notice specifically required to be given by such Person in any provision of any Financing Document. 20. TERMINATION. Subject to Section 2.7, this Guarantee shall terminate and have no further force or effect upon payment in full of the Guarantied Obligations. [Remainder of page intentionally left blank. Next page is signature page.] Exhibit D-12 IN WITNESS WHEREOF, each Guarantor has caused this Guarantee to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. KEYSTONE TUBE COMPANY, LLC By:_____________________________ Name: Title: TOTAL PLASTICS, INC. By:_____________________________ Name: Title: PARAMONT MACHINE COMPANY LLC By:_____________________________ Name: Title: ADVANCED FABRICATING TECHNOLOGY, LLC By:_____________________________ Name: Title: OLIVER STEEL PLATE CO. By:_____________________________ Name: Title: Annex 1-1 METAL MART, LLC By:_____________________________ Name: Title: DATAMET, INC. By:_____________________________ Name: Title: Annex 1-2 EXHIBIT A [FORM OF JOINDER AGREEMENT] JOINDER AGREEMENT NO. ___ TO GUARANTEE AGREEMENT Re: A. M. CASTLE & CO. This Joinder Agreement is made as of ________________, in favor of the Noteholders (as such terms are defined in the Castle Guaranty, as hereinafter defined). A. Reference is made to the Guarantee Agreement made as of November 22, 2002 (as such Guaranty may be supplemented, amended, restated or consolidated from time to time, the "Castle Guaranty") by certain Persons in favor of the holders from time to time of the Notes (as defined in the Castle Guaranty), under which such Persons have guaranteed to the Noteholders the due payment and performance by A. M. Castle & Co. ("Castle") of all its present and future indebtedness, liabilities and obligations to the Noteholders in connection with the Note Agreement. B. Capitalized terms used but not otherwise defined in this Joinder Agreement have the respective meanings given to such terms in the Castle Guaranty, including the definitions of terms incorporated in the Castle Guaranty by reference to other agreements. C. Section 5 of the Castle Guaranty provides that additional Persons may from time to time after the date of the Castle Guaranty become Guarantors under the Castle Guaranty by executing and delivering to the Noteholders a supplemental agreement to the Castle Guaranty in the form of this Joinder Agreement. For valuable consideration, each of the undersigned (each a "New Guarantor") severally (and not jointly, or jointly and severally) agrees as follows: 1. Each of the New Guarantors has received a copy of, and has reviewed, the Castle Guaranty and the Note Agreement in existence on the date of this Joinder Agreement and is executing and delivering this Joinder Agreement to the Noteholders pursuant to Section 5 of the Castle Guaranty. 2. Effective from and after the date this Joinder Agreement is executed and delivered to the Noteholders by any one of the New Guarantors (and irrespective of whether this Joinder Agreement has been executed and delivered by any other Person), such New Guarantor is, and shall be deemed for all purposes to be, a Guarantor under the Castle Guaranty with the same force and effect, and subject to the same agreements, representations, guarantees, indemnities, liabilities and obligations, as if such New Guarantor was, effective as of the date of this Joinder Agreement, an original signatory to the Castle Guaranty as a Guarantor. In furtherance of the foregoing, each of the New Guarantors jointly and severally guarantees to the Noteholders in accordance with the provisions of the Castle Guaranty the due and punctual payment and performance in full of each of the Guarantied Obligations as each such Guarantied Obligation becomes due from Exhibit A-1 time to time (whether because of maturity, default, demand, acceleration or otherwise) and understands, agrees and confirms that the Noteholders may enforce the Castle Guaranty and this Joinder Agreement against such New Guarantor for the benefit of the Noteholders up to the full amount of the Guarantied Obligations without proceeding against any other Guarantor, Castle, any other Person or any collateral securing the Guarantied Obligations. The terms and provisions of the Castle Guaranty are incorporated by reference in this Joinder Agreement. 3. Upon this Joinder Agreement bearing the signature of any Person claiming to have authority to bind any New Guarantor coming into the hands of the Noteholders, and irrespective of whether this Joinder Agreement or the Castle Guaranty has been executed by any other Person, this Joinder Agreement will be deemed to be finally and irrevocably executed and delivered by, and be effective and binding on, and enforceable against, such New Guarantor free from any promise or condition affecting or limiting the liabilities of such New Guarantor and such New Guarantor shall be, and shall be deemed for all purposes to be, a Guarantor under the Castle Guaranty. No statement, representation, agreement or promise by any officer, employee or agent of any one or more of the Noteholders, forms any part of this Joinder Agreement or the Castle Guaranty or has induced the making of this Joinder Agreement or the Castle Guaranty by any of the New Guarantors or in any way affects any of the obligations or liabilities of any of the New Guarantors in respect of the Guarantied Obligations. 4. This Joinder Agreement may be executed in counterparts. Each executed counterpart shall be deemed to be an original and all counterparts taken together shall constitute one and the same Joinder Agreement. Delivery of an executed signature page to this Joinder Agreement by any New Guarantor by facsimile transmission shall be as effective as delivery of a manually executed copy of this Joinder Agreement by such New Guarantor. 5. This Joinder Agreement is a contract made under, and will for all purposes be governed by and interpreted and enforced according to, the internal laws of the State of Illinois excluding any conflict of laws rule or principle which might refer these matters to the laws of another jurisdiction. 6. This Joinder Agreement and the Castle Guaranty shall be binding upon each of the New Guarantors and the successors of each of the New Guarantors. None of the New Guarantors may assign any of its obligations or liabilities in respect of the Guarantied Obligations. IN WITNESS OF WHICH this Joinder Agreement has been duly executed and delivered by each of the New Guarantors as of the date indicated on the first page of this Joinder Agreement. [NEW GUARANTOR] By: _______________________ Name: Title: Exhibit A-2 EX-4.7 10 castle47.txt NOTE AGREEMENT DATED 03-01-98 Exhibit 4.7 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A.M. CASTLE & CO. NOTE AGREEMENT Dated as of March 1, 1998 $15,000,000 6.40% Series A Senior Notes Due March 1, 2008 $25,000,000 6.53% Series B Senior Notes Due March 1, 2010 $15,000,000 6.69% Series C Senior Notes Due March 1, 2012 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Series A PPN: 148411 C@8 Series B PPN: 148411 C#6 Series C PPN: 148411 D*9 TABLE OF CONTENTS Section 1. DESCRIPTION OF NOTES AND COMMITMENT COMMITMENT ................1 1.1. Description of Notes ...........................................1 1.2. Commitment; Closing Date .......................................2 Section 2. PREPAYMENT OF NOTES ...........................................2 2.1. Required Prepayments ...........................................2 2.2. Optional Prepayments ...........................................3 2.3. Notice of Prepayments ..........................................3 2.4. Surrender of Notes on Prepayment or Exchange ...................3 2.5. Direct Payment and Deemed Date of Receipt ......................4 2.6. Allocation of Payments .........................................4 2.7. Payments Due on Saturdays, Sundays and Holidays ................4 Section 3. REPRESENTATIONS ...............................................4 3.1. Representations of the Company .................................4 3.2. Representations of the Purchaser ..............................11 Section 4. CLOSING CONDITIONS ...........................................11 4.1. Representations and Warranties ................................12 4.2. Legal Opinions ................................................12 4.3. Events of Default .............................................12 4.4. Payment of Fees and Expenses ..................................13 4.5. Legality of Investment ........................................13 4.6. Private Placement Number ..................................... 13 4.7. Proceedings and Documents .....................................13 Section 4. INTERPRETATION OF AGREEMENT ..................................13 5.1. Certain Terms Defined .........................................12 5.2. Accounting Principles .........................................20 5.3. Valuation Principles ..........................................20 5.4. Direct or Indirect Actions ....................................21 Section 5. AFFIRMATIVE COVENANTS ........................................21 6.1. Corporate Existence ...........................................21 6.2. Insurance .....................................................21 6.3. Taxes, Claims for Labor and Materials .........................21 6.4. Maintenance of Properties .....................................21 6.5. Maintenance of Records ........................................22 i 6.6. Financial Information and Reports .............................22 6.7. Inspection of Properties and Records ..........................24 6.8. ERISA .........................................................24 6.9. Compliance with Laws ..........................................25 6.10. Acquisition of Notes .........................................25 6.11. Private Placement Number .....................................26 Section 7. NEGATIVE COVENANTS ...........................................26 7.1. Adjusted Consolidated Net Worth ...............................26 7.2. Consolidated Debt .............................................26 7.3. Net Working Capital ...........................................26 7.4. Liens .........................................................26 7.5. Merger or Consolidation .......................................27 7.6. Sale of Assets ................................................27 7.7. Disposition of Stock of Subsidiaries ..........................28 7.8. Leases ........................................................28 7.9. Transactions with Affiliates ..................................28 7.10. Nature of Business ...........................................28 Section 8. EVENTS OF DEFAULT AND REMEDIES THEREFOR ......................29 8.1. Nature of Events ..............................................29 8.2. Remedies on Default ...........................................30 8.3. Annulment of Acceleration of Notes ............................31 8.4. Other Remedies ................................................31 8.5. Conduct No Waiver; Collection Expenses ........................31 8.6. Remedies Cumulative ...........................................31 8.7. Notice of Default .............................................32 Section 9. AMENDMENTS, WAIVERS AND CONSENTS .............................32 9.1. Matters Subject to Modification ...............................32 9.2. Solicitation 0f Holders of Notes ..............................32 9.3. Binding Effect ................................................33 Section 10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT .............................................33 10.1. Form of Notes ................................................33 10.2. Note Register ................................................33 10.3. Issuance of New Notes upon Exchange or Transfer ..............33 10.4. Replacement of Notes .........................................34 ii Section 11. MISCELLANEOUS ...............................................34 11.1. Expenses .....................................................34 11.2. Notices ......................................................34 11.3. Reproduction of Documents ....................................35 11.4. Successors and Assigns .......................................35 11.5. Law Governing ................................................35 11.6. Headings .....................................................35 11.7. Counterparts .................................................35 11.8. Reliance on and Survival of Provisions .......................35 11.9. Integration and Severability .................................35 SCHEDULE I ..............................................................37 ANNEXES .................................................................37 I Subsidiaries .................................................44 II Litigation or Proceedings, Including Environmental Matters ...45 III Debt .........................................................46 1V Investments ..................................................47 V Liens ........................................................48 EXH1BITS ................................................................49 A Form of Series A Senior Note .................................49 B Form of Series B Senior Note .................................51 C Form of Series C Senior Note .................................53 D Form of Opinion of Purchasers' Counsel .......................55 E Form of Opinion of Company's Counsel .........................56 iii A. M. CASTLE & CO. NOTE AGREEMENT Dated as of March 1. 1998 To the Purchasers Named in the Attached Schedule I Ladies and Gentlemen: A. M. CASTLE & CO., a Delaware corporation (the "Company"), agrees with you as follows: ss.1. DESCRIPTION OF NOTES AND COMMITMENT 1.1. Description of Notes. The Company has authorized the issuance and sale of $55,000,000 aggregate principal amount of its Senior Notes (the "Notes"), to be dated the date of issuance, to bear interest from such date (computed on the basis of a 360-day year comprised of twelve 30-day months), payable semi-annually in arrears on March 1 and September 1 of each year, commencing September 1, 1998, and at maturity, at the following rates and shall be expressed to mature as follows: (i) $15,000,000 aggregate principal amount of the Notes (the "Series A Notes") shall bear interest at the rate of 6.40% per annum prior to maturity, shall bear interest on any overdue principal (including any overdue optional or required prepayment), on any overdue Make-Whole Amount (to the extent legally enforceable) and on any overdue installment of interest (to the extent legally enforceable) at a rate per annum equal to the greater of (a) 8.40% and (b) the sum of the reference rate announced by Bank of America NT&SA from time to time as its "prime rate" for United States domestic loans in United States dollars plus 2%, and shall be expressed to mature on March 1, 2008; (ii) $25,000,000 aggregate principal amount of the Notes (the "Series B Notes") shall bear interest at the rate of 6.53% per annum prior to maturity, shall bear interest on any overdue principal (including any overdue optional or required prepayment), on any overdue Make-Whole Amount (to the extent legally enforceable) and on any overdue installment of interest (to the extent legally enforceable) at a rate per annum equal to the greater of (a) 8.53% and (b) the sum of the reference rate announced by Bank of America NT&SA from time to time as its "prime rate" for United States domestic loans in United States dollars plus 2%, and shall be expressed to mature on March 1, 2010, and (iii) $15,000,000 aggregate principal amount of the Notes (the "Series C Notes") shall bear interest at the rate of 6.69% per annum prior to maturity, shall bear interest on any overdue principal (including any overdue optional or required prepayment), on any overdue Make-Whole Amount (to the extent legally enforceable) and on any overdue installment of interest (to the extent legally enforceable) at a rate per annum equal to the greater of (a) 8.69% and (b) the sum of the reference rate announced by Bank of America NT&SA from time to time as its "prime rate" for United States domestic loans in United States dollars plus 2%, and shall be expressed to mature on March 1, 2012. The Notes shall be substantially in the forms attached as Exhibits A, B and C, respectively. The term "Notes" as used herein shall include each Note delivered pursuant to this Note Agreement (the "Agreement") and each Note delivered in substitution or exchange therefor and. where applicable, shall include the singular number as well as the plural. Any reference to you in this Agreement shall in all instances be deemed to include any nominee of yours or any separate account or other person on whose behalf you are purchasing Notes. You and the other purchasers are sometimes referred to herein individually as a "Purchaser" and collectively as the "Purchasers." 1.2. Commitments Closing Date. Subject to the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth, the Company agrees to issue and sell to you, and you agree to purchase from the Company, Notes of the series and in the aggregate principal amount set forth opposite your name in the attached Schedule I at a price of 100% of the principal amount thereof. Delivery of and payment for the Notes shall be made at the offices of Gardner, Carton & Douglas, 321 North Clark Street, Quaker Tower, Chicago, Illinois 60610, at 9:00 a.m., Chicago time, on March 16, 1998 or at such later time or on such later date, not later than Noon, Chicago time, on March 16, 1998, as may be mutually agreed upon by the Company and the Purchasers (the "Closing Date"). The Notes shall be delivered to you in the form of one or more Notes in fully registered form, issued in your name or in the name of your nominee. Delivery of the Notes to you on the Closing Date shall be against payment of the purchase price thereof in Federal funds or other funds in U.S. dollars immediately available at The Northern Trust, Chicago, Illinois, ABA #0710 0015 2 for the account of A. M. Castle & Co., Account #82171. If on the Closing Date the Company shall fail to tender the Notes to you, you shall be relieved of all remaining obligations under this Agreement. Nothing in the preceding sentence shall relieve the Company of any liability occasioned by such failure to deliver the Notes. ss.2. PREPAYMENT OF NOTES 2.1. Required Prepayments. In addition to payment of all outstanding principal of the Notes at maturity and except as provided below in Section 2.2, regardless of the amount of Notes which may be outstanding from time to time, the Company shall prepay and there shall become due and payable on March 1 in each year: (a) $1,875,000 of the principal amount of the Series A Notes or such lesser amount as would constitute payment in full on the Series A Notes, commencing March 1, 2001 and ending March 1, 2007, inclusive, with the remaining principal payable on March 1, 2008; -2- (b) $5,000,000 of the principal amount of the Series B Notes or such lesser amount as would constitute payment in full on the Series B Notes. commencing March 1, 2006 and ending March 1, 2009, inclusive, with the remaining principal payable on March 1, 2010; and (c) $3.000.000 of the principal amount of the Series C Notes or such lesser amount as would constitute payment in full on the Series C Notes, commencing March 1, 2008 and ending March 1, 2011, inclusive, with the remaining principal payable on March 1, 2012. Each such prepayment shall be at a price of 100% of the principal amount prepaid, together with interest accrued thereon to the date of prepayment, without a Make-Whole Amount or other premium or penalty. 2.2. Optional Prepayments. -------------------- (a) Upon notice as provided in Section 2.3(a) and (b), the Company may prepay the Notes, in whole or in part, on any interest payment date, in an aggregate principal amount not less than $1,000,000, and in integral multiples of $100,000 in excess thereof or such lesser amount as shall constitute payment in full of the Notes. Each such prepayment shall be at a price of 100% of the principal amount to be prepaid, plus interest accrued thereon to the date of prepayment, plus the Make-Whole Amount. (b) Upon any optional prepayment of less than all of the Notes outstanding pursuant to Section 2.2(a) and Section 7.6, the principal amount of each prepayment and payment at maturity required by Section 2.1 on and after the date of such optional prepayment shall be reduced in the same proportion as the aggregate unpaid principal amount of the Notes is reduced as a result of such optional prepayment. (c) Except as provided in Section 2.1, Section 7.6 and in this Section 2.2, the Notes shall not be prepayable in whole or in part. 2.3. Notice of Prepayments. --------------------- (a) The Company shall give notice of any optional prepayment of the Notes pursuant to Section 2.2(a) to each holder of the Notes not less than 30 days nor more than 60 days before the date fixed for prepayment, specifying (i) such date, (ii) the principal amount of the holder's Notes to be prepaid on such date, (iii) the Determination Date for calculating the Make-Whole Amount, (iv) a calculation of the estimated amount of the Make-Whole Amount, showing in reasonable detail the method of calculation, and (v) the accrued interest applicable to the prepayment. Notice of prepayment having been so given, the aggregate principal amount of the Notes specified in such notice, together with the actual Make-Whole Amount, if any, and the accrued interest thereon shall become due and payable on the prepayment date. (b) The Company also shall give notice to each holder of the Notes to be prepaid pursuant to Section 2.2(a) by telecopy, telegram, telex or other same-day written communication, two Business Days prior to the prepayment date, of the actual Make-Whole Amount applicable to such prepayment and the details of the calculations used to determine the amount of such Make-Whole Amount. -3- 2.4. Surrender of Notes on Prepayment or Exchange. Subject to Section 2.5, upon any partial prepayment of a Note pursuant to this Section 2 or partial exchange of a Note pursuant to Section 10.3, such Note may, at the option of the holder thereof, (i) be surrendered to the Company pursuant to Section 10.3 in exchange for a new Note or Notes equal to the principal amount remaining unpaid on the surrendered Note, or (ii) be made available to the Company, at the Company's principal office, for notation thereon of the portion of the principal so prepaid or exchanged. In case the entire principal amount of any Note is prepaid, such Note shall be surrendered to the Company, upon its request, following such prepayment for cancellation and shall not be reissued. No Note shall be issued in lieu of a Note the entire principal amount of which has been prepaid. 2.5. Direct Payment an Deemed Date of Receipt. Notwithstanding any other provision contained in the Notes or this Agreement, the Company will pay all sums becoming due on each Note held by you or any subsequent Institutional Holder by wire transfer of immediately available funds to such account as you have designated in Schedule I, or as you or such subsequent Institutional Holder may otherwise designate by notice to the Company, in each case without presentment and, subject to Section 2.4(ii) above, without notations being made thereon, except that any such Note so paid or prepaid in full shall be surrendered to the Company, upon its written request, for cancellation. Any wire transfer shall identify such payment in the manner set forth in Schedule I and shall identify the payment as principal, Make-Whole Amount, if any, and/or interest. Any payment made pursuant to this Section 2.5 shall be deemed received on the payment date only if received before Noon, Chicago time. Payments received after Noon, Chicago time, shall be deemed received on the next succeeding Business Day, with the Make-Whole Amount, if any, and/or interest payable to such Business Day. 2.6. Allocation of Payments. In the case of a prepayment pursuant to Section 2.2(a), if less than the entire principal amount of all of the Notes outstanding is to be paid, the Company will prorate the aggregate principal amount to be prepaid among the outstanding Notes in proportion to the unpaid principal amounts thereof. 2.7. Payments Due on Saturdays, Sundays and Holidays. If any interest payment date on the Notes or the date fixed for any other payment of any Note or exchange of any Note is a day other than a Business Day, then such payment or exchange need not be made on such date but may be made on the next succeeding Business Day, with the Make-Whole Amount, if any, and/or interest payable to the actual date of payment. ss.3. REPRESENTATIONS 3.1. Representations of the Company. As an inducement to, and as part of the consideration for, your purchase of the Notes pursuant to this Agreement, the Company represents and warrants to you as follows: -4- (a) Corporate Organization and Authority. The Company is a solvent corporation duly organized, validly existing and in good standing under the laws of the State of Delaware, has all requisite corporate power and authority to own and operate its properties, to carry on its business as now conducted and as presently proposed to be conducted, to enter into and perform under the Agreement and to issue and sell the Notes as contemplated in the Agreement. (b) Qualification to Do Business. The Company is duly qualified or licensed and in good standing as a foreign corporation authorized to do business in each jurisdiction where the nature of the business transacted by it or the character of its properties owned or leased makes such qualification or licensing necessary, except for jurisdictions, individually or in the aggregate, where the failure to be so licensed or qualified would not have a Material Adverse Effect. (c) Subsidiaries. The Company has no Subsidiaries except those listed in the attached Annex 1, which correctly sets forth the jurisdiction of incorporation or formation and the percentage of the outstanding Voting Stock or other equity interests of each Subsidiary which is owned, of record or beneficially, by the Company and/or one or more Subsidiaries. Each Subsidiary has been duly organized and is validly existing and in good standing under the laws of its jurisdiction of incorporation or organization and is duly licensed or qualified and in good standing as a foreign corporation or other organization in each other jurisdiction where the nature of the business transacted by it or the character of its properties owned or leased makes such qualification or licensing necessary, except for jurisdictions, individually or in the aggregate, where the failure to be so licensed or qualified would not have a Material Adverse Effect. Each Subsidiary has full corporate or other power and authority to own and operate its properties and to carry on its business as now conducted and as presently proposed to be conducted. The Company and each Subsidiary have good and transferable title to all of the shares of capital stock, or all of the equity interests, they purport to own of each Subsidiary, free and clear in each case of any Lien, except as otherwise described in Annex I, and all such shares or interests have been duly issued and are fully paid and nonassessable. (d) Financial Statements. The consolidated balance sheets of the Company and its Subsidiaries as of December 31, 1996, 1995, 1994, 1993 and 1992, and the related consolidated statements of income, reinvested earnings and cash flows for each of the years ended on such dates, accompanied by the reports and unqualified opinions of Arthur Andersen LLP, independent public accountants, copies of which have heretofore been delivered to you, were prepared in accordance with GAAP consistently applied throughout the periods involved (except as otherwise noted therein) and present fairly the consolidated financial position of the Company and its Subsidiaries on such dates and the consolidated results of their operations and their cash flows for the years then ended. The unaudited consolidated balance sheets of the Company and its Subsidiaries as of September 30, 1997 and the related unaudited consolidated statements of income, reinvested earnings and cash flows for the three months and nine months ended September 30, 1997 and 1996, copies of which have heretofore been delivered to you, were prepared in accordance with generally accepted accounting principles and, subject to customary year end audit adjustments, present fairly the consolidated financial condition of the Company -5- and its Subsidiaries as of such dates and the consolidated results of their operations and changes in their cash flows for the periods then ended. (e) No Contingent Liabilities or Adverse Chance. Neither the Company nor any of its Subsidiaries has any contingent liabilities that, individually or in the aggregate, are material to the Company and its Subsidiaries, taken as a whole, other than as indicated in the most recent audited financial statements described in Section 3.1(d), and except as indicated as aforesaid, since December 31, 1996, there have been no changes in the condition, financial or otherwise, of the Company and its Subsidiaries on a consolidated basis, except changes occurring in the ordinary course of business, none of which, individually or in the aggregate, have had a Material Adverse Effect. (f) No Pending Litigation or Proceedings. Except as described in Annex II, there are no actions, suits or proceedings pending or, to the Company's knowledge, threatened against or affecting the Company or any of its Subsidiaries, at law or in equity or before or by any Federal. state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which would have, individually or in the aggregate, a Material Adverse Effect. (g) Compliance with Law. ------------------- (i) Neither the Company nor any of its Subsidiaries is: (x) in default with respect to any order, writ, injunction or decree of any court to which it is a named party; or (y) in default under any law, rule, regulation, ordinance or order relating to its or their respective businesses, the sanctions and penalties resulting from such defaults described in clauses (x) and (y) would have, individually or in the aggregate, a Material Adverse Effect. (ii) None of the Company, any Subsidiary or any Affiliate of the Company is an entity defined as a "designated national" within the meaning of the Foreign Assets Control Regulations, 31 C.F.R. Chapter V (other than Castle de Mexico, S.A. de C.V.), or is in violation of any Federal statute or Presidential Executive Order, or any rules or regulations of any department, agency or administrative body promulgated under any such statute or Order, concerning trade or other relations with any foreign country or any citizen or national thereof or the ownership or operation of any property, and no restriction of prohibition applicable to the Company or any Subsidiary under any such statute, Order, rule or regulation has, or would have, individually or in the aggregate, a Material Adverse Effect. (h) ERISA. ----- (i) The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws, except for such instances of noncompliance as have not resulted in and would not result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA (other than benefit liabilities pursuant to Plan terms) or the penalty or -6- excise tax provisions of the Code relating to employee benefit plans (as defined in Section 3 of ERISA), and no event, transaction or condition has occurred or exists that would result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other than such liabilities or Liens as would not be individually or in the aggregate material. (ii) The present value of the aggregate benefit liabilities under each of the Plans subject to Title IV of ERISA (other than multiemployer plans), determined as of the end of such Plan's most recently ended plan year on the basis of the actuarial assumptions specified for funding purposes in such Plan's most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities. The term "benefit liabilities" has the meaning specified in Section 4001 of ERISA and the terms "current value" and "present value" have the meanings specified in Section 3 of ERISA. (iii) The Company and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under Section 4201 or 4204 of ERISA in respect of Multiemployer Plans that individually or in the aggregate are material. (iv) The expected postretirement benefit obligation (determined as of the last day of the Company's most recently ended fiscal year in accordance with Financial Accounting Standards Board Statement No. 106, without regard to liabilities attributable to continuation coverage mandated by Section 4980B of the Code) of the Company and its Subsidiaries, is not material. (v) The execution and delivery of this Agreement and the issuance and sale of the Notes hereunder will not involve any transaction that is subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code. The representation by the Company in the first sentence of this clause (v) is made in reliance upon and subject to the accuracy of your representation in Section 3.2(b) as to the sources of the funds used to pay the purchase price of the Notes to be purchased by you. (i) Title to Properties. Except as disclosed on the most recent audited consolidated balance sheet described in the foregoing paragraph (d) of this Section 3.1, the Company and each Subsidiary have (x) good and marketable title in fee simple or its equivalent under applicable law to all the real property owned by them and (y) good and marketable title to all of the other property reflected in such balance sheet as owned by them or subsequently acquired by the Company or any Subsidiary (except as sold or otherwise disposed of in the ordinary course of business), in each case free from all Liens or defects in title except those permitted by Section 7.4. -7- (j) Leases. The Company and each Subsidiary enjoy peaceful and undisturbed possession under all leases under which the Company or such Subsidiary is a lessee or is operating. except for leases the termination of which. individually or in the aggregate. would not have a Material Adverse Effect. (k) Franchises, Patents, Trademarks and Other Rights. The Company and each Subsidiary have all franchises, permits, licenses and other authority necessary to carry on or used in their businesses as now being conducted, except for franchises. permits, licenses or other authority the lack or loss of which, individually or in the aggregate, would not have a Material Adverse Effect, and none are in default under any of such franchises, permits, licenses, or other authority except for defaults, individually or in the aggregate, which would not have a Material Adverse Effect. The Company and each Subsidiary own or possess all patents, trademarks, service marks, trade names, copyrights, and licenses, or rights with respect to the foregoing, necessary for, or used by them in, the present conduct of their businesses, without any known conflict with the rights of others. (1) Authorization. This Agreement and the Notes have been duly authorized on the part of the Company and the Agreement does, and the Notes when issued will, constitute the legal, valid and binding obligations of the Company, enforceable in accordance with their terms, except to the extent that enforcement of this Agreement or the Notes may be limited by applicable bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium or similar laws of general application relating to or affecting the enforcement of the rights of creditors or by equitable principles, regardless of whether enforcement is sought in equity or at law. The sale of the Notes, the execution and delivery of the Agreement and compliance by the Company with all of the provisions of this Agreement and of the Notes (i) are within the corporate powers of the Company, (ii) have been duly authorized by proper corporate action, (iii) are legal and will not violate any provisions of any law or regulation or order of any court, governmental authority or agency, and (iv) will not result in any breach of any of the provisions of, constitute a default under, or result in the creation of any Lien on any property of the Company or any Subsidiary under the provisions of any charter document, by-law, loan agreement or other agreement or instrument to which the Company or any Subsidiary is a party or by which any of them or their property may be bound. (m) No Defaults. No event has occurred and no condition exists which, upon the issuance of the Notes, would constitute a Default or an Event of Default under this Agreement. Neither the Company nor any Subsidiary is in default under any charter document, by-law, loan agreement or other material agreement or material instrument to which it is a party or by which it or its property may be bound. (n) Government Consent. None of the nature of the Company or any of its Subsidiaries, their respective businesses or properties, any relationship between the Company or any of its Subsidiaries and any other Person, or any circumstances relative to the offer, issuance, sale or delivery of the Notes or execution and delivery of this Agreement is such as to require a consent, approval or authorization of, withholding of objection on the part of, or filing, registration or qualification with, any governmental authority on the part of the Company or any of its Subsidiaries in connection with the execution and delivery of this Agreement or the offer. issuance, sale or delivery of the Notes. -8- (o) Taxes. All tax or information returns required to be filed by the Company or any Subsidiary in any jurisdiction have been timely filed, and all taxes. assessments, fees and other governmental charges or levies upon the Company or any Subsidiary, or upon any of their respective properties, assets, income or franchises, which are due and payable, have been paid timely or contested in good faith by appropriate proceedings that stay the collection thereof by the applicable governmental authority during the period of the contest and as to which adequate reserves are maintained in accordance with GAAP. The Company does not know of any proposed additional tax assessment against it or any Subsidiary for which adequate provision has not been made on its books in accordance with GAAP. The United States Federal income tax liability of the Company and its Subsidiaries for all taxable years up to and including the taxable year ended December 31, 1993, has been finally determined, and no material controversy in respect of additional taxes due by the Company or any Subsidiary since such date is pending or, to the Company's knowledge, threatened. The provisions for taxes on the books of the Company and each Subsidiary are adequate for all open years and for the current fiscal period. (p) Status under Certain Statutes. Neither the Company nor any Subsidiary is: (i) a "public utility company" or a "holding company," or an "affiliate" or a "subsidiary company" of a "holding company," or an "affiliate" of such a "subsidiary company," as such terms are defined in the Public Utility Holding Company Act of 1935, as amended, (ii) a "public utility" as defined in the Federal Power Act, as amended, or (iii) an "investment company" or an "affiliated person" thereof or an "affiliated person" of any such "affiliated person," as such terms are defined in the Investment Company Act of 1940, as amended. (q) Private Offering. Neither the Company, nor BancAmerica Robertson Stephens, the only Person authorized or employed by the Company as agent, broker, dealer or otherwise in connection with the offering of the Notes or any similar security of the Company, has offered any of the Notes or any similar security of the Company for sale to, or solicited offers to buy any thereof from, or otherwise approached or negotiated with respect thereto with, any prospective purchaser, other than ten (10) institutional investors, including the Purchasers, each of whom was offered all or a portion of the Notes at private sale for investment. Neither the Company nor anyone acting on its authorization will offer the Notes or any part thereof or any similar security for issuance or sale to, or solicit any offer to acquire any of the same from, anyone so as to cause the issuance and sale of the Notes to be subject to the provisions of Section 5 of the Securities Act. (r) Effect of Other Instruments. Neither the Company nor any Subsidiary is bound by any agreement or instrument or subject to any charter or other corporate restriction which in any way restricts any Subsidiary's ability to pay dividends or make advances to the Company or which has a Material Adverse Effect. (s) Use of Proceeds. The Company will use the net proceeds from the sale of the Notes to repay existing Indebtedness and for general corporate purposes. None of the transactions contemplated in this Agreement (including, without -9- limitation thereof. the use of the proceeds from the sale of the Notes) will violate or result in a violation of Section 7 of the Exchange Act, or any regulations issued pursuant thereto. including. without limitation. Regulations G, T, U and X of the Board of Governors of the Federal Reserve System (12 C.F.R.. Chapter II). Neither the Company nor any Subsidiary owns nor does the Company or any Subsidiary intend to carry or purchase any "margin stock" within the meaning of Regulation G. and none of the proceeds from the sale of the Notes will be used to purchase or carry or refinance any borrowing the proceeds of which were used to purchase or carry any "margin stock" or "margin security" in violation of Regulations G, T, U or X. (t) Condition of Property. All of the facilities of the Company and its Subsidiaries are in good operating condition and repair, except for facilities being repaired in the ordinary course of business or facilities which, individually or in the aggregate, are not material to the Company and its Subsidiaries, on a consolidated basis. (u) Books and Records. The Company and each of its Subsidiaries (i) maintain books, records and accounts in reasonable detail which accurately and fairly reflect their respective transactions and business affairs, and (ii) maintain a system of internal accounting controls sufficient to provide reasonable assurances that transactions are executed in accordance with management's general or specific authorization and to permit preparation of financial statements in accordance with GAAP. (v) Environmental Compliance. Except as disclosed in the attached Annex II. the Company and each Subsidiary (including their operations and the conditions at or in their Facilities) comply with all Environmental Laws except for violations which. individually or in the aggregate, would not have a Material Adverse Effect; the Company and each Subsidiary have obtained all permits under Environmental Laws necessary to their respective operations, all such permits are in full force and effect, and the Company and each Subsidiary are in compliance with all material terms and conditions of such permits except for permits, individually or in the aggregate, the lack of which or noncompliance with which would not have a Material Adverse Effect; and except as disclosed in the attached Annex II, neither the Company nor any of its Subsidiaries has any liability (contingent or otherwise) in connection with any Release of any Hazardous Material or the existence of any Hazardous Material on, under or about any Facility that could give rise to an Environmental Claim that would have a Material Adverse Effect. (w) Debt. Annex III sets forth a list of all outstanding Debt of the Company and its Subsidiaries as of the date of this Agreement, since which date there has been no material change in the amounts, interest rates, sinking funds, installment payments or maturities thereof. Neither the Company nor any Subsidiary is in default, and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of the Company or such Subsidiary and no event or condition exists with respect to any Debt of the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment. Except as disclosed in Annex III, neither the Company nor any Subsidiary has agreed or consented to cause or permit in the future (upon the -10- happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 7..4. (x) Full Disclosure. None of the financial statements referred to in Section 3.1(d). this Agreement, and any other written statement or document furnished by or on behalf of the Company to you in connection with the negotiation of the sale of the Notes and the execution and delivery of the Agreement, taken together, contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein or herein not misleading in light of the circumstances under which they were made. There is no fact (exclusive of general economic, political or social conditions or trends) particular to the Company and known by the Company that the Company has not disclosed to you in writing and that has a Material Adverse Effect or, to the Company's best knowledge, will have, individually or in the aggregate, a Material Adverse Effect. 3.2. Representations of the Purchasers. --------------------------------- (a) You represent, and in entering into this Agreement the Company understands, that you are acquiring the Notes for your own account and not with a view to any distribution thereof, provided that the disposition of your property shall at all times be and remain within your control; subject, however, to compliance with Federal securities laws. You acknowledge that the Notes have not been registered under the Securities Act and you understand that the Notes must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. You have been advised that the Company does not contemplate registering, and is not legally required to register, the Notes under the Securities Act. (b) You further represent that, as of the date of this Agreement, at least one of the following statements is an accurate representation as to each source of funds (a "Source") to be used by you to pay the purchase price of the Notes to be purchased by you hereunder: (i) if you are an insurance company, the Source does not include assets allocated to any separate account maintained by you in which any employee benefit plan (or its related trust) has any interest, other than a separate account that is maintained solely in connection with your fixed contractual obligations under which the amounts payable, or credited, to such plan and to any participant or beneficiary of such plan (including any annuitant) are not affected in any manner by the investment performance of the separate account; (ii) the Source is either (x) an insurance company pooled separate account, within the meaning of Prohibited Transaction Exemption ("PTE") 90-1 (issued January 29, 1990), or (y) a bank collective investment fund, within the meaning of PTE 91-38 (issued July 12, 1991) and, except as you have disclosed to the Company in writing pursuant to this paragraph (b), no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; -11- (iii) the Source constitutes assets of an "investment fund" (within the meaning of Part V of the QPAM Exemption) managed by a "qualified professional asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption), no employee benefit plan's assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed 20% of the total client assets managed by such QPAM, the conditions of Part I of the QPAM Exemption are satisfied, neither the QPAM nor a person controlling or controlled by the QPAM (applying the definition of "control" in Section V(e) of the QPAM Exemption) owns a 5% or more interest in the Company and (x) the identity of such QPAM and (y) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Company in writing pursuant to this clause (iii); (iv) the Source is a governmental plan; (v) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this paragraph (b)(v); (vi) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA; or (vii) if you are an insurance company and the Source includes assets of your general account, (A) your purchase of Notes is entitled to the exemption afforded by PTE 95-60 (issued July 12, 1995), provided the Company is not an affiliate (within the meaning of Section v(a) of PTE 95-60) of you, or (B) there is no Plan with respect to which the assets of your general account's reserves (as determined under Section 807(d) of the Code) for all contracts held by or on behalf of such Plan and all other Plans maintained by the same employer or its affiliates (as so defined) or by the same employee organization exceeds 10% of the liabilities of your general account. As used in this Section 3.2(b), the terms "employee benefit plan," "governmental plan," "party in interest" and "separate account" shall have the respective meanings assigned to such terms in Section 3 of ERISA. ss.4. CLOSING CONDITIONS Your obligation to purchase the Notes on the Closing Date shall be subject to the performance by the Company of its agreements hereunder, which are to be performed at or prior to the time of delivery of the Notes, and to the following conditions to be satisfied on or before the Closing Date: 4.1. Representations and Warranties. The representations and warranties of the Company contained in this Agreement, in the certificates delivered pursuant -12- to this Section 4 or otherwise made in connection herewith shall be true and correct on or as of the Closing Date and the Company shall have delivered to you a certificate to such effect, dated the Closing Date and executed by the president, the chief financial officer, the chief accounting officer or the treasurer of the Company. 4.2. Legal Opinions. You shall have received from Gardner. Carton & Douglas. who is acting as your special counsel in this transaction, and from Jerry M. Aufox, corporate counsel to the Company, their opinions, dated as of the Closing Date, in form and substance satisfactory to you and covering substantially the matters set forth or provided in the attached Exhibits D and E, respectively. 4.3. Events of Default. No Default or Event of Default shall have occurred and be continuing on the Closing Date, and the Company shall have delivered to you a certificate to such effect, dated the Closing Date and executed by the president, the chief financial officer, the chief accounting officer or the treasurer of the Company. 4.4. Payment of Fees and Expenses. The Company shall have paid all of the fees and expenses of Gardner, Carton & Douglas, your special counsel, through the Closing Date. 4.5. Legality of Investment. Your acquisition of the Notes shall constitute a legal investment as of the Closing Date under the laws and regulations of each jurisdiction to which you may be subject (without resort to any "basket" or "leeway" provision which permits the making of an investment without restrictions as to the character of the particular investment being made), and such acquisition shall not subject you to any penalty or other onerous condition in or pursuant to any such law or regulation; and you shall have received such certificates or other evidence as you may reasonably request to establish compliance with this condition. 4.6. Private Placement Number. A private placement number with respect to each series of Notes shall have been issued by S&P. 4.7. Proceedings and Documents. All proceedings taken in connection with the transactions contemplated by this Agreement, and all documents necessary to the consummation of such transactions shall be satisfactory in form and substance to you and your special counsel, and you and your special counsel shall have received copies (executed or certified as may be appropriate) of all legal documents or proceedings which you and they may reasonably request. ss.5. INTERPRETATION OF AGREEMENT 5.1. Certain Terms Defined. The terms hereinafter set forth when used in this Agreement shall have the following meanings: Adjusted Consolidated Net Worth - Consolidated Stockholders' Equity less all Restricted Investments that exceed, in the aggregate, 10% of Consolidated Stockholders' Equity. Affiliate - Any Person (other than a Subsidiary or an original Purchaser) (i) who is a director or executive officer of the Company or any Subsidiary, -13- (ii) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, the Company, (iii) which beneficially owns or holds securities representing 10% or more of the combined voting power of the Voting Stock of the Company, or (iv) of which securities representing 10% or more of the combined voting power of its Voting Stock (or in the case of a Person not a corporation, 10% or more of its equity) is beneficially owned or held by the Company or any Subsidiary. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person. whether through the ownership of voting securities, by contract or otherwise. Agreement - As defined in Section 1.1. Business Day - Any day, other than Saturday, Sunday or a legal holiday or any other day on which banking institutions in Chicago, Illinois generally are authorized by law to close. Capitalized Lease - Any lease the obligation for Rentals with respect to which, in accordance with GAAP, would be required to be capitalized on a balance sheet of the lessee or for which the amount of the asset and liability thereunder, as if so capitalized, would be required to be disclosed in a note to such balance sheet. Capitalized Lease Obligations - Any amounts required to be capitalized under any Capitalized Lease. Closing Date - As defined in Section 1.2. Code -The Internal Revenue Code of 1986, as amended. Commission - The Securities and Exchange Commission. Consolidated Debt - Debt of the Company and its Subsidiaries consolidated in accordance with GAAP. Consolidated Indebtedness - Indebtedness of the Company and its Subsidiaries consolidated in accordance with GAAP. Consolidated Net Income - For any period, the net income (or deficit) of the Company and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP. Consolidated Stockholders' Equity - The stockholders' equity of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP. Consolidated Total Assets - The assets of the Company and its Subsidiaries determined on a consolidated basis in accordance with GAAP. Consolidated Total Capitalization - The sum of (i) Consolidated Stockholders' Equity, (ii) 50% of the LIFO Reserve, and (iii) Consolidated Debt, less Restricted Investments in excess of 10% of Consolidated Stockholders' Equity. -14- Debt - The sum of (i) all Indebtedness (excluding obligations with respect to bankers' acceptances and trade acceptance financings to the extent such obligations, in the aggregate, are less than $5,000,000, but including any such obligations, in the aggregate, in excess of such amount), and (ii) the Total Investment. Default - Any event which, with the lapse of time or the giving of notice. or both, would become an Event of Default. Determination Date - Two Business Days before the date fixed for a prepayment pursuant to Section 2.2(a), Section 7.6 or the date of declaration pursuant to Section 8.2. Environmental Claim - Any notice of violation, claim, demand, abatement order or other order by any Person for any damage, including personal injury (including sickness, disease or death), tangible or intangible property damage, contribution, indemnity, indirect or consequential damages, damage to the environment, nuisance, pollution, contamination or other adverse effects on the environment, or for fines, penalties or restrictions, resulting from or based upon (i) the existence of a Release (whether sudden or non-sudden or accidental or non-accidental) of, or exposure to, any Hazardous Material in, into or onto the environment at, in, by, from or related to any Facility, (ii) the use, handling, transportation, storage, treatment or disposal of Hazardous Materials in connection with the operation of any Facility, or (iii) the violation, or alleged violation, of any statute, rule, regulation, ordinance, order, permit. license or authorization of or from any governmental authority, agency or court relating to environmental matters pertaining to the Facilities. Environmental Laws - All laws relating to environmental matters, including those relating to (i) fines, orders, injunctions, penalties, damages, contribution, cost recovery compensation, losses or injuries resulting from the Release or threatened Release of Hazardous Materials and to the generation, use, storage, transportation, or disposal of Hazardous Materials, in any manner applicable to the Company or any of its Subsidiaries or any of their respective properties, including, without limitation, the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C.ss.9601 et seq.), the Hazardous Material Transportation Act (49 U.S.C.ss. 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.ss. 6901 et seq.), the Federal Water Pollution Control Act (33 U.S.C.ss. 1251 et seq.), the Safe Drinking Water Act (42 U.S.C.ss.300f et.seq.), the Clean Air Act (42 U.S.C.ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C.ss.2601 et seq.), the Occupational Safety and Health Act (29 U.S.C.ss.651 et seq.), and the Emergency Planning and Community Right-to-Know Act (42 U.S.C.ss. 11001 et seq.), and (ii) environmental protection, including the National Environmental Policy Act (42 U.S.C.ss. 4321 et seq.), and comparable state and foreign laws; each as amended or supplemented, and any similar or analogous local, state, federal and foreign statutes and regulations promulgated pursuant thereto, each as in effect as of the date of determination. ERISA - The Employee Retirement Income Act of 1974, as amended from time to time and any successor statute. ' -15- ERISA Affiliate - The Company and (i) any corporation that is a member of a controlled group of corporations within the meaning of Section 414(b) of the Code of which the Company is a member; (ii) any trade or business (whether or not incorporated) which is a member of a group of trades or businesses under common control within the meaning of Section 414(c) of the Code of which the Company is a member; and (iii) any member of an affiliated service group within the meaning of Section 414(m) or (o) of the Code of which the Company, any corporation described in clause (i) above or any trade or business described in clause (ii) above is a member. Event of Default - As defined in Section 8.1. Exchange Act - The Securities Exchange Act of 1934, as amended. Facilities - Any and all real property (including all buildings, fixtures or other improvements located thereon) now or heretofore or hereafter owned, leased, operated or used (under permit or otherwise) by the Company or any of its Subsidiaries. GAAP - Generally accepted accounting principles in effect from time to time in the United States. Guaranties - All obligations (other than endorsements in the ordinary course of business of negotiable instruments for deposit or collection) of a Person guaranteeing, or in effect guaranteeing, any Indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including, without limitation, all obligations incurred through an agreement, contingent or otherwise, by such Person: (i) to purchase such Indebtedness or obligation or any property or assets constituting security therefor; (ii) to advance or supply funds (x) for the purchase or payment of such Indebtedness or obligation, (y) to maintain working capital or other balance sheet condition, or (z) otherwise to advance or make available funds for the purchase or payment of such Indebtedness or obligation; (iii) to lease property or to purchase securities or other property or services primarily for the purpose of assuring the owner of such Indebtedness or obligation against loss in respect thereof; or (iv) otherwise to assure the owner of the Indebtedness or obligation against loss in respect thereof. For the purposes of all computations made under this Agreement, Guaranties in respect of any Indebtedness for borrowed money shall be deemed to be Indebtedness equal to the principal amount of such Indebtedness for borrowed money which has been guaranteed, and Guaranties in respect of any other obligation or liability or any dividend shall be deemed to be Indebtedness equal to the maximum aggregate amount of such obligation, liability or dividend. Hazardous Materials - (i) Any chemical, material or substance defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous waste," "restricted hazardous waste," or "toxic substances" or "pollutant" or words of similar import under any Environmental Laws; (ii) any oil, petroleum or petroleum derived substance, any drilling fluid, produced water or other waste associated with the exploration, development or production of crude oil, any flammable substance or explosive, any radioactive material, any hazardous waste or substance, any toxic waste or substance or any other material or pollutant that (x) poses a hazard to any property of the Company or any of its Subsidiaries or to Persons on or about such property, or (y) causes such property to be in violation of any -16- Environmental Law; (iii) any friable asbestos, urea formaldehyde foam insulation, electrical equipment which contains any oil or dielectric fluid with levels of polychlorinated biphenyls in excess of fifty parts per million; and (iv) any other chemical, material or substance. exposure to which is prohibited, limited or regulated by any governmental authority. Indebtedness - For any Person, without duplication, all (i) obligations for borrowed money or to pay the deferred purchase price of property or assets (except trade account payables), (ii) obligations secured by any Lien upon property or assets owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligations, (iii) obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired, notwithstanding the fact that the rights and remedies of the seller, lender or lessor under such agreement in the event of default are limited to repossession or sale of property, (iv) Capitalized Lease Obligations, and (v) Guaranties of obligations of others of the character referred to in the foregoing clauses (i) through (iv), but excluding from Indebtedness the Total Investment. Institutional Holder - Any bank, trust company, insurance company, pension fund, mutual fund or other similar financial institution, including, without limiting the foregoing, any "qualified institutional buyer" within the meaning of Rule 144A under the Securities Act, which is or becomes a holder of any Note. Investments - All investments made, in cash or by delivery of property, directly or indirectly, in any other Person, whether by acquisition of shares of capital stock, equity interests, indebtedness or other obligations or securities or by loan, advance, capital contribution or otherwise; provided, however, that "Investments" shall not mean or include routine investments in property to be used or consumed in the ordinary course of business. Lien - Any mortgage, pledge, security interest, encumbrance, lien or charge of any kind; including any agreement to grant any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, including a Capitalized Lease, and the filing of or agreement to file any financing statement under the Uniform Commercial Code of any jurisdiction in connection with any of the foregoing. LIFO Reserve - The difference between the cost of inventory using the last-in, first-out ("LIFO") method of valuing inventory under GAAP and the cost of inventory using the replacement cost method under GAAP, so long as the Company and its Subsidiaries are reporting the value of their inventory under the LIFO method for purposes of GAAP. Make-Whole Amount. As of any Determination Date, to the extent that the Reinvestment Yield on such Determination Date is lower than the interest rate payable on or in respect of the Notes, the excess of (a) the present value of the principal and interest payments to be foregone by any prepayment (exclusive of accrued interest on such Notes through the date of prepayment) on such Notes (taking into account the manner of application of such prepayment required by Section 2.2(b)), determined by discounting (semi-annually on the basis of a 360-day year composed of twelve 30-day months), such payments at a rate that is equal to the Reinvestment Yield over (b) the aggregate principal amount of such Notes then to be prepaid or paid. To the extent that the Reinvestment Yield on any Determination Date is equal to or higher than the interest rate payable on or in respect of such Notes, the Make-Whole Amount is zero. -17- Material Adverse Effect - (i) A material adverse effect on the business. assets, properties. profits, prospects, operations or condition, financial or otherwise, of the Company and its Subsidiaries. on a consolidated basis, (ii) the impairment of the ability of the Company to perform its obligations under this Agreement or the Notes, or (iii) the impairment of the ability of the holders of the Notes to enforce the Company's obligations under this Agreement or the Notes. Moody's - Moody's Investor Service, Inc. Net Working Capital - The sum of (i) the current assets of the Company and its Subsidiaries determined in accordance with GAAP and (ii) 75% of the LIFO Reserve, less the current liabilities of the Company and its Subsidiaries determined in accordance with GAAP. i Notes - As defined in Section 1.1. PBGC - The Pension Benefit Guaranty Corporation or any successor thereto. Person - Any individual, corporation, partnership, joint venture, limited liability company, association, joint-stock company, trust, unincorporated organization or government or any governmental authority, agency or political subdivision. Plan - Any employee pension benefit plan, as defined in Section 3(2) of ERISA, that has been established by, or contributed to, or is maintained by the Company, any Subsidiary or any ERISA Affiliate. Purchasers - As defined in Section 1.1. Receivables Purchase Agreement - The Receivables Purchase Agreement dated as of March 1, 1995, among the Company, various financial institutions named therein, Bank of America Illinois, as administrative agent, and PNC Bank, National Association, as managing agent and documentation agent. Reinvestment Yield - The sum of (i) 0.50% plus (ii) the yield reported, as of 10:00 A.M. (New York City time) on the Determination Date, on page PX1 of the Bloomberg Information System (or, if not available, any other nationally recognized trading screen reporting on-line intraday trading in United States government securities) for actively traded U.S. Treasury securities having a maturity equal to the Weighted Average Life to Maturity of the Notes then being prepaid or paid as of the date of prepayment or payment, rounded to the nearest month, or if such yields shall not be reported as of such time or the yields reported as of such time are not ascertainable in accordance with the preceding clause, then the arithmetic mean of the yields published in the statistical release designated H.15(519) (or any successor publication) of the Board of Governors of the Federal Reserve System under the caption "U.S. Government Securities--Treasury Constant Maturities" (the "statistical release") for the maturity corresponding to the remaining Weighted Average Life to Maturity of the -18- Notes as of the date of such prepayment or payment rounded to the nearest month. For purposes of calculating the Reinvestment Yield, the most recent weekly statistical release published prior to the applicable Determination Date shall be used. In the event the statistical release is not published, the arithmetic mean of such reasonably comparable index, as may be designated by the holders of at least 51 % in aggregate principal amount of the Notes, for the maturity corresponding to the remaining Weighted Average Life to Maturity of the Notes as of the date of prepayment or payment, as the case may be, rounded to the nearest month shall be used. If no maturity exactly corresponding to such rounded Weighted Average Life to Maturity shall appear therein. yields for the two most closely corresponding published maturities (one of which occurs prior and the other subsequent to the Weighted Average Life to Maturity) shall be calculated pursuant to the foregoing sentence and the Reinvestment Yield shall be interpolated from such yields on a straight-line basis (rounding, in each of such relevant periods, to the nearest month). Release - Any release, spill, emission, leaking, pumping, pouring, emptying. dumping. injection, escaping, deposit, disposal, discharge, dispersal, leaching or migration into the indoor or outdoor environment (including the abandonment or disposal of any barrel. container or other closed receptacle containing any Hazardous Material), or into or out of any Facility, including the movement of any Hazardous Material through the air, soil, surface water, groundwater or property. Rentals - As of the date of any determination thereof, all fixed payments (including all payments which the lessee is obligated to make to the lessor on termination of the lease or surrender of the property) payable by the Company or a Subsidiary, as lessee or sublessee under a lease of real or personal property, but exclusive of any amounts required to be paid by the Company or a Subsidiary (whether or not designated as rents or additional rents) on account of maintenance, repairs, insurance, taxes, assessments, amortization and similar charges. Fixed rents under any so-called "percentage leases" shall be computed on the basis of the minimum rents, if any, required to be paid by the lessee, regardless of sales volume or gross revenues. Restricted Investments - Any Investments of the Company and its Subsidiaries other than: (i) Investments in existing and hereafter created or designated Subsidiaries and any Person that concurrently with such Investment becomes a Subsidiary; (ii) Investments in (A) commercial paper of a domestic issuer maturing in 270 days or less from the date of issuance which is rated P-2 or better by Moody's or A-2 or better by S&P, (B) certificates of deposit or banker's acceptances issued by commercial banks or trust companies located in the United States of America and organized under its laws or the laws of any state thereof each having a combined capital, surplus and undivided profits of $100,000,000 or more, (C) obligations of or fully guaranteed by the United States of America or an agency thereof maturing within three years from the date of acquisition, (D) municipal securities maturing within three years from the date of acquisition which are rated in one of the top two rating classifications by at least-one national rating agency, or (E) money market instrument programs which are classified as current assets in accordance with GAAP; -19- (iii) Extensions of credit in the nature of accounts receivable or notes receivable arising from the sale of goods and services m the ordinary course of business: (iv) Shares of stock, obligations or other securities received in settlement of claims arising in the ordinary course of business; (v) Participations in notes maturing within 60 days which are rated P-2 or better by Moody's or A-2 or better by S&P (vi) Advances to officers, employees, subcontractors or suppliers not exceeding $5,000,000 in the aggregate; and (vii) Investments existing as of the date of this Agreement and described in the attached Annex IV. S&P - Standard & Poor's Ratings Group, a division of McGraw Hill, Inc. Securities Act - The Securities Act of 1933, as amended. Subsidiary. Any Person a majority or more of the shares of Voting Stock of which, or in the case of a Person which is riot a corporation a majority or more of the equity of which, is owned or controlled, directly or indirectly, by the Company. Total Investment - As defined in the Receivables Purchase Agreement as in effect on the date of this Agreement. Voting Stock - Capital stack of any class of a corporation having power under ordinary circumstances to vote for the election of members of the board of directors of such corporation, or persons performing similar functions. Weighted Average Life to Maturity - As applied to any prepayment of principal of the Notes at any date, the number of years obtained by dividing (a) the then outstanding principal amount of the Notes to be prepaid into (b) the sum of the products obtained by multiplying (i) the amount of each then remaining installment, sinking fund, serial maturity, or other required payment, including payment at final maturity, foregone by virtue of such prepayment of the Notes, by (ii) the number of years (calculated to the neatest 1112th) which would have elapsed between such date and the making of such payment. Wholly-Owned - When applied to a Subsidiary, any Subsidiary 100% of the Voting Stock or other equity interests of which is owned by the Company and/or its Wholly-Owned Subsidiaries, other than directors' qualifying shares or, in the case of Subsidiaries organized under the laws of a jurisdiction other than the United States or a state thereof, nominal shares held by foreign nationals in accordance with local law. -20- Terms which are not defined in this Section and are defined in other Sections of this Agreement shall have the meanings specified therein. 5.2. Accounting Principles. Where the character or amount of any asset or liability or item of income or expense is required to be determined or any consolidation or other accounting computation is required to be made for the purposes of this Agreement, the same shall be done in accordance with GAAP, except where such principles are inconsistent with the requirements of this Agreement. 5.3. Valuation Principles. Except where indicated expressly to the contrary by the use of terms such as "fair value," "fair market value" or "market value," each asset, each liability and each capital item of any Person, and any quantity derivable by a computation involving any of such assets, liabilities or capital items, shall be taken at the net book value thereof for all purposes of this Agreement. "Net book value" with respect to any asset, liability or capital item of any Person shall mean the amount at which the same is recorded or, in accordance with GAAP should have been recorded, in the books of account of such Person, as reduced by any reserves which have been or, in accordance with GAAP should have been, set aside with respect thereto, but in every case (whether or not permitted in accordance with GAAP) without giving effect to any write-up, write-down or write-off (other than any write-down or write-off the entire amount of which was charged to Consolidated Net Income or to a reserve which was a charge to Consolidated Net Income) relating thereto which wag made after the date of this Agreement. 5.4. Direct or Indirect Actions. Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether the action in question is taken directly or indirectly by such Person. ss.6. AFFIRMATIVE COVENANTS The Company agrees that, for so long as any amount remains unpaid on any Note: 6.1. Corporate Existence. The Company will maintain and preserve, and will cause each Subsidiary to maintain and preserve, its corporate or partnership existence and right to carry on its business and maintain, preserve, renew and extend all of its rights, powers, privileges and franchises necessary to the proper conduct of its business; provided, however, that the foregoing shall not prevent any transaction permitted by Section 7.5, Section 7.6 or Section 7.7, or the termination of the corporate or partnership existence of any Subsidiary or of any right, power, privilege or franchise of any Subsidiary if, in the reasonable good faith opinion of the Board of Directors of the Company, such termination is in the best interests of the Company, is not disadvantageous to the holders of the Notes, and is not otherwise prohibited by this Agreement. 6.2. Insurance, The Company will, arid will cause each Subsidiary to, maintain insurance coverage with financially sound and reputable insurers in such forms and amounts, with such deductibles and against such risks as are required by law or sound business practice and are customary for corporations engaged in the same or similar businesses and owning and operating similar properties as the Company and its Subsidiaries. -21- 6.3. Taxes, Claims for Labor and Materials. The Company will, and will cause each Subsidiary to, file timely all tax returns required to be filed in any jurisdiction and pay and discharge all taxes, assessments, fees and other governmental charges or levies imposed upon the Company or any Subsidiary or upon any of their respective properties, including leased properties (but only to the extent required to do so by the applicable lease), assets, income or franchises, prior to the date on which penalties attach thereto, and all lawful claims which, if unpaid. might become a Lien upon any of their respective properties or assets not permitted by Section 7.4, provided that neither the Company nor any Subsidiary shall be required to pay any such tax, assessment, fee, charge, levy or claim, the payment of which is being contested in good faith and by proper proceedings that will stay the collection thereof or the forfeiture or sale of any property and with respect to which adequate reserves are maintained in accordance with GAAP. 6.4. Maintenance of Properties. The Company will maintain, preserve and keep, and will cause each Subsidiary to maintain, preserve and keep, its properties (whether owned in fee or a leasehold interest), other than any property which is obsolete or, in the good faith judgment of the Company, no longer necessary for the operation of the business of the Company or any Subsidiary, in good repair and working order, ordinary wear and tear excepted, and from time to time will make all necessary repairs, replacements, renewals and additions thereto so that the business carried on in connection therewith may be properly conducted. 6.5. Maintenance of Records. The Company will keep, and will cause each Subsidiary to keep, at all times proper books of record and account in which full, true and correct entries will be made of all dealings or transactions of or in relation to the business and affairs of the Company or such subsidiary in accordance with GAAP consistently applied throughout the period involved (except for such changes as are disclosed in such financial statements or in the notes thereto and concurred in by the Company's independent certified public accountants), and the Company will, and will cause each Subsidiary to, provide reasonable protection against loss or damage to such books of record and account. 6.6. Financial Information and Reports. The Company will furnish to you and to any other Institutional Holder (in duplicate if you or such other holder so request) the following: (a) As soon as available and in any event within 45 days after the end of each of the first three quarterly accounting periods of each fiscal year of the Company, a consolidated balance sheet of the Company and its Subsidiaries as of the end of such period and consolidated statements of income and cash flows of the Company and its Subsidiaries for the periods beginning on the first day of such fiscal year and the first day of such quarterly accounting period (for the statements of income) and ending on the date of such balance sheet, setting forth in comparative form the corresponding consolidated figures for the corresponding periods of the preceding fiscal year, all in reasonable detail, prepared in accordance with GAAP consistently applied throughout the period involved and certified by the chief financial officer or chief accounting officer of the Company (i) outlining the basis of presentation, and (ii) stating that the information presented in such financial statements contains all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company and its -22- Subsidiaries as of such dates and the consolidated results of their operations and cash flows for the periods then ended, except that such financial statements condense or omit certain footnotes pursuant to the rules and regulations of the Commission. Delivery within the time period specified above of copies of the Company's Quarterly Reports on form 10-Q prepared in compliance with the requirements therefor and filed with the Commission shall be deemed to satisfy the requirements of this Section 6.6(a). (b) As soon as available and in any event within 90 days after the last day of each fiscal year, a consolidated balance sheet of the Company and its Subsidiaries as of the end of such fiscal year and the related consolidated statements of income, reinvested earnings and cash flows for such fiscal year, in each case setting forth in comparative form figures for the preceding fiscal year, all in reasonable detail, prepared in accordance with GAAP consistently applied throughout the period involved (except for changes disclosed in such financial statements or in the notes thereto and concurred in by the Company's independent certified public accountants) and accompanied by a report as to the consolidated balance sheet and the related consolidated statements of income, reinvested earnings and cash flows unqualified as to scope of audit and unqualified as to going concern by Arthur Andersen LLP, or any other firm of independent public accountants of recognized national standing selected by the Company, to the effect that such financial statements gave been prepared in conformity with GAAP and present fairly, in all material respects, the consolidated financial position and results of operations and cash flows of the Company and its Subsidiaries and that the examination of such financial statements by such accounting firm has been made in accordance with generally accepted auditing standards. Delivery within the time period specified above of the Company's Annual Report on Form 10-K for such fiscal year (together with the Company's annual report to shareholders prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in compliance with the requirements therefor and filed with the Commission, together with the accountant's certificate described in Section 6.6(b), shall be deemed to satisfy the requirements of this Section 6.6(b). (c) Together with the consolidated financial statements delivered pursuant paragraphs (a) and (b) of this Section 6.6, a certificate of the chief financial officer, accounting officer or treasurer of the Company, (i) to the effect that such officer has re-examined the terms and provisions of this Agreement and that on the date such calculations were made, during the periods covered by such financial reports and as of the end of such periods the Company is not, or was not, in default in the fulfillment of any of the terms, covenants, provisions and conditions of this Agreement and that no Default or Event of Default is occurring or has occurred as of the date of such certificate, during the periods covered by such financial statements and as of the end of such periods, or if such officer is aware of any Default or Event of Default, such officer shall disclose in such statement the nature thereof, its period of existence and what action, if any, the Company has taken or proposes to take with respect thereto, and (ii) stating whether the Company is in compliance with Sections 7.1 through 7.10 and setting forth, in sufficient detail, the information and computations required to establish whether or not the Company was in compliance with the requirements of Sections 7.1 through 7.8 during the periods covered by the financial statements then being furnished and as of the end of such periods. -23- (d) Together with the financial reports delivered pursuant to paragraph (b) of this Section 6.6, a letter of the Company's independent certified public accountants stating that they have reviewed this Agreement and stating whether, in making their audit, they have become aware of any condition or event that then constitutes a Default or an Event of Default, and, if they are aware that any such condition or event then exists, specifying the nature and period of the existence thereof (it being understood that such accountants shall not be liable, directly or indirectly, for any failure to obtain knowledge of any Default or Event of Default unless such accountants should have obtained knowledge thereof in making an audit in accordance with generally accepted auditing standards or did not make such an audit). (e) Concurrently with notice filed with the Commission, notice of (i) the filing of any suit, action, claim or counterclaim against the Company or any Subsidiary in which the amount claimed as damages against the Company or any Subsidiary exceeds $5,000,000 after deducting the amount which the Company reasonably believes is covered by insurance, and (ii) the entering of any judgment or decree against the Company or any Subsidiary if the aggregate amount of all judgments and decrees then outstanding against the Company and all Subsidiaries exceeds $2,500,000 after deducting the amount the Company or any Subsidiary (x) is insured therefor and with respect to which the insurer has assumed responsibility in writing and (y) is otherwise indemnified therefor if the terms of such indemnification are satisfactory to holders of 55% or more in aggregate principal amount of the Notes then outstanding. (f) As soon as available, copies of each financial statement, notice, report and proxy statement which the Company furnishes to its shareholders generally; within 15 days of filing, copies of each registration statement and periodic report (without exhibits and other than registration statements relating to employee benefit plans) which the Company files with the Commission, and any similar or successor agency of the Federal government administering the Securities Act, and Exchange Act or the Trust Indenture Act of 1939, as amended; without duplication, within 15 days of filing, copies of each report (other than reports relating solely to the issuance of, or transactions by others involving, its securities) relating to the Company or its securities which the Company files with any securities exchange on which any of the Company's securities may be registered; copies of any orders applicable to the Company or a Subsidiary in any material proceedings to which the Company or any Subsidiary is a party, issued by any governmental agency, Federal or state, having jurisdiction over the Company or any Subsidiary and, at any time as the Company is not a reporting company under Section 13 or 15(d) of the Exchange Act or has not complied with the requirements for the exemption from registration under the Exchange Act set forth in Rule 12g-3-2(b), such financial or other information as any holder of the Notes or prospective purchaser of the Notes may reasonably request. (g) As soon as available, a copy of each other report submitted to the Company or any Subsidiary by independent accountants retained by the Company or any Subsidiary in connection with any special audit made by them of the books of the Company or any Subsidiary. (h) Promptly following any change in the composition of the Company's Subsidiaries from that set forth in Annex I, as theretofore updated pursuant to this paragraph, and also at the time of delivery of the financial statements referred to in Section 6.6(b), an updated list setting forth the information specified in Annex I. -24- (i) Such additional information as you or such other Institutional Holder of the Notes may reasonably request concerning the Company and its Subsidiaries. 6.7. Inspection of Properties and Records. The Company will allow, and will cause each Subsidiary to allow, any representative of you or any other Institutional Holder. so long as you or such other Institutional Holder holds any Note, to visit and inspect any of its properties, to examine (and, if at the time thereof any Default or Event of Default has occurred and is continuing, make copies and extracts of) its books of record and account and to discuss its affairs, finances and accounts with its officers and its present and former public accountants (and by this provision the Company authorizes such accountants to discuss with you or such Institutional Holder the Company's and any Subsidiary's affairs, finances and accounts), all at such reasonable times and upon such reasonable notice and as often as you or such Institutional Holder may reasonably request and, if at the time thereof any Default or Event of Default has occurred and is continuing, at the Company's expense. 6.8. ERISA. (a) All assumptions and methods used to determine the actuarial valuation of employee benefits. both vested and unvested, under any Plan subject to Title IV of ERISA, and each such Plan, whether now existing or adopted after the date hereof, will comply in all material respects with ERISA. (b) The Company will not at any time permit any Plan to: (i) engage in any "prohibited transaction" as such term is defined in Section 4975 of the Code or in Section 406 of ERISA; (ii) incur any "accumulated funding deficiency" as such term is defined in Section 302 of ERISA, whether or not waived; or (iii) be terminated under circumstances which are likely to result in the imposition of a Lien on the property of the Company or any ERISA Affiliate pursuant to Section 4068 of ERISA; if the event or condition described in clauses (i), (ii) or (iii) above is likely to subject the Company or an ERISA Affiliate to liabilities which, individually or in the aggregate, would have a Material Adverse Effect. (c) Upon the request of you or any subsequent Institutional Holder, the Company will furnish a copy of the annual report of each Plan (Form 5500) required to be filed with the Internal Revenue Service. (d) Within 5 days after obtaining knowledge of any event specified in clauses (i) through (vi) below that would result in a Material Adverse Effect, the Company will give you and any subsequent Institutional Holder written notice of (i) a reportable event with respect to any Plan: (ii) the institution of any -25- steps by any of the Company, any ERISA Affiliate or the PBGC to terminate any Plan; (iii) the institution of any steps by any of the Company or any ERISA Affiliate to withdraw from any Plan; (iv) a prohibited transaction in connection with any Plan; (v) any material increase in the contingent liability of the Company or any Subsidiary with respect to any post-retirement welfare liability; or (vi) the taking of any action by the Internal Revenue Service. the Department of Labor or the PBGC with respect to any of the foregoing. 6.9. Compliance with Laws. -------------------- (a) The Company will comply, and will cause each Subsidiary to comply, with all laws, rules and regulations, including Environmental Laws, relating to its or their respectiVe businesses, other than laws, rules and regulations the failure to comply with which or the sanctions and penalties resulting therefrom, individually or in the aggregate. would not have a Material Adverse Effect. (b) Promptly upon the occurrence thereof, the Company will give you and each other Institutional Holder notice of the institution of any proceedings against, or the receipt of written notice of potential liability or responsibility of, the Company or any Subsidiary for violation, or the alleged violation, of any Environmental Law which violation would give rise to a Material Adverse Effect. 6.10. Acquisition of Notes. Neither the Company nor any Subsidiary nor any Affiliate of any of them, directly or indirectly, will repurchase, redeem, prepay or otherwise acquire, directly or indirectly, any Notes except upon payment or prepayment of the Notes pursuant to Section 2 or Section 7.6. The Company will forthwith cancel any Notes in any manner or at any time acquired by the Company or any Subsidiary or Affiliate of any of them, and such Notes shall not be deemed to be outstanding for any of the purposes of this Agreement or the Notes. 6.11. Private Placement Number. The Company consents to the filing by your special counsel of copies of this Agreement with S&P to obtain a private placement number. ss.7. NEGATIVE COVENANTS The Company agrees that, for so long as any amount remains unpaid on any Note: 7.1. Adjusted Consolidated Net Worth. The Company will not permit its Adjusted Consolidated Net Worth (calculated on the last day of each fiscal quarter) to be less than $74,296,000 plus the cumulative sum of 40% of its Consolidated Net income (but only if a positive number) for (i) each completed fiscal year of the Company ending after December 31, 1994, and (ii) the period from the beginning of the fiscal year of which the fiscal quarter being measured is a part to the last day of such fiscal quarter. 7.2. Consolidated Debt. The Company will not permit the ratio (calculated on the last day of each fiscal quarter) of Consolidated Debt to Consolidated Total Capitalization to exceed the ratio of .55 to 1.0. -26- 7.3. Net Working. Capital. The Company will not permit the ratio (calculated on the last day of each fiscal quarter) of Net Working Capital to Consolidated Debt to be less than 1.2 to 1.0. 7.4. Liens. The Company will not, and will not permit any Subsidiary to, permit to exist, create, assume or incur, directly or indirectly, any Lien on its properties or assets. whether now owned or hereafter acquired, except: (a) Liens on property created substantially contemporaneously or within 180 days of the acquisition thereof to secure or provide for all or a portion of the purchase price of such property, provided that (i) such Liens do not extend to other property of the Company or any Subsidiary, (ii) the aggregate principal amount of Indebtedness secured by each such Lien does not exceed 80% of the purchase price at the time of acquisition of the property subject to such Lien, and (iii) the Indebtedness secured by such Liens is otherwise permitted by Section 7.2 and Section 7.3 of this Agreement; (b) Liens for taxes, assessments or governmental charges not then due and delinquent or the validity of which is being contested in good faith by appropriate proceedings and as to which the Company has established adequate reserves therefor on its books in accordance with GAAP; (c) Liens arising in connection with court proceedings, provided the execution of such Liens is effectively stayed, such Liens are being contested in good faith by appropriate proceedings and the Company has established adequate reserves therefor on its books in accordance with GAAP; (d) Liens arising in the ordinary course of business and not incurred in connection with the borrowing of money (including mechanic's and materialmen's liens and minor survey exceptions on real property) that in the aggregate do not materially interfere with the conduct of the business of the Company or any Subsidiary or materially impair the value of the property or assets subject to such Liens; (e) Liens in connection with worker' compensation, unemployment insurance or other social security laws to secure the public or statutory obligations of the Company or any Subsidiary; (f) Liens securing Indebtedness of a Subsidiary to the Company; (g) Liens permitted by and arising under the Receivables Purchase Agreement; (h) Liens existing on property or assets of the Company or any Subsidiary as of the date of this Agreement that are described in the attached Annex V; (i) Liens not otherwise permitted by paragraphs (a) through (h) of this Section 7.4 created, assumed or incurred subsequent to the Closing Date to secure Indebtedness, provided that at the time of creating, assuming or incurring such additional Indebtedness and after giving effect thereto and to -27- the application of the proceeds therefrom the sum (without duplication) of the aggregate principal amount of outstanding Consolidated Indebtedness secured by Liens permitted by this Section 7.4(i) does not exceed 10% of Adjusted Consolidated Net Worth. 7.5. Merger or Consolidation. The Company will not. and will not permit any Subsidiary to. merge or consolidate with, or convey, transfer or lease all or substantially all of its assets in a single transaction or series of transactions to, any Person. except that: (a) The Company may merge into or consolidate with. or sell all or substantially all of its assets to, any Person or permit any Person to merge into or consolidate with it, provided that immediately after giving effect thereto, (i) the Company is the successor corporation or, if the Company is not the successor corporation, the successor corporation is a solvent corporation organized under the laws of a state of the United States of America or the District of Columbia and expressly assumes in writing the Company's obligations under the Notes and this Agreement; and (ii) there shall exist no Default or Event of Default. (b) Any Subsidiary may (i) merge into the Company or a Wholly-Owned Subsidiary, (ii) convey, transfer or lease all or any part of its assets to the Company or a Wholly-Owned Subsidiary, and (iii) merge with any Person which, as a result of such merger, becomes a Wholly-Owned Subsidiary; provided in each instance set forth in clauses (i) through (iii) that immediately before and after giving effect thereto, there shall exist no Default or Event of Default. 7.6. Sale of Assets. The Company will riot, and will not permit any Subsidiary to, sell, lease, transfer or otherwise dispose of, including by way of merger (collectively a "Disposition"), any assets, including capital stock or equity interests of Subsidiaries, in one or a series of. transactions, other than in the ordinary course of business, to any Person, except to the Company or a Wholly-Owned Subsidiary, (i) if, in any fiscal year, after giving effect to such Disposition, the aggregate net book value of assets subject to Dispositions during such fiscal year would exceed 15% of Consolidated Total Assets as of the end of the immediately preceding fiscal year or (ii) if a Default or Event of Default exists or would exist. Notwithstanding the foregoing, the Company may, or may permit a Subsidiary to, make a Disposition and the assets subject to such Disposition shall not be subject to or included in the foregoing limitation and computation contained in clause (i) of the preceding sentence to the extent that (x) such assets are leased back by the Company or such Subsidiary, as lessee, within 180 days following the date of the Disposition, or (y) the net proceeds from such Disposition are (1) reinvested in productive assets of the Company or a Subsidiary of at least equivalent value within 180 days of the date of such Disposition, or (2) applied to the payment or prepayment of outstanding senior Indebtedness. Any repayment of Notes pursuant to this Section 7.6 shall be in accordance with Section 2.2(a). 7.7. Disposition of Stock of Subsidiaries. The Company will not permit any Subsidiary to issue its capital stock or other equity interests, or any warrants, rights or options to purchase, or securities convertible into or exchangeable for, such capital stock or other equity interests, to any Person other than the Company or a Wholly-Owned Subsidiary. The Company will not, and will not permit any Subsidiary to, sell, transfer or otherwise dispose of (other -28- than to the Company or a Wholly-Owned Subsidiary) any capital stock or other equity interests (including any warrants, rights or options to purchase, or securities convertible into or exchangeable for, capital stock or other equity interests) or Indebtedness of any Subsidiary. unless: (a) simultaneously therewith all Investments in such Subsidiary owned by the Company and every other Subsidiary are disposed of as an entirety; (b) such Subsidiary does not have any continuing Investment in the Company or any other Subsidiary not being simultaneously disposed of; and (c) such sale, transfer or other disposition is permitted by Section 7.6. 7.8. Leases. The Company will not, and will not permit any Subsidiary to, enter into or permit to exist any Capitalized Lease which requires the payment during the remaining term thereof by the Company or any Subsidiary of Capitalized Lease Obligations which, after giving effect thereto, and to any other Capitalized Lease Obligations of the Company and its Subsidiaries on a consolidated basis, exceed in the aggregate 10% of Consolidated Total Capitalization. 7.9. Transactions with Affiliates. The Company will not, and will not permit any Subsidiary to, enter into any transaction (including the furnishing of goods or services) with an Affiliate, except on terms and conditions no less favorable to the Company or such Subsidiary than would be obtained in a comparable arm's-length transaction with a Person not an Affiliate, except for (i) the transfer pricing between the Company and its joint venture, Castle Metals de Mexico, S.A. de C.V., and (ii) benefit and compensation plans and arrangements approved by a majority of the disinterested members of the Board of Directors of the Company or any Subsidiary. 7.10. Nature of Business. The Company will not, and will not permit any Subsidiary to, engage in any business if, as a result thereof, the business then to be conducted by the Company and its Subsidiaries, taken as a whole, would be substantially changed from the business conducted on the Closing Date. ss.8. EVENTS OF DEFAULT AND REMEDIES THEREFOR 8.1. Nature of Events. An "Event of Default" shall exist if any one or more of the following occurs: (a) Any default in the payment of interest when due on any of the Notes and continuance of such default for a period of five Business Days; (b) Any default in the payment of the principal of any of the Notes or the Make-Whole Amount thereon, if any, at maturity, upon acceleration of maturity or at any date fixed for prepayment; -29- (c) (i) Any default in the payment of the principal of, or interest or premium on. any other Debt of the Company and its Subsidiaries aggregating in excess of $3,000,000 as and when due and payable (whether by lapse of time. declaration. call for redemption or otherwise) and the continuation of such default beyond the period of grace. if any, allowed with respect thereto, or (ii) any default (other than a payment default) under any mortgages. agreements or other instruments of the Company and its Subsidiaries under or pursuant to which Debt aggregating in excess of $3,000,000 is issued and the continuation of such default beyond the period of grace, if any, allowed with respect thereto; (d) Any default in the observance or performance of Sections 7.1 through 7.10 or in Section 8.7; (e) Any default in the observance or performance of any other covenant or provision of this Agreement which is not remedied within 30 days after the date on which the Company learns of such default; (f) Any representation or warranty made by the Company in this Agreement, or made by the Company in any written statement or certificate furnished by the Company in connection with the issuance and sale of the Notes or furnished by the Company pursuant to this Agreement, proves incorrect in any material respect as of the date of the making or issuance thereof; (g) Any judgment, decree, writ or warrant of attachment or any similar process in an aggregate amount in excess of $5,000,000 shall be entered or filed against the Company or any Subsidiary or against any property or assets of either and remain unpaid, unvacated, unbonded or unstayed (through appeal or otherwise) for a period of 60 days after the Company or any Subsidiary receives notice thereof, except for any judgment, decree, writ or warrant of attachment or any similar process to the extent that the Company or any Subsidiary (i) is insured therefor and with respect to which the insurer has assumed responsibility in writing, or (ii) is indemnified therefor, provided the terms of such indemnification are satisfactory to holders of 55% or more in aggregate principal amount of the Notes then outstanding; (h) The Company or any Subsidiary shall: (i) generally not pay its debts as they become due or admit in writing its inability to pay its debts generally as they become due; (ii) file a petition in bankruptcy or for reorganization or for the adoption of an arrangement under the Federal Bankruptcy Code, or any similar applicable bankruptcy or insolvency law, as now or in the future amended (herein collectively called "Bankruptcy Laws"); file an answer or other pleading admitting or failing to deny the material allegations of such a petition; fail to obtain the dismissal of such a petition within 60 days of its filing or be subject to an order for relief or a decree approving such a petition; or file an answer or other pleading seeking, consenting to or acquiescing in relief provided for under the Bankruptcy Laws; -30- (iii) make an assignment of all or a substantial part of its property for the benefit of its creditors; (iv) seek or consent to or acquiesce in the appointment of a receiver, liquidator, custodian or trustee of it or for all or a substantial part of its property; (v) be finally adjudicated bankrupt or insolvent; (vi) be subject to the entry of a court order which shall not be vacated. set aside or stayed within 60 days of the date of entry, (A) appointing a receiver. liquidator, custodian or trustee of it or for all or a substantial part of its property, (B) for relief pursuant to an involuntary case brought under, or effecting an arrangement in, bankruptcy, (C) for a reorganization pursuant to the Bankruptcy Laws, or (D) for any other judicial modification or alteration of the rights of creditors; or (vii) be subject to the assumption of custody or sequestration by a court of competent jurisdiction of all or a substantial part of its property, which custody or sequestration shall not be suspended or terminated within 60 days from its inception. 8.2. Remedies on Default. When any Event of Default described in paragraphs (a) through (g) of Section 8.1 has occurred and is continuing, the holders of 33% or more in aggregate principal amount of the Notes then outstanding may, by notice to the Company, declare the entire principal, together with the Make-Whole Amount (to the extent permitted by law) and all interest accrued on all Notes to be, and such Notes shall thereupon become, forthwith due and payable, without any presentment, demand, protest or other notice of any kind, all of which are expressly waived. Notwithstanding the foregoing, (i) when any Event of Default described in paragraph (a) or (b) of Section 8.1 has occurred and is continuing, any holder may by notice to the Company declare the entire principal, together with the Make-Whole Amount (to the extent permitted by law) and all interest accrued on the Notes then held by such holder to be, and such Notes shall thereupon become, forthwith due and payable, without any presentment, demand, protest or other notice of any kind, all of which are expressly waived, and (ii) when any Event of Default described in paragraph (h) of Section 8.1 has occurred, then the entire principal, together with the Make-Whole Amount (to the extent permitted by law) and all interest accrued on all outstanding Notes shall immediately become due and payable without presentment, demand or notice of any kind. Upon the Notes or any of them becoming due and payable as aforesaid, the Company will forthwith pay to the holders of such Notes the entire principal of and interest accrued on such Notes, plus the Make-Whole Amount (to the extent permitted by law) which shall be calculated on the Determination Date. 8.3. Annulment of Acceleration of Notes. The provisions of Section 8.2 are subject to the condition that if the principal of, the Make-Whole Amount and accrued interest on the Notes have been declared immediately due and payable by reason of the occurrence of any Event of Default described in paragraphs (a) through (g), inclusive, of Section 8.1, the holder or holders of 68% or more in aggregate principal amount of the Notes then outstanding may, by written instrument filed with the Company, rescind and annul such declaration and the consequences thereof, provided that (i) at the time such declaration is annulled and rescinded no judgment or decree has been entered for the payment of any -31- monies due pursuant to the Notes or this Agreement, (ii) all arrears of interest upon all the Notes and all other sums payable under the Notes and under this Agreement (except any principal, Make-Whole Amount or interest on the Notes which has become due and payable solely by reason of such declaration under Section 8.2) shall have been duly paid, and (iii) each and every Default or Event of Default shall have been cured or waived; and provided further, that no such rescission and annulment shall extend to or affect any subsequent Default or Event of Default or impair any right consequent thereto. 8.4. Other Remedies. If any Event of Default shall be continuing, any holder of Notes may enforce its rights by suit in equity, by action at law, or by any other appropriate proceedings. whether for the specific performance (to the extent permitted by law) of any covenant or agreement contained in this Agreement or in the Notes or in aid of the exercise of any power granted in this Agreement, and may enforce the payment of any Note held by such holder and any of its other legal or equitable rights. 8.5. Conduct No Waiver; Collection Expenses. No course of dealing on the part of any holder of Notes, nor any delay or failure on the part of any holder of Notes to exercise any of its rights, shall operate as a waiver of such rights or otherwise prejudice such holder's rights, powers and remedies. If the Company fails to pay, when due, the principal of, the Make-Whole Amount, or the interest on, any Note, or fails to comply with any other provision of this Agreement, the Company will pay to each holder, to the extent permitted by law, on demand, such further amounts as shall be sufficient to cover the cost and expenses, including but not limited to attorneys' fees, incurred by such holders of the Notes in collecting any sums due on the Notes or in otherwise enforcing any of their rights. 8.6. Remedies Cumulative. No right or remedy conferred upon or reserved to any holder of Notes under this Agreement is intended to be exclusive of any other right or remedy, and every right and remedy shall be cumulative and in addition to every other right or remedy given under this Agreement or now or hereafter existing under any applicable law. Every right and remedy given by this Agreement or by applicable law to any holder of Notes may be exercised from tune to time and as often as may be deemed expedient by such holder, as the case may be. 8.7. Notice of Default. With respect to Defaults, Events of Default or claimed defaults, the Company will give the following notices: (a) The Company promptly will furnish to each holder of a Note written notice of the occurrence of a Default or an Event of Default. Such notice shall specify the nature of such default, the period of existence thereof and what action the Company has taken or is taking or proposes to take with respect thereto. (b) If the holder of any Note or of any other evidence of Debt of the Company or any Subsidiary gives any notice or takes any other action with respect to a claimed default, the Company will forthwith give written notice thereof to each holder of the then outstanding Notes, describing the notice or action and the nature of the claimed default. -32- ss.9. AMENDMENTS, WAIVERS AND CONSENTS 9.1. Matters Subject to Modification. Any term, covenant, agreement or condition of this Agreement may, with the written consent of the Company, be amended, or compliance therewith may be waived (either generally or in a particular instance and either retroactively or prospectively), if the Company shall have obtained the consent in writing of the holder or holders of 51% or more in aggregate principal amount of outstanding Notes; provided, however, that, without the written consent of the holder or holders of all of the Notes then outstanding, no such amendment, waiver, modification or alteration shall be effective which will (i) change any of the provisions, including definitions, relating to payment (including any required prepayment or optional prepayment) of the principal of, Make-Whole Amount or interest on any Note, (ii) change the amount of any payment or prepayment of principal or Make-Whole Amount, or change the rate of interest thereon, or (iii) change any of the provisions of Section 2.1, Section 2.2, Section 8.1, Section 8.2, Section 8.3 or this Section 9.. For the purpose of determining whether holders of the requisite principal amount of Notes have made or concurred in any amendment, waiver, consent, approval, notice or other communication under this Agreement, Notes held in the name of, or owned beneficially by, the Company, any Subsidiary or any Affiliate thereof, shall not be deemed outstanding. 9.2. Solicitation of Holders of Notes. Neither the Company nor any Person acting on the Company's behalf will solicit, request or negotiate for or with respect to any proposed waiver or amendment of any of the provisions of this Agreement or the Notes unless each holder of the Notes (irrespective of the amount of Notes then owned by it) shall concurrently be informed thereof by the Company and shall be afforded the opportunity of considering the same and shall be supplied by the Company with sufficient information to enable it to make an informed decision with respect thereto. Executed or true and correct copies of any waiver or consent effected pursuant to the provisions of this Section 9 shall be delivered by the Company to each holder of outstanding Notes forthwith following the date on which the same shall have been executed and delivered by the holder or holders of the requisite percentage of outstanding Notes. The Company will not, directly or indirectly, pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, to any holder of the Notes, as consideration for or as an inducement to the consideration of or the entering into by any holder of the Notes of any waiver or amendment of any of the terms and provisions of this Agreement unless such remuneration is concurrently paid, on the same terms, ratably to each holder of the then outstanding Notes. Any consent made by a holder of Notes that has transferred or has agreed to transfer its Notes to the Company, any Subsidiary, or any Affiliate thereof and has provided or has agreed to provide such written consent as a condition to such transfer shall be void and of no force and effect except solely as to such holder, and any amendments effected or waivers granted or to be effected or granted that would not have been or would not be so effected or granted but for such consent (and the consents of all other holders of Notes that were acquired under the same or similar conditions) shall be void and of no force and effect retroactive to the date such amendment or waiver initially took or takes effect, except solely as to such holder.. -33- 9.3. lading Effect. Any such amendment, consent or waiver shall apply equally to all the holders of the Notes and shall be binding upon them, upon each future holder of any Note and upon the Company whether or not such Note shall have been marked to indicate such amendment. consent or waiver and whether or not such holder approved of such amendment. consent or waiver. No such amendment. consent or waiver shall extend to or affect any obligation not expressly amended, consented to or waived or impair any right related thereto. ss.10. FORM OF NOTES, REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT 10.1. Form of Notes. Each Note initially delivered under this Agreement will be in the form of one fully registered Note in the form attached as Exhibit A, B or C, as the case may be. The Notes are issuable only in fully registered form and in denominations of at least $1.000,000 (or the remaining outstanding balance thereof, if less than $1,000,000). 10.2. Note Register. The Company shall cause to be kept at its principal office a register (the "Note Register") for the registration and transfer of the Notes. The names and addresses of the holders of Notes. the transfer thereof and the names and addresses of the transferees of the Notes shall be registered in the Note Register. The Company may deem and treat the person in whose name a Note is so registered as the holder and owner thereof for all purposes (subject to the provisions of Section 2.5) and shall not be affected by any notice to the contrary, until due presentment of such Note for registration of transfer as provided in this Section 10. 10.3. Issuance of New Notes upon Exchange or Transfer. Upon surrender for exchange or registration of transfer of any Note at the office of the Company designated for notices in accordance with Section 11.2, the Company shall execute and deliver, at its expense, one or more new Notes of any authorized denominations of the same series requested by the holder of the surrendered Note, each dated the date to which interest has been paid on the Notes so surrendered (or, if no interest has been paid, the date of such surrendered Note), but in the same aggregate unpaid principal amount as such surrendered Note, and registered in the name of such person or persons as shall be designated in writing by such holder. Every Note surrendered for registration of transfer shall be duly endorsed, or be accompanied by a written instrument of transfer duly executed, by the holder of such Note or by his attorney duly authorized in writing. 10.4. Replacement of Notes. Upon receipt of evidence satisfactory to the Company of the ownership of and loss, theft, mutilation or destruction of any Note, and in the case of any such loss, theft or destruction upon delivery of a bond of indemnity in such form and amount as shall be reasonably satisfactory to the Company or in the event of such mutilation upon surrender and cancellation of the Note, the Company, without charge to the holder thereof, will make and deliver a new Note of like tenor in lieu of such lost, stolen, destroyed or mutilated Note. If any such lost, stolen or destroyed Note is owned by you or any other Institutional Holder, then the affidavit of an authorized officer of such owner setting forth the fact of such loss, theft or destruction and of its ownership of the Note at the time of such loss, theft or destruction shall be accepted as satisfactory evidence thereof, and no further indemnity shall be -34- required as a condition to the execution and delivery of a new Note, other than a written agreement of such owner (in form reasonably satisfactory to the Company) to indemnify the Company for any losses directly suffered by the Company relating to the lost, stolen. destroyed or mutilated Note and the issuance by the Company of a new Note. ss.11. MISCELLANEOUS 11.1. Expenses. Whether or not the purchase of Notes herein contemplated shall be consummated, the Company agrees to pay directly all expenses (including fees and expenses of counsel) in connection with the preparation, execution and delivery of this Agreement and the transactions contemplated by this Agreement, including, but not limited to, out-of-pocket expenses, filing fees of S&P in connection with obtaining a private placement number, fees. charges and disbursements of special counsel, photocopying and printing costs and charges for shipping the Notes, adequately insured, to you at your home office or at such other address as you may designate, and all similar expenses (including the fees and expenses of counsel, and the fees and expenses of a financial advisor, but only in connection with any work-out. renegotiation or restructuring in the case of a financial advisor) relating to any amendments, waivers or consents in connection with this Agreement or the Notes (whether or not any such amendments, waivers or consents become effective), including, but not limited to, any such amendments, waivers or consents resulting from any Default, Event of Default, work-out, renegotiation or restructuring relating to the performance by the Company of its obligations under this Agreement or the Notes. The Company also agrees that it will pay and save you harmless against any and all liability with respect to stamp and other documentary taxes, if any, which may be payable. or which may be determined to be payable in connection with the execution and delivery of this Agreement or the Notes (but not in connection with a transfer or replacement of any Notes), whether or not any Notes are then outstanding. The obligations of the Company under this Section 11.1 shall survive the retirement of the Notes. 11.2. Notices. Except as otherwise expressly provided herein, all communications provided for in this Agreement shall be in writing and delivered or sent by registered or certified mail, return receipt requested, or by overnight courier (i) if to you, to the address set forth below your name in Schedule I, or to such other address as you may in writing designate, (ii) if to any other holder of the Notes, to such address as the holder may designate in writing to the Company, and (iii) if to the Company, to A. M. Castle & Co.., 3400 North Wolf Road, Franklin Park, Illinois 60131, Attention: Treasurer, or to such other address as the Company may in writing designate. 11.3. Reproduction of Documents. This Agreement and all documents relating hereto, including, without limitation, (i) consents, waivers and modifications which may hereafter be executed, (ii) documents received by you at the closing of the purchase of the Notes (except the Notes themselves), and (iii) financial statements, certificates and other information previously or hereafter furnished to you, may be reproduced by you by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process, and you may destroy any original document so reproduced. The Company agrees and stipulates that any such reproduction which is legible shall be admissible in evidence as the -35- original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by you in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence: provided that nothing herein contained shall preclude the Company from objecting to the admission of any reproduction on the basis that such reproduction is not accurate, has been altered or is otherwise incomplete. 11.4. Successors and Assigns. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. 11.5. Law Govening. This Agreement shall be governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. 11.6. Headings. The headings of the sections and subsections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement. 11.7. Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all such counterparts shall together constitute one and the same instrument, and it shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart or reproduction thereof permitted by Section 11.3. 11.8. Reliance on and Survival of Provisions. All covenants, representations and warranties made by the Company herein and in any certificates delivered pursuant to this Agreement, whether or not in connection with a closing, (i) shall be presumed to have been relied upon by you, notwithstanding any investigation heretofore or hereafter made by you or on your behalf, and (ii) shall survive the delivery of this Agreement and the Notes. 11.9. Integration and Severability. This Agreement embodies the entire agreement and understanding between you and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof. In case any one or more of the provisions contained in this Agreement or in any Note, or application thereof, shall be invalid, illegal of unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained in this Agreement and in any Note, and any other application thereof, shall not in any way be affected or impaired thereby. -36- IN WITNESS WHEREOF, the Company and the Purchasers have caused this Note Agreement to be executed and delivered by their respective officer or officers thereunto duly authorized. A. M. CASTLE & CO. By: /s/ James A. Podojil -------------------------------- Title: Treasurer ALLSTATE LIFE INSURANCE COMPANY By: /s/ Patricia W. Wilson -------------------------------- By: /s/ David A. Chalupnik -------------------------------- Authorized Signatories THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By: /s/ J. Thomas Christofferson -------------------------------- Title: Authorized Representative MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: /s/ Lawrence O. Stillman -------------------------------- Title: Managing Director MUTUAL OF OMAHA INSURANCE COMPANY By: /s/ Edwin H. Garrison -------------------------------- Title: First Vice President -37- UNITED OF OMAHA LIFE INSURANCE COMPANY By: /s/ Edwin H. Garrison. Jr. -------------------------------- Title: First Vice President -38- EX-4.8 11 castle4-8.txt 1ST AMEND AND WAIVER TO NOTE AGREE 12-01-98 EXHIBIT 4.8 A.M. CASTLE & CO. FIRST AMENDMENT AND WAIVER TO NOTE AGREEMENT $15,000,000 6.40% Series A Senior Notes Due March 1, 2008 $25,000,000 6.53% Series B Senior Notes Due March 1, 2010 $15,000,000 6.69% Series C Senior Notes Due March 1, 2012 Dated as of December 1, 1998 To the Holders of the Senior Notes of A.M. Castle & Co. Named in the Attached Schedule I Ladies and Gentlemen: Reference is made to the Note Agreement dated as of March 1, 1998 (the "Note Agreement") among A.M. Castle & Co. (the "Company"), and each of the Purchasers named in Schedule I to the Note Agreement, pursuant to which the Company issued $15,000,000 principal amount of its 6.40% Series A Senior Notes due March 1, 2008, $25,000,000 principal amount of its 6.53% Series B Senior Notes due March 1, 2010 and $15,000,000 principal amount of its 6.69% Series C Senior Notes due March 1, 2012 (collectively, the "Notes"). You are referred to herein individually as a "Holder" and collectively as the "Holders." Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to them in the Note Agreement. The Company was in breach of the Net Working Capital Covenant contained in Section 7.3 of the Note Agreement as of September 30, 1998. Consequently, the Company has requested the waiver and modification of that covenant of the Note Agreement. The Holders are willing to grant an amendment and waiver on the terms and conditions hereinafter set forth. In consideration of the premises and for good and valuable consideration, the receipt and sufficiency of which are acknowledged, the Company and the Holders agree as follows: SECTION 1. AMENDMENTS 1.1. Amendment of Section 7.3. Section 7.3 of the Note Agreement is amended to read in its entirety as fo11ows: "7.3. Net Working Capital. The Company will not permit the ratio (calculated on the last day of each fiscal quarter) of Net Working Capital to Consolidated Debt to be less than 1.0 to 1.0." SECTION 2. WAIVER AND CONSENT 2.1. Waiver. The Holder waives compliance by the Company with the provisions of Section 7.3 of the Note Agreement for the quarter ending September 30, 1998. 2.2 Limitation on Waiver. The waiver under Section 2.1 hereof is limited precisely to its terms and shall not constitute a waiver generally or in any other instance. Nothing contained herein shall be deemed a waiver of (or otherwise affect the Holders' ability to enforce) any Default or Event of Default other than as expressly set forth herein. SECTION 3. REAFFIRMATION; REPRESENTATIONS AND WARRANTIES 3.1. Reaffirmation of Note Agreement. The Company reaffirms its agreement to comply with each of the covenants, agreements and other provisions of the Note Agreement and the Notes, including the additions and amendments of such provisions effected by this First Amendment and Waiver. 3.2. Note Agreement The Company represents and warrants that, subject to the effectiveness of this First Amendment and Waiver, the representations and warranties contained in the Note Agreement are true and correct as of the date hereof, except for such changes, facts, transactions and occurrences that have arisen since March 1, 1998 in the ordinary course of business and such other matters as have been previously disclosed in writing by the Company to the Holders. 3.3. No Default or Event of Default. After giving effect to the transactions contemplated hereby, no Default or Event of Default will exist. 3.4. Authorization. The execution, delivery and performance by the Company of this First Amendment and Waiver have been duly authorized by all necessary corporate and other action and do not and will not require any registration with, consent or approval of; notice to or action by, any Person (including any Governmental Authority) in order to be effective and enforceab1e. Each of the Note Agreement and this First Amendment and Waiver constitutes the legal, valid and binding obligations of the Company, enforceable against it in accordance with its respective terms, without defense, counterclaim or offset. SECTION 4. EFFECTIVE DATE This First Amendment and Waiver shall become effective upon: (i) execution by Holders of at least 51% of an aggregate principal amount of the Notes outstanding of counterparts of this First Amendment and Waiver and (ii) receipt by each Holder of payment of the amendment fee required by Section 5(a) hereof. 2 SECTION 5. AMENDMENT FEE; EXPENSES (a) Amendment Fee. As consideration for the approval by the Holders of this First Amendment and Waiver, the Company will pay to each Holder, whether or not such Holder executes this First Amendment and Waiver, an amendment fee equal to 0.15% of the principal amount of the outstanding Notes held by such Holder. Such fee shall be paid in accordance with the instructions set forth in the Note Agreement. (b) Expenses. The Company shall pay (within two business days of receipt of a detailed statement therefor) all reasonab1e fees and expenses of special counsel to the Holders. SECTION 6. MISCELLANEOUS 6.1. Ratification. Except to the extent amended, modified, deleted or added to hereby, the terms and provisions of the Note Agreement, including the representations and warranties contained therein, shall remain in full force and effect and are ratified, confirmed, remade and approved in all respects as of the date hereof. 6.2. Reference to and Effect on the Note Agreement. Upon the final effectiveness of this First Amendment and Waiver, each reference in the Note Agreement and in other documents describing or referencing the Note Agreement to the "Agreement," "Note Agreement," "hereunder," "hereof," "herein," or words of like import referring to the Note Agreement, shall mean and be a reference to the Note Agreement, as amended hereby. 6.3. Binding Effect. This First Amendment and Waiver shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto. 6.4. Governing Law. This First Amendment and Waiver shall be governed by and construed in accordance with Illinois law. 6.5. Counterparts. This First Amendment and Waiver may be executed in any number of counterparts, each executed counterpart constituting an original, but altogether only one instrument. 3 IN WITNESS WHEREOF, the Company and the Holders have caused this First Amendment and Waiver to be executed and delivered by their respective officer or officers thereunto duly authorized. A.M. CASTLE & CO. By: /s/ James A. Podojil Name: James A. Podojil Title: Treasurer ALLSTATE LIFE INSURANCE COMPANY By: Name: By: Name: Authorized Signatories THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By: /s/ Jerome R. Baier Name: Jerome R. Baier Title: Authorized Representative MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: /s/ Lawrence Stillman Name: Lawrence Stillman Title: Managing Director MUTUAL OF OMAHA INSURANCE COMPANY By: /s/ Curtis R. Caldwell Name: Curtis R. Caldwell Title: First Vice President UNITED OF OMAHA LIFE INSURANCE COMPANY By: /s/ Curtis R. Caldwell Name: Curtis R. Caldwell Title: First Vice President 4
SCHEDULE I Name of Purchaser Original Principal Amount of Notes - ----------------- ------------------------------------- Series A Series B Series C -------- -------- -------- Allstate Life Insurance Company $10,000,000 $10,000,000 The Northwestern Mutual Life Insurance Company $15,000,000 Massachusetts Mutual Life Insurance Company 10,000,000 Mutual of Omaha Insurance Company 5,000,000 United of Omaha Life Insurance Company 5,000,000 5
EX-4.9 12 amcastle8k112202exib4-9.txt 2ND AMEND TO NOTE AGREE 11-22-02 ================================================================================ Exhibit 4.9 A. M. CASTLE & CO. -------------------------------------------------------- SECOND AMENDMENT TO NOTE AGREEMENT -------------------------------------------------------- Dated as of November 22, 2002 $15,000,000 RESET RATE SERIES A SENIOR SECURED NOTES DUE 2008 $25,000,000 RESET RATE SERIES B SENIOR SECURED NOTES DUE 2010 $15,000,000 RESET RATE SERIES C SENIOR SECURED NOTES DUE 2012 ================================================================================ As of November 22, 2002 To each of the Current Holders Named in Annex 1 hereto Ladies and Gentlemen: A. M. CASTLE & CO., a Maryland corporation (together with any successors and assigns, the "Company"), hereby agrees with each of you as follows: 1. PRIOR ISSUANCE OF NOTES, ETC. The Company issued and sold (i) fifteen million dollars ($15,000,000) in aggregate principal amount of its 6.40% Series A Senior Notes due March 1, 2008 (the "Existing Series A Notes"), (ii) twenty-five million dollars ($25,000,000) in aggregate principal amount of its 6.53% Series B Senior Notes due March 1, 2010 (the "Existing Series B Notes"), and (iii) fifteen million dollars ($15,000,000) in aggregate principal amount of its 6.69% Series C Senior Notes due March 1, 2012 (the "Existing Series C Notes" and together with the Existing Series A Notes and the Existing Series B Notes as in effect prior to giving effect to the amendments provided for by this Agreement, collectively, the "Existing Notes" and, as amended by this Agreement and as may be further amended, restated or otherwise modified from time to time, the "Notes") pursuant to a Note Agreement, dated as of March 1, 1998, between the Company and the purchasers named in Schedule 1 thereto (the "Original Note Agreement"). The Original Note Agreement was amended by the First Amendment and Waiver to Note Agreement dated as of December 1, 1998 (the Original Note Agreement, as amended by the foregoing and as in effect immediately prior to giving effect to the amendments provided for by this Agreement, is referred to herein as the "Existing Note Agreement" and, as may be amended pursuant to this Agreement and as may be further amended, restated or otherwise modified from time to time, the "Note Agreement"). The register kept by the Company for the registration and transfer of the Notes indicates that each of the Persons named in Annex 1 hereto (collectively, the "Current Holders") is currently a holder of the aggregate principal amount of the Notes indicated in such Annex. 2. REQUEST FOR CONSENT TO AMENDMENTS The Company requests that each of the Current Holders consent to the amendments (collectively, the "Amendments") to the Existing Note Agreement provided for by this Agreement. 3. WARRANTIES AND REPRESENTATIONS To induce the Current Holders to enter into this Agreement and to consent to the Amendments, the Company warrants and represents to each of the Current Holders as follows (it being agreed, however, that nothing in this Section 3 shall affect any of the warranties and representations previously made by the Company in or pursuant to the Existing Note Agreement, and that all of such other warranties and representations, as well as the warranties and representations in this Section 3, shall survive the effectiveness of the Amendments): 3.1. No Material Adverse Change. Except for matters publicly disclosed in the Company's most recent reports to the Commission under the Exchange Act, since December 31, 2001, there has been no change in the business operations, profits, financial condition, properties or business prospects of the Company except changes that, in the aggregate, could not reasonably be expected to have a Material Adverse Effect. 3.2. Corporate Authority; Authorization. The Company is a corporation duly organized and existing in good standing under the laws of the State of Maryland and has the requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations under the Note Agreement. This Agreement has been duly authorized by all necessary corporate action on the part of the Company, and this Agreement constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, reorganization, arrangement, insolvency, moratorium or other similar laws affecting the enforceability of creditors' rights generally, and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 3.3. Full Disclosure. Neither the financial statements and other certificates previously provided to each of the Current Holders pursuant to the provisions of the Existing Note Agreement nor the statements made in this Agreement nor any other written statements furnished to each of the Current Holders by or on behalf of the Company in connection with the proposal and negotiation of the transactions contemplated hereby (other than pro forma financial information or financial or other projections or any forward-looking statements), or disclosed in the Company's report on Form 10-Q filed with the Commission on November 14, 2002 or report on Form 10-K filed with the Commission on March 14, 2002, taken as a whole, contained any untrue statement of a material fact or omitted a material fact necessary to make the statements contained therein and herein not misleading, in each case as of the time such financial statements or certificates were provided or such statements were made or furnished. There is 2 no fact known to the Company relating to any event or circumstance that has occurred or arisen since the Closing Date that the Company has not disclosed to each of the Current Holders in writing or disclosed in the Company's report on Form 10-Q filed with the Commission on November 14, 2002 or report on Form 10-K filed with the Commission on March 14, 2002, that has had or, so far as the Company can now reasonably foresee, could reasonably be expected to have, a Material Adverse Effect. All pro forma financial information, financial or other projections and forward-looking statements delivered to the Current Holders has been prepared in good faith by the Company based on reasonable assumptions. 3.4. Ownership of Subsidiaries. (a) Annex 2 contains a complete and correct description of the Company's Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary. The Subsidiary Side Letter contains a complete and correct description of the Company's Subsidiaries, showing, as to each Subsidiary, the book value of its assets as of September 30, 2002 and its contribution to Consolidated EBITDA for the four quarter period ended on September 30, 2002. (b) Each Subsidiary identified in Annex 2 is a corporation or other legal entity duly organized, validly existing and, except as set forth in Annex 2, in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact. 3.5. Title to Properties. The Company and its Subsidiaries have good and sufficient title to or the legal right to use their respective properties that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet of the Company delivered pursuant to the provisions of Section 6.6 of the Existing Note Agreement (except as sold or otherwise disposed of in the ordinary course of business) or purported to have been acquired by the Company or any Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear from Liens not permitted by the Note Agreement. 3 3.6. Solvency. The fair value of the business and assets of each of the Company and each Subsidiary, exceeds, as of the Effective Date, the amount that will be required to pay the probable liabilities of such Person (including subordinated, contingent, unmatured and unliquidated liabilities), on existing debts as they may become absolute and matured. No such Person, after the Effective Date, will be engaged in any business or transaction, or be about to engage in any business or transaction, for which such Person has unreasonably small assets or capital, and no such Person has incurred, or has any intent to, incur debts that would be beyond such Person's ability to pay as they mature. 3.7. Intent. Neither the Company nor any Subsidiary is entering into this Agreement with any intent to hinder, delay, or defraud either current creditors or future creditors of the Company or any Subsidiary. 3.8. No Defaults. No event has occurred and no condition exists that, upon the execution and delivery of this Agreement and the effectiveness of the Amendments, would constitute a Default or an Event of Default. 3.9. Financial Statements. The quarterly and annual financial statements most recently delivered to each of the Current Holders pursuant to Section 6.6 of the Existing Note Agreement have been prepared in accordance with GAAP consistently applied and present fairly, in all material respects, the consolidated financial position of the Company and its consolidated subsidiaries as of such dates and the results of their operations and cash flows for the periods specified therein. 3.10. Litigation; Observance of Agreements. (a) Other than as disclosed in the footnotes to the financial statements in the Company's most recent report on Form 10-Q and Form 10-K filed with the Commission on November 14, 2002 and March 14, 2002, there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any property of the Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 4 (b) Neither the Company nor any Subsidiary is in default under any term of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation (including, without limitation, Environmental Laws) of any Governmental Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect. 3.11. Charter Instruments; Other Agreements. Neither the Company nor any Subsidiary is in violation in any respect of any term of any charter instrument or bylaw. Upon the execution and delivery hereof and the effectiveness of the Amendments as provided herein, neither the Company nor any Subsidiary is in violation or default in any material respect of any term in any agreement or other instrument to which it is a party or by which it or any of its material property may be bound or affected. The execution, delivery and performance by the Company of this Agreement will not conflict with or result in the breach of any of the terms, conditions or provisions of any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or violate any provision of any statute or other rule or regulation of any Government Authority applicable to the Company or any Subsidiary. 3.12. Taxes. The Company and the Subsidiaries have filed all tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (a) the amount of which is not individually or in the aggregate Material or (b) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The Company knows of no basis for any other tax or assessment that could reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and the Subsidiaries in respect of federal, state or other taxes for all fiscal periods are adequate. The federal income tax liabilities of the Company and the Subsidiaries have been determined by the Internal Revenue Service and paid for all fiscal years up to and including the fiscal year ended December 31, 1997. 5 3.13. Certain Laws. The execution and delivery of this Agreement by the Company: (a) is not subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 1935, as amended, the Transportation Acts, as amended, or the Federal Power Act, as amended, and (b) does not violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary. 3.14. Guarantee Representations. All of the representations and warranties of the Company and each Guarantor set forth in the Guarantee Agreement are true and correct. 3.15. Debt; Liens. Annex 3(a) to this Agreement correctly describes all Debt of the Company and its Subsidiaries as of the date hereof. Annex 3(b) to this Agreement correctly describes all outstanding Liens securing Debt in an amount greater than $1,000,000 and all other material Liens on property of the Company or its Subsidiaries as of the date hereof. Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Debt of the Company or such Subsidiary listed on Annex 3(a) hereto and no event or condition exists with respect to any Debt of the Company or any Subsidiary listed on Annex 3(a) that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Debt to become due and payable before its stated maturity or before its regularly scheduled dates of payment. 3.16. Transaction is Legal and Authorized; Obligations are Enforceable. (a) Transaction is Legal and Authorized. Each of the execution and delivery of this Agreement and the Guarantee Agreement by the Company and each Guarantor and compliance by the Company and each of the Guarantors with all of their respective obligations thereunder: (i) is within the corporate powers of the Company and each Guarantor, as the case may be; (ii) is legal and, except as set forth on Annex 4, does not conflict with, result in any material breach in any of the provisions of, constitute a material default under, or result in the creation of 6 any Lien upon any material property of the Company or any Guarantor under the provisions of, any agreement, charter instrument, bylaw or other instrument to which it is a party or by which it or any of its property may be bound; and (iii) does not give rise to a right or option of any other Person under any agreement or other instrument, which right or option could reasonably be expected to have a Material Adverse Effect. (b) Obligations are Enforceable. Each of this Agreement and the Guarantee Agreement have been duly authorized by all necessary action on the part of the Company and each of the Guarantors, as the case may be, and has been executed and delivered by one or more duly authorized officers of the Company and each of the Guarantors party thereto, and each constitutes a legal, valid and binding obligation of the Company and each of the Guarantors party thereto, enforceable in accordance with its terms, except that such enforceability may be: (i) limited by applicable bankruptcy, reorganization, arrangement, insolvency, moratorium or other similar laws affecting the enforceability of creditors' rights generally; and (ii) subject to the availability of equitable remedies. 3.17. Governmental Consent. Neither the nature of the Company or any Guarantor thereof, or of any of their respective businesses or properties, nor any relationship between the Company or any such Guarantor and any other Person, nor any circumstance in connection with the execution and delivery of this Agreement or the Guarantee Agreement is such as to require a consent, approval or authorization of, or filing, registration or qualification with, any Governmental Authority on the part of the Company or any Guarantor as a condition to the execution and delivery of this Agreement or the Guarantee Agreement. 4. AMENDMENTS; WAIVERS; ACKNOWLEDGMENTS. 4.1. Amendments to Existing Note Agreement and Existing Notes. (a) Subject to the provisions of Section 4.2, the Existing Note Agreement is hereby amended in the manner specified in Exhibit A to this Agreement. (b) Subject to the provisions of Section 4.2, the Existing Notes are hereby amended in the manner specified in Exhibits B1, B2 and B3 to this Agreement. 7 4.2. Effectiveness of Amendments and Waivers. The Amendments contemplated by Section 4.1(a) and 4.1(b) shall become effective (the date of such effectiveness herein referred to as the "Effective Date"), if at all, at such time as the Company and each Current Holder shall have consented in writing to such Amendments by executing and delivering the applicable counterparts of this Agreement. It is understood that any Current Holder may withhold its consent for any reason or for no reason, and that, without limitation of the foregoing, any Current Holder hereby makes the granting of its consent contingent upon its receipt of each of the following: (a) a certificate of the Secretary or Assistant Secretary of the Company certifying as to resolutions of its Board of Directors and other constitutive documents which authorize and permit the Company to execute and deliver this Agreement and to consummate the transactions contemplated hereby; (b) closing opinions from (i) Sidley Austin Brown & Wood LLP, special counsel to the Company, (ii) Ballard Spahr, special Maryland counsel to the Company, and (iii) Jerry Aufox, Corporate Counsel of the Company, dated as of the Effective Date, covering the matters set forth on Exhibit C to this Agreement. This Section 4.2(b) shall constitute direction by the Company and each Guarantor to such counsel to deliver such closing opinions to the Current Holders; (c) confirmation from your special counsel that its fees and disbursements reflected on a statement delivered in connection with the execution and delivery of this Agreement pursuant to Section 7 have been paid in full; (d) if required by applicable regulations, a Private Placement Number issued by Standard & Poor's CUSIP Service Bureau reflecting the amendment to the interest rate on the Notes contemplated by this Agreement; (e) a Guarantee Agreement, dated as of November 22, 2002 (as may be amended, restated or otherwise modified from time to time, the "Guarantee Agreement"), duly executed by each Guarantor in substantially the form of Exhibit D to this Agreement, and (ii) a certificate of the Secretary or Assistant Secretary of each such Guarantor certifying as to the resolutions of their Board of Directors and other constitutive documents which authorize and permit such Guarantors to execute and deliver the Guarantee Agreement and to consummate the transactions contemplated hereby; (f) the Company shall have received at least $10,000,000 in gross proceeds from the issuance and sale of its convertible preferred stock (in one or more transactions) substantially in accordance with the economic terms set forth on the term sheet dated as of October 24, 2002; 8 (g) copies of one or more agreements reasonably satisfactory to such Current Holder providing for amendments to certain covenants of the Company contained in agreements of the Company with The Bank of Nova Scotia, Bank of America, N.A. and The Northern Trust Company; and (h) the Subsidiary Side Letter. 4.3. No Other Amendments; Confirmation. Except as expressly provided herein, (a) no terms or provisions of any agreement are modified or changed by this Agreement, (b) the terms of this Agreement shall not operate as a waiver by you of, or otherwise prejudice any of your rights, remedies or powers under, the Existing Note Agreement, the Existing Notes or any other instrument or agreement executed in connection therewith or under any applicable law, and (c) the terms and provisions of the Existing Note Agreement, the Existing Notes and each other instrument or agreement executed in connection therewith shall continue in full force and effect. 5. COLLATERAL COVENANT (a) The Company hereby agrees and covenants that it will, and will cause each Significant Subsidiary to, on or before December 23, 2002, enter into, or cause to be delivered, such agreements, documents or instruments of any kind (including, without limitation, security agreements, mortgages, deeds of trust, UCC financing statements and opinions of nationally recognized counsel as to the enforceability, Lien perfection, no conflicts with agreements and other customary matters), acceptable in all respects to the Required Holders, to grant Liens in favor of a Collateral Agent on all personal property of the Company and Significant Subsidiaries whether now held or hereafter acquired by the Company or any such Significant Subsidiary (other than Excluded Receivables and Excluded Collateral), in each case to secure the obligations of the Company and each Guarantor under the Note Agreement, the Notes and the Guarantee Agreement; provided, that the Company's obligation to grant such Liens on or before December 23, 2002 shall be conditioned upon the execution by the holders of Notes and the Other Senior Creditors of an Acceptable Intercreditor Agreement. The Company further agrees and covenants that it will, and will cause each Significant Subsidiary to, as soon as reasonably practicable after the Effective Date and in any event on or before February 15, 2003, enter into, or cause to be delivered, such agreements, documents or instruments of any kind (including, without limitation, security agreements, mortgages, deeds of trust, UCC financing statements and opinions of nationally recognized counsel as to the enforceability, Lien perfection, no conflicts with agreements and other customary matters) acceptable in all respects to the Required Holders, to grant Liens in favor of the Collateral Agent on all real property owned by the Company or any Significant Subsidiary, whether now held or hereafter acquired by the Company or any such Significant Subsidiary (other than Excluded Collateral), in 9 each case to secure the Obligations of the Company and each Guarantor under the Agreement and the Guarantee Agreement; provided, that the Company's obligation to grant such Liens by February 15, 2003 shall be conditioned upon the execution by the holders of the Notes and the Other Senior Creditors of an Acceptable Intercreditor Agreement. Such collateral may be shared on a pari passu basis with the Other Senior Creditors pursuant to an Acceptable Intercreditor Agreement. Notwithstanding anything to the contrary in this Agreement or the Note Agreement, the failure to comply with this Section 5(a) despite the exercise by the Company of all commercially reasonable efforts to effect such compliance shall not constitute a Default or Event of Default under this Agreement or the Note Agreement and the sole and exclusive remedy for any breach of this Section 5(a) shall be the adjustments set forth in the definitions of "Applicable Base," "First Year Ratio" and "Second Year Ratio" as they relate to Section 7.1 or 7.2 of the Note Agreement, as applicable. (b) Each of the holders of the Notes agrees (i) to use commercially reasonable efforts to negotiate the terms of, and, contemporaneously with the grant of such Liens to enter into, an Acceptable Intercreditor Agreement with a bank or trust company to act as Collateral Agent and each of the Other Senior Creditors (which Acceptable Intercreditor Agreement will provide that the Collateral Agent may enter into an intercreditor agreement with the lender(s) or purchaser(s) under any Receivables Purchase Agreement); and (ii) that at such time the Company enters into an Acceptable Revolving Credit Facility to replace the Existing Receivables Purchase Agreement (or any replacement thereof) and the Company's unsecured debt obligations are Investment Grade, it will promptly take such action requested by the Company to instruct the Collateral Agent to release the Liens granted pursuant to the Security Documents as of the time such Acceptable Revolving Credit Facility is entered into and becomes effective. 6. DEFINED TERMS Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Existing Note Agreement as contemplated to be amended by the Amendments. 7. EXPENSES Whether or not any of the Amendments becomes effective, the Company will promptly (and in any event within thirty (30) days of receiving any statement or invoice therefor) pay all fees, expenses and costs relating to this Agreement, including, but not limited to, (a) the cost of reproducing this Agreement and the other documents delivered in connection herewith and (b) the reasonable fees and disbursements of the Current Holders' special counsel, Bingham McCutchen LLP, incurred in connection with the preparation, negotiation and delivery of this Agreement. This Section 7 shall not be construed to limit the Company's obligations under Section 11.1 of the Note Agreement. 10 8. MISCELLANEOUS 8.1. Part of Note Agreement, Future References, etc. The Agreement shall be construed in connection with and as a part of each of the Existing Note Agreement and the Existing Notes and, except as expressly amended by this Agreement, all terms, conditions and covenants contained in the Existing Note Agreement, the Existing Notes and the other documents executed and/or delivered in connection therewith are hereby ratified and shall be and remain in full force and effect. Any and all notices, requests, certificates and other instruments executed and delivered after the execution and delivery of this Agreement may refer to the Note Agreement without making specific reference to this Agreement, but nevertheless all such references shall include this Agreement unless the context otherwise requires. 8.2. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAW OF THE STATE OF ILLINOIS, UNITED STATES OF AMERICA, EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER THAN SUCH STATE. 8.3. Duplicate Originals, Execution in Counterpart. Two (2) or more duplicate originals hereof may be signed by the parties, each of which shall be an original but all of which together shall constitute one and the same instrument. This Agreement may be executed in one or more counterparts and shall become effective at the time provided in Section 4.2 hereof, and each set of counterparts that, collectively, show execution by the Company and each consenting Current Holder shall constitute one duplicate original. 8.4. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the Company and you and your respective successors and assigns. [Remainder of page intentionally left blank. Next page is signature page.] 11 If this Agreement is satisfactory to you, please so indicate by signing the applicable acceptance on a counterpart hereof and returning such counterpart to the Company, whereupon this Agreement shall become binding among the Company and you in accordance with its terms. Very truly yours, A. M. CASTLE & CO. By: /s/ G. Thomas McKane -------------------------------- Name: G. Thomas McKane Title: President and Chief Executive Officer [Signature Page to Second Amendment to Note Agreement] Accepted: ALLSTATE LIFE INSURANCE COMPANY By: /s/ Jerry D. Zinkula ------------------------------------ Name: Jerry D. Zinkula Title: Authorized Signatory By: /s/ Robert B. Bodett ------------------------------------- Name: Robert B. Bodett Title: Authorized Signatory THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY By: /s/ David A. Barras ------------------------------------ Name: David A. Barras Title: Authorized Signatory MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY By: David L. Babson & Company Inc., as Investment Adviser By: /s/ Emeka O. Onukwugna -------------------------------------- Name: Emeka O. Onukwugna Title: Managing Director [Signature Page to Second Amendment to Note Agreement] MUTUAL OF OMAHA INSURANCE COMPANY By: /s/ Edwin H. Garrison, Jr. ------------------------------------- Name: Edwin H. Garrison, Jr. Title: First Vice President UNITED OF OMAHA LIFE INSURANCE COMPANY By: /s/ Edwin H. Garrison, Jr. ------------------------------------- Name: Edwin H. Garrison, Jr. Title: First Vice President The undersigned Guarantors of the company hereby acknowledge and agree to the terms and provisions contained herein and consent to the Company's execution hereof: DATAMET, INC. By: /s/ Jerry M. Aufox ------------------------------------ Name: Jerry M. Aufox Title: Secretary KEYSTONE TUBE COMPANY, LLC By: /s/ Jerry M. Aufox ------------------------------------ Name: Jerry M. Aufox Title: Secretary TOTAL PLASTICS, INC. By: /s/ Jerry M. Aufox ------------------------------------ Name: Jerry M. Aufox Title: Secretary [Signature Page to Second Amendment to Note Agreement] PARAMONT MACHINE COMPANY, LLC By: /s/ Jerry M. Aufox ------------------------------------ Name: Jerry M. Aufox Title: Secretary ADVANCED FABRICATING TECHNOLOGY, LLC By: /s/ Jerry M. Aufox ------------------------------------ Name: Jerry M. Aufox Title: Secretary OLIVER STEEL PLATE CO. By: /s/ Jerry M. Aufox ------------------------------------ Name: Jerry M. Aufox Title: Secretary METAL MART, LLC By: /s/ Jerry M. Aufox ------------------------------------ Name: Jerry M. Aufox Title: Secretary [Signature Page to Second Amendment to Note Agreement] EXHIBIT A 1. Section 1.1 of the Existing Note Agreement is hereby amended by deleting the phrases "rate of 6.40% per annum", "rate of 6.53% per annum" and "rate of 6.69% per annum" and substituting "Reset Rate" in lieu thereof. 2. Section 1.1 of the Existing Note Agreement is hereby amended by deleting the phrases "8.40% and", 8.53% and" and "8.69% and" and substituting "Reset Rate plus two percent (2%) per annum" in lieu thereof. 3. The definition of "Net Working Capital" appearing in Section 5.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "Net Working Capital - the sum of (i) the consolidated current assets of the Company and its Subsidiaries determined in accordance with GAAP and (ii) 75% of the LIFO Reserve, less the consolidated current liabilities (excluding Current Debt and Current Maturities of Funded Debt) of the Company and its Subsidiaries determined in accordance with GAAP." 4. The definition of "Debt" appearing in Section 5.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "Debt - All Indebtedness (excluding obligations with respect to bankers' acceptances and trade acceptance financings to the extent such obligations, in the aggregate, are less than $5,000,000, but including any such obligations, in the aggregate, in excess of such amount) of the Company or any Subsidiary, but excluding the aggregate outstanding investment or claim held by purchasers, assignees or other transferees of Receivables of the Company and its Subsidiaries in connection with Securitization Transactions." 5. The definition of "Indebtedness appearing in Section 5.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "Indebtedness - means for any Person, without duplication, all (i) obligations for borrowed money or to pay the deferred purchase price of property or assets (except trade account payables), (ii) obligations secured by any Lien upon property or assets owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligations, Exhibit A-1 (iii) obligations created or arising under any conditional sale or other title retention agreement with respect to property acquired, notwithstanding the fact that the rights and remedies of the seller, lender or lessor under such agreement in the event of default are limited to repossession or sale of property, (iv) Capitalized Lease Obligations, and (v) Guaranties of obligations of others of the character referred to in the foregoing clauses (i) through (iv), but excluding from Indebtedness the aggregate outstanding investment or claim held by purchasers, assignees or other transferees of Receivables of the Company and its Subsidiaries in connection with Securitization Transactions." 6. The definition of "Receivables Purchase Agreement" appearing in Section 5.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: Receivables Purchase Agreement - means the Existing Receivables Purchase Agreement and any other similar agreement pursuant to which any one or more of the Company or any Subsidiary sells its accounts receivable as a means of providing it working capital for its business operations. 7. The definition of "Consolidated Total Assets" appearing in Section 5.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "Consolidated Total Assets - means, at any time, all assets of the Company and its Subsidiaries which would be reflected on a consolidated balance sheet of such Persons at such time prepared in accordance with GAAP." 8. The following definitions are hereby added to Section 5.1 of the Existing Note Agreement in their proper alphabetical order: "Applicable Base - means (a) prior to February 15, 2003, $100,000,000 and (b) on or after February 15, 2003 either (i) $100,000,000 if the Notes are Secured or (ii) $115,901,000 if the Notes are not Secured. "Acceptable Intercreditor Agreement - means an intercreditor and collateral agency agreement, in form and substance reasonably satisfactory to the Required Holders of the Notes, by and among an independent bank or trust company selected by the Company and reasonably satisfactory to the Required Holders but not affiliated with any of such holders or the Exhibit A-2 Other Senior Creditors, the Institutional Holders which are or may become a party to this Agreement, the Other Senior Creditors and the Company which shall provide, among other things, that any future Indebtedness of the Company owing to one or more of the Other Senior Creditors or the Institutional Holders party hereto which is incurred in compliance with Section 7.2 hereof, may be secured on an equal and ratable basis by the Liens which are granted pursuant to the terms of the Security Documents. Acceptable Revolving Credit Facility - means a loan agreement or similar facility pursuant to which a lender or lenders provides revolving loans to the Company or any Subsidiary for the primary purpose of financing such Person's ongoing business operations so long as such agreement or facility (a) is not secured by Liens on the property of the Company or any Subsidiary and (b) provides for interest rates, fees and other pricing terms similar to those generally available to borrowers whose unsecured long term debt is rated Investment Grade. For the avoidance of doubt, no Receivables Purchase Agreement shall constitute a Revolving Loan Facility. A. M. Castle Canada - means A. M. Castle & Co. (Canada), Inc. and any successor thereto. Collateral Agent - means an independent bank or trust company selected by the Company and reasonably satisfactory to the Required Holders but not affiliated with any of such holders or the Other Senior Creditors acting as collateral agent or trustee for the benefit of the holders of the Notes and the Other Senior Creditors pursuant to the provisions of the Security Documents. Consolidated EBITDA - means, for any period, the sum of (a) Consolidated Net Income for such period; plus (b) to the extent, and only to the extent, that such aggregate amount was deducted in the computation of such Consolidated Net Income, the aggregate amount of (i) income tax expense of the Company and its Subsidiaries for such period, plus (ii) charges for depreciation, amortization and other non-cash charges of the Company and its Subsidiaries for such period, plus (iii) Interest Charges for such period. Exhibit A-3 Current Debt - means, at any time and with respect to any Person, all Indebtedness of such Person outstanding at such time other than Funded Debt of such Person. Current Maturities of Funded Debt - means (without duplication), at any time and with respect to any item of Funded Debt, the portion of such Funded Debt outstanding at such time which by the terms of such Funded Debt or the terms of any instrument or agreement relating thereto is (a) due on demand or within 365 days from such time (whether by sinking fund, other required prepayment or final payment at maturity) and (b)(i) is not directly or indirectly renewable, extendible or refundable at the option of the obligor under an agreement or firm commitment in effect at such time to a date 365 days or more from such time or (ii) if so renewable, extendible or refundable at the option of the obligor, the obligor shall have agreed that it will not renew, extend or refund to a date 365 days or more from such time. Effective Date - means the "Effective Date" as defined in the Second Amendment. Excluded Collateral - means (i) any property (whether currently existing or subsequently acquired) subject to a Lien permitted under Section 7.4 of this Agreement, to the extent the agreement creating such Lien prohibits additional Liens on such property; (ii) cash sufficient to secure the Company's (or any of its Subsidiaries' obligations to pay its workmen's compensation benefits, including obligations to any Person providing surety, insurance, letters of credit or other credit support so long as such cash does not secure any other obligation for any other purpose; (iii) all property purchased with proceeds of the note issued pursuant to the Loan Agreement dated as of November 1, 1994 between the Company and the City of Hammond, Indiana; (iv) all properties and assets of A. M. Castle Canada, and any successor holder of such assets; (v) other property with a deminumus fair market value that, individually or in the aggregate with all other such property, is not material to the continued business operations of the Company or any Subsidiary which owns such property; and (vi) any leasehold interest in any real property leased by the Company or any Subsidiary the termination of which would not result in a Material Adverse Effect. Exhibit A-4 Excluded Receivables - means, at any time, outstanding Receivables and Related Security arising out of the ordinary course of business of the Company or its Subsidiaries which shall have been sold to generate funds for working capital purposes pursuant to the provisions of a Receivables Purchase Agreement which makes funds available to the Company or any Subsidiary in an aggregate amount not exceeding $65,000,000 at any time and covering Receivables not exceeding, in the aggregate, $90,000,000 at any time. Existing Receivables Purchase Agreement - means that certain Receivables Purchase Agreement dated as of September 27, 2001 among Castle Funding Corp. as seller, the Company as servicer, Market Street Funding Corporation as issuer and PNC Bank, National Association as administrator (as in effect on the Effective Date). Financial Covenant - means any covenant (or substantially equivalent default provision) which requires the Company to attain or maintain a prescribed level of financial condition, financial achievement or results of operations or cash flow or prohibits the Company from taking specified actions (such as incurring Debt, selling assets, making distributions or making investments) unless it will be in compliance with such a prescribed level immediately thereafter, including, without limitation, covenants of the type contained in Section 7 of this Agreement. First Year Ratio - means (a) prior to February 15, 2003, .65 to 1.0; and (b) on or after February 15, 2003 either (i) .65 to 1.0 if the Notes are Secured or (ii) .55 to 1.0 if the Notes are not Secured. Funded Debt - means with respect to any Person, all Debt which would, in accordance with GAAP, be required to be classified as a long term liability on the balance sheet of such Person prepared in accordance with GAAP, and without limiting the generality of the foregoing shall also include, without limitation (i) any Indebtedness which by its terms or by the terms of any instrument or agreement relating thereto matures, or which is otherwise payable or unpaid, more than 365 days from the date of creation thereof, (ii) any Indebtedness outstanding under a revolving credit or similar agreement providing for borrowings (and renewals and extensions thereof) which would, in accordance with GAAP, be required to be Exhibit A-5 classified as a long term liability of such Person, and (iii) any Guaranties of such Person with respect to Funded Debt of another Person. Governmental Authority - means (a) the government of (i) the United States of America or any State or other political subdivision thereof, or (ii) any jurisdiction in which the Company or any Subsidiary conducts all or any part of its business, or which asserts jurisdiction over any properties of the Company or any Subsidiary, or (b) any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government. Guarantee Agreement - means that certain Guarantee Agreement entered into by each of the Guarantors, substantially in the form of Exhibit C to the Second Amendment, as amended, restated or otherwise modified from time to time. Guarantors - means any Subsidiary that is a party to the Guarantee Agreement as of the Effective Date and each other Person which delivers a Guarantee Agreement or a joinder agreement to the Guarantee Agreement pursuant to Section 6.13 hereof, together with the respective successors and assigns of each of the foregoing entities unless and until released in accordance with the terms of this Agreement or the Guarantee Agreement. Interest Charges - means, with respect to any period, the sum (without duplication) of the following (in each case, eliminating all offsetting debits and credits between the Company and its Subsidiaries and all other items required to be eliminated in the course of the preparation of consolidated financial statements of the Company and its Subsidiaries in accordance with GAAP): (a) all interest in respect of Debt of the Company and its Subsidiaries (including, without limitation, imputed interest on Capitalized Lease Obligations) deducted in determining Consolidated Net Income for such period, together with all interest capitalized or deferred during such period and not deducted in determining Consolidated Net Income for such period, and (b) all debt discount and expense amortized or required to be amortized in the determination of Consolidated Net Income for such period. Investment Grade - means in respect of any obligation that such obligation (i) has a rating of Baa3 or greater by Moody's Investor Service or a rating BBB- or greater by Standard & Exhibit A-6 Poor's; or (ii) has a rating of NAIC 1 or NAIC 2 from the National Association of Insurance Commissioners; or (iii) in the judgment of the Required Holders and the Other Senior Creditors, has a credit quality equal to or better than one which would be afforded either of the ratings described in clause (i) or clause (ii) of this definition. Keystone Guarantee - means that certain Guarantee Agreement, dated as of November 22, 2002, by the Company in favor of Bank of America, N.A. pursuant to which the Company guarantees (i) the payment to Bank of America by the City of LaPorte, Indiana (the "Keystone Issuer") of all principal, interest and any other amounts payable by the Keystone Issuer in respect of the Keystone Issuer's Economic Development Revenue Bonds, Series 1998 (Keystone Services, Inc. Project), and (ii) the payment and performance by Keystone Service, Inc. of all of its covenants, agreements, obligations and liabilities under that certain Loan Agreement, dated as of April 1, 1998, between the Keystone Issuer and Keystone Service, Inc. Kreher Steel Letter of Credit Agreement - means the Application and Agreement for Standby Letter of Credit, dated March 15, 2002, as amended, pursuant to which Bank of America issued its Irrevocable Standby Letter of Credit No. 7409195 in the stated amount of $5,000,000. Material - means material in relation to the business, operations, affairs, financial condition, assets, properties or prospects of the Company and its Subsidiaries taken as a whole. Mecklenburg Guaranty - means that certain Guarantee Agreement, dated as of November 22, 2002, by the Company in favor of Bank of America, N.A. pursuant to which the Company guarantees the payment to Bank of America by The Mecklenburg County Industrial Facilities and Pollution Control Financing Authority (the "Mecklenburg Issuer") of all principal, interest and any other amounts payable by the Mecklenburg Issuer in respect to the Mecklenburg Issuer's Tax-Exempt Industrial Revenue Bonds (A. M. Castle & Co. Project) Series 1996. Other Senior Creditors - means the following parties or their permitted successor and/or assigns: (i) Bank of America N.A., (ii) Nationwide Life Insurance Company, (iii) The Northern Exhibit A-7 Trust Company and (iv) any other holders of Debt of the Company incurred after the Effective Date in compliance with Section 7.2 hereof. Other Senior Debt - Debt of the Company and/or its Subsidiaries (i) owed to the Bank of America N.A. pursuant to the terms of a Reimbursement Agreement, dated as of June 1, 1994 by the Company in favor of NBD Bank, N.A., as assigned and amended pursuant to an Assignment and Amendment of Reimbursement Agreement, dated as of June 12, 2001, by and among the Company, Bank One, N.A. (successor to NBD Bank, N.A.) and Bank of America, N.A., as further amended pursuant to the Second Amendment to Reimbursement Agreement dated as of November 22, 2002, (ii) owed to Bank of America, N.A. pursuant to the terms of a Reimbursement Agreement dated as of November 1, 1994 by the Company in favor of NBD Bank, N.A., as assigned an amended pursuant to the terms of an Assignment and Amendment of Reimbursement Agreement, dated as of November 1, 2001, by and among the Company, Bank One, N.A. and Bank of America, N.A. and further amended pursuant to the terms of a Second Amendment to Reimbursement Agreement, dated as of November 1, 2001 and a Third Amendment to Reimbursement Agreement dated as of November 22, 2002, (iii) owed to Bank of America, N.A. pursuant to the terms of the Keystone Guarantee, (iv) owed to Bank of America, N.A. pursuant to the terms of the Mecklenburg Guaranty, (v) owed to Bank of America, N.A. as reimbursement for payments under the terms of the Kreher Steel Letter of Credit Agreement, as amended, (vi) owed pursuant to a Note Agreement dated as of April 1, 1996 between the Company and Nationwide Life Insurance Company as amended by a First Amendment and Waiver to Note Agreement dated as of December 1, 1998 and a Second Amendment to Note Agreement dated as of November 22, 2002, (vii) owed pursuant to a Trade Acceptance Purchase Agreement dated as of August 13, 2001 between the Company and the Northern Trust Company in an aggregate amount not in excess of $10,000,000, as amended by the First Amendment thereto dated as of April 29, 2002, the Second Amendment thereto dated as of June 30, 2002 and the Third Amendment thereto dated as of November 22, 2002, (viii) owed pursuant to a Note Agreement dated as of May 15, 1997 among the Company, Massachusetts Mutual Life Insurance Company and United of Omaha Life Insurance Company, as amended by First Amendment and Waiver to Note Agreement dated as of December 1, Exhibit A-8 1998 and a Second Amendment to Note Agreement dated as of November 22, 2002, and (ix) Debt of the Company incurred after the Effective Date in compliance with Section 7.2 hereof. Receivable - means a payment owing to a Person (whether constituting an account, chattel paper, document, instrument, letter-of-credit right, letter of credit, investment property or general intangible) arising from the provision of merchandise, goods or services by such Person, including the right to payment of any interest or finance charges and other obligations owing to such Person with respect thereto. Related Security - means with respect to any Receivable: (a) all supporting obligations, security interests or Liens and property subject thereto from time to time securing or purporting to secure the payment of such Receivable by the Person obligated thereon (b) all guaranties, indemnities and warranties, insurance policies, financing statements and other agreements or arrangements of whatever character from time to time supporting or securing payment of such Receivable, (c) all right, title and interest of the Company or any Subsidiary in and to any goods (including returned, repossessed or foreclosed goods) the sale of which gave rise to such Receivable; provided, that Related Security will not include returned goods only to the extent that all amounts required to be paid pursuant to the transactions involving the transfer of such Receivable in respect of such goods have been paid, (d) all collections with respect to any of the foregoing, (e) all records with respect to any of the foregoing, and (f) all proceeds of such Receivable or with respect to any of the foregoing. Required Holders - means, at any time, the holders of at least 51% in principal amount of the Notes at the time outstanding (exclusive of Notes then owned by the Company, any Subsidiary or any Affiliate). Reset Rate - means an annual interest rate equal to: (i) 8.40% in respect of the Series A Notes; (ii) 8.53% in respect of the Series B Notes; and (iii) 8.69% in respect of the Series C Notes provided, however; in the event the Company shall have replaced the Existing Receivables Purchase Agreement (or any replacement thereof) in its entirety with a Revolving Loan Facility satisfactory to the Required Holders AND so long as neither the Company nor Exhibit A-9 any Subsidiary is a party to any other Receivables Purchase Agreement, then upon execution of such Revolving Loan Facility (and so long as neither the Company nor any Subsidiary is a party to a Receivables Purchase Agreement), the Reset Rate means an annual interest rate equal to (i) 6.90% in respect of the Series A Notes; (ii) 7.03% in respect of the Series B Notes; and (iii) 7.19% in respect of the Series C Notes. Revolving Loan Facility - means a loan agreement or similar facility pursuant to which a lender or lenders provides revolving loans to the Company or any Subsidiary for the primary purpose of financing such Person's ongoing business operations, whether such agreement or facility is secured or unsecured. For the avoidance of doubt, no Receivables Purchase Agreement shall constitute a Revolving Loan Facility. Second Amendment - means the Second Amendment to the Note Agreement dated as of November 22, 2002 amending this Agreement. Second Year Ratio - means on or after December 31, 2003 either (i) .60 to 1.0 if the Notes are Secured, or (ii) .55 to 1.0 if the Notes are not Secured. Secured - means the Notes are secured by Liens on property representing (in the aggregate) 95% of the book value (measured as of the Effective Date) of all the real and personal property of the Company and Significant Subsidiaries required to be secured (excluding from such calculation, property that the Required Holders or any Other Senior Creditor in good faith has determined to be unsuitable as collateral for environmental concerns) pursuant to the terms and conditions of Section 5 of the Second Amendment including, without limitation, any condition that an Acceptable Intercreditor Agreement be executed prior to the grant of any Liens or security interests. Securitization Transactions - means one or more transactions involving the transfer by the Company or any of its Subsidiaries of Receivables and Related Security including, without limitation, the sale or granting of a Lien in such Receivables and Related Security, (not including a Revolving Loan Facility) to an SPV as a contribution to the capital of Exhibit A-10 such SPV or for consideration in the form of cash or advances under a subordinated note due from such SPV, provided such transactions are entered into in good faith to provide working capital to the Company and its Subsidiaries, and provided further that the aggregate outstanding amount of the obligations incurred under all such transactions by all such Persons that would be characterized as principal if such transaction or transactions were structured as a secured lending facility rather than as purchase transaction or transactions does not exceed $65,000,000 in the aggregate at any one time outstanding, and provided, further that the aggregate amount of Receivables and Related Security sold, pledged or otherwise transferred to the SPV does not exceed $90,000,000 in the aggregate at any one time outstanding. Security Documents - means each of the security agreements, mortgages, deeds of trust, collateral assignments and other similar documents granting Liens to secure, directly or indirectly, the obligations of the Company under this Agreement or the Notes or any of the Guarantors under the Guarantee Agreement. Senior Financial Officer - means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company. Significant Subsidiary - means all Subsidiaries of the Company other than: (i) A. M. Castle Canada, (ii) any SPV and (iii) any Subsidiary of the Company which is not required to be a Guarantor pursuant to the provisions of the first sentence of Section 6.13 of this Agreement so long as such Subsidiary described in the foregoing has not guaranteed any Debt of the Company or any other Subsidiary (other than the Debt outstanding under this Agreement and the Other Senior Debt). SPV - means an entity in which the Company or any of its Subsidiaries owns an equity interest and a substantial economic interest created and maintained for the sole purpose of purchasing or otherwise acquiring interests in Receivables and Related Security from the Company or any of its Subsidiaries. Subsidiary Side Letter - means a letter from the Company dated as of the Effective Date to the holders of the Notes setting forth a description of the Company's Subsidiaries showing, as to each Subsidiary, the book value of its assets as of September 30, 2002 and its contribution to Consolidated EBITDA for the fourth quarter period ended on September 30, 2002. Exhibit A-11 9. Section 6.6 of the Existing Note Agreement is hereby amended by adding the following new paragraph (j) at the end of Section 6.6: "(j) To the extent not otherwise provided herein, all information required to be delivered by the Company or any of its Subsidiaries to the Other Senior Creditors pursuant to the terms of any one or more agreements between or among any one or more of them and the Company or any Subsidiary at the same time and in the same manner as delivered to such Persons." 10. Section 6 of the Existing Note Agreement is hereby amended by adding the following new Section 6.12 to read as follows: "6.12 Maintenance of Most Favored Lender Status. The Company hereby acknowledges and agrees that if the Company or any Subsidiary shall enter into or be a party to a Revolving Loan Facility which contains for the benefit of any lender or other Person any Financial Covenants or events of default in respect thereof that are more favorable to such lender than the Financial Covenants and Events of Default in respect of such Financial Covenants contained in this Agreement then, and in each and any such event, the Financial Covenants and Events of Default in this Agreement shall be and shall be deemed to be, notwithstanding Section 9.1 and without any further action on the part of the Company or any other Person being necessary or required, amended to permanently afford (until so amended or waived pursuant to Section 9.1) the holders of the Notes the same benefits and rights as so afforded to any such lender or Person (such deemed amendment may be the addition of one or more new Financial Covenants and Events of Default with respect thereto addressing matters not addressed by the then existing Financial Covenants and Events of Default with respect thereto set forth herein, as well as modifications to such Financial Covenants and Events of Default with respect thereto that are more favorable to such lender or Person). The Company will promptly deliver to each holder of Notes a copy of each Revolving Loan Facility entered into after the Effective Date. Without limiting the effectiveness of the first sentence of this Section 6.12, the Company agrees, no later than forty-five (45) days following the date the Company or any Subsidiary shall have granted any such lender or Person any such benefits or rights, to enter into such documentation as the Required Holders may reasonably request to evidence the amendments provided for in this Section 6.12." Exhibit A-12 11. Section 6 of the Existing Note Agreement is hereby amended by adding the following new Section 6.13: "6.13 Subsequent Guarantors. The Company covenants that at all times the assets of the Company and all Guarantors shall constitute at least 95% of Consolidated Total Assets (excluding for purposes of this calculation, the assets of A. M. Castle Canada and any SPV) and the Company and the Guarantors shall have contributed at least 95% of Consolidated EBITDA (excluding for purposes of this calculation, the EBITDA of A. M. Castle Canada and any SPV) for the four quarters then most recently ended. To the extent necessary to permit the Company to comply with the foregoing the Company will cause one or more Significant Subsidiaries to become Guarantors and the Company will cause each such Subsidiary to deliver to the holders of the Notes (a) a joinder agreement to the Guarantee Agreement, which joinder agreement is to be in the form of Exhibit A to the Guarantee Agreement; (b) an opinion of counsel for such Person with respect to the Guarantee Agreement and such joinder agreement which is in form and substance reasonably acceptable to the Required Holders; and (c) all applicable Security Documents and any other documents as may be necessary or appropriate to permit the Company to be in compliance with its obligations set forth in Section 6.14. The Guarantors shall be permitted to guaranty all Other Senior Debt." 12. Section 6 of the Existing Note Agreement is hereby amended by adding the following new Section 6.14: "6.14 Collateral Covenant. At any time on or after the Effective Date (as such term is defined in the Second Amendment), at the Company's expense: (a) The Company will, and will cause each Guarantor to, execute and deliver, within forty-five (45) days after any request therefor by the Required Holders, all further instruments and documents and take all further action that may be necessary, in order to give effect to, and to aid in the exercise and enforcement of the Liens, rights and remedies of the holders of the Notes and the Collateral Agent under, the Note Agreement, the Notes, the Security Documents and each other instrument and agreement executed in connection with any of the foregoing. Exhibit A-13 (b) The Company will, and will cause each Guarantor to, take any and all steps, and execute and deliver one or more Security Documents to insure that all property of the Company and its Significant Subsidiaries (other than Excluded Receivables and Excluded Collateral) will be subject to Liens in favor of the Collateral Agent pursuant to one or more Security Documents in form reasonably satisfactory to the Required Holders." 13. Section 6 of the Existing Note Agreement is hereby amended by adding the following new Section 6.15: "6.15 Receivables Purchase Agreement. At such time as any Receivables Purchase Agreement is replaced with a Revolving Loan Facility satisfactory to the Required Holders, neither the Company nor any of its Subsidiaries or SPVs will enter into, or be a party to, any Receivables Purchase Agreement." 14. Section 7.1 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "7.1 Adjusted Consolidated Net Worth. The Company will not permit its Adjusted Consolidated Net Worth (calculated on the last day of each fiscal quarter) to be less than the Applicable Base plus the cumulative sum of 40% of Consolidated Net Income (but only if a positive number) for (i) each completed fiscal year of the Company ending after December 31, 2001, and (ii) the period from the beginning of the then current fiscal year through the end of the then most recently ended fiscal quarter which shall have been completed (if any shall have been completed) in such then current fiscal year; provided, that at any time the Company or any Subsidiary incurs additional Indebtedness, immediately following and after giving effect to the incurrence of such additional Indebtedness, the Adjusted Consolidated Net Worth shall not be less than the minimum Adjusted Consolidated Net Worth that would have been permitted as of the last day of the then most recently ended fiscal quarter." Exhibit A-14 15. Section 7.2 of the Existing Note Agreement is hereby amended and restated in its entirety to read as follows: "7.2 Consolidated Debt. The Company will not permit the ratio (calculated on the last day of each fiscal quarter) of Consolidated Debt to Consolidated Total Capitalization to exceed the applicable ratio set forth opposite such quarter end in the table below; provided, that at any time the Company or any Subsidiary incurs additional Indebtedness, immediately following and after giving effect to the incurrence of such additional Indebtedness, the ratio of Consolidated Debt to Consolidated Total Capitalization shall not exceed the applicable ratio as of the then most recently ended fiscal quarter: - ------------------------------------ ------------------------ Each Fiscal Quarter End The applicable ratio is: - ------------------------------------ ------------------------ Before December 31, 2003 First Year Ratio - ------------------------------------ ------------------------ On or after December 31, 2003 and Second Year Ratio prior to March 31, 2004 - ------------------------------------ ------------------------ On or after March 31, 2004 .55 to 1.0" - ------------------------------------ ------------------------ 16. Section 7.4 of the Existing Note Agreement is hereby amended by deleting paragraph (i) and adding new paragraphs (i), (j) and (k) to follow paragraph (h): "(i) Liens in favor of the Collateral Agent to secure the Notes and the Other Senior Debt as provided in the Security Documents and an Acceptable Intercreditor Agreement; and (j) Liens attaching solely to the property and assets of A. M. Castle Canada to secure Debt of A. M. Castle Canada and no other Debt; and (k) Liens not otherwise permitted by paragraphs (a) through (j) of this Section 7.4 created, assumed or incurred subsequent to the Closing Date to secure Indebtedness, provided that at the time of creating, assuming or incurring such additional Indebtedness and after giving effect thereto and to the application of the proceeds therefrom the sum (without duplication) of the aggregate principal amount of outstanding Consolidated Indebtedness secured by Liens permitted by this Section 7.4(k) does not exceed 10% of Adjusted Consolidated Net Worth." Exhibit A-15 17. section 7.5 of the Existing Note Agreement is hereby amended by (i) adding the phrase "(other than A. M. Castle Canada)" after the word "Subsidiary" in the second line and (ii) deleting the "." at the end of clause (b), substituting a ";" in lieu thereof and adding the following new language: "provided, however, that if any Subsidiary merges into any other Person in compliance with the terms hereof or conveys or transfers all or any part of its assets in compliance with the terms hereof and following such conveyance or transfer such Subsidiary no longer constitutes a Significant Subsidiary, then the Required Holders, pursuant to the terms of the Acceptable Intercreditor Agreement, will promptly take all necessary action to cause such Guarantor to be released from the Guarantee Agreement as of the time of such sale, conveyance or transfer." 18. Section 7.6 of the Existing Note Agreement is hereby amended by (i) inserting the phrase "(other than A. M. Castle Canada)" after the word "Subsidiary" in the first sentence and (ii) adding the following new paragraph at the end of the section to read as follows: "If the Company or any Significant Subsidiary gives notice that it intends to sell, lease, transfer or otherwise dispose of any assets in compliance with the terms of this Section 7.6, the holders of the Notes, pursuant to the terms of the Acceptable Intercreditor Agreement, will promptly take such action reasonably requested by the Company to instruct the Collateral Agent to release such assets from the Liens granted pursuant to the Security Documents as of the time of any sale, lease, transfer or other disposition made in compliance with the terms of said Section 7.6." 19. Section 7.7 of the Existing Note Agreement is hereby amended by (i) adding the phrase "(other than A. M. Castle Canada)" after the word "Subsidiary" in the first sentence and (ii) deleting the "." at the end of clause (c), substituting a ";" in lieu thereof and adding the following new paragraph: "provided, however, that if the Company gives notice that it intends to sell, transfer or otherwise dispose of the capital stock of a Guarantor in compliance with the terms of this Section 7.7, the holders of the Notes will promptly take all necessary action to cause such Guarantor to be released from the Guarantee Agreement and shall instruct the Collateral Agent to release the assets of such Guarantor from the Liens granted pursuant to the Security Documents, in each case, as of the time of any sale, transfer or other disposition made in compliance with the terms of said Section 7.7." Exhibit A-16 20. Section 7.9 of the Existing Note Agreement is hereby amended by adding the phrase "and (iii) other than the sale of equity securities to an Affiliate on November 22, 2002" at the end thereof. 21. Section 8.1 of the Existing Note Agreement is hereby amended by deleting the "." at the end of paragraph (h); subparagraph (vii) thereof and inserting ";" in lieu thereof and adding new paragraphs (i), (j), (k) and (l), to follow paragraph (h) (vii): "(i) except as otherwise specifically permitted and provided for in this Note Agreement, including, without limitation, Section 6.13, Section 7.6, Section 7.7 and paragraph 5(b) of the Second Amendment to this Agreement (i) the obligations of any Guarantor contained in the Guarantee Agreement or any of the Security Documents shall cease to be in full force and effect or shall be declared by a court or Governmental Authority of competent jurisdiction to be void, voidable or unenforceable against any such Guarantor; (ii) the Company or any Guarantor shall contest the validity or enforceability of the Guarantee Agreement or any of the Security Documents against any such Guarantor, or (iii) the Company or any Guarantor shall deny that such Guarantor has any further liability or obligation under the Guarantee Agreement or any of the Security Documents; (j) any representation or warranty made in writing by or on behalf of the Company or any Guarantor or by any officer of the Company or any Guarantor in any amendment to this Agreement (including, without limitation, the Second Amendment), the Guarantee Agreement or any Security Document or in any writing furnished in connection therewith or pursuant to the terms thereof proves to have been false or incorrect in any material respect on the date as of which made; (k) except as otherwise specifically permitted and provided for in this Note Agreement, including, without limitation, Section 6.13, Section 7.6, Section 7.7 and paragraph 5(b) of the Second Amendment to this Agreement (i) any Security Document shall cease to be in full force and effect (other than in accordance with its terms) or shall be declared by any court or Governmental Authority of competent jurisdiction to be void, voidable or unenforceable against the grantor thereunder; (ii) the validity or enforceability of any Security Document against the grantor thereof shall be contested by such grantor; or (iii) the Company or any Guarantor shall default in the performance or observance of any covenant or provisions under the Guarantee Agreement or any Security Document; or (l) the Company or any Subsidiary shall enter into a Receivables Purchase Agreement after the termination of the Existing Receivables Purchase Agreement (or any replacement thereof) and its replacement with a Revolving Credit Facility satisfactory to the Required Holders." Exhibit A-17 EXHIBIT B1 AMENDMENTS TO EXISTING SERIES A NOTES The Existing Series A Notes outstanding on the Effective Date are hereby, without any further action required on the part of any other Person, deemed to be automatically amended to conform to and have the terms provided in Attachment I hereto (except that the principal amount and the payee of each Note shall remain unchanged). Any Series A Note issued on or after the Effective Date shall be in the form of Attachment I hereto. Exhibit B1-1 ATTACHMENT 1 A. M. CASTLE & CO. RESET RATE SERIES A SENIOR SECURED NOTE Due March 1, 2008 _______________ Registered Note No. AR-____ __________________ $__________________________ A. M. CASTLE & CO., a Maryland corporation (the "Company"), for value received, promises to pay to ______________ or registered assigns, on March 1, 2008, the principal amount of _________________ ($__________) and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the principal amount from time to time remaining unpaid hereon at the Reset Rate specified in the Note Agreement referred to below from the date hereof until maturity, payable in arrears on March 1 and September 1, in each year, commencing September 1, 1998, and at maturity, and to pay interest on any overdue principal, on any overdue Make-Whole Amount and (to the extent legally enforceable) on any overdue installment of interest at a per annum rate equal to the greater of (a) 10.40% and (b) the sum of the reference rate announced by Bank of America NT&SA from time to time as its "prime rate" for United States domestic loans in United States dollars, plus 2%, until paid. Payments of the principal of, the Make-Whole Amount, if any, and the interest on this Note shall be made in lawful money of the United States of America in the manner and at the principal office of the Company. This Note is issued under and pursuant to the terms and provisions of the Note Agreement, dated as of March 1, 1998, entered into by the Company with the Purchasers named in Schedule I thereto (as may be amended from time to time, the "Note Agreement"), and this Note and any holder hereof are entitled to all of the benefits provided for by such Note Agreement or referred to therein. Reference is made to the Note Agreement for a statement of such benefits and for the terms governing this Note. Capitalized terms used herein shall have the meanings ascribed to them in the Note Agreement unless provided otherwise herein. As provided in the Note Agreement, upon surrender of this Note for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder hereof or its attorney duly authorized in writing, a new Note for a like unpaid principal amount will be issued to, and registered in the name of, the transferee upon the payment of the taxes or other governmental charges, if any, that may be imposed in connection therewith. The Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary. This Note may be declared due prior to its expressed maturity date, voluntary prepayments may be made hereon and certain prepayments are required to be made hereon all in the events, on the terms and in the manner as provided in the Note Agreement. Such prepayments include certain required prepayments on Exhibit B1-2 March 1 of each year beginning March 1, 2001 through March 1, 2007, inclusive, with the remaining principal payable on March 1, 2008, and certain optional prepayments with a Make-Whole Amount. Should the indebtedness represented by this Note or any part thereof be collected in any proceeding provided for in the Note Agreement or be placed in the hands of attorneys for collection, the Company agrees to pay, in addition to the principal, Make-Whole Amount, if any, and interest due and payable hereon, all costs of collecting this Note, including attorneys' fees and expenses. This Note and the Note Agreement are governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. A. M. CASTLE & CO. By:________________________________ Title: Exhibit B1-3 EXHIBIT B2 AMENDMENTS TO EXISTING SERIES B NOTES The Existing Series B Notes outstanding on the Effective Date are hereby, without any further action required on the part of any other Person, deemed to be automatically amended to conform to and have the terms provided in Attachment I hereto (except that the principal amount and the payee of each Note shall remain unchanged). Any Series B Note issued on or after the Effective Date shall be in the form of Attachment I hereto. Exhibit B2-1 ATTACHMENT I A. M. CASTLE & CO. RESET RATE SERIES B SENIOR SECURED NOTE Due March 1, 2010 _______________ Registered Note No. AR-____ __________________ $__________________________ A. M. CASTLE & CO., a Maryland corporation (the "Company"), for value received, promises to pay to ______________ or registered assigns, on March 1, 2010, the principal amount of _________________ ($__________) and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the principal amount from time to time remaining unpaid hereon at the Reset Rate specified in the Note Agreement referred to below from the date hereof until maturity, payable in arrears on March 1 and September 1, in each year, commencing September 1, 1998, and at maturity, and to pay interest on any overdue principal, on any overdue Make-Whole Amount and (to the extent legally enforceable) on any overdue installment of interest at a per annum rate equal to the greater of (a) 10.53% and (b) the sum of the reference rate announced by Bank of America NT&SA from time to time as its "prime rate" for United States domestic loans in United States dollars, plus 2%, until paid. Payments of the principal of, the Make-Whole Amount, if any, and the interest on this Note shall be made in lawful money of the United States of America in the manner and at the principal office of the Company. This Note is issued under and pursuant to the terms and provisions of the Note Agreement, dated as of March 1, 1998, entered into by the Company with the Purchasers named in Schedule I thereto (as may be amended from time to time, the "Note Agreement"), and this Note and any holder hereof are entitled to all of the benefits provided for by such Note Agreement or referred to therein. Reference is made to the Note Agreement for a statement of such benefits and for the terms governing this Note. Capitalized terms used herein shall have the meanings ascribed to them in the Note Agreement unless provided otherwise herein. As provided in the Note Agreement, upon surrender of this Note for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder hereof or its attorney duly authorized in writing, a new Note for a like unpaid principal amount will be issued to, and registered in the name of, the transferee upon the payment of the taxes or other governmental charges, if any, that may be imposed in connection therewith. The Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary. This Note may be declared due prior to its expressed maturity date, voluntary prepayments may be made hereon and certain prepayments are required to be made hereon all in the events, on the terms and in the manner as provided in the Note Agreement. Such prepayments include certain required prepayments on Exhibit B2-2 March 1 of each year beginning March 1, 2006 through March 1, 2009, inclusive, with the remaining principal payable on March 1, 2010, and certain optional prepayments with a Make-Whole Amount. Should the indebtedness represented by this Note or any part thereof be collected in any proceeding provided for in the Note Agreement or be placed in the hands of attorneys for collection, the Company agrees to pay, in addition to the principal, Make-Whole Amount, if any, and interest due and payable hereon, all costs of collecting this Note, including attorneys' fees and expenses. This Note and the Note Agreement are governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. A. M. CASTLE & CO. By:________________________________ Title: Exhibit B2-3 EXHIBIT B3 AMENDMENTS TO EXISTING SERIES C NOTES The Existing Series C Notes outstanding on the Effective Date are hereby, without any further action required on the part of any other Person, deemed to be automatically amended to conform to and have the terms provided in Attachment I hereto (except that the principal amount and the payee of each Note shall remain unchanged). Any Series C Note issued on or after the Effective Date shall be in the form of Attachment I hereto. Exhibit B3-1 ATTACHMENT I A. M. CASTLE & CO. RESET RATE SERIES C SENIOR SECURED NOTE Due March 1, 2012 _______________ Registered Note No. AR-____ __________________ $__________________________ A. M. CASTLE & CO., a Maryland corporation (the "Company"), for value received, promises to pay to ______________ or registered assigns, on March 1, 2012, the principal amount of _________________ ($__________) and to pay interest (computed on the basis of a 360-day year of twelve 30-day months) on the principal amount from time to time remaining unpaid hereon at the Reset Rate specified in the Note Agreement referred to below from the date hereof until maturity, payable in arrears on March 1 and September 1, in each year, commencing September 1, 1998, and at maturity, and to pay interest on any overdue principal, on any overdue Make-Whole Amount and (to the extent legally enforceable) on any overdue installment of interest at a per annum rate equal to the greater of (a) 10.69% and (b) the sum of the reference rate announced by Bank of America NT&SA from time to time as its "prime rate" for United States domestic loans in United States dollars, plus 2%, until paid. Payments of the principal of, the Make-Whole Amount, if any, and the interest on this Note shall be made in lawful money of the United States of America in the manner and at the principal office of the Company. This Note is issued under and pursuant to the terms and provisions of the Note Agreement, dated as of March 1, 1998, entered into by the Company with the Purchasers named in Schedule I thereto (as may be amended from time to time, the "Note Agreement"), and this Note and any holder hereof are entitled to all of the benefits provided for by such Note Agreement or referred to therein. Reference is made to the Note Agreement for a statement of such benefits and for the terms governing this Note. Capitalized terms used herein shall have the meanings ascribed to them in the Note Agreement unless provided otherwise herein. As provided in the Note Agreement, upon surrender of this Note for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder hereof or its attorney duly authorized in writing, a new Note for a like unpaid principal amount will be issued to, and registered in the name of, the transferee upon the payment of the taxes or other governmental charges, if any, that may be imposed in connection therewith. The Company may treat the person in whose name this Note is registered as the owner hereof for the purpose of receiving payment and for all other purposes, and the Company shall not be affected by any notice to the contrary. This Note may be declared due prior to its expressed maturity date, voluntary prepayments may be made hereon and certain prepayments are required to be made hereon all in the events, on the terms and in the manner as provided in the Note Agreement. Such prepayments include certain required prepayments on Exhibit B3-2 March 1 of each year beginning March 1, 2008 through March 1, 2011, inclusive, with the remaining principal payable on March 1, 2012, and certain optional prepayments with a Make-Whole Amount. Should the indebtedness represented by this Note or any part thereof be collected in any proceeding provided for in the Note Agreement or be placed in the hands of attorneys for collection, the Company agrees to pay, in addition to the principal, Make-Whole Amount, if any, and interest due and payable hereon, all costs of collecting this Note, including attorneys' fees and expenses. This Note and the Note Agreement are governed by and construed in accordance with the internal laws (and not the law of conflicts) of the State of Illinois. A. M. CASTLE & CO. By:________________________________ Title: Exhibit B3-3 EXHIBIT D [FORM OF GUARANTEE AGREEMENT] This GUARANTEE AGREEMENT (as the same may hereafter be amended, supplemented or otherwise modified, this "Guarantee"), dated as of November 22, 2002, is by Datamet, Inc., an Illinois Corporation, Keystone Tube Company, LLC, a Delaware limited liability company, Total Plastics, Inc., a Michigan corporation, Paramont Machine Company, LLC, a Delaware limited liability company, Advanced Fabricating Technology, LLC, a Delaware limited liability company, Oliver Steel Plate Co., a Delaware corporation and Metal Mart, LLC, a Delaware limited liability company (each of whom, together with each other Person which from time to time becomes a Guarantor pursuant to Section 5 hereof, is referred to herein, individually, as a "Guarantor" and, collectively, as the "Guarantors"), in favor of Allstate Insurance Company, The Northwestern Mutual Life Insurance Company, Massachusetts Mutual Life Insurance Company, Mutual of Omaha Insurance Company and United of Omaha Life Insurance Company (together with their successors and assigns including, without limitation, future holders of the Notes (defined below), herein collectively referred to as the "Noteholders"). RECITALS: WHEREAS, each of the Guarantors is a direct or indirect Subsidiary of A. M. Castle & Co., a Maryland corporation (together with its successors and assigns, the "Company"); WHEREAS, the Guarantors' obligations under this Guarantee (and the Guarantors' obligations under guarantees to the Other Senior Creditors) shall be secured by Liens granted on certain property of the Guarantors pursuant to the terms of certain of the security documents to be entered into by the Guarantors (collectively, the "Security Documents"); WHEREAS, the Company entered into a Note Agreement, dated as of March 1, 1998 (as amended by that certain First Amendment to Note Purchase Agreement dated December 1, 1998 and the Second Amendment (as defined below), and as may be further as amended, modified, restated or replaced from time to time, the "Note Agreement"), with the purchasers identified on Schedule 1 thereto (the "Purchasers"), pursuant to which the Company, among other things, issued to the Purchasers (i) $15,000,000 of its 6.40% Series A Senior Notes due March 1, 2008 (the "Series A Notes"), (ii) $25,000,000 of its 6.53% Series B Notes due March 2, 2010 (the "Series B Notes") and (iii) $15,000,000 of its 6.69% Series C Notes due March 1, 2012 (the "Series C Notes", and together with the Series A Notes, the Series B Notes and all other notes for which such notes, or any successor notes, may be substituted or exchanged, all as may be amended from time to time, collectively, the "Notes"). WHEREAS, the Noteholders agreed to the amendments to the Note Agreement and the Notes as set forth in that certain Second Amendment to Note Agreement, dated of even date herewith (the "Second Amendment") conditioned upon, among other things, the execution and delivery by the Guarantors of this Guarantee; Exhibit D-1 WHEREAS, each Guarantor will receive substantial direct and indirect economic, financial and other benefits as a result of the amendments set forth in the Second Amendment. NOW THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each Guarantor hereby agrees as follows: 1. DEFINITIONS. All capitalized terms used herein and not defined herein have the respective meanings given them in the Note Agreement. 2. GUARANTEE. 2.1. Guarantee of Payment and Performance. Each Guarantor hereby absolutely, unconditionally and irrevocably, on a joint and several basis with each other Guarantor, guarantees to the Noteholders: (a) the full and punctual payment by the Company of the principal of, and interest and Make-Whole Amount, if any, on, the Notes at any time outstanding and the due and punctual payment of all other amounts payable, and all other indebtedness owing, by the Company to the Noteholders under the Note Agreement, the Notes, the Security Documents to be entered into by the Guarantors and each of the other instruments and agreements executed or to be executed in connection with the foregoing (collectively, the "Financing Documents") in each case when and as the same shall become due and payable, whether at maturity, pursuant to mandatory or optional prepayment, by acceleration or otherwise, all in accordance with the terms and provisions of this Guarantee, the Note Agreement, the Notes and the other Financing Documents, including, without limitation, overdue interest, post-petition interest, indemnification payments and all of such obligations which would become due but for the operation of the automatic stay pursuant to Section 362(a) of the United States Bankruptcy Code and the operation of Sections 502(b) and 506(b) of the United States Bankruptcy Code; and (b) the full and punctual performance by the Company of all duties, agreements, covenants and obligations of the Company contained in the Note Agreement, the Notes and the other Financing Documents, and the full and prompt payment, on demand, of all reasonable costs and expenses incurred by (x) the Noteholders in connection with the negotiation, preparation, execution and delivery of this Guarantee and (y) any one or more of the Noteholders or any trustee or agent acting on behalf of the Noteholders in enforcing any of their respective rights and remedies under this Guarantee, the Note Agreement, the Notes or any of the other Financing Documents, including, but not limited to, all reasonable attorney's fees and expenses (whether or not there is litigation), court costs and all costs in connection with any proceedings under the United States Bankruptcy Code (collectively, the "Guarantied Obligations"), provided that the Guarantor shall not be liable for the reasonable fees and expenses of more than one separate firm of attorneys representing the Noteholders. Exhibit D-2 2.2. Nature of Guarantee. This is a continuing, absolute and unconditional Guarantee of payment and performance and not merely of collection, and shall continue in full force and effect until such time as the Guarantied Obligations have been fully and irrevocably paid. 2.3. Binding Nature of Certain Adjudications. Each Guarantor shall be conclusively bound by the final adjudication in any action or proceeding, legal or otherwise to which the Company is a party, involving any controversy arising under, in connection with, or in any way related to, any of the Guarantied Obligations, and by a final judgment, award or decree entered therein. 2.4. No Duty to Pursue Others. Upon any default with respect to the Guarantied Obligations, the Note Agreement or the Notes, and after the expiration of any notice or cure periods, any one or more of the Noteholders or any trustee or agent acting on the Noteholders' behalf may proceed to enforce its rights and remedies directly against any one or more of the Guarantors without first proceeding against the Company or any other Person liable for the Guarantied Obligations or any security for the Guarantied Obligations. 2.5. No Release of Guarantors. Each Guarantor's liability under this Guarantee shall not be limited, diminished or extinguished by, and each Guarantor shall not be entitled to raise as a defense, any: (a) invalidity, irregularity or unenforceability of the Guarantied Obligations or of such Guarantor's obligations hereunder; (b) failure of such Guarantor to be given notice of default by the Company; (c) reorganization, merger or consolidation of the Company or any Guarantor into or with any other Person; (d) waiver of the Company's defaults or extensions of due dates for payments or other accommodations, indulgences or forbearance granted to the Company; (e) release of or non-perfection with respect to part or all of any security for the Guarantied Obligations or the Notes; (f) taking or accepting of any other security, collateral or guaranty of payment of any or all of the Guarantied Obligations or the Notes; (g) release of or settlement or compromise with any one or more Persons who constitute guarantors or the release of or settlement or compromise with any one or more Persons who are otherwise liable for the payment or performance of all or any portion of the Guarantied Obligations or the Notes and who are not primary obligors thereon; Exhibit D-3 (h) any loss or impairment of any right of any Guarantor for subrogation, reimbursement or contributions; (i) assignment or other transfer by the Noteholders (or any trustee or agent acting on the behalf of the Noteholders, as the case may be) of any part of the Guarantied Obligations or the Notes, or any collateral or security securing any portion of the Guarantied Obligations or the Notes; (j) illegality or impossibility of performance on the part of the Company or the Guarantors under the Note Agreement, the Notes or this Guarantee; or (k) other acts or omissions of the Noteholders which, in the absence of this Section, would operate so as to impair, diminish or extinguish any Guarantor's liability under this Guarantee. 2.6. Certain Waivers. (a) Waiver of Notice. Each Guarantor hereby waives notice of (i) acceptance of this Guarantee, (ii) any amendment, extension or other modification of the Note Agreement, the Notes and/or any of the other Financing Documents, (iii) any loans or advances made by any one or more of the Noteholders to the Company, (iv) the occurrence of a Default or Event of Default under the Note Agreement or the Notes, (v) any transfer or other disposition of the Guarantied Obligations or the Notes pursuant to Section 10 of the Note Agreement, and (vi) any other action at any time taken or omitted by the Noteholders or by any trustee or agent acting on behalf of any one or more Noteholder, and generally, all demands and notices of every kind in connection with this Guarantee, the Note Agreement, the Notes and the other Financing Documents, except as provided herein and in the Note Agreement. (b) Certain Other Waivers. Each Guarantor hereby waives (i) diligence, presentment, demand for payment, protest or notice, whether of nonpayment, dishonor, protest or otherwise, (ii) all setoffs, counterclaims and claims of recoupment against, the Guarantied Obligations or the Notes that may be available to the Company or any other guarantor of the Guarantied Obligations or the Notes (it being understood that the waivers set forth anywhere in this Guarantee shall not preclude any action by such Guarantor, after payment in full of its obligations hereunder, to recover for any tortious action which resulted in injury to such Guarantor), (iii) any defense based upon or in any way related to any claim that any election of remedies by any one or more of the Noteholders (or by any trustee or agent acting on behalf of the Noteholders) impaired, reduced, released or otherwise extinguished any rights such Guarantor might otherwise have had against the Company or any security, (iv) any claim based upon or in any way related to any of the matters referred to in Section 2.5, and (v) any claim that this Guarantee should be strictly construed against the Noteholders. 2.7. Bankruptcy; Other Matters. In the event that, pursuant to any insolvency, bankruptcy, reorganization, receivership or other debtor relief law, or any judgment, order or decision thereunder, or for any other reason any Exhibit D-4 Noteholder must rescind or restore any payment received by such Noteholder in connection with the Guarantied Obligations, the Note Agreement, the Notes or any other Financing Documents, or the Company ceases to be liable to any Noteholder for any of the Notes (other than by the full and irrevocable payment in full thereof), then any prior release or discharge from this Guarantee shall be without effect and this Guarantee and the obligations of Guarantor hereunder shall remain in full force and effect. 2.8. Payments by Guarantors. If all or any part of the Guarantied Obligations or the Notes are not paid when due, whether at maturity, by reason of acceleration, or otherwise, and remain unpaid until the expiration of any applicable grace or cure period, or otherwise upon the occurrence and continuance of any Event of Default, the Guarantors shall, immediately upon demand by any Noteholder (or any trustee or agent acting on behalf of the Noteholders), and without presentment, protest, notice of protest, notice of nonpayment, notice of intention to accelerate or acceleration or any other notice whatsoever, pay in immediately available funds, the amount due on the Guarantied Obligations for distribution to such Noteholder. All obligations of the Guarantors under this Guarantee shall be performable and payable to each Noteholder at its offices at the addresses set forth in Schedule A of the Note Agreement. 2.9. Failure to Pay Guarantied Obligations. If any Guarantor fails to pay the Guarantied Obligations as required by this Guarantee, then each of the Guarantors, as the principal obligor and not as a guarantor only, shall jointly and severally pay, on demand, all out-of-pocket costs and expenses incurred or expended by any one or more of the Noteholders (and any trustee or agent acting on behalf of the Noteholders) in connection with the enforcement of, and the preservation of the Noteholders' rights under and with respect to, this Guarantee, including, but not limited to, all reasonable attorney's fees and expenses (whether or not there is litigation), court costs and all costs incurred in connection with any proceedings under the United States Bankruptcy Code, provided that the Guarantor shall not be liable for the reasonable fees and expenses of more than one separate firm of attorneys representing the Noteholders. Until paid, all such amounts recoverable under this Section 2.9 shall bear interest from the time when such amounts become due until payment in full thereof at the rate for overdue principal set forth in the Note Agreement. 2.10. Subordination of Affiliate Obligations. Each of the Guarantors agrees that all Affiliate Obligations (as defined below), interest thereon, and all other amounts due with respect thereto, are hereby subordinated as to time of payment and in all other respects to all the Guarantied Obligations. Each Guarantor agrees that at all times during the existence of an Event of Default, such Guarantor shall not be entitled to enforce or receive any payment in respect thereof until all sums then due and owing to any one or more of the Noteholders in respect of the Guarantied Obligations shall have been paid in full. If any payment shall have been made to any Guarantor by the Company or such indebted Person on any such Affiliate Obligation during any time that an Event of Default exists and there are Guarantied Obligations outstanding, such Guarantor shall collect and receive all such payments as trustee for the Noteholders, to the extent of all amounts owing with respect to this Guarantee, and such amounts shall be immediately paid over to the Noteholders (or any trustee or agent acting on behalf of the Noteholders), without affecting in any manner the liability of the Guarantors under the other provisions of this Exhibit D-5 Guarantee. For purposes of this Section 2.10, "Affiliate Obligation" means any indebtedness of any kind of the Company, or any Person obligated in respect of the Guarantied Obligations to Guarantor. 2.11. Postponement of Subrogation Rights. No Guarantor will exercise any Subrogation Rights (as defined below) which it may acquire with respect to this Guarantee, until the prior and indefeasible payment, in full and in cash, of all Guarantied Obligations. Any amount paid to a Guarantor by or on behalf of the Company or any other guarantor of the Guarantied Obligations on account of any such Subrogation Rights prior to the payment in full of all Guarantied Obligations shall immediately be paid over to the Noteholders and credited and applied against the Guarantied Obligations whether matured or unmatured, in accordance with the terms of the Note Agreement. In furtherance of the foregoing, for so long as any Guarantied Obligations remain outstanding, no Guarantor shall take any action or commence any proceeding against the Company or any other guarantor of the Guarantied Obligation, (or any of their respective successors or assigns, whether in connection with a bankruptcy proceeding or otherwise) to recover any amounts in the respect of payments made under this Guarantee to the Noteholders and each Guarantor hereby forbears realizing any benefit of and any right to participate in any security which may be held by the Noteholders or any agent or trustee acting on their behalf. For purposes of this Section 2.11, "Subrogation Right" means any right of contribution, subrogation, reimbursement, indemnity, or repayment, and any other "claim", as that term is defined in the United States Bankruptcy Code, which any Guarantor might now have or hereafter acquire against the Company or any other guarantor of the Guarantied Obligations that arises from the existence or performance of such Guarantor's obligations under this Guarantee, and any right to participate in any security for the Guarantied Obligations. 2.12. Notices in Respect of Payments. If any Guarantor shall pay to any holder of the Notes from time to time any amount in respect of the Guarantied Obligations, such Guarantor shall, within five (5) Business Days after making such payment, provide notice of such payment to each other holder of the Notes at such time. 2.13. Limitation on Guarantied Obligations. Notwithstanding anything in Section 2.1 or elsewhere in this Guarantee or any other Financing Document to the contrary, the obligations of the Guarantors under this Guarantee shall at each point in time be limited to an aggregate amount equal to the greatest amount that would not result in such obligations being subject to avoidance, or otherwise result in such obligations being unenforceable, at such time under applicable law (including, without limitation, to the extent, and only to the extent, applicable to the Guarantors, Section 548 of the United States Bankruptcy Code and any comparable provisions of the law of any other jurisdiction, any capital preservation law of any jurisdiction and any other law of any jurisdiction that at such time limits the enforceability of the obligations of the Guarantors under this Guarantee). This Section 2.13 is intended solely to preserve the rights of the Noteholders hereunder to the maximum extent permitted by applicable law, and neither the Guarantors nor any other Person shall have any rights under this Section 2.13 that it would not otherwise have under applicable law. 2.14. Separate Action; Other Enforcement Rights. Each of the rights and remedies granted under this Guarantee to any Noteholder in respect of the Notes held by such Noteholder may be exercised by such Noteholder without notice by such Noteholder to, or the consent of or any other action by, any other holder Exhibit D-6 of the Notes from time to time. Any one or more of the Noteholders may proceed to protect and enforce this Guarantee by suit or suits or proceedings in equity, at law or in bankruptcy, and whether for the specific performance of any covenant or agreement contained herein or in execution or aid of any power herein granted or for the recovery of judgment for the obligations hereby guaranteed or for the enforcement of any other proper legal or equitable remedy available under applicable law. 2.15. Security. The Guarantied Obligations and the obligations of each Guarantor set forth herein will be secured pursuant to certain of the Security Documents to which such Guarantor is a party and each agent or trustee acting on behalf of the Noteholders, shall be entitled to all of the rights, remedies and benefits of the Security Documents to which such Guarantor is a party. 3. REPRESENTATIONS AND WARRANTIES. Each Guarantor hereby represents and warrants to the Noteholders that: 3.1. Organization and Existence. The Guarantor is duly organized and existing in good standing under the laws of its jurisdiction of organization, is duly qualified to do business and is in good standing where the nature or extent of its businesses or properties requires it to be qualified to do business except where the failure to so qualify will not have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents. The Guarantor has the power and authority to own its properties and carry on its business as now being conducted. 3.2. Authorization. The Guarantor is duly authorized to execute and perform this Guarantee and this Guarantee has been properly authorized by all requisite action of such Guarantor. No consent, approval or authorization of, or declaration or filing with, any Governmental Authority or any other Person, is required in connection with the execution, delivery or performance of this Guarantee, except for those already duly obtained. 3.3. Due Execution. This Guarantee has been executed on behalf of such Guarantor by a Person duly authorized to do so. 3.4. Enforceability. This Guarantee constitutes the legal, valid and binding obligation of the Guarantor, enforceable against such Guarantor in accordance with its terms, except to the extent that the enforceability thereof against such Guarantor may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditor's rights generally or by equitable principles of general application (regardless of whether such enforceability is considered in a proceeding in equity or at law). Exhibit D-7 3.5. Legal Restraints. The execution of this Guarantee by the Guarantor and the performance by such Guarantor of its obligations under this Guarantee, will not (i) violate or constitute a default under the certificate or articles of incorporation, bylaws or other organizational documents of such Guarantor as applicable, (ii) except as contemplated by the Security Documents and the granting of Liens to secure Other Senior Debt, result in any Lien being imposed on any of such Guarantor's property, or (iii) violate or constitute a default under any agreement to which the Guarantor is a party or any law, ordinance, governmental rule or regulation to which it is subject, except where such violation or default could not reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents. 3.6. No Material Proceedings. There are no proceedings, actions or investigations pending or, to the knowledge of the Guarantor, threatened against such Guarantor that, in the aggregate for all such proceedings, actions and investigations, could reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents. 3.7. Compliance with Laws. The Guarantor is in compliance with all laws, ordinances, governmental rules and regulations to which it is subject, except for such failures to comply that, in the aggregate for all such failures, could not reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents. 3.8. Other Names. Except for the trade names set forth in Schedule 3.8, the Guarantor has not used, and does not use, any name other than the full name which identifies such Guarantor in this Guarantee. 3.9. No Defaults. The Guarantor has not breached or violated, or is not in default under, any agreement to which it is a party, and is not in default with respect to any of its obligations, except for such breaches, violations and defaults that, in the aggregate for all such breaches, violations and defaults, could not reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents. 3.10. Independent Credit Evaluation. The Guarantor has independently, and without reliance on any information supplied by any one or more of the Noteholders, taken, and will continue to take, whatever steps such Guarantor deems necessary to evaluate the financial condition and affairs of the Company, and the Noteholders shall have no duty to advise the Guarantor of information at any time known to the Noteholders regarding such financial condition or affairs. 3.11. No Representation By Agent. None of the Noteholders nor any trustee or agent acting on their behalf has made any representation, warranty or statement to the Guarantor to induce such Guarantor to execute this Guarantee. Exhibit D-8 3.12. Survival. All representations and warranties made by the Guarantor herein shall survive the execution hereof and may be relied upon by the Noteholders as being true and accurate until the Guarantied Obligations are fully and irrevocably paid. 4. COVENANTS. 4.1 Corporate Existence; Scope of Business; Compliance with Law; Preservation of Enforceability. Each Guarantor covenants that from the date hereof and until the Guarantied Obligations and the Notes are fully and irrevocably paid, such Guarantor shall (a) preserve and maintain its existence in good standing and its right to transact business in those states in which it is now or hereafter doing business and obtain and maintain all licenses, except where the failure to obtain and maintain such licenses that, in the aggregate for all such failures, could not reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor or on its ability to perform its obligations hereunder and under the other Financing Documents; (b) comply, with all applicable laws, ordinances, governmental rules and regulations to which it is subject, except where such failure to comply could not reasonably be expected to have a material adverse effect on the business, operations, profits, financial condition, properties or business prospects of such Guarantor; or on its ability to perform its obligations hereunder and under the other Financing Documents; and (c) take all action and obtain all consents and governmental approvals required so that its obligations under this Guarantee will at all times be legal, valid and binding and enforceable in accordance with the terms hereof. Exhibit D-9 5. ADDITIONAL GUARANTORS. In accordance with Section 6.13 of the Note Agreement, additional Persons may from time to time after the date of this Guarantee become Guarantors under this Guarantee by executing and delivering to the Noteholders a joinder agreement (a "Joinder Agreement") to this Guarantee in substantially the form attached as Exhibit A to this Guarantee. Effective from and after the date of the execution and delivery by any Person to the Noteholders of a Joinder Agreement, such Person shall be, and shall be deemed for all purposes to be, a Guarantor under this Guarantee with the same force and effect, and subject to the same agreements, representations, guarantees, indemnities, liabilities and obligations, as if such Person were, effective as of such date, an original signatory to this Guarantee as a Guarantor. The execution and delivery of a Joinder Agreement by any Person shall not require the consent of any other Guarantor and all of the Guarantied Obligations of each Guarantor under this Guarantee shall remain in force and effect notwithstanding the addition of any additional Guarantor to this Guarantee. 6. SUCCESSORS AND ASSIGNS. This Guarantee shall bind the successors, assignees, trustees, and administrators of the Guarantor and shall inure to the benefit of each of the Noteholders, and each of its successors, transferees, participants and assignees. 7. CONTINUANCE OF GUARANTEE. Each Guarantor is liable under this Guarantee for the full amount of the Guarantied Obligations. Any holder of the Notes from time to time may release, settle with or compromise with any one or more Persons who are otherwise liable for the payment or performance of all or any portion of the Guarantied Obligations without impairing, diminishing or releasing the rights of any other holders of the Notes hereunder against any Guarantor or any other Person liable for the Guarantied Obligations. This Guarantee shall continue in full force and effect and shall bind Guarantor notwithstanding the death or release of any other Person who is otherwise liable for the payment or performance of all or any portion of the Guarantied Obligations. 8. AMENDMENTS AND WAIVERS. No amendment to, waiver of, or departure from full compliance with any provision of this Guarantee, or consent to any departure by any Guarantor herefrom, shall be effective unless it is in writing and signed by authorized officers of each Guarantor directly affected thereby and the Noteholders; provided, however, that any such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No failure by any Noteholder to exercise, and no delay by any Noteholder in exercising, any right, remedy, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by any Noteholder of any right, remedy, power or privilege hereunder preclude any other exercise thereof, or the exercise of any other right, remedy, power or privilege. Exhibit D-10 9. RIGHTS CUMULATIVE. Each of the rights and remedies of the Noteholders under this Guarantee shall be in addition to all of their other rights and remedies under applicable law, and nothing in this Guarantee shall be construed as limiting any such rights or remedies. 10. SERVICE OF PROCESS. EACH GUARANTOR HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO IT AT ITS ADDRESS SET FORTH IN ANNEX 1 HERETO. SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED AS OF THE DATE THAT SUCH GUARANTOR SIGNS THE RETURN RECEIPT. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE NOTEHOLDERS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. 11. WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS GUARANTEE. 12. SEVERABILITY. Any provision of this Guarantee which is prohibited, unenforceable or not authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, unenforceability or nonauthorization without invalidating the remaining provisions hereof or affecting the validity, enforceability or legality of such provision in any other jurisdiction unless the ineffectiveness of such provision would result in such a material change as to cause completion of the transactions contemplated hereby to be unreasonable. 13. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS. 14. SECTION HEADINGS. Section headings are for convenience only and shall not affect the interpretation of this Guarantee. Exhibit D-11 15. LIMITATION OF LIABILITY. THE NOTEHOLDERS SHALL NOT HAVE ANY LIABILITY WITH RESPECT TO, AND EACH OF THE GUARANTORS HEREBY WAIVES, RELEASES AND AGREES NOT TO SUE FOR, (a) ANY LOSS OR DAMAGE SUSTAINED BY ANY GUARANTOR THAT MAY OCCUR AS A RESULT OF, IN CONNECTION WITH, OR THAT IS IN ANY WAY RELATED TO, ANY ACT OR FAILURE TO ACT REFERRED TO IN SECTION 2.5 OR (b) ANY SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES SUFFERED BY ANY GUARANTOR IN CONNECTION WITH ANY CLAIM RELATED TO THIS GUARANTEE. 16. ENTIRE AGREEMENT. This Guarantee embodies the entire agreement among Guarantors and the Noteholders relating to the subject matter hereof and supersedes all prior agreements, representations and understandings, if any, relating to the subject matter hereof. 17. COMMUNICATIONS. All notices and other communications to the Noteholders or Guarantors hereunder shall be in writing, shall be delivered in the manner and with the effect, as provided by the Note Agreement, and shall be addressed to the Guarantors as set forth in Annex 1 hereto and to the Noteholders as set forth in the Note Agreement. 18. DUPLICATE ORIGINALS. Two or more duplicate counterpart originals hereof may be signed by the parties, each of which shall be an original but all of which together shall constitute one and the same instrument. Delivery of any executed signature page to this Guarantee by any Guarantor by facsimile transmission shall be as effective as delivery of a manually executed copy of this Guarantee by such Guarantor. 19. NOTICES. Nothing in this Guarantee shall void or abrogate any obligation of the Company, any Guarantor or any Noteholder to give any notice specifically required to be given by such Person in any provision of any Financing Document. 20. TERMINATION. Subject to Section 2.7, this Guarantee shall terminate and have no further force or effect upon payment in full of the Guarantied Obligations. [Remainder of page intentionally left blank. Next page is signature page.] Exhibit D-12 IN WITNESS WHEREOF, each Guarantor has caused this Guarantee to be duly executed and delivered by its officer thereunto duly authorized as of the date first above written. KEYSTONE TUBE COMPANY, LLC By:_____________________________ Name: Title: TOTAL PLASTICS, INC. By:_____________________________ Name: Title: PARAMONT MACHINE COMPANY LLC By:_____________________________ Name: Title: ADVANCED FABRICATING TECHNOLOGY, LLC By:_____________________________ Name: Title: OLIVER STEEL PLATE CO. By:_____________________________ Name: Title: [Signature Page to Guarantee Agreement] METAL MART, LLC By:_____________________________ Name: Title: DATAMET, INC. By:_____________________________ Name: Title: [Signature Page to Guarantee Agreement] EXHIBIT A [FORM OF JOINDER AGREEMENT] JOINDER AGREEMENT NO. ___ TO GUARANTEE AGREEMENT Re: A. M. CASTLE & CO. This Joinder Agreement is made as of ________________, in favor of the Noteholders (as such terms are defined in the Castle Guaranty, as hereinafter defined). A. Reference is made to the Guarantee Agreement made as of November 22, 2002 (as such Guaranty may be supplemented, amended, restated or consolidated from time to time, the "Castle Guaranty") by certain Persons in favor of the holders from time to time of the Notes (as defined in the Castle Guaranty), under which such Persons have guaranteed to the Noteholders the due payment and performance by A. M. Castle & Co. ("Castle") of all its present and future indebtedness, liabilities and obligations to the Noteholders in connection with the Note Agreement. B. Capitalized terms used but not otherwise defined in this Joinder Agreement have the respective meanings given to such terms in the Castle Guaranty, including the definitions of terms incorporated in the Castle Guaranty by reference to other agreements. C. Section 5 of the Castle Guaranty provides that additional Persons may from time to time after the date of the Castle Guaranty become Guarantors under the Castle Guaranty by executing and delivering to the Noteholders a supplemental agreement to the Castle Guaranty in the form of this Joinder Agreement. For valuable consideration, each of the undersigned (each a "New Guarantor") severally (and not jointly, or jointly and severally) agrees as follows: 1. Each of the New Guarantors has received a copy of, and has reviewed, the Castle Guaranty and the Note Agreement in existence on the date of this Joinder Agreement and is executing and delivering this Joinder Agreement to the Noteholders pursuant to Section 5 of the Castle Guaranty. 2. Effective from and after the date this Joinder Agreement is executed and delivered to the Noteholders by any one of the New Guarantors (and irrespective of whether this Joinder Agreement has been executed and delivered by any other Person), such New Guarantor is, and shall be deemed for all purposes to be, a Guarantor under the Castle Guaranty with the same force and effect, and subject to the same agreements, representations, guarantees, indemnities, liabilities and obligations, as if such New Guarantor was, effective as of the date of this Joinder Agreement, an original signatory to the Castle Guaranty as a Guarantor. In furtherance of the foregoing, each of the New Guarantors jointly and severally guarantees to the Noteholders in accordance with the provisions of the Castle Guaranty the due and punctual payment and performance in full of each of the Guarantied Obligations as each such Guarantied Obligation becomes due from Exhibit A-1 time to time (whether because of maturity, default, demand, acceleration or otherwise) and understands, agrees and confirms that the Noteholders may enforce the Castle Guaranty and this Joinder Agreement against such New Guarantor for the benefit of the Noteholders up to the full amount of the Guarantied Obligations without proceeding against any other Guarantor, Castle, any other Person or any collateral securing the Guarantied Obligations. The terms and provisions of the Castle Guaranty are incorporated by reference in this Joinder Agreement. 3. Upon this Joinder Agreement bearing the signature of any Person claiming to have authority to bind any New Guarantor coming into the hands of the Noteholders, and irrespective of whether this Joinder Agreement or the Castle Guaranty has been executed by any other Person, this Joinder Agreement will be deemed to be finally and irrevocably executed and delivered by, and be effective and binding on, and enforceable against, such New Guarantor free from any promise or condition affecting or limiting the liabilities of such New Guarantor and such New Guarantor shall be, and shall be deemed for all purposes to be, a Guarantor under the Castle Guaranty. No statement, representation, agreement or promise by any officer, employee or agent of any one or more of the Noteholders, forms any part of this Joinder Agreement or the Castle Guaranty or has induced the making of this Joinder Agreement or the Castle Guaranty by any of the New Guarantors or in any way affects any of the obligations or liabilities of any of the New Guarantors in respect of the Guarantied Obligations. 4. This Joinder Agreement may be executed in counterparts. Each executed counterpart shall be deemed to be an original and all counterparts taken together shall constitute one and the same Joinder Agreement. Delivery of an executed signature page to this Joinder Agreement by any New Guarantor by facsimile transmission shall be as effective as delivery of a manually executed copy of this Joinder Agreement by such New Guarantor. 5. This Joinder Agreement is a contract made under, and will for all purposes be governed by and interpreted and enforced according to, the internal laws of the State of Illinois excluding any conflict of laws rule or principle which might refer these matters to the laws of another jurisdiction. 6. This Joinder Agreement and the Castle Guaranty shall be binding upon each of the New Guarantors and the successors of each of the New Guarantors. None of the New Guarantors may assign any of its obligations or liabilities in respect of the Guarantied Obligations. IN WITNESS OF WHICH this Joinder Agreement has been duly executed and delivered by each of the New Guarantors as of the date indicated on the first page of this Joinder Agreement. [NEW GUARANTOR] By: _______________________ Name: Title: Exhibit A-2 EX-10.1 13 amcastle8k112202exib10-1.txt PREFERRED STOCK PURCHASE AGREE 11-22-02 Exhibit 10.1 EXECUTION COPY SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT Dated as of November 22, 2002 among A.M. CASTLE & CO., the INVESTORS named herein and W.B. & CO. for itself, and as nominee and agent of such INVESTORS TABLE OF CONTENTS ----------------- Page ---- ARTICLE I DEFINITIONS AND INTERPRETATION....................................1 1.1. Definitions........................................................1 1.2. Interpretation.....................................................4 ARTICLE II AUTHORIZATION AND SALE OF SERIES A PREFERRED SHARES...............5 2.1. Purchase and Sale of Series A Preferred............................5 2.2. Delivery of Series A Preferred Shares; Payment of Purchase Price...6 ARTICLE III COVENANTS.........................................................6 3.1. Compliance with Agreements.........................................6 3.2. Current Public Information; Listing................................6 3.3. Reservation of Common Stock........................................6 3.4. Termination........................................................7 3.5. Pre-emptive Rights.................................................7 3.6. Registration Rights................................................8 3.7. Board Representatives..............................................8 3.8. Schedule 13D and 13G...............................................8 3.9. Use of Proceeds....................................................8 ARTICLE IV TRANSFER OF RESTRICTED SECURITIES.................................8 4.1. General Provisions.................................................8 4.2. Rule 144A..........................................................8 4.3. Legend.............................................................8 4.4. Legend Removal.....................................................9 ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................9 5.1. Organization, Qualifications and Corporate Power...................9 5.2. Authorization.....................................................10 5.3. Authorized Capital Stock..........................................10 5.4. No Conflicts......................................................10 5.5. SEC Documents; Financial Statements...............................11 5.6. Absence of Certain Changes........................................11 5.7. Absence of Litigation.............................................11 5.8. No Undisclosed Liabilities........................................12 5.9. No General Solicitation...........................................12 5.10. No Integrated Offering............................................12 5.11. Brokers...........................................................12 5.12. Absence of Labor Dispute..........................................12 5.13. Possession of Intellectual Property...............................12 5.14. Possession of Licenses and Permits................................13 5.15. Title to Property.................................................13 5.16. Compliance with Law...............................................13 5.17. Tax Matters.......................................................13 5.18. Absence of Further Requirements...................................13 ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE INVESTORS..................14 6.1. Organization, Qualifications and Corporate Power..................14 6.2. Authorization.....................................................14 -i- TABLE OF CONTENTS ----------------- (continued) Page ---- 6.3. Brokers...........................................................15 6.4. Investment Representations........................................15 6.5. Absence of Further Requirements...................................15 6.6. The Nominee.......................................................15 ARTICLE VII MISCELLANEOUS....................................................16 7.1. Survival of Representations and Warranties........................16 7.2. Amendments and Waivers............................................16 7.3. Successors and Assigns............................................16 7.4. No Third Party Beneficiaries......................................16 7.5. Remedies..........................................................16 7.6. Indemnification...................................................16 7.7. Severability......................................................17 7.8. Notices...........................................................17 7.9. Governing Law.....................................................18 7.10. Submission to Jurisdiction........................................18 7.11. Attorneys' Fees...................................................18 7.12. Execution in Counterparts.........................................19 7.13. Transaction Expenses..............................................19 7.14. Entire Agreement..................................................19 7.15. Actions by the Investors..........................................19 -ii- EXHIBITS - -------- Exhibit A Articles Supplementary Exhibit B Registration Rights Agreement SCHEDULE - -------- 1.1 List of Investors -iii- SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of November 22, 2002, among A.M. Castle & Co., a Maryland corporation (the "Company"), the persons and entities listed on Schedule 1.1 attached hereto (the "Investors") and W.B. & Co., an Illinois general partnership, executing this Agreement for itself, and as nominee and agent of the Investors (the "Nominee"). RECITALS -------- WHEREAS, the Company desires to issue and sell to the Investors, and the Investors desire to purchase from the Company, an aggregate of 12,000 shares of the authorized and unissued shares of Series A Cumulative Convertible Preferred Stock, $.01 par value per share, of the Company (the "Series A Preferred"), which shares of Series A Preferred are convertible into shares of common stock, $.01 par value per share, of the Company (the "Common Stock"). NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties, covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: ARTICLE I DEFINITIONS AND INTERPRETATION ------------------------------ 1.1. Definitions. For the purposes of this Agreement, the following terms have the meanings specified or referred to in this Section 1.1: "Affiliate" means, with respect to any particular Person, any other Person that directly or indirectly controls, is controlled by or is under common control with such particular Person. For the purpose of this definition, "control" means the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise. "Agreement" has the meaning set forth in the first paragraph of this Agreement. "Articles of Incorporation" means the Company's Articles of Incorporation, as amended by the Articles Supplementary attached hereto as Exhibit A. "Board" means the Board of Directors of the Company. "By-laws" means the Company's By-laws, as amended. "Common Stock" has the meaning set forth in the Recitals. "Company" has the meaning set forth in the first paragraph of this Agreement. "Conversion Common Shares" means the Common Stock issued or issuable upon conversion of the Series A Preferred Shares. For purposes of this Agreement, any Person who holds Series A Preferred Shares shall be deemed to be the holder of the Conversion Common Shares obtainable upon conversion of the Series A Preferred Shares, regardless of any restriction or limitation on the conversion of the Series A Preferred Shares, such Conversion Common Shares shall be deemed to be in existence, and such Person shall be entitled to exercise the rights of a holder of Conversion Common Shares hereunder. As to any particular Conversion Common Shares, such shares shall cease to be Conversion Common Shares when they have been (x) effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, (y) distributed to the public through a broker, dealer or market maker pursuant to Rule 144 under the Securities Act (or any similar provision then in force) or (z) repurchased by the Company. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar federal law then in force. "GAAP" means United States generally accepted accounting principles consistently applied, in effect at the date of the financial statement(s) to which such term refers. "Indemnified Liabilities" has the meaning set forth in Section 7.5. "Indemnitees" has the meaning set forth in Section 7.5. "Indemnitor" has the meaning set forth in Section 7.5. "Investors" has the meaning set forth in the first paragraph of this Agreement. "Lien" means any mortgage, pledge, security interest, encumbrance, lien, claim or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof). "Material Adverse Effect" means any change or effect that, individually or in the aggregate with any such other changes or effects, is materially adverse to the business, properties, assets, liabilities, condition (financial or otherwise) or results of operations of the Company and its Subsidiaries, taken as a whole, but shall exclude (i) any change or effect relating or due to general economic conditions or conditions in the Company's industry, (ii) any change or effect disclosed in any SEC Document, and (iii) any change or effect otherwise disclosed to the Investors or the Nominee or their respective representatives prior to the date hereof. "Nominee" has the meaning set forth in the first paragraph of this Agreement. "Offer Period" has the meaning set forth in Section 3.5(a). "Offered Securities" has the meaning set forth in Section 3.5(a). -2- "Party" means the Company and each of the Investors and the Nominee. "Permitted Lien" means (i) liens with respect to Taxes not yet due and payable or which are being contested in good faith by appropriate proceedings, (ii) mechanics', materialmens' or contractors' liens or encumbrances or any similar lien or restriction, (iii) easements, rights-of-way, restrictions and other similar charges and encumbrances not interfering with the ordinary conduct of the business of the Company, (iv) liens created under the Company's or its Subsidiaries' borrowing or financing arrangements, (v) purchase money security interests, (vi) liens arising in connection with sale-leaseback transactions and (vi) liens existing on the date of this Agreement. "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, a governmental entity or any department, agency or political subdivision thereof or any other entity. "Prohibited Action" has the meaning set forth in Section 3.7. "Purchase Price" has the meaning set forth in Section 2.2(b). "Registration Rights Agreement" means the Registration Rights Agreement, dated November 22, 2002, among the Company, the Investors and the Nominee for itself, and as nominee and agent of the Investors, attached hereto as Exhibit B. "Restricted Securities" means (i) the Series A Preferred issued hereunder and (ii) the Conversion Common Shares. As to any particular Restricted Securities, such securities shall cease to be Restricted Securities when they have (a) been effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, (b) been distributed to the public through a broker, dealer or market maker pursuant to Rule 144 (or any similar provision then in force) under the Securities Act or become eligible for sale pursuant to Rule 144(k) (or any similar provision then in force) under the Securities Act, or (c) been otherwise transferred and new certificates for them not bearing the Securities Act legend set forth in Section 4.3 have been delivered by the Company in accordance with Section 4.4. Whenever any particular securities cease to be Restricted Securities, the holder thereof shall be entitled to receive from the Company, without expense, new securities of like tenor not bearing a Securities Act legend of the character set forth in Section 4.3. Any holder requesting the removal of such legend shall deliver or cause to be delivered to the Company a certificate executed by the holder and an opinion of such holder's counsel, such certificate and opinion to be in form and substance reasonably satisfactory to the Company. "SEC" means the Securities and Exchange Commission and includes any governmental authority or agency succeeding to the functions thereof. "SEC Documents" has the meaning set forth in Section 5.5. "Securities Act" means the Securities Act of 1933, as amended, or any similar federal law then in force. -3- "Series A Preferred" has the meaning set forth in the Recitals. "Series A Preferred Shares" has the meaning set forth in Section 2.1. "Subsidiary" means any entity in which the Company, directly or indirectly, owns a controlling position of capital stock or holds a controlling position of an equity or similar interest. "Tax" (and, with correlative meaning, "Taxes" and "Taxable") means: (i) any federal, state, local or foreign net income, gross income, gross receipts, windfall profit, severance, property, production, sales, use, license, excise, franchise, employment, payroll, withholding, alternative or add-on minimum, ad valorem, value-added, transfer, stamp, or environmental tax, or any other tax, custom, duty, governmental fee or other like assessment or charge of any kind whatsoever, together with any interest or penalty, addition to tax or additional amount imposed by any governmental authority; and (ii) any liability of the Company for the payment of amounts with respect to payments of a type described in clause (i) as a result of any obligation of the Company under any Tax sharing or indemnity arrangement. "Transaction Documents" means the agreements, documents and instruments expressly contemplated hereby and thereby, including the Registration Rights Agreement. 1.2. Interpretation. (a) As used in this Agreement and each Transaction Document, unless the context clearly indicates otherwise: (i) words used in the singular include the plural and words in the plural include the singular; (ii) reference to any Person includes such Person's successors and assigns, but only if such successors and assigns are permitted by this Agreement or such other Transaction Document, and reference to a Person in a particular capacity excludes such Person in any other capacity; (iii) reference to any gender includes the other gender; (iv) whenever the words "include," "includes" or "including" are used in this Agreement or any Transaction Document, they shall be deemed to be followed by the words "without limitation" or "but not limited to" or words of similar import; (v) reference to any Article, Section, Exhibit or schedule means such Article or Section of, or such Exhibit or schedule to, this Agreement, as the case may be, and references in any Section or definition to any clause means such clause of such Section or definition; -4- (vi) the words "herein," "hereunder," "hereof," "hereto" and words of similar import shall be deemed references to this Agreement as a whole and not to any particular Section or other provision hereof; (vii) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and by this Agreement; (viii) reference to any law (including statutes and ordinances) means such law (including all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability, and reference to any particular provision of any law shall be interpreted to include any revision of or successor to that provision regardless of how numbered or classified; (ix) relative to the determination of any period of time, "from" means "from and including," "to" means "to but excluding" and "through" means "through and including"; (x) in the event of any conflict between the provisions of the body of this Agreement and the Exhibits or schedules hereto, the provisions of the body of this Agreement shall control; and (xi) the titles to Articles and headings of Sections contained in this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of or to affect the meaning or interpretation of this Agreement. (b) This Agreement and each of the Transaction Documents were negotiated by the Parties with the benefit of legal representation, and no rule of construction or interpretation otherwise requiring this Agreement or any of the Transaction Documents to be construed or interpreted against any Party shall apply to any construction or interpretation hereof. Subject to Section 7.7, this Agreement shall be interpreted and construed to the maximum extent possible so as to uphold the enforceability of each of the terms and provisions hereof, it being understood and acknowledged that this Agreement was entered into by the Parties after substantial negotiations and with full awareness by the Parties of the terms and provisions hereof and the consequences thereof. ARTICLE II AUTHORIZATION AND SALE OF SERIES A PREFERRED SHARES --------------------------------------------------- 2.1. Purchase and Sale of Series A Preferred. Simultaneously upon the execution of this Agreement, and in reliance upon the representations and warranties of the Company set forth herein or in any certificate or other document delivered pursuant hereto, the Company shall issue, sell and deliver to the Nominee, on behalf of the Investors, and the Investors shall purchase from the Company at a purchase price of $1,000.00 per share, 12,000 shares of Series A Preferred (the "Series A Preferred Shares") having the rights and preferences set forth in the Articles Supplementary attached hereto as Exhibit A. -5- 2.2. Delivery of Series A Preferred Shares; Payment of Purchase Price. (a)Simultaneously upon the execution of this Agreement, the Company shall issue and deliver to the Nominee, on behalf of the Investors, one or more stock certificates, duly executed by the Company and registered in the Company's stock ledger in the Nominee's name, evidencing the Series A Preferred Shares. (b) Simultaneously upon the execution of this Agreement, as payment in full for the Series A Preferred Shares being purchased by it under this Agreement, and against delivery of the stock certificate(s) therefor as described in subparagraph (a) above, the Investors shall transfer to the account of the Company by wire transfer $12 million (the "Purchase Price"). ARTICLE III COVENANTS --------- 3.1. Compliance with Agreements. The Company shall perform and observe all of its obligations to each holder of the Series A Preferred Shares and all of its obligations to each holder of the Conversion Common Shares set forth in the Articles of Incorporation and the By-laws. 3.2. Current Public Information; Listing. (a) Any information to be furnished to or on behalf of any Investor or the Nominee (or any assignee or successor of any Investor or transferee of the Series A Preferred Shares) in connection with the transactions contemplated by this Agreement shall only be furnished pursuant to the terms of a confidentiality agreement, in form and substance reasonably acceptable to the Company, executed by the Investors and the Nominee and any other recipient of such information prior to the receipt of such information. (b) The Company shall file all reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder and, subject to Section 3.2(a), shall take such further action as the Investors may reasonably request, which request shall be made through the Nominee, all to the extent required to enable the Investors to sell Restricted Securities pursuant to Rule 144 adopted by the SEC under the Securities Act (as such rule may be amended from time to time) or any similar rule or regulation hereafter adopted by the SEC. The Company will file with the American Stock Exchange and the Chicago Stock Exchange, if required, the appropriate notification form for the listing of additional shares under the rules and regulations of such exchange (and otherwise in a form reasonably acceptable to the Nominee) in respect of the Conversion Common Shares and the Company shall use its commercially reasonable efforts to cause the Conversion Common Shares to at all times be listed (or traded) on one of the New York Stock Exchange, American Stock Exchange, Chicago Stock Exchange or NASDAQ System. 3.3. Reservation of Common Stock. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of issuance upon the conversion of the Series A Preferred Shares, such number of shares of Common Stock issuable upon the conversion of all outstanding Series A Preferred Shares. -6- 3.4. Termination. Notwithstanding any other provision of this Article III, upon such time as the Investors no longer own any Series A Preferred Shares, the Company's obligations pursuant to this Article III shall terminate (provided that the Company shall remain liable for any breach thereof prior to such termination). 3.5. Pre-emptive Rights. (a) Except for Excluded Issuances (as defined below in Section 3.5(d)), if the Company authorizes or issues any of its Common Stock, Series A Preferred or other equity securities, debt securities containing equity features or other securities or other rights convertible into or containing options or rights to acquire any such debt or equity securities ("Offered Securities"), the Company shall first offer, by written notice (a "Proposal Notice"), to sell to each holder of Series A Preferred Shares, a portion of such Offered Securities equal to the product of (i) the number of such Offered Securities and (ii) the quotient determined by dividing (A) the number of Conversion Common Shares held by such holder by (B) the number of shares of Common Stock then outstanding (calculated assuming the conversion into Common Stock of all Series A Preferred Shares immediately prior to such proposed issuance). The Proposal Notice shall be delivered to each holder of Series A Preferred Shares at least 20 days prior to the proposed issuance and shall set forth in reasonable detail the Offered Securities, the purchase price thereof, the payment terms and such holder's percentage allotment. During such 10 day period following delivery of the Proposal Notice (the "Offer Period"), each holder of Series A Preferred Shares shall be entitled to purchase his portion of such Offered Securities at the most favorable price and on the most favorable terms as such Offered Securities are to be offered to any other Person. (b) In order to exercise its purchase rights hereunder, each holder of Series A Preferred Shares must deliver a written notice to the Company describing its election hereunder within 10 days after receipt of the Proposal Notice from the Company; provided that any such election may be subject to the consummation of the sale of the Offered Securities and other rights described in the Proposal Notice on the terms set forth therein. (c) To the extent any of the Offered Securities are not acquired by any holder of Series A Preferred Shares pursuant to Section 3.5(a), the Company shall be entitled to sell such Offered Securities on terms and conditions no more favorable to the purchasers thereof than those offered to the holders of Series A Preferred Shares during the 90 days following the expiration of the Offer Period. Any Offered Securities so offered or sold by the Company to any Person after such 90-day period must be reoffered to each holder of Series A Preferred Shares pursuant to the terms of Section 3.5(a). (d) For purposes of the foregoing, "Excluded Issuances" means (A) issuances to employees, officers, directors and consultants of the Company of stock options or restricted stock under any equity incentive or restricted stock plan or plans currently existing or approved hereafter by the Board, (B) the issuance of shares of Common Stock upon exercise of the options referred to in clause (A) of this subsection in accordance with their terms, (C) issuances of Common Stock or other equity securities of the Company upon conversion or exchange of any Series A Preferred Shares or of any securities issued directly or indirectly upon conversion or exchange thereof, in each case in accordance with the Articles of Incorporation, (D) the issuance of 17,397 shares of Common -7- Stock to William Blair & Company, LLC in connection with the transactions contemplated hereby and (E) any other issuance of Common Stock or other Company securities if and to the extent that the Investors holding a majority of the outstanding Series A Preferred Shares have waived in writing the provisions of this Section 3.5 in respect thereof. 3.6. Registration Rights. Simultaneously upon the execution of this Agreement, the Company and the Nominee, for itself, and as nominee and agent of the Investors, shall have entered into the Registration Rights Agreement attached hereto as Exhibit B. 3.7. Board Representatives. Until the fifth anniversary of the date of this Agreement, and so long as the Board includes two representatives of the Investors (which such representatives are Michael Simpson and Patrick Herbert as of the date of this Agreement), the Investors shall not take any action alone or in concert with others to directly or indirectly seek to elect or control a majority of the Board (a "Prohibited Action"). Notwithstanding the preceding sentence, before the Investors at any time initiate or commence any Prohibited Action, they shall cause all of their representatives on the Board to resign from the Board. 3.8. Schedule 13D and 13G. The Nominee and each of the Investors agree to provide the Company with a copy of any Schedule 13D or 13G that the Nominee or any Investor intends to file with the SEC in connection with its purchase of Series A Preferred Shares in advance of such filing and such 13D or 13G shall be true and correct when filed with the SEC. 3.9. Use of Proceeds. The Company shall use the proceeds from the sale of the Series A Preferred Shares for general working capital purposes, including the repayment of debt. ARTICLE IV TRANSFER OF RESTRICTED SECURITIES --------------------------------- 4.1. General Provisions. Restricted Securities are transferable only pursuant to (a) public offerings registered under the Securities Act, (b) Rule 144 or Rule 144A of the SEC (or any similar rule or rules then in force) if such rule is available and (c) any other legally available means of transfer. 4.2. Rule 144A. Subject to Section 3.2(a), upon the request of Nominee, on behalf of any Investor, the Company shall promptly supply to the Nominee all information regarding the Company required to be delivered in connection with a transfer pursuant to Rule 144A of the SEC. 4.3. Legend. Each certificate or instrument representing Restricted Securities shall be imprinted with a legend in substantially the following form: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS -8- SUBJECT TO THE CONDITIONS SPECIFIED IN THE SERIES A CUMULATIVE CONVERTIBLE PREFERRED STOCK PURCHASE AGREEMENT, DATED AS OF NOVEMBER 22, 2002, AND MODIFIED FROM TIME TO TIME, AMONG A.M. CASTLE & CO. (THE "COMPANY"), THE INVESTORS NAMED THEREIN (THE "INVESTORS") AND W.B. & CO. FOR ITSELF, AND AS NOMINEE AND AGENT OF THE INVESTORS AND THE COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST AND WITHOUT CHARGE." 4.4. Legend Removal. If any Restricted Securities become eligible for sale pursuant to Rule 144(k), the Company shall, upon the request of the holder of such Restricted Securities, remove the legend set forth in Section 4.3 from the certificates for such Restricted Securities. Any holder requesting the removal of such legend shall deliver or cause to be delivered to the Company a certificate executed by the holder and an opinion of such holder's counsel, such certificate and opinion to be in form and substance reasonably satisfactory to the Company. ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE COMPANY --------------------------------------------- As an inducement to the Investors to enter into this Agreement and to purchase the Series A Preferred Shares, the Company hereby represents and warrants to the Investors and agrees as follows: 5.1. Organization, Qualifications and Corporate Power. (a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Maryland. The Company is duly qualified to do business as a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary, except in those jurisdictions where failure to be so qualified or in good standing would not, individually or in the aggregate, have a Material Adverse Effect. The Company has full corporate power and authority to own or lease and to operate and use its properties and assets and to carry on its business as currently conducted. (b) The Company has full corporate power and authority (i) to execute, deliver and perform each of the Transaction Documents, (ii) to issue, sell and deliver the Series A Preferred Shares and the Conversion Common Shares and (iii) to carry out fully and perform its obligations under the terms hereof and thereof. (c) Each of the Subsidiaries is a corporation or limited liability company duly incorporated or formed, as the case may be, validly existing and in good standing under the laws of its jurisdiction of incorporation or formation, as the case may be. Each of the Subsidiaries is duly qualified to do business as -9- a foreign corporation and is in good standing in each jurisdiction where such qualification is necessary, except in those jurisdictions where failure to be so qualified or in good standing would not, individually or in the aggregate, have a Material Adverse Effect. Each of the Subsidiaries has full corporate power and authority to own or lease and to operate and use its properties and assets and to carry on its business as currently conducted. 5.2. Authorization. The execution, delivery and performance of this Agreement and each of the Transaction Documents, and the issuance, sale and delivery of the Series A Preferred Shares and the Conversion Common Shares, have been duly authorized and approved by all requisite action on the part of the Company, its directors and its shareholders. This Agreement has been duly authorized, executed and delivered by the Company and is the legal, valid and binding obligation of the Company enforceable in accordance with its terms, and each of the Transaction Documents to which the Company is a party has been duly authorized by the Company and, upon execution and delivery by the Company, will be a legal, valid and binding obligation of the Company enforceable in accordance with its respective terms, except in each case (i) to the extent that bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws of general applicability relating to or affecting the enforcement of creditors' rights and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and (ii) the rights to indemnity may be limited by federal and state securities laws and public policy considerations. 5.3. Authorized Capital Stock. (a) The authorized capital stock of the Company consists of (i) 30,000,000 shares of Common Stock, of which 15,098,770 shares are issued and outstanding as of the date hereof, and of which 2,004,703 have been reserved for issuance upon exercise of granted stock options; and (ii) 10,000,000 shares of preferred stock, $.01 par value per share, of which 12,000 shares have been designated as Series A Preferred, no shares of which are issued and outstanding. The Company has reserved for issuance sufficient shares of Common Stock for issuance upon conversion of all outstanding Series A Preferred Shares. (b) The Series A Preferred Shares, when issued, sold and delivered in accordance with the terms of this Agreement and the Articles of Incorporation, will be duly and validly issued, fully paid, non-assessable and free and clear of all Liens, except any Liens created by or through any Investor. (c) The Conversion Common Shares issuable upon conversion of the Series A Preferred Shares will, when issued, in accordance with the conversion provisions of the Series A Preferred Shares, be duly and validly issued, fully paid, non-assessable and free and clear of all Liens, except any Liens created by or through any Investor. 5.4. No Conflicts. Neither the execution and delivery of this Agreement or any other Transaction Document or the consummation of any of the transactions contemplated hereby or thereby nor compliance with or fulfillment of the terms, conditions and provisions hereof or thereof will conflict with, result in a breach of the terms, conditions or provisions of, or constitute a default, an event of default or an event creating rights of acceleration, termination or cancellation or a loss of rights under, or result in the creation or imposition of any, Lien (other than Permitted Liens) upon any of the assets -10- or properties of the Company, under (1) the Articles of Incorporation or By-laws, (2) any note, instrument, agreement, mortgage, lease, license, franchise, permit or other authorization, right, restriction or obligation to which the Company or any of its Subsidiaries is a party or any of their respective assets or properties is subject or by which the Company or any of its Subsidiaries is bound, (3) any court order, judgement, decree or order to which the Company or any of its Subsidiaries is a party or any of their respective assets or properties is subject or by which the Company or any of its Subsidiaries is bound, or (4) any law, ordinance or regulation affecting the Company, any of its Subsidiaries or any of their respective assets or properties, other than, in the case of clauses (2), (3) and (4), any such conflicts, breaches, defaults, rights or Liens (other than Permitted Liens) that, individually or in the aggregate, would not have a Material Adverse Effect, or would not prevent the consummation of any of the transactions contemplated hereby. The Company has not granted any pre-emptive rights or other similar rights which would provide any Person the right to acquire any shares of Series A Preferred as of the date hereof. 5.5. SEC Documents; Financial Statements. Since January 1, 2001, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Exchange Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein being hereinafter referred to as the "SEC Documents"). As of their respective dates (or in the case of any amended SEC Document, as of the date of amendment), each SEC Document complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder applicable to such SEC Document, and none of the SEC Documents, at the time they were filed with the SEC (or in the case of any amended SEC Document, as of the date of amendment), contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the consolidated financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such consolidated financial statements have been prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such consolidated financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the consolidated financial position of the Company as of the dates thereof and the consolidated results of its operations and consolidated cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). As of the date hereof, the Company is not aware of any unresolved comments issued by the SEC with respect to the SEC Documents. 5.6. Absence of Certain Changes. Since the most recent filing by the Company with the SEC, except as set forth in any SEC Document, there has been no event or change that, individually or in the aggregate, whether or not arising in the ordinary course of business, would have a Material Adverse Effect. 5.7. Absence of Litigation. Except as set forth in the SEC Documents, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body -11- pending or, to the knowledge of the Company, threatened against or affecting the Company or any of its Subsidiaries, which, if adversely determined, would, individually or in the aggregate, have a Material Adverse Effect. 5.8. No Undisclosed Liabilities. There are no liabilities of the Company or any of its Subsidiaries, other than (i) as disclosed in the SEC Documents, (ii) liabilities incurred since September 30, 2002 in the ordinary course of business, (iii) liabilities under this Agreement and any other Transaction Document or incurred in connection with the transactions contemplated hereby or thereby and (iv) liabilities which would not, individually or in the aggregate, have a Material Adverse Effect. 5.9. No General Solicitation. Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the 1933 Act) in connection with the offer or sale of the Series A Preferred. 5.10. No Integrated Offering. Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of any of the Series A Preferred under the Securities Act or cause this offering of the Series A Preferred to be integrated with prior offerings by the Company for purposes of the Securities Act. 5.11. Brokers. The Company has no agreement with any broker, finder or similar agent with respect to the transactions contemplated by this Agreement for which the Company shall have any liability or responsibility, except for consideration owed to William Blair & Company, which the Company hereby expressly covenants and agrees to pay in full. 5.12. Absence of Labor Dispute. No labor dispute with the employees of the Company or any of its Subsidiaries exists or, to the knowledge of the Company, is threatened, which, in either case, individually or in the aggregate, would result in a Material Adverse Effect. 5.13. Possession of Intellectual Property. The Company and its Subsidiaries own or have the right to use the intellectual property used to carry on the business as currently operated by them, except to the extent the failure to so own or have such right would not result in a Material Adverse Effect (the "Intellectual Property"), and neither the Company nor any of its Subsidiaries has received any notice or is otherwise aware of any infringement of or conflict with asserted rights of others with respect to any Intellectual Property or of any facts or circumstances which would render any Intellectual Property invalid or inadequate to protect the interest of the Company or any of its Subsidiaries therein, and which infringement or conflict (if the subject of any unfavorable decision, ruling or finding) or invalidity or inadequacy, individually or in the aggregate, would result in a Material Adverse Effect. To the knowledge of the Company, the conduct of the Company's and each of its Subsidiaries' business has not infringed, misappropriated or conflicted with any intellectual property of other Persons, except as would not have a Material Adverse Effect. -12- 5.14. Possession of Licenses and Permits. To the knowledge of the Company, the Company and its Subsidiaries possess such permits, licenses, approvals, consents, franchises, grants, easements, variances, exceptions, certificate and other authorizations issued by the appropriate governmental entity necessary to own, lease and operate their respective properties and to conduct their business as currently conducted, except such permits, licenses, approvals, consents, franchises, grants, easements, variances, exceptions, certificates and other authorizations the failure of which to possess would not, individually or in the aggregate, result in a Material Adverse Effect (collectively, "Governmental Licenses"); to the knowledge of the Company, the Company and its Subsidiaries are in compliance with the terms and conditions of all such Governmental Licenses, except where the failure so to comply would not, individually or in the aggregate, result in a Material Adverse Effect; to the knowledge of the Company, all of the Governmental Licenses are valid and in full force and effect, except when the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not have a Material Adverse Effect; and neither the Company nor any of its Subsidiaries has received any notice of proceedings relating to the revocation, suspension, cancellation or modification of any such Governmental Licenses which, individually or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would result in a Material Adverse Effect. 5.15. Title to Property. The Company and its Subsidiaries have good and marketable title to all real property owned by the Company and its Subsidiaries and good title to all other properties owned by them, in each case, free and clear of all Liens of any kind except (i) Permitted Liens or (ii) Liens that would not have a Material Adverse Effect. The Company and its Subsidiaries own, or have a valid leasehold interest in, all material assets necessary for the conduct of their business as now conducted and presently proposed to be conducted, except such as would not, individually or in the aggregate, have a Material Adverse Effect. 5.16. Compliance with Law. The Company and its Subsidiaries are in compliance with all applicable laws, except where the failure to be in such compliance would not (either individually or in the aggregate) have a Material Adverse Effect. To the knowledge of the Company, neither the Company, any Subsidiary nor any of their respective officer, directors, representatives or Affiliates (other than any Investor or any of its Affiliates), has at any time made any unlawful payments on behalf of the Company for political contributions or made any bribes, kickback payments or other illegal payments. 5.17. Tax Matters. All material Tax returns of the Company and each of its Subsidiaries required by law to be filed have been duly filed and all Taxes which are due and payable, have been paid, except any such Taxes (i) (x) the payment of which the Company or any of its Subsidiaries is contesting in good faith, (y) for which adequate reserves (as determined in accordance with GAAP) have been provided on the books of the Company or its Subsidiaries involved, and (z) as to which no Lien other than a Permitted Lien has attached and no foreclosure, distraint, sale or similar proceedings have been commenced, (ii) which may result from audits not yet conducted or (iii) the failure of which to pay would not have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of Taxes have been determined in accordance with GAAP. 5.18. Absence of Further Requirements. Other than filings with the Secretary of State of Maryland, the SEC or otherwise with respect to federal or state securities law, no filing with, or authorization, approval, consent, -13- license, order, registration, qualification or decree of, any governmental entity, other than those that have been made or obtained, is necessary or required for the performance by the Company of its obligations under the Transaction Documents or the consummation by the Company of the transactions contemplated by the Transaction Documents. ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE INVESTORS ----------------------------------------------- As an inducement to the Company to enter into this Agreement and to issue and sell the Series A Preferred Shares, each Investor hereby severally represents and warrants to the Company and agrees with respect to himself or itself as follows: 6.1. Organization, Qualifications and Corporate Power. (a) Each Investor that is a corporation is duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its incorporation and has full corporate power and authority to own or lease and to operate and use its properties and assets and to carry on its business as currently conducted. (b) Each Investor that is a trust is validly created and existing under the laws of the jurisdiction of its creation. (c) Each Investor has full individual, trust or corporate, as applicable, capacity, power and authority (i) to execute, deliver and perform each of the Transaction Documents, (ii) to purchase and take possession of the Series A Preferred Shares it is purchasing hereunder and the related Conversion Common Shares and (iii) to carry out fully and perform its obligations under the terms hereof and thereof. 6.2. Authorization. The execution, delivery and performance of this Agreement and each of the Transaction Documents have been duly authorized and approved by each Investor. This Agreement has been duly executed and delivered by or on behalf of each Investor and is the legal, valid and binding obligation of each Investor enforceable in accordance with its terms, and each of the Transaction Documents to which such Investor is a party has been duly authorized by such Investor and, upon execution and delivery by or on behalf of such Investor, will be a legal, valid and binding obligation of such Investor enforceable in accordance with its respective terms, except in each case (i) to the extent that bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other similar laws of general applicability relating to or affecting the enforcement of creditors' rights and by the effect of general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law) and (ii) the rights to indemnity may be limited by federal and state securities laws and public policy considerations. -14- 6.3. Brokers. Neither the Nominee nor any Investor has any agreement with any broker, finder or similar agent with respect to the transactions contemplated by this Agreement for which the Nominee or such Investor shall have any liability or responsibility. 6.4. Investment Representations. (a) The Series A Preferred Shares acquired by each Investor pursuant to this Agreement are being acquired for its own account and without a view to the resale or distribution of such shares or any Conversion Common Shares or any interest therein other than in a transaction exempt from registration under the Securities Act. (b) Each Investor listed under the heading "Accredited Investor" on Schedule 1.1 attached hereto is an "accredited investor" as such term is defined in Rule 501(a) of Regulation D under the Securities Act. Each other Investor has been advised regarding an investment in the Series A Preferred by a "purchaser representative" as such term is defined in Rule 501(e) of Regulation D under the Securities Act. (c) Each Investor understands that the Restricted Securities being sold hereby have not been registered under the Securities Act, or applicable state securities laws, and are being issued in reliance on exemptions for private offerings contained in Section 4(2) of the Securities Act and in reliance on exemptions from the registration requirements of certain state securities laws. Because the Restricted Securities have not been registered under the Securities Act or applicable state securities laws, the Restricted Securities may not be re-offered or resold except through a valid and effective registration statement or pursuant to a valid exemption from the registration requirements under the Securities Act and applicable state securities laws. (d) Each Investor has sufficient knowledge and experience in financial and business matters so as to be capable of evaluating the merits and risks of its investment in the Series A Preferred Shares and is capable of bearing the economic risks of such investment, including a complete loss of its investment in the Series A Preferred. Each Investor understands that its investment in the Series A Preferred involves a high degree of risk. (e) Each Investor has been furnished with and carefully read a copy of the Company's Annual Report on Form 10-K for the year ended December 31, 2001, each of the Company's Quarterly Reports on Form 10-Q for 2002 and this Agreement and has been given the opportunity to ask questions of, and receive answers from, the Company concerning the terms and conditions of the Series A Preferred and other related matters. The Company has made available to each Investor or its agents all documents and information relating to an investment in the Series A Preferred requested by or on behalf of such Investor. 6.5. Absence of Further Requirements. Other than filings with the Secretary of State of Maryland, the SEC or otherwise with respect to federal or state securities law, no filing with, or authorization, approval, consent, -15- license, order, registration, qualification or decree of, any governmental entity, other than those that have been made or obtained, is necessary or required for the performance by each Investor of its obligations under the Transaction Documents or the consummation by each Investor of the transactions contemplated by the Transaction Documents. 6.6. The Nominee. The Nominee is an Illinois general partnership and is the nominee holder of the Series A Preferred Shares for all of the Investors. The two general partners of the Nominee are Patrick J. Herbert, III and Simpson Estates, Inc., each of whom share the power to vote the Investors' Series A Preferred. Except as set forth in the first two sentences of this Section 6.6, elsewhere in this Agreement and the Transaction Documents, no Investor has any agreements, arrangements or understandings with any other Person (other than Affiliates of such Investor) with regard to acquiring, holding, voting or disposing of any securities of the Company. ARTICLE VII MISCELLANEOUS ------------- 7.1. Survival of Representations and Warranties. All representations and warranties contained herein or made in writing by any Party in connection herewith shall survive until the first anniversary of the date of this Agreement. 7.2. Amendments and Waivers. Except as otherwise expressly provided herein, the provisions of this Agreement may be amended, modified or waived if the Company shall have obtained the written consent of a majority of the holders of the outstanding Series A Preferred Shares. 7.3. Successors and Assigns. Except as otherwise expressly provided herein, all covenants and agreements contained in this Agreement by or on behalf of any of the Parties will bind and inure to the benefit of the respective successors and permitted assigns of the Parties, whether so expressed or not. 7.4. No Third Party Beneficiaries. This Agreement is intended for the benefit of the Parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person. 7.5. Remedies. Each holder of any Series A Preferred Share or Conversion Common Share shall have all rights and remedies set forth in this Agreement, the Articles of Incorporation and any other agreement or contract that grants rights and remedies to such holders, and all rights that such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to enforce such rights specifically, to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. 7.6. Indemnification. Each of the Company and the Investors (jointly and severally) (for purposes of this Section, an "Indemnitor") shall defend, protect, indemnify and hold harmless the Investors or the Company, as the case may be, and all of such Party's partners, officers, directors, employees and agents (including those retained in connection with the transactions contemplated by this Agreement), as applicable (collectively, the "Indemnitees"), from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorney's fees and disbursements (the "Indemnified Liabilities"), incurred by the Indemnitees as a result of, or arising out of, or relating to any breach by such Indemnitor -16- of any of the representations, warranties or covenants contained in this Agreement or any of the Transaction Documents for so long as such representations and warranties or covenants shall survive as contemplated herein and therein. It is understood that the Indemnitor shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for reasonable fees and expenses of more than one separate firm (in addition to local counsel) for all Indemnitees. To the extent that the foregoing undertaking may be unenforceable for any reason, the Indemnitor shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law. Neither the Investors, on the one hand, nor the Company, on the other hand, shall have any liability for any inaccuracy in or breach of any representation or warranty by the other if the Company or the Investors, as the case may be, or any of their or its officers, employees, counsel or other representatives (including, in the case of the Investors, the Nominee or any partner in the Nominee or any of their respective officers, counsel or representatives) had actual knowledge on or before the date hereof of any fact which would cause it to believe that such representation or warranty was inaccurate or breached. 7.7. Severability. Wherever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law and in such a way as to, as closely as possible, achieve the intended economic effect of such provision and this Agreement as a whole, but if any provision contained herein is, for any reason, held to be invalid, illegal or unenforceable in any respect, such provision shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or any other provisions hereof, unless such a construction would be unreasonable. 7.8. Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered (a) when delivered personally, (b) if transmitted by facsimile when confirmation of transmission is received, (c) if sent by registered or certified mail, postage prepaid, return receipt requested, three business days after mailing or (d) if sent by reputable overnight courier service, one business day after delivery to such service; and shall be addressed as follows: If to the Company, to A.M. Castle & Co. 3400 North Wolf Road Franklin Park, IL 60131 Attention: President Facsimile: (847) 455-6930 with a copy to: A.M. Castle & Co. 3400 North Wolf Road Franklin Park, IL 60131 Attention: Counsel Facsimile: (847) 455-6930 -17- and Sidley Austin Brown & Wood Bank One Plaza 10 South Dearborn Street Chicago, Illinois 60603 Attention: Thomas A. Cole Kevin F. Blatchford Facsimile: (312) 853-7036 If to the Investors or the Nominee, to: Simpson Estates, Inc. 30 North LaSalle Street Suite 1231 Chicago, IL 60601 Attention: Patrick J. Herbert, III Facsimile: (312) 726-3143 with a copy to: McDermott, Will & Emery 227 West Monroe Street Suite 5500 Chicago, Illinois 60606 Attention: Timothy R.M. Bryant Facsimile: (312) 984-3669 7.9. Governing Law. This Agreement and the exhibits hereto shall be governed by, and construed in accordance with, the laws of the State of Illinois, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. In furtherance of the foregoing, the internal law of the State of Illinois shall control the interpretation and construction of this Agreement (and all exhibits hereto), even though under that jurisdiction's choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply. 7.10. Submission to Jurisdiction. Each of the Parties hereby irrevocably submits in any suit, action or proceeding arising out of or related to this Agreement or any of the Transaction Documents, or any of the transactions contemplated hereby or thereby, to the exclusive jurisdiction of the United States District Court for the Northern District of Illinois and the Circuit Court of Cook County, Illinois, and, to the extent permissible by law, waives any and all claims and objections that any such court is an inconvenient forum or improper venue. 7.11. Attorneys' Fees. In the event of any action or suit based upon or arising out of any actual or alleged breach by any Party of any representation, warranty or agreement in this Agreement, the prevailing party -18- shall be entitled to recover its reasonable attorneys' fees and expenses (determined on an aggregate basis with respect to the Investors) of such action or suit from the losing party, in addition to any other relief ordered by the court. 7.12. Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which will be considered an original instrument, but all of which together will be considered one and the same agreement, and will become binding when one or more counterparts have been signed by and delivered to each of the Parties. 7.13. Transaction Expenses. The Company shall pay all costs and expenses that it incurs, and the reasonable fees and expenses of McDermott, Will & Emery, special legal counsel to the Investors and the Nominee incurred, in connection with the negotiation, execution, delivery and performance of this Agreement and the transactions contemplated hereby. 7.14. Entire Agreement. This Agreement and the exhibits referred to herein, the Transaction Documents and the other documents delivered pursuant hereto contain the entire understanding of the Parties with regard to the subject matter contained herein or therein, and supersede all prior agreements, understandings or letters of intent between or among any of the Parties, including the Term Sheet dated October 24, 2002 entered into by and among the Company and the Nominee. 7.15. Actions by the Investors. (a) Each Investor hereby constitutes and appoints the Nominee, the true and lawful attorney and agent of such Investor to execute in the name, place and stead of such Investor any and all amendments to this Agreement and any Transaction Document and all notices, communications or other instruments necessary or advisable in connection herewith or therewith; the Nominee to have the full power and authority to do and perform in the name and on behalf of each Investor every act whatsoever necessary or advisable to be done on the premises as fully and to all intents and purposes as such Investor might or could do in person. (b) For all purposes of this Agreement and any Transaction Document, the Investors represent, warrant and covenant that any notice, communication or action taken by the Nominee may be unconditionally relied upon by the Company as being for and on behalf of all of the Investors. [SIGNATURE PAGE FOLLOWS] -19- Agreement IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed the day and year first above written by its duly authorized officer or agent. A.M. CASTLE & CO. By: /s/ G. Thomas McKane -------------------------------- Name: G. Thomas McKane Title: President and CEO W.B. & CO. for itself, and as nominee and agent of the Investors listed on Schedule 1.1 attached hereto By: /s/ Patrick J. Herbert, III -------------------------------- Name: Patrick J. Herbert, III Title: General Partner /s/ Patrick J. Herbert, III ----------------------------------- Patrick J. Herbert, III, as Attorney-in-Fact, Trustee or Authorized Officer for those Investors listed on Schedule 1.1 attached hereto under the heading "Patrick J. Herbert, III, Attorney-in-Fact, Trustee or Authorized Officer" United States Trust Company of New York, as Trustee for those Investors listed on Schedule 1.1 attached hereto under the heading "United States Trust Company of New York, Trustee" By: /s/ Scott A. Salisbury -------------------------------- Name: Scott A. Salisbury Title: Senior Vice President Signature Page to the Series A Cumulative Convertible Preferred Stock Purchase EX-10.2 14 amcastle8k112202exib10-2.txt REGISTRATION RIGHTS AGREEMENT 11-22-02 Exhibit 10.2 EXECUTION COPY REGISTRATION RIGHTS AGREEMENT ----------------------------- This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of November 22, 2002, among A.M. Castle & Co., a Maryland corporation (the "Company"), the persons and entities listed on Schedule 1.1 attached hereto (each an "Investor") and W.B. & Co., an Illinois general partnership, for itself, and as nominee and agent of the Investors (the "Nominee"). RECITALS -------- WHEREAS, pursuant to the terms of that certain Series A Preferred Stock Purchase Agreement (the "Series A Purchase Agreement") dated as of the date hereof, the Investors are acquiring shares of Series A Cumulative Convertible Preferred Stock, $.01 par value per share, of the Company (the "Series A Preferred Stock"); and WHEREAS, the Series A Purchase Agreement contemplates this Agreement being executed by the parties hereto as of the date hereof. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Definitions and Usage. --------------------- 1.1 Definitions. Unless otherwise provided in this Agreement, capitalized terms used herein shall have the following meanings: "Agreement" has the meaning set forth in the first paragraph of this Agreement. "Common Stock" means the Company's common stock, without par value. "Company" has the meaning set forth in the first paragraph of this Agreement. "Continuously Effective" with respect to a specified registration statement, means that such registration statement shall not cease to be effective and available for Transfers of Registrable Securities thereunder for longer than either (i) any ten (10) consecutive business days, or (ii) an aggregate of fifteen (15) business days during the period specified in the relevant provision of this Agreement. "Demand Registration" has the meaning set forth in Section 2.1(a). "Demand Registration Request" has the meaning set forth in Section 2.1(a). "Equity Securities" has the meaning set forth in Section 2.3(b). "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at that time. "Investor" has the meaning set forth in the first paragraph of this Agreement. "Holder" means (i) the Nominee or (ii) an Investor, unless and until such Investor assigns all of its rights and obligations hereunder to any Persons in accordance with Section 9.4, at such times as such Persons shall own Registrable Securities. "Losses" has the meaning set forth in Section 7(a). "Nominee" has the meaning set forth in the first paragraph of this Agreement. "Participating Holders" means the Holders participating in a registration hereunder. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, limited liability company, trust, unincorporated organization or government or other agency or political subdivision thereof. "Piggyback Registration" has the meaning set forth in Section 3.1. "Qualified Holders" means the holders of a majority of the Registrable Securities then outstanding. "register, registered and registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act, and the declaration or ordering by the SEC of effectiveness of such registration statement or document. "Registrable Securities" means (a) any Common Stock issued upon the conversion of any Series A Preferred Stock and (b) any Common Stock issued or issuable with respect to any of the securities referred to in clause (a) by way of a stock dividend, stock split, combination, subdivision or other similar event. As to any particular Registrable Securities, such securities shall cease to be Registrable Securities when they (x) have been registered and sold pursuant to the Securities Act or which have been sold to the public pursuant to Rule 144 or any similar rule promulgated by the SEC pursuant to the Securities Act permitting the resale of restricted securities without the necessity of a registration statement under the Securities Act or (y) upon any Transfer in any manner to a Person which, by virtue of Section 9.4, is not entitled to the rights provided by this Agreement. For purposes of this Agreement, a Person shall be deemed to be the Holder of Registrable Securities, and the Registrable Securities shall be deemed to be outstanding and in existence, whenever such Person has the right to acquire such Registrable Securities upon conversion of Series A Preferred Stock, whether or not such acquisition has actually been effected, and such Person shall be entitled to exercise the rights of a Holder of such Registrable Securities hereunder. "Registration Expenses" has the meaning set forth in Section 6.1. "Requesting Holders" means the Holders requesting a registration hereunder. 2 "SEC" means the Securities and Exchange Commission and includes any governmental authority or agency succeeding to the functions thereof. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at that time. "Series A Preferred Stock" has the meaning set forth in the Recitals. "Series A Purchase Agreement" has the meaning set forth in the Recitals. "Shelf Registration" has the meaning set forth in Section 2.2. "Transfer" means and includes the act of selling, giving, transferring, creating a trust (voting or otherwise), assigning or otherwise disposing of (other than pledging, hypothecating or otherwise transferring as security) (and correlative words shall have correlative meanings); provided, however, that any transfer or other disposition upon foreclosure or other exercise of remedies of a secured creditor after an event of default under or with respect to a pledge, hypothecation or other transfer as security shall constitute a "Transfer"; provided, further, however, no "Transfer" shall be deemed to have occurred if W.B. & Co. continued to be the nominee with respect to the Registrable Securities subject to such transfer or other distribution. For the avoidance of doubt, the parties hereto acknowledge that the W.B. & Co. nominee arrangement with the Investors with respect to the Registrable Securities does not itself constitute a "Transfer" "Violation" has the meaning set forth in Section 7(a). "Underwriters' Representative" means the managing underwriter, or, in the case of a co-managed underwriting, the managing underwriter designated as the Underwriters' Representative by the co-managers. 1.2 Usage. ----- (a) References to a Person are also references to its successors in interest (by means of merger, consolidation or sale of all or substantially all the assets of such Person or otherwise, as the case may be) and permitted assigns in accordance with Section 9.4. (b) References to Registrable Securities "owned" by a Holder shall include Registrable Securities beneficially owned by such Person but which are held of record in the name of a nominee, trustee, custodian, or other agent, but shall exclude Registrable Securities held by such Holder in a fiduciary capacity for customers of such Person. (c) References to a document are to it as amended, waived and otherwise modified from time to time and references to a statute or other governmental rule are to it as amended and otherwise modified from time to time (and references to any provision thereof shall include references to any successor provision). (d) References to Sections are to sections hereof, unless the context otherwise requires. 3 (e) The definitions set forth herein are equally applicable both to the singular and plural forms and the feminine, masculine and neuter forms of the terms defined. (f) The term "including" and correlative terms shall be deemed to be followed by "without limitation" whether or not followed by such words or words of like import. (g) The term "hereof" and similar terms refer to this Agreement as a whole. (h) The "date of" any notice or request given pursuant to this Agreement shall be determined in accordance with Section 9.8. 2. Demand Registrations. -------------------- 2.1 Requests for Registration. ------------------------- (a) At any time after the 10 business days following the date that the Company's Annual Report on Form 10-K for the year ended December 31, 2002 is filed with the SEC, the Qualified Holders may make a written request (a "Demand Registration Request") to the Company that the Company effect the registration of all or any portion of the Registrable Securities as the Qualified Holders shall set forth in the Demand Registration Request pursuant to the terms of this Agreement (a "Demand Registration"), provided, that (i) the aggregate offering price of such Registrable Securities to be registered is at least $2,000,000 and (ii) the Company shall not be required to cause more than two Demand Registrations in any twelve month period. (b) Each Demand Registration Request shall specify the approximate number of Registrable Securities requested to be registered. Within ten days after receipt of any such request, the Company shall give written notice of such requested registration to all other Holders, and shall include as part of such Demand Registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after the receipt of the Company's notice by such Holders. (c) Upon receipt of a Demand Registration Request, the Company shall, subject to the terms and conditions of this Agreement, cause to be filed with the SEC a registration statement in accordance with the Securities Act and the Company shall include therein the Registrable Securities requested in the Demand Registration Request. The registration statement shall be on Form S-3 (or such successor form), unless at the time of filing such registration statement or at any time prior to the SEC entering an order declaring such registration statement to be effective under the Securities Act, either (i) the Company does not meet the "Registrant Requirements" of, or (ii) the proposed offering by the Participating Holders does not meet the "Transaction Requirements" of, "I. Eligibility Requirements For Use of Form S-3" to the General Instructions to Form S-3 under the Securities Act. In the event that Form S-3 is not available for use in connection with the registration statement, the registration statement shall be on an appropriate form of the SEC as shall be selected by the Company and shall permit the disposition of the Registrable Securities in accordance with the intended method of disposition specified in the Registration Request. 2.2 Shelf Registration. In connection with any Demand Registration, the Qualified Holders requesting such Demand Registration may require the Company to file such registration with the Securities and Exchange Commission in 4 accordance with and pursuant to Rule 415 promulgated under the Securities Act (or any successor rule then in effect) (a "Shelf Registration"), provided that the Company shall only be required to file a Shelf Registration on Form S-2 or S-3 (or such successor forms). 2.3 Restrictions on Registration. ---------------------------- (a) The Company shall be entitled to (i) postpone the filing, effectiveness, supplementing or amending of the registration statement or prospectus otherwise required to be prepared and filed pursuant to this Agreement, and (ii) suspend the use of any prospectus included in the registration statement, if in either case the Company reasonably determines that such registration and/or the offer or Transfer of Registrable Securities contemplated by the registration statement or any prospectus would interfere with, or require premature disclosure of, any plan or proposal by the Company or any of its subsidiaries to engage in any material financing, acquisition, disposition, reorganization, merger or tender offer or other significant transaction, and the Company promptly gives the Participating Holders written notice of such determination. Notwithstanding anything herein to the contrary, the Company shall not exercise its rights under this Section 2.3(a) more than twice in any 12 month period, nor, in each case, for a period of more than 60 days. The Holders hereby acknowledge that any notice given by the Company pursuant to this Section 2.3(a) shall constitute material non-public information and that the United States securities laws prohibit any Person who has material non-public information about a company from purchasing or selling securities of such company or from communicating such information to any other Person under circumstances in which it is reasonably foreseeable that such Person is likely to purchase or sell such securities. (b) The Company shall not be obligated to file the registration statement otherwise required to be prepared and filed pursuant to this Section 2 if, within 30 days after its receipt of a Demand Registration Request, the Company notifies the Requesting Holders that (i) prior to the Company's receipt of such Demand Registration Request, the Company had a plan or intention promptly to register equity securities, including any security convertible into or exchangeable for equity securities ("Equity Securities"), under the Securities Act (other than Equity Securities to be registered on a registration statement on Form S-4 or Form S-8 (or any successor form to such forms)) and (ii) the Company reasonably believes that the proposed methods of distribution of the Registrable Securities subject to such Demand Registration Request would impair or adversely affect the proposed distribution of the Equity Securities to be registered by the Company. (c) If the Company postpones the filing or effectiveness of a registration statement pursuant to Section 2.3(a)(i) or is not obligated to file a registration statement pursuant to Section 2.3(b), the Requesting Holders may withdraw in writing their Demand Registration Request and such Holders' rights under Section 2.1 to make a Demand Registration Request shall be reinstated and continue as if such unfulfilled Demand Registration Request had not been made. (d) Notwithstanding anything in this Agreement to the contrary, in no event will the Company be obligated to effect more than three Demand Registrations hereunder. For purposes of the preceding sentence, a Demand Registration shall not be deemed to have been effected (i) unless a registration 5 statement with respect thereto has become effective, or (ii) if after such registration statement has become effective, the related offer, sale or distribution of Registrable Securities thereunder is prohibited by any stop order, injunction or other order or requirement of SEC or other governmental agency or court for any reason not attributable to any Holder and such prohibition is not thereafter eliminated. If the Company shall have complied with its obligations under this Agreement, a right to request a registration pursuant to this Section 2 shall be deemed to have been satisfied upon the effective date of such registration; provided, that, no stop order or similar order, or proceedings for such an order, is thereafter entered or initiated. (e) Notwithstanding anything in this Agreement to the contrary, the Company shall have no obligation hereunder to register any Registrable Securities if, at the time of a Demand Registration Request, the proposed sale or disposition of all of the Registrable Securities for which registration was requested by the Requesting Holders does not require registration under the Securities Act for a sale or disposition in a single public sale (including sales in accordance with Rule 144(k) or any similar rule promulgated by the SEC under the Securities Act), and the Company offers to remove any and all legends restricting Transfer from the certificates evidencing such Registrable Securities. (f) If at least 75% of the Registrable Securities requested to be registered by the Requesting Holders pursuant to a Demand Registration are not sold in such registration (a "Failed Registration"), the Requesting Holders shall have the right to require the Company to effect an additional registration of all or part of the Requesting Holders' Registrable Securities in accordance with this Section 2; provided, (i) the Holders shall reimburse the Company for the Registration Expenses incurred in the Failed Registration and (ii) the foregoing right to an additional registration shall only be available to the Holders with respect to one Failed Registration and thereafter any additional registrations (including Failed Registrations) shall count against the three Demand Registrations to which the Holders are entitled pursuant to Section 2.3(d) herein. 2.4 Underwritten Offerings. ---------------------- (a) If a Demand Registration pursuant to this Section 2 involves an underwritten offering (whether on a "firm commitment", "best efforts" or "all reasonable efforts" basis or otherwise), the Holders of a majority of the Registrable Securities initially requesting registration shall select the underwriter or underwriters and manager or managers to administer such underwritten offering; provided, however, that each Person so selected shall be reasonably acceptable to the Company. (b) If the Company effects the registration pursuant to this Section 2 in connection with an underwritten offering of Registrable Securities and the Underwriters' Representative advises the Participating Holders that, in its opinion, the amount of securities requested to be included in such offering (whether by the Holders or other holders of securities of the Company) exceeds the amount that can be sold in such offering within a price range acceptable to the Holders of a majority of the Registrable Securities initially requesting registration, securities shall be included in such offering and the related registration, to the extent of the amount that can be sold within such price range in the following order of priority: first, the Registrable Securities requested by the Participating Holders to be included in such registration 6 pursuant to this Section 2 pro rata among the respective Holders thereof on the basis of the amount of Registrable Securities owned by each such Holder; and second, all other securities requested to be included in such registration. Subject to Section 9.13, the Holders shall continue to have their rights hereunder with regard to any such excluded Registrable Securities. 3. Piggyback Registrations. ----------------------- 3.1 Right to Piggyback. Whenever the Company proposes to register any of its securities under the Securities Act (other than pursuant to a Demand Registration which shall be governed by Section 2, and registrations related solely to employee benefit plans or a Rule 145 transaction) and the registration form to be used may be used for the registration of Registrable Securities (a "Piggyback Registration"), the Company shall give prompt written notice to all Holders, of its intention to effect such a registration and, subject to the terms hereof, shall include in such registration all Registrable Securities with respect to which the Company has received written requests for inclusion therein within 15 days after such Holders receive the Company's notice. 3.2 Priority on Primary Registrations. If a Piggyback Registration is an underwritten primary registration on behalf of the Company, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold therein without adversely affecting the marketability of the offering, the Company shall include in such registration (a) first, the securities the Company proposes to sell, (b) second, the Registrable Securities requested to be included in such registration, pro rata among the respective Holders thereof on the basis of the amount of Registrable Securities owned by each such Holder and (c) third, other securities requested to be included in such registration. 3.3 Priority on Secondary Registrations. If a Piggyback Registration is an underwritten secondary registration on behalf of holders of the Company's securities, and the managing underwriters advise the Company in writing that in their opinion the number of securities requested to be included in such registration exceeds the number which can be sold in such offering without adversely affecting the marketability of the offering, the Company shall include in such registration (a) first, the securities requested to be included therein by the holders requesting such registration, (b) second, the Registrable Securities requested to be included in such registration, pro rata among the Holders of such securities on the basis of the number of Registrable Securities owned by each such Holder and (c) third, other securities requested to be included in such registration. 3.4 Selection of Underwriters. The Company shall have the right to select the investment banker(s) and manager(s) to administer the offering in connection with any Piggyback Registration. 4. Registration Procedures. Whenever the Holders have requested that any Registrable Securities be registered pursuant to this Agreement, the Company shall use commercially reasonable efforts to effect the registration of such Registrable Securities in accordance with the intended method of disposition thereof, and pursuant thereto the Company shall as expeditiously as practicable: 7 (a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its commercially reasonable efforts to cause the registration statement to become effective (giving due regard to the need to prepare current financial statements, conduct due diligence and complete other actions that are reasonably necessary to effect a public offering); provided, however, that before filing the registration statement or prospectus or any amendments or supplements thereto, the Company shall furnish to one firm of counsel for the Participating Holders copies of all such documents in the form substantially as proposed to be filed with the SEC. (b) Prepare and file with the SEC such amendments and supplements to the registration statement and the prospectus used in connection with the registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by the registration statement. Subject to Section 2.3(a), (i) the Company shall amend the registration statement or supplement the prospectus so that it will remain current and in compliance with the requirements of the Securities Act for the period specified in Section 4(j), and (ii) if during such period any event or development occurs as a result of which the registration statement or prospectus contains a misstatement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading, then the Company shall promptly notify the Participating Holders, amend the registration statement or supplement the prospectus so that each will thereafter comply with the Securities Act and furnish to the Participating Holders such amended or supplemented prospectus, which such Holders shall thereafter use in the Transfer of Registrable Securities covered by such registration statement. Pending any such amendment or supplement described in this Section 4(b), the Participating Holders shall cease making offers or Transfers of Registrable Securities pursuant to the prior prospectus. If any Registrable Securities included in the registration statement subject to, or required by, this Agreement remain unsold at the end of the period during which the Company is obligated to use its reasonable efforts to maintain the effectiveness of the registration statement, the Company may file a post-effective amendment to the registration statement for the purpose of removing such Registrable Securities from registered status. (c) Furnish to the Participating Holders, without charge, such numbers of copies of the registration statement, any pre-effective or post-effective amendment thereto, the prospectus, including each preliminary prospectus and any amendments or supplements thereto, in each case in conformity with the requirements of the Securities Act, and such other related documents as such Holders may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holders. (d) Use its reasonable efforts (i) to register and qualify the securities covered by the registration statement under such other securities or Blue Sky laws of such states where an exemption from registration is not available and as shall be reasonably requested by any Underwriters' Representative (or, if the registration is not for a public offering, in up to ten states designated by the Holders of a majority of the Registrable Securities being registered) and (ii) to obtain the withdrawal of any order suspending the effectiveness of the registration statement, or the lifting of any suspension of the qualification (or exemption from qualification) of the offer and Transfer of any of the Registrable Securities in any state, at the earliest possible moment; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business as a foreign corporation, to consent to general service of process or subject itself to taxation in any state. 8 (e) In the event of any underwritten offering, use its reasonable efforts to enter into and perform its obligations under an underwriting agreement (including indemnification and contribution obligations of underwriters), in the usual and customary form for other securities offerings of the Company, with the managing underwriter or underwriters of such offering. The Company shall also cooperate with the Participating Holders and the Underwriters' Representative for such offering in the marketing of the Registrable Securities, including making available the officers, accountants, counsel, premises, books and records of the Company for such purpose, but the Company shall not be required to incur any material out-of-pocket expense pursuant to this sentence. (f) Promptly notify the Participating Holders of any stop order issued or threatened to be issued by the SEC in connection therewith and take all reasonable actions required to prevent the entry of such stop order or to remove it if entered. (g) Make available for inspection by the Participating Holders, any underwriter participating in such offering and the representatives of such Holders and the Underwriter's Representative (but not more than one firm of counsel to such Holders), all financial and other information as shall be reasonably requested by them, and provide such Holders, any underwriter participating in such offering and the representatives of such Holders and the Underwriter's Representative the reasonable opportunity to discuss the business affairs of the Company with its principal executives and with the independent public accountants who have certified the audited financial statements included in the registration statement, in each case all as reasonably necessary to enable them to exercise their due diligence responsibility under the Securities Act; provided, however, that information that the Company determines to be confidential and which the Company advises such Person in writing is confidential shall not be disclosed unless such Person signs a confidentiality agreement reasonably satisfactory to the Company and such Holders agree to be responsible for such Person's breach of confidentiality on terms reasonably satisfactory to the Company. (h) Use its reasonable efforts to obtain a so-called "comfort letter" from the independent public accountants of the Company, and legal opinions of counsel to the Company addressed to the Participating Holders, in customary form and covering such matters of the type customarily covered by such letters, and in a form that shall be reasonably satisfactory to the Holders of a majority of the Registrable Securities being registered. Delivery of any such comfort letter or opinion shall be subject to the recipient furnishing such written representations or acknowledgements as are customarily provided by selling stockholders who receive such comfort letters or opinions. (i) Cause the Registrable Securities covered by the registration statement, if then listed on a securities exchange or included for quotation in a recognized trading market, to continue to be so listed or included for a reasonable period of time after the offering, but in no event for less than the period such registration is effective. (j) Keep the registration statement Continuously Effective (i) if a Demand Registration, for up to 60 calendar days or until such earlier date of which all the Registrable Securities under the Demand Registration statement 9 shall have been disposed of in the manner described in the registration statement and (ii) if a Shelf Registration, for up to 12 months or until such earlier date as of which all the Registrable Securities under the Shelf Registration statement have been disposed of in a manner described in the registration statement. Notwithstanding the foregoing, if for any reason the effectiveness of a registration is suspended or postponed as permitted by any provision of this Agreement, the relevant foregoing period shall be extended by the aggregate number of days of such suspension or postponement. (k) Take such other actions as are reasonably required in order to expedite or facilitate the disposition of Registrable Securities included in the registration. 5. Holders' Obligations. It shall be a condition precedent to the obligation of the Company to take any action pursuant to this Agreement with respect to the Registrable Securities of the Participating Holders, that each Participating Holder shall: (a) Promptly furnish to the Company such information regarding the Holder, the number of the Registrable Securities owned by it, the number of Registrable Securities to be registered and the intended method of disposition of such securities as shall be required to effect the registration of the Holder's Registrable Securities, and cooperate fully with the Company in preparing the registration. (b) If the Company has delivered a prospectus to the Holder and after having done so the prospectus is amended or supplemented to comply with the requirements of the Securities Act, at the written request of the Company, the Holder shall immediately cease making offers or Transfers of Registrable Securities and shall return the prospectuses to the Company and, upon receipt of the amended or supplemented prospectus from the Company, the Holder shall use only such amended or supplemented prospectus in making offers or Transfers of the Registrable Securities. (c) If the Company has delivered to the Holder written notice in accordance with Section 2.3(a), then the Holder shall immediately cease making offers or Transfers of Registrable Securities until the Company shall have given the Holder written notice that the Holder may once again commence making offers or Transfers of Registrable Securities under the current prospectus or has delivered to the Holder an amended or supplemented prospectus, in which event the Holder shall use only such amended or supplemented prospectus to make offers or Transfers of Registrable Securities. (d) During such time as the Holder may be engaged in a distribution of Registrable Securities, the Holder shall comply with Regulation M promulgated under the Exchange Act and pursuant thereto it shall, among other things, (i) not engage in any stabilization activity in connection with the securities of the Company in contravention of such regulation or (ii) distribute Registrable Securities under the registration statement solely in the manner described in the registration statement. 6. Registration Expenses. --------------------- 6.1 Company Expenses. Subject to Section 6.2, all expenses incident to the Company's performance of or compliance with this Agreement, including all registration and filing fees, fees of any transfer agent and registrar, fees and 10 expenses of compliance with securities or blue sky laws, printing expenses, fees and disbursements of counsel for the Company and its independent certified public accountants, fees and expenses of underwriters (excluding discounts and commissions attributable to the Registrable Securities included in such registration), the Company's internal expenses and the expenses and fees for listing the securities to be registered on each securities exchange or quotation system on which similar securities issued by the Company are then listed or quoted (all such expenses being herein called "Registration Expenses") shall be borne by the Company. 6.2 Holder Expenses. In connection with a registration hereunder, the Company shall reimburse the Holders included in a registration for the reasonable fees and disbursements of one counsel (not to exceed $20,000). 7. Indemnification; Contribution. If any Registrable Securities are included in a registration statement under this Agreement: (a) To the extent permitted by applicable law, the Company shall indemnify and hold harmless each Holder, each Person, if any, who controls such Holder within the meaning of the Securities Act, and each officer, director, partner and employee of such Holder and such controlling Person, against any and all losses, claims, damages, liabilities and expenses (joint or several), including reasonable attorney's fees and disbursements and reasonable expenses of investigation (collectively, "Losses"), incurred by such Person pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may otherwise become subject under the Securities Act, the Exchange Act or other federal or state laws, but only insofar as such Losses arise out of or are based upon any of the following statements or omissions (collectively, a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in the registration statement, including any preliminary prospectus or final prospectus contained therein, or any amendments or supplements thereto; or (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, however, that the indemnification required by this Section 7(a) shall not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such Loss to the extent that it arises out of or is based upon a Violation which occurs in reliance upon and in conformity with information furnished in writing to the Company by or on behalf of a Holder or any underwriter expressly for use in connection with such registration; and provided, further, that any indemnification required by this Section 7(a) shall not apply to the extent that any such Loss is based on or arises out of an untrue statement or alleged untrue statement of a material fact, or an omission or alleged omission to state a material fact, included in or omitted from any preliminary prospectus if the final prospectus shall correct such untrue statement or alleged untrue statement, or such omission or alleged omission, and a copy of the final prospectus has not been sent or given by the Holder or any underwriter to the 11 Person alleging damage at or prior to the confirmation of sale to such Person; and provided, further, that this indemnity shall not be available to any Person who offers or Transfers any Registrable Securities (whether pursuant to a prospectus or not) during any period which the Company has notified the Holder that such offers and Transfers must cease under the Agreement, including Sections 2.3(a), 4(b), 5(b) and 5(c). Subject to Section 7(c), in connection with the foregoing indemnification obligations, the Company shall not be liable for reasonable fees and expenses of more than one separate firm for all the Holders and the Nominee. (b) To the extent permitted by applicable law, the Holders (jointly and severally) shall indemnify and hold harmless the Company, each of the directors of the Company, each of the officers of the Company who shall have signed the registration statement, each Person, if any, who controls the Company within the meaning of the Securities Act, and each officer, director, partner, and employee of such controlling Person, against any and all Losses incurred by such Person pursuant to any actual or threatened action, suit, proceeding or investigation, or to which any of the foregoing Persons may otherwise become subject under the Securities Act, the Exchange Act or other federal or state laws, but only insofar as such Losses arise out of or are based upon any Violation, in each case to the extent that such Violation arises out of or is based upon information furnished in writing by or on behalf of a Holder expressly for use in connection with such registration; provided, however, that (x) any indemnification required by this Section 7(b) shall not apply to amounts paid in settlement of any such Loss if such settlement is effected without the consent of the Qualified Holders (which consent shall not be unreasonably withheld) and (y) in no event shall the amount of any indemnity obligation under this Section 7(b) exceed the gross proceeds from the applicable offering received by the Holders. (c) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, suit, proceeding, investigation or threat thereof made in writing for which such indemnified party may make a claim under this Section 7, such indemnified party shall deliver to the indemnifying party a written notice thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and disbursements and expenses (in each case, to the extent reasonable) to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time following the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 7 to the extent of such prejudice but shall not relieve the indemnifying party of any liability that it may have to any indemnified party otherwise than pursuant to this Section 7. Any such indemnified party shall have the right to employ separate counsel in any such action, claim or proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be the expenses of such indemnified party unless (i) the indemnifying party has agreed to pay such fees and expenses or (ii) the indemnifying party shall have failed to promptly assume the defense of such action, claim or proceeding or (iii) the named parties to any such action, claim or proceeding (including any impleaded parties) include both such indemnified party and the 12 indemnifying party, and such indemnified party shall have been advised by counsel that there may be one or more legal defenses available to it that are different from or in addition to those available to the indemnifying party and that the assertion of such defenses would create a conflict of interest such that counsel employed by the indemnifying party could not faithfully represent the indemnified party (in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such action, claim or proceeding on behalf of such indemnified party, it being understood, however, that the indemnifying party shall not, in connection with any one such action, claim or proceeding or separate but substantially similar or related actions, claims or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (together with appropriate local counsel) at any time for all such indemnified parties, unless in the reasonable judgment of such indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such action, claim or proceeding, in which event the indemnifying party shall be obligated to pay the reasonable fees and expenses of such additional counsel or counsels). (d) If the indemnification required by this Section 7 from the indemnifying party is unavailable to an indemnified party hereunder in respect of any Losses referred to in this Section 7: (i) the indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and indemnified parties in connection with the actions that resulted in such Losses, as well as any other relevant equitable considerations. The relative fault of such indemnifying party and indemnified parties shall be determined by reference to, among other things, whether any Violation has been committed by, or relates to information supplied by, such indemnifying party or indemnified parties, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such Violation. The amount paid or payable by a party as a result of the Losses referred to above shall be deemed to include, subject to the limitations set forth in Sections 7(a), 7(b) and 7(c), any legal or other fees or expenses reasonably incurred by such party in connection with any investigation or proceeding; (ii) the parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 7(d) were determined by pro rata allocation or by any other method of allocation which does not take into account the equitable considerations referred to in Section 7(d)(i). No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. (e) The obligations of the Company and the Holders under this Section 7 shall survive the completion of any offering of Registrable Securities pursuant to the registration statement under this Agreement, and otherwise. 13 8. Holdback. Each Holder, if so requested by the Company or the Underwriters' Representative in connection with an offering of any Equity Securities covered by a registration statement filed by the Company, shall (to the extent that similarly situated Persons are so required) not effect any public sale or distribution of Common Stock or any securities convertible into or exchangeable or exercisable for Common Stock, including a sale pursuant to Rule 144 under the Securities Act during the 15-day period prior to, and during the 90-day period beginning on, the date (i) such registration statement is declared effective under the Securities Act by the SEC or (ii) of commencement of such offering or distribution if such offering or distribution is on a delayed or continuous basis pursuant to Rule 415 under the Securities Act. In order to enforce the foregoing covenant, the Company shall be entitled to impose stop-Transfer instructions with respect to the Registrable Securities of each Holder until the end of such period. Each Holder shall treat any such request confidentially and shall not disclose such information to any Person. 9. Miscellaneous. ------------- 9.1 Remedies. Any Person having rights under any provision of this Agreement shall be entitled to enforce such rights specifically to recover damages caused by reason of any breach of any provision of this Agreement and to exercise all other rights granted by law. The parties hereto agree and acknowledge that money damages are not an adequate remedy for any breach of the provisions of this Agreement and that any party may apply for specific performance and for other injunctive relief in order to enforce or prevent violation of the provisions of this Agreement. 9.2 Amendments and Waivers. ---------------------- (a) This Agreement shall not be amended, modified or supplemented except by written instrument signed by each of the parties hereto. (b) Any term or provision of this Agreement may be waived, or the time for performance extended, as authorized in writing by the party or parties entitled to the benefit thereof. No waiver of any term or condition of this Agreement shall operate as a waiver of any other breach of such term and condition or any other term or condition, nor shall any failure to enforce any provision hereof operate as a waiver of such provision or of any other provision hereof. No written waiver hereunder, unless it by its own terms explicitly provides to the contrary, shall be construed to effect a continuing waiver of the provisions being waived and no such waiver in any instance shall constitute a waiver in any other instance or for any other purpose or impair the right of the party against whom such waiver is claimed in all other instances or for all other purposes to require full compliance with such provision. 9.3 Further Assurances. Each of the parties hereto shall execute all such further instruments and documents and take all such further action as any other party hereto may reasonably require in order to effectuate the terms and purposes of this Agreement. 14 9.4 Successors, Assigns and Subsequent Holders. ------------------------------------------ (a) All covenants and agreements in this Agreement by or on behalf of any of the parties hereto shall bind and inure to the benefit of the respective successors and the permitted assigns of the parties hereto. (b) The rights to cause the Company to register Registrable Securities pursuant to this Agreement may be assigned (but only with all related obligations) by a Holder if (x) such Transfer involves at least 33% of the Registrable Securities held by the Holder on the date hereof or (y) the Transfer is to (i) a subsidiary, parent, partner, limited partner, member, retired member, retired partner or stockholder of such Holder or (ii) such Holder's family member or trust for the benefit of such Holder (provided, that all such transferees who would not qualify individually for assignment of registration rights under clause (x) of this Section 9.4 have a single attorney-in-fact for the purpose of exercising any rights, receiving notices or taking any action under this Agreement). (c) No assignment or Transfer pursuant to this Section 9.4 shall be effective unless (i) the Company is, within a reasonable time after such Transfer, furnished with written notice of the name and address of such transferee or assignee and the securities with respect to which such registration rights are being assigned; and (ii) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement. 9.5 Aggregation of Stock. All shares of Registrable Securities held or acquired by affiliated entities or Persons shall be aggregated together for the purpose of determining the availability of any rights under this Agreement. 9.6 Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter contained herein, and supersedes all prior agreements, negotiations, discussions and understandings among the parties hereto with respect to such subject matter (including without limitation the Term Sheet signed October 24, 2002 between the Company and the Nominee). 9.7 Severability. Wherever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law and in such a way as to, as closely as possible, achieve the intended economic effect of such provision and this Agreement as a whole, but if any provision contained herein is, for any reason, held to be invalid, illegal or unenforceable in any respect, such provision shall be ineffective to the extent, but only to the extent, of such invalidity, illegality or unenforceability without invalidating the remainder of such provision or any other provisions hereof, unless such a construction would be unreasonable. 9.8 Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed given (a) when delivered personally, (b) if transmitted by facsimile, when confirmation of transmission is received, (c) if sent by registered or certified mail, postage prepaid, return receipt requested, when received, or (d) if sent by reputable overnight courier service, the next business day; and shall be addressed as follows: 15 If to the Company, to A.M. Castle & Co. 3400 North Wolf Road Franklin Park, IL 60131 Attention: President Facsimile: (847) 455-6930 with a copy to: A.M. Castle & Co. 3400 North Wolf Road Franklin Park, IL 60131 Attention: Counsel Facsimile: (847) 455-6930 and Sidley Austin Brown & Wood Bank One Plaza 10 South Dearborn Street Chicago, Illinois 60603 Attention: Thomas A. Cole Kevin F. Blatchford Facsimile: (312) 853-7036 If to the Holders or the Nominee, to: Simpson Estates, Inc. 30 North LaSalle Street Suite 1231 Chicago, IL 60601 Attention: Patrick J. Herbert, III Facsimile: (312) 726-3143 with a copy to: McDermott, Will & Emery 227 West Monroe Street Suite 5500 Chicago, Illinois 60606 Attention: Timothy R.M. Bryant Facsimile: (312) 984-3669 9.9 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Illinois, without giving effect to any choice of law or conflict of law rules or provisions (whether of the State of Illinois or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Illinois. In furtherance of the foregoing, the internal law of the State of Illinois shall control the interpretation and construction of this Agreement, even though under that jurisdiction's choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply. 16 9.10 Submission to Jurisdiction. Each of the parties hereto hereby irrevocably submits in any suit, action or proceeding arising out of or related to this Agreement, or any of the transactions contemplated hereby, to the exclusive jurisdiction of the United States District Court for the Northern District of Illinois and the Circuit Court of Cook County, Illinois, and, to the extent permissible by law, waives any and all claims and objections that any such court is an inconvenient forum. 9.11 Attorneys' Fees. In the event of any action or suit based upon or arising out of any actual or alleged breach by the Company, on the one hand, or the Nominee or the Investors, on the other hand, of any provision of this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees and expenses of such action or suit from the losing party, in addition to any other relief ordered by the court; provided, that, unless otherwise specified herein, the Company shall not be liable for reasonable fees and expenses of more than one firm for all of the Holders and the Nominee. 9.12 Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which will be considered an original instrument, but all of which together will be considered one and the same agreement, and will become binding when one or more counterparts have been signed by and delivered to each of the parties. 9.13 Termination. This Agreement may be terminated at any time by a written instrument signed by the Company and the Nominee, on behalf of the Qualified Holders. Unless sooner terminated in accordance with the preceding sentence, this Agreement (other than Section 7) shall terminate in its entirety automatically upon the earlier of (i) such date as there are fewer than 500,000 shares of Registrable Securities outstanding and (ii) the date that the Company is a party to a merger or consolidation and the Holders receive pursuant to such merger or consolidation securities registered under the Securities Act in exchange for the Registrable Securities. 9.14 No Third Party Beneficiaries. Except as provided in Section 7 and Section 9.4(b), nothing herein expressed or implied is intended to confer upon any Person, other than the parties hereto or their respective permitted assigns or successors, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 9.15 Actions by the Investors. (a) Each Investor hereby constitutes and appoints the Nominee, the true and lawful attorney and agent of such Investor to execute in the name, place and stead of such Investor any and all amendments to this Agreement and all notices, communications or other instruments necessary or advisable in connection herewith; the Nominee to have the full power and authority to do and perform in the name and on behalf of each Investor every act whatsoever necessary or advisable to be done on the premises as fully and to all intents and purposes as such Investor might or could do in person. (b) For all purposes of this Agreement, each Investor represents, warrants and covenants that any notice, communication or action taken by the Nominee may be unconditionally relied upon by the Company as being for and on behalf of all of the Investors. 17 (c) For all purposes of this Agreement where the Company is required to give notice to any Holder (or any group of Holders) who is an Investor on the date hereof, the Company may provide such notice to the Nominee on behalf of such Holder(s) and the receipt of such notice by the Nominee shall be deemed for all purposes hereunder to be receipt by such Holder(s). [SIGNATURE PAGE FOLLOWS] 18 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed the day and year first above written. A.M. CASTLE & CO. By: /s/ G. Thomas McKane -------------------------------- Name: G. Thomas McKane Title: President and CEO W.B. & CO. for itself, and as nominee and agent of the Investors listed on Schedule 1.1 attached hereto By: /s/ Patrick J. Herbert, III -------------------------------- Name: Patrick J. Herbert, III Title: General Partner /s/ Patrick J. Herbert, III ----------------------------------- Patrick J. Herbert, III, as Attorney-in-Fact, Trustee or Authorized Officer for those Investors listed on Schedule 1.1 attached hereto under the heading "Patrick J. Herbert, III, Attorney-in-Fact, Trustee or Authorized Officer" United States Trust Company of New York, as Trustee for those Investors listed on Schedule 1.1 attached hereto under the heading "United States Trust Company of New York, Trustee" By: /s/ Scott A. Salisbury -------------------------------- Name: Scott A. Salisbury Title: Senior Vice President Signature Page to the Registration Rights Agreement -----END PRIVACY-ENHANCED MESSAGE-----