EXHIBIT 10.16
September 5, 2006
A. M. Castle & Co.
3400 North Wolf Road
Franklin Park, Illinois 60131
     Re: Amendment No. 1 to Note Agreement
Ladies and Gentlemen:
     Reference is made to that certain Note Agreement dated as of November 17,
2005 (the “Note Agreement”) between A.M. Castle & Co., a Maryland corporation
(the “Company”), and The Prudential Insurance Company of America and Prudential
Retirement Insurance and Annuity Company (collectively, the “Purchasers”).
Capitalized terms used herein and not otherwise defined herein shall have the
meanings assigned to such terms in the Note Agreement.
     The Company has requested certain amendments to the Note Agreement as set
forth below and the Purchasers are willing to agree to such amendments on the
terms and conditions set for the herein. Accordingly, and in accordance with the
provisions of paragraph 11C of the Note Agreement, the parties hereto agree as
follows:
     SECTION 1. Amendment. From and after the Effective Date (as defined in
Section 3 hereof), the Note Agreement is hereby amended as follows:
     1.1. Paragraph 4 of the Note Agreement is amended by adding the words “and
4E” after the words “paragraph 4A” in the introductory sentence thereof.
     1.2. Paragraph 4A(1) of the Note Agreement is amended by the adding the
words “or 4F” after the words “paragraph 4E” therein.
     1.3. Paragraph 4E of the Note Agreement is renumbered as paragraph 4F and
amended and follows and a new paragraph 4E is added to the Note Agreement as
follows:
     “4E. Offer to Prepay Notes in the Event of a Credit Agreement Mandatory
Prepayment.
     4E(1). Notice of Credit Agreement Mandatory Prepayment. The Company will,
at least 30 days prior to any Credit Agreement Mandatory Prepayment at a time
following the occurrence and during the continuance of an Event of Default, give
written notice of such Credit Agreement Mandatory Prepayment to each holder of
the Notes. Such notice shall contain and constitute an offer to prepay the Notes
as described in paragraph 4E(3) in an amount (the “Offered Amount”) such that
the ratio of the Offered Amount to the outstanding principal amount of the Notes
immediately prior to the payment of such Credit

 

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A.M. Castle & Co.
September 5, 2006
Page 2
Agreement Mandatory Prepayment is equal to the ratio of the amount of such
Credit Agreement Mandatory Repayment to the outstanding principal amount of the
Term A Loans (as defined in the Credit Agreement) immediately prior to the
payment of such Credit Agreement Mandatory Prepayment, and shall be accompanied
by the certificate described in paragraph 4E(6).
     4E(2). Notice of Acceptance of Offer under Paragraph 4E(1). If the Company
shall at any time receive an acceptance to an offer to prepay Notes under
paragraph 4E(1) from some, but not all, of the holders of the Notes, then the
Company will, within two Business Days after the receipt of such acceptance,
give written notice of such acceptance to each other holder of the Notes.
     4E(3). Offer to Prepay Notes. The offer to prepay Notes contemplated by
paragraph 4E(1) shall be an offer to prepay, in accordance with and subject to
this paragraph 4E, the Notes in an aggregate amount equal to the Offered Amount
at the time of the occurrence of the Credit Agreement Mandatory Prepayment.
     4E(4). Rejection; Acceptance. A holder of Notes may accept or reject the
offer to prepay made pursuant to this paragraph 4E by causing a notice of such
acceptance or rejection to be delivered to the Company prior to the prepayment
date. A failure by a holder of Notes to so respond to an offer to prepay made
pursuant to this paragraph 4E shall be deemed to constitute a rejection of such
offer by such holder.
     4E(5). Prepayment. Prepayment of the Notes to be prepaid pursuant to this
paragraph 4E shall be at 100% of the principal amount of such Notes to be
prepaid, together with interest accrued thereon to the date of prepayment. The
prepayment shall be made at the time of occurrence of a Credit Agreement
Mandatory Prepayment. If the aggregate principal amount of the Notes held by the
holders of the Notes which have accepted an offer to prepay pursuant to
paragraph 4E(4) exceeds the Offered Amount, the principal amount so prepaid
shall be allocated to such Notes pro rata in proportion to the respective
outstanding principal amounts thereof.
     4E(6). Officer’s Certificate. Each offer to prepay the Notes pursuant to
this paragraph 4E shall be accompanied by a certificate, executed by a
Responsible Officer of the Company and dated the date of such offer, specifying
(i) the proposed prepayment date (which shall be the date of such Credit
Agreement Mandatory Prepayment), (ii) that such offer is made pursuant to this
paragraph 4E, (iii) the principal amount of each Note offered to be prepaid,
(iv) the interest that would be due on the portion of each Note offered to be
prepaid, accrued to the prepayment date, (v) that the conditions of this
paragraph 4E have been fulfilled, and (vi) in reasonable detail, the nature and
anticipated date of the Credit Agreement Mandatory Prepayment.

 

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A.M. Castle & Co.
September 5, 2006
Page 3
Paragraph 4E to the contrary, so long as the Intercreditor Agreement is in
effect, any Net Cash Proceeds (as defined in the Credit Agreement) of a
Disposition referred to in Section 2.06(b)(ii) of the Credit Agreement or an
Extraordinary Receipt (as defined in the Credit Agreement) referred to in
Section 2.06(b)(v) of the Credit Agreement shall, to the extent provided in the
Intercreditor Agreement, be distributed as provided therein and shall not
require an offer to prepay under this paragraph 4E; provided, however, if any
portion of an “Offered Repayment” (as such term is defined in the Intercreditor
Agreement) relating to a Disposition referred to in Section 2.06(b)(ii) of the
Credit Agreement or an Extraordinary Receipt (as defined in the Credit
Agreement) referred to in Section 2.06(b)(v) of the Credit Agreement is paid to
the Company or any Guarantor as a result of the rejection of all or a portion of
an Offered Repayment by any Other Senior Creditor, the Company shall make an
offer to prepay in accordance with this paragraph 4E in an aggregate amount
determined in accordance with paragraph 4E(1) with respect to the Net Cash
Proceeds (as defined in the Credit Agreement) not applied pursuant to the
Intercreditor Agreement.
     4F. Acquisition of Notes. The Company shall not, and shall not permit any
of its Subsidiaries or Affiliates to, prepay or otherwise retire in whole or in
part prior to their stated final maturity (other than by prepayment pursuant to
paragraph 4A or 4B, upon acceptance of an offer to prepay pursuant to paragraph
4E or upon acceleration of such final maturity pursuant to paragraph 7A), or
purchase or otherwise acquire, directly or indirectly, Notes held by any holder
unless the Company or such Subsidiary or Affiliate shall have offered to prepay
or otherwise retire or purchase or otherwise acquire, as the case may be, the
same proportion of the aggregate principal amount of Notes held by each other
holder of Notes at the time outstanding upon the same terms and conditions. Any
Notes so prepaid or otherwise retired or purchased or otherwise acquired by the
Company or any of its Subsidiaries or Affiliates shall not be deemed to be
outstanding for any purpose under this Agreement.”
     1.4. Paragraph 5A of the Note Agreement is amended by adding the words “,
or limited liability company” after the first appearance of the word “corporate”
therein.
     1.5. Clause (b) of paragraph 5F of the Note Agreement is amended by adding
the words “or with respect to the absence of any material misstatement” after
the words “unqualified as to scope of audit” therein.
     1.6. Paragraph 5K of the Note Agreement is amended and restated in its
entirety as follows:
     5K. Subsequent Guarantors. The Company covenants that at all times the
assets of the Company and all Guarantors shall constitute at least 95% of
Consolidated

 

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A.M. Castle & Co.
September 5, 2006
Page 4
Total Assets (excluding, for the purposes of this calculation, the assets of the
Foreign Subsidiaries (except (i) with respect to the Canadian Subsidiary, so
long as the assets of the Canadian Subsidiary do not constitute more than 20% of
Consolidated Total Assets, (ii) with respect to the Mexican Subsidiary, so long
as the assets of the Mexican Subsidiary do not constitute more than 5% of
Consolidated Total Assets)) and (iii) with respect to any other Foreign
Subsidiaries, so long as the assets of all such Foreign Subsidiaries do not
constitute more than 30% of Consolidated Total Assets) and the Company and the
Guarantors shall have contributed at least 95% of Consolidated EBITDA
(excluding, for the purposes of this calculation, the EBITDA of the Foreign
Subsidiaries (except (i) with respect to the Canadian Subsidiary, so long as the
assets of the Canadian Subsidiary do not constitute more than 20% of
Consolidated Total Assets, (ii) with respect to the Mexican Subsidiary, so long
as the assets of the Mexican Subsidiary do not constitute more than 5% of
Consolidated Total Assets) and (iii) with respect to any other Foreign
Subsidiaries, so long as the assets of all such Foreign Subsidiaries do not
constitute more than 30% of Consolidated Total Assets)) 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
Significant Subsidiary to deliver to the holders of the Notes (i) a joinder
agreement to the Guaranty Agreement, which joinder agreement is to be in the
form of Exhibit A to the Guaranty Agreement; (ii) an opinion of counsel to such
Person with respect to the Guaranty Agreement and such joinder agreement which
is in form and substance reasonably acceptable to the Required Holders; and
(iii) all applicable Collateral 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 this paragraph 5K. The Guarantors shall be permitted to
guaranty all Other Senior Debt.
     1.7. The Note Agreement is amended by adding new paragraphs 5O, 5P and 5Q
as follows:
     “5O. Notices. The Company covenants that it shall promptly notify you and
any Institutional Holder:
     (a) of the occurrence of any Default;
     (b) of any matter that has resulted or could reasonably be expected to
result in a Material Adverse Effect, including (i) breach or non-performance of,
or any default under, a Contractual Obligation of the Company or any Subsidiary;
(ii) any dispute, litigation, investigation, proceeding or suspension between
the Company or any Subsidiary and any Governmental Authority; or (iii) the
commencement of, or any material development in, any litigation or proceeding
affecting the Company or any Subsidiary, including pursuant to any applicable
Environmental Laws;

 

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A.M. Castle & Co.
September 5, 2006
Page 5
     (c) of any material change in accounting policies or financial reporting
practices by the Company or any Subsidiary; and
     (d) of the occurrence of any Internal Control Event.
     Each notice pursuant to this Section shall be accompanied by a statement of
a Responsible Officer of the Company setting forth details of the occurrence
referred to therein and stating what action the Company has taken and propose to
take with respect thereto. Each notice pursuant to paragraph 5O shall describe
with particularity any and all provisions of this Agreement and any other
Transaction Document that have been breached.
     5P. Compliance with Terms of Leaseholds. The Company covenants that it
shall, and shall cause each of its Subsidiaries to, make all payments and
otherwise perform all obligations in respect of all leases of real property to
which the Company or such Subsidiary is a party, keep such leases in full force
and effect and not allow such leases to lapse or be terminated or any rights to
renew such leases to be forfeited or cancelled, notify each Institutional Holder
of any default by any party with respect to such leases and cooperate with the
holders of the Notes in all respects to cure any such default, and cause each of
its Subsidiaries to do so, except, in any case, where the failure to do so,
either individually or in the aggregate, could not be reasonably likely to have
a Material Adverse Effect.
     5Q. Material Contracts. The Company covenants that it shall, and shall
cause each of its Subsidiaries to, perform and observe all the terms and
provisions of each Material Contract to be performed or observed by it, maintain
each such Material Contract in full force and effect, enforce each such Material
Contract in accordance with its terms, take all such action to such end as may
be from time to time requested by the Required Holder(s) and, upon request of
the Required Holder(s), make to each other party to each such Material Contract
such demands and requests for information and reports or for action as the
Company any of its Subsidiaries is entitled to make under such Material
Contract, and cause each of its Subsidiaries to do so, except, in any case,
where the failure to do so, either individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.”
     1.8 Paragraph 6A of the Note Agreement is amended and restated in its
entirety as follows:
     “6A. 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 $149,180,000 plus the cumulative sum of (x) 40% of
Consolidated Net Income (but only if a positive number), plus (y) 75% of Net
Cash Proceeds received by the Company from the issuance of Equity Interests by
the Company for (i) each completed fiscal year of the Company ending after
December 31, 2005, and (ii) the period from the

 

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A.M. Castle & Co.
September 5, 2006
Page 6
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.”
     1.9. Paragraph 6D of the Note Agreement is amended and restated in its
entirety as follows:
     “6D. 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
their 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
paragraph 6B and paragraph 6C;
     (b) Liens on assets existing at the time such assets are acquired by the
Company or a Subsidiary; provided that (i) no such Lien is created in
contemplation of or in connection with such acquisition, (ii) no such Lien shall
apply to any other property or assets of the Company or any Subsidiary other
than improvements and accessions to the subject assets and proceeds thereof and
(iii) no such Lien shall secure obligations other than those which it secures on
the date of such acquisition and permitted extensions, renewals and replacements
thereof;
     (c) 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 generally accepted accounting
principles;
     (d) 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 generally accepted accounting
principles;
     (e) 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

 

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A.M. Castle & Co.
September 5, 2006
Page 7
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;
     (f) 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;
     (g) Liens securing Indebtedness of a Subsidiary to the Company;
     (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 Schedule 6D;
     (i) Liens in favor of Collateral Agent to secure the obligations and
liabilities of the Company and the Guarantors under this Agreement and the Other
Senior Debt as provided in the Collateral Documents and the Intercreditor
Agreement;
     (j) Liens attaching solely to the property and assets of the Canadian
Subsidiary to secure Debt of the Canadian Subsidiary and no other Debt;
     (k) Liens attaching solely to the property and assets of any Foreign
Subsidiary (other than Guarantors and the Canadian Subsidiary) securing
Indebtedness for borrowed money of any such Foreign Subsidiary of not more than
U.S. $15,000,000 in the aggregate at any time outstanding for all such Foreign
Subsidiaries; and
     (l) (i) If the Notes are not Secured, Liens not otherwise permitted by
paragraphs (a) through (k) of this paragraph 6D created, assumed or incurred
subsequent to the date of closing 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 paragraph 6D(l)
does not exceed 10% of Adjusted Consolidated Net Worth and (ii) if the Notes are
Secured, Existing First Priority Liens (as such term is defined in the
Intercreditor Agreement) and Future Acquired Liens (as such term is defined in
the Intercreditor Agreement).”
     1.10. Paragraph 6E of the Note Agreement is amended by adding the following
parenthetical after the words “any Person: in the introductory clause thereof:
“(other than Dispositions permitted under paragraph 6F and sales, transfers and
other dispositions permitted under paragraph 6G)”
     1.11. Paragraph 6F of the Note Agreement is amended by replacing the words
“15% of Consolidated Total Assets as of the end of the immediately preceding
fiscal year” with “$5,000,000”.

 

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A.M. Castle & Co.
September 5, 2006
Page 8
     1.12. Paragraphs 6H, 6I, 6J and 6K of the Note Agreement are renumbered as
paragraphs 6I, 6J, 6L and 6M, and new paragraphs 6H, 6K and 6N are added to the
Note Agreement as follows:
     “6H. Investments. The Company will not, and will not permit any Subsidiary
to make or hold any Investments, except:
     (a) Investments held by the Company and its Subsidiaries in the form of
Cash Equivalents;
     (b) Short-term Investments of Foreign Subsidiaries acquired by Foreign
Subsidiaries in the ordinary course of business and of a credit quality similar
to Cash Equivalents;
     (c) advances to officers, directors and employees of the Company and its
Subsidiaries in an aggregate amount not to exceed $1,000,000 at any time
outstanding, for travel, entertainment, relocation and analogous ordinary
business purposes;
     (d) (i) Investments by the Company and its Subsidiaries in their respective
Subsidiaries outstanding on the date hereof, (ii) additional Investments by
Company and its Subsidiaries in the Company, the Canadian Subsidiary and the
Guarantors, (iii) additional Investments by Subsidiaries of the Company that are
not Guarantors in other Subsidiaries that are not Guarantors and (iv) so long as
no Default has occurred and is continuing or would result from such Investment,
additional Investments by the Company and the Guarantors in wholly-owned
Subsidiaries that are not Guarantors in an aggregate amount invested from the
date hereof not to exceed $5,000,000;
     (e) Investments consisting of extensions of credit in the nature of
accounts receivable or notes receivable arising from the grant of trade credit
in the ordinary course of business, and Investments received in satisfaction or
partial satisfaction thereof from financially troubled account debtors to the
extent reasonably necessary in order to prevent or limit loss;
     (f) Guarantees by the Company or a Guarantor of the obligations,
liabilities or indebtedness of the Company, the Canadian Subsidiary or another
Guarantor;
     (g) the Guaranty Agreement, the Guarantee by the Company of the Canadian
Obligations (as defined in the Credit Agreement) and the Guarantee by the
Subsidiaries of the Bank Credit Agreement Debt (as defined in the Intercreditor
Agreement);
     (h) Guarantees by any Foreign Subsidiary (other than the Canadian
Subsidiary) of the obligations, liabilities or indebtedness of any other Foreign
Subsidiary (other than the Canadian Subsidiary);

 

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A.M. Castle & Co.
September 5, 2006
Page 9
     (i) Guarantees by Company of the obligations, liabilities or indebtedness
of any Subsidiary (other than the Guarantors and the Canadian Subsidiary) not
exceeding $7,500,000 in the aggregate at any time outstanding;
     (j) the Transtar Acquisition;
     (k) Investments existing on the date hereof (other than those referred to
in paragraph 6H(d)(i));
     (l) the purchase or other acquisition of all of the Equity Interests in, or
all or substantially all of the property of, any Person that, upon the
consummation thereof, will be wholly-owned directly by the Company or one or
more of its Wholly-Owned Subsidiaries (including as a result of a merger or
consolidation); provided that, with respect to each purchase or other
acquisition made pursuant to this paragraph 6H(l):
     (i) the Term A Facility (as defined in the Credit Agreement) has been paid
in full;
     (ii) any such newly-created or acquired Subsidiary shall comply with the
requirements of paragraph 5K;
     (iii) the lines of business of the Person to be (or the property of which
is to be) so purchased or otherwise acquired shall be substantially the same
lines of business as one or more of the principal businesses of the Company and
its Subsidiaries in the ordinary course;
     (iv) the prior, effective consent or approval to such purchase shall have
been granted by the Board of Directors or equivalent governing body of the
acquiree;
     (v) such purchase or other acquisition shall not include or result in any
contingent liabilities that could reasonably be expected to be material to the
business, financial condition, operations or prospects of the Company and its
Subsidiaries, taken as a whole (as determined in good faith by the board of
directors (or the persons performing similar functions) of the Company or such
Subsidiary if the board of directors is otherwise approving such transaction
and, in each other case, by a Responsible Officer);
     (vi) the total cash and noncash consideration (including the fair market
value of all Equity Interests issued or transferred to the sellers thereof
(other than Equity Interests of the Company), all indemnities, earnouts and
other contingent payment obligations to (with the amount thereof being
determined by reference to the amount reflected on the Company’s or the
applicable Subsidiary’s balance sheet as of the first date after the
consummation of the applicable Investment), and the aggregate amounts paid or to
be paid under noncompete, consulting and

 

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A.M. Castle & Co.
September 5, 2006
Page 10
other affiliated agreements with, the sellers thereof and all assumptions of
debt, liabilities and other obligations in connection therewith) paid by or on
behalf of the Company and its Subsidiaries for any such purchase or other
acquisition, when aggregated with the total cash and noncash consideration paid
by or on behalf of the Company and its Subsidiaries for all other purchases and
other acquisitions made by the Company and its Subsidiaries pursuant to this
paragraph 6H(l) during the immediately preceding 12 months, shall not exceed
$50,000,000;
     (vii) (A) immediately before and immediately after giving pro forma effect
to any such purchase or other acquisition, no Default or Event of Default shall
have occurred and be continuing and (B) immediately after giving effect to such
purchase or other acquisition, the Company and its Subsidiaries shall be in pro
forma compliance with all of the covenants set forth in paragraphs 6A, 6B and
6C, such compliance to be determined on the basis of the financial information
most recently delivered to the holders of the Notes pursuant to paragraph 5F(a)
or (b) as though such purchase or other acquisition had been consummated as of
the first day of the fiscal period covered thereby; and
     (viii) the Company shall have delivered to each holder of the Notes at
least five Business Days prior to the date on which any such purchase or other
acquisition is to be consummated, a certificate of a Responsible Officer, in
form and substance reasonably satisfactory to the Required Holder(s), certifying
that all of the requirements set forth in this paragraph 6H(l) have been
satisfied or will be satisfied on or prior to the consummation of such purchase
or other acquisition;
     (m) Investments in promissory notes issued as all or a portion of the
purchase price paid in connection with any Disposition permitted by paragraph 6F
or any sale permitted by paragraph 6G, not exceeding (i) $10,000,000 in
aggregate principal amount at any time outstanding with respect to Dispositions
of the Company’s interests in joint ventures in existence on September 5, 2006,
or (ii) $1,000,000 with respect to any other such Disposition or sale.
     (n) Investments made after September 5, 2006 in joint ventures not
exceeding $7,500,000 in the aggregate at any time outstanding.
     ...
     6K. Off-Balance Sheet Liabilities. The Company will not, and will not
permit any Subsidiary to, incur or suffer to exist any Off-Balance Sheet
Liabilities, except for existing Off-Balance Sheet Liabilities described in the
attached Schedule 6K.
     ...
     6N. Accounting Changes. The Company will not, and will not permit any
Subsidiary to, make any change in (a) accounting policies or reporting practices
for

 

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A.M. Castle & Co.
September 5, 2006
Page 11
purposes of this Agreement or Securities and Exchange Commission reporting
requirements, except as required by generally accepted accounting principles, or
(b) fiscal year.”
     1.13. Clause (d) of paragraph 7A of the Note Agreement is amended and
restated in its entirety as follows:
     “(d) any default in the observance or performance of paragraph 4E,
paragraphs 6A through 6N or in paragraph 7E;”
     1.14. Paragraph 10 of the Note Agreement is amended by adding, or amending
and restating, the following definitions as follows:
     “Bank Guarantee Agreement” shall mean that certain Guarantee Agreement,
dated as of September 5, 2006, by the Guarantors in favor of the Bank Agent and
the Banks, and all joinder thereto, as the same may be amended, modified or
supplemented from time to time in accordance with the provisions thereof.
     “Cash Equivalents” means any of the following types of Investments, to the
extent owned by the Company or any of its Subsidiaries free and clear of all
Liens (other than Liens created under the Collateral Documents and other Liens
permitted hereunder):
     (a) 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 generally accepted accounting
principles; and
     (b) 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.
     “Collateral Agent” shall mean Bank of America, N.A., in its capacity as
collateral agent under the Intercreditor Agreement, and its successor and
assigns in that capacity.

 

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September 5, 2006
Page 12
     “Contractual Obligation” shall mean , as to any Person, any provision of
any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
     “Credit Agreement” shall mean the “Amended and Restated Credit Agreement”,
dated as of September 5, 2006, between the Company, the Canadian Subsidiary, and
the Banks, as amended, restated, supplemented or otherwise modified from time to
time.
     “Credit Agreement Mandatory Prepayment” shall mean a prepayment of Term A
Loans (as defined in the Credit Agreement) pursuant to Section 2.06(b) of the
Credit Agreement.
     “Equity Interests” shall mean, with respect to any person, all of the
shares of capital stock of (or other ownership or profit interests in) such
Person, all of the warrants, options or other rights for the purchase or
acquisition from such Person of shares of capital stock of (or other ownership
or profit interests in) such Person, all of the securities convertible into or
exchangeable for shares of capital stock of (or other ownership or profit
interests in) such Person or warrants, rights or options for the purchase or
acquisition from such Person of such shares (or such other interests), and all
of the other ownership or profit interests in such person (including
partnership, membership or trust interests therein), whether voting or
nonvoting, and whether or not such shares, warrants, options, rights or other
interests are outstanding on any date of determination.
     “Intercreditor Agreement” shall mean that certain Amended and Restated
Collateral Agency and Intercreditor Agreement, dated as of September 5, 2006, by
and among Collateral Agent, Bank of America N.A., the Noteholders (as defined
therein), Northern Trust, the Company and the Guarantors, as amended, restated,
supplemented or otherwise modified from time to time.
     “Internal Control Event” shall mean a fraud that involves management or
other employees who have a significant role in the Company’s internal controls
over financial reporting.
     “Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of Equity Interests of another Person, (b) a loan, advance or
capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or interest in, another Person, or (c) the
purchase or other acquisition (in one transaction or a series of transactions)
of assets of another Person that constitute a business unit or all or a
substantial part of the business of, such Person. For purposes of covenant
compliance, the amount of

 

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A.M. Castle & Co.
September 5, 2006
Page 13
any Investment shall be the amount actually invested, without adjustment for
subsequent increases or decreases in the value of such Investment.
     “Material Adverse Effect” shall mean a (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 (iii) the impairment of the ability of any
holder of the Notes to enforce the Company’s and the Guarantor’s obligations
under this Agreement, the Notes or any Transaction Document to which it is a
party.
     “Material Contract” means, with respect to any Person, each contract to
which such Person is a party involving aggregate consideration payable to or by
such Person of $20,000,000 or more in any year or otherwise material to the
business, condition (financial or otherwise), operations, performance,
properties or prospects of such Person.
     “Moody’s” shall mean Moody’s Investor Service, Inc.
     “Net Cash Proceeds” shall mean, with respect to the sale or issuance of any
Equity Interest by the Company, the excess of (i) the sum of the cash and Cash
Equivalents received in connection with such transaction over (ii) the
underwriting discounts and commissions, and other reasonable and customary
out-of-pocket expenses, incurred by such Loan Party or such Subsidiary in
connection therewith.
     “Off-Balance Sheet Liabilities” means any transaction, agreement or other
contractual arrangement to which an entity unconsolidated with the Company is a
party, under which the Company or any Subsidiary has:
     (a) any obligation under a guarantee contract that has any of the
characteristics identified in paragraph 3 of FASB Interpretation No. 45,
Guarantor’s Accounting and Disclosure Requirements for Guarantees, including
Indirect Guarantees of Indebtedness of Others (November 2002) (“FIN 45”), as may
be modified or supplemented, and that is not excluded from the initial
recognition and measurement provisions of FIN 45 pursuant to paragraphs 6 or 7
of that Interpretation;
     (b) a retained or contingent interest in assets transferred to an
unconsolidated entity or similar arrangement that serves as credit, liquidity or
market risk support to such entity for such assets;
     (c) any obligation, including a contingent obligation, under a contract
that would be accounted for as a derivative instrument, except that it is both

 

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A.M. Castle & Co.
September 5, 2006
Page 14
indexed to the Company’s own stock and classified in stockholders’ equity in the
Company’s statement of financial position, and therefore excluded from the scope
of FASB Statement of Financial Accounting Standards No. 133, Accounting for
Derivative Instruments and Hedging Activities (June 1998), pursuant to paragraph
11(a) of the Statement, as may be modified or supplemented; or
     (d) any obligation, including a contingent obligation, arising out of a
variable interest (as referenced in FASB Interpretation No. 46, Consolidation of
Variable Interest Entities (January 2003), as may be modified or supplemented)
in an unconsolidated entity that is held by, and material to, the Company or any
Subsidiary, where such entity provides financing, liquidity, market risk or
credit risk support to, or engages in leasing, hedging or research and
development services with, the Company or any Subsidiary.
     “Other Senior Debt” shall mean Debt of the Company and/or its Subsidiaries
(i) owed pursuant to the Credit Agreement, (ii) owed pursuant to the Trade
Agreement in an aggregate principal amount not in excess of $10,000,000, and
(iii) Debt of the Company incurred after the date of closing in compliance with
paragraph 6B.
     “Significant Subsidiary” shall mean all Subsidiaries of the Company other
than: (i) Foreign Subsidiaries and (ii) any other Subsidiary of the Company
which is not required to be a Guarantor pursuant to the provisions of the first
sentence of paragraph 5K so long as such Subsidiary described in the foregoing
has not guaranteed any Debt of the Company or any other Guarantor (other than
the Debt outstanding under this Agreement and the Other Senior Debt).
     “Solvent” and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay such debts and
liabilities as they mature, (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s property would constitute an unreasonably small capital, and
(e) such Person is able to pay its debts and liabilities, contingent obligations
and other commitments as they mature in the ordinary course of business. The
amount of contingent liabilities at any time shall be computed as the amount
that, in the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an actual or
matured liability.

 

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A.M. Castle & Co.
September 5, 2006
Page 15
     “S&P” shall mean Standard & Poor’s Ratings Services, Inc., a division of
the McGraw-Hill Companies, and any successor thereto.
     “Trade Agreement” shall mean the Amended and Restated Trade Acceptance
Purchase Agreement, dated as of September 5, 2006, between the Company and
Northern Trust, as amended, restated, supplemented or otherwise modified from
time to time.
     “Transtar Acquisition” means the purchase by the Company of 100% of the
outstanding Equity Interests of Transtar Intermediate Holdings #2, Inc.,
pursuant to the Transtar Stock Purchase Agreement.
     “Transtar Entities” shall mean Transtar Intermediate Holdings #2, Inc., a
Delaware corporation, Transtar Metals Holdings, Inc., a Delaware corporation,
Transtar Inventory Corp., a Delaware corporation, Transtar Metals Corp., a
Delaware corporation and Transtar Marine Corp., a Delaware corporation.
     “Transtar Stock Purchase Agreement” means that certain Stock Purchase
Agreement, dated as of August 12, 2006, among Transtar Holdings #2, LLC, as
seller, and the Company, as buyer.
     1.15. Paragraph 10C is amended by adding the following sentence to the end
thereof:
“In the event that compliance with the provisions of the Pension Protection Act
of 2006 by the Company and its Subsidiaries results in non-cash charges which
are reflected on the Company’s balance sheets or income statements, such charges
shall be disregarded for purposes of calculating Adjusted Consolidated Net
Worth, the ratio of Consolidated Debt to Consolidated Total Capitalization and
the ratio of Net Working Capital to Consolidated Debt hereunder.”
     1.16. Schedule 2 to Exhibit F (Compliance Certificate) to the Note
Agreement is hereby amended and restated in its entirety as set forth on
Schedule 2 hereto.
     1.17. The Note Agreement is amended (i) by adding new Schedules 6D and 6K
thereto in the form of Schedules 6D and 6K hereto and (ii) by amending and
restating Schedule 8A(1) thereto in the form of Schedule 8A(1) attached hereto.
     1.18. Section 5 of the Guaranty Agreement is hereby amended by replacing
the reference to “paragraph 5K(a)” therein with “paragraph 5K”.
     SECTION 2. Representations and Warranties. The Company and each Guarantor
represents and warrants that (a) each representation and warranty set forth in
paragraph 8 of the Note Agreement and the other Transaction Documents to which
it is a party, is true and correct as of the date of execution and delivery of
this letter by the Company or such Guarantor with the same effect as if made on
such date (except to the extent such representations and warranties

 

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A.M. Castle & Co.
September 5, 2006
Page 16
expressly refer to an earlier date, in which case they were true and correct as
of such earlier date and except that the representations and warranties
contained in paragraph 8B of the Note Agreement shall be deemed to refer to the
most recent statements furnished pursuant to clauses (a) and (b), respectively,
of paragraph 5F of the Note Agreement); (b) both before and after giving effect
to the amendments set forth in Section 1 hereof, no Event of Default or Default
exists or has occurred and is continuing on the date hereof; and (c) both before
and after giving effect to the amendments set forth in Section 1 hereof and the
consummation of the transactions contemplated by the Credit Agreement, Trade
Agreement and Transtar Stock Purchase Agreement, the Company, individually and
together with its Subsidiaries on a consolidated basis, is Solvent.
     SECTION 3. Conditions Precedent. This amendments in Section 1 of this
letter shall become effective on the date (the “Effective Date”) when each
Purchaser shall have received original counterparts or, if satisfactory to such
Purchaser, certified or other copies of all of the following, each duly executed
and delivered by the party or parties thereto, in form and substance
satisfactory to such Purchaser, dated the date hereof unless otherwise
indicated, and on the Effective Date in full force and effect:
     (i) counterparts to this letter executed by the Company and each Guarantor;
     (ii) counterparts to the Intercreditor Agreement executed by the Collateral
Agent, Bank of America, N.A., Northern Trust, the Company and the Guarantors;
     (iii) a copy of the amendments to certain Collateral Documents set forth on
Exhibit C to the Intercreditor Agreement (the “Collateral Document Amendments”);
     (iv) a Joinder to the Guaranty Agreement, in the form of Exhibit A hereto,
executed by each Transtar Entity;
     (v) a Secretary’s Certificate signed by the Secretary or an Assistant
Secretary and one other officer of each Transtar Entity certifying, among other
things, (a) as to the names, titles and true signatures of the officers of such
Transtar Entity authorized to sign the Transaction Documents to which such
Transtar Entity is a party, (b) that attached thereto is a true, accurate and
complete copy of the certificate of incorporation of such Transtar Entity,
certified by the Secretary of State of the state of organization of such
Transtar Entity, as of a recent date, (c) that attached thereto is a true,
accurate and complete copy of the by-laws of such Transtar Entity, which were
duly adopted and are in effect as of the Date and have been in effect
immediately prior to and at all times since the adoption of the resolutions
referred to in clause (d), below, (d) that attached thereto is a true, accurate
and complete copy of the resolutions of the board of directors or other managing
body of the such Transtar Entity, duly adopted at a meeting or by unanimous
written consent of such board of directors or other managing body, authorizing
the execution, delivery and performance of the Transaction Documents to which
such Transtar Entity is a party, and that such resolutions have not been
amended, modified,

 

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A.M. Castle & Co.
September 5, 2006
Page 17
revoked or rescinded, are in full force and effect and are the only resolutions
of the shareholders of such Transtar Entity, or of such board of directors or
other managing body or any committee thereof relating to the subject matter
thereof, (e) that the Transaction Documents executed and delivered to such
Purchaser by such Transtar Entity, are in the form approved by its board of
directors or other managing body in the resolutions referred to in clause (d),
above, and (f) that no dissolution or liquidation proceedings as to such
Transtar Entity have been commenced or are contemplated;
     (vi) a certificate of corporate or other type of entity and tax good
standing for each Transtar Entity from the Secretary of State of the state of
organization of such Transtar Entity and of each state in which such Transtar
Entity is required to be qualified to transact business as a foreign
organization, in each case dated as of a recent date;
     (vii) Certified copies of Requests for Information or Copies (Form UCC-11)
or equivalent reports listing all effective financing statements which name any
Transtar Entity (under its present name and previous names) as debtor and which
are filed in the office of the Secretary of State in any state in which any
Transtar Entity is located (as determined under the UCC), and lien and judgment
search reports from the county recorder of any county in which any Transtar
Entity maintains an office or in which any assets of any Transtar Entity are
located;
     (viii) a favorable opinion of McDermott Will & Emery, special counsel to
the Transtar Entities, and each Transtar Entity, by its execution hereof, hereby
requests and authorizes such special counsel to render such opinion and to allow
each holder of the Notes to rely on such opinion, and understands and agrees
that each Purchaser receiving such an opinion will be relying, and is hereby
authorized to rely, on such opinion;
     (ix) a copy of the Credit Agreement and all instruments, documents and
agreements delivered at the closing of and making of the term loan and the
initial revolving loan thereunder, certified by an Officer’s Certificate, dated
the Effective Date, as correct and complete;
     (x) a copy of the Trade Agreement and all instruments, documents and
agreements delivered at the closing thereof, certified by an Officer’s
Certificate, dated the Effective Date, as correct and complete;
     (xi) an Officer’s Certificate confirming that all conditions precedent to
the Transtar Acquisition have been satisfied or waived by the applicable
Persons;
     (xii) evidence that all commitments under the Financing Agreement, dated as
of December 14, 2004 among Transtar Inventory Corp., Transtar Metals Corp., U.S.
Bank National Association, as Agent, and the other lenders party thereto (the
“Existing Credit Facilities Agreement”) have been or concurrently with the
Effective Date are being terminated, and all outstanding amounts thereunder paid
in full and all Liens

 

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A.M. Castle & Co.
September 5, 2006
Page 18
securing obligations under the Existing Credit Facilities Agreement have been or
concurrently with the Effective Date are being released;
     (xiii) evidence that after giving effect to the U.S. Revolving Credit Loans
(as defined in the Credit Agreement) on the Effective Date, Undrawn Availability
(as defined in the Credit Agreement) is not less than $15,000,000;
     (xiv) evidence that (i) the Consolidated EBITDA of the Company and its
Subsidiaries (with Subsidiaries being determined after giving effect to the
consummation of the Transtar Acquisition) for the 12 months ended June 30, 2006
was not less than $105,000,000, and (ii) the ratio of Consolidated Debt to
Consolidated EBITDA of the Company and its Subsidiaries (with Subsidiaries being
determined after giving effect to the consummation of the Transtar Acquisition
and with EBITDA being calculated for the 12 months ended June 30, 2006) as of
the Effective Date is not greater than 2.75 to 1.0; and
     (xi) such other certificates, documents and agreements as such Purchaser
may reasonably request.
     SECTION 4. Reference to and Effect on Note Agreement. Upon the
effectiveness of the amendments to the Note Agreement made in this letter, each
reference to the Note Agreement in any other document, instrument or agreement
shall mean and be a reference to the Note Agreement as modified by this letter.
Except as specifically set forth in Section 1 hereof, the Note Agreement shall
remain in full force and effect and is hereby ratified and confirmed in all
respects. The Company and each Guarantor hereby represents and warrants that all
necessary or required consents to this letter have been obtained and are in full
force and effect. Except as specifically stated in this letter, the execution,
delivery and effectiveness of this letter shall not (a) amend the Note
Agreement, any Note or any of the other Transaction Documents, (b) operate as a
waiver of any right, power or remedy of the holder of any Note, (c) constitute a
waiver of, or consent to any departure from, any provision of the Note
Agreement, any Note or any of the other Transaction Documents at any time or
(d) be construed as a course of dealing or other implication that any holder of
any Note has agreed to or is prepared to grant any consents or agree to any
amendments to the Note Agreement, any Note or any of the other Transaction
Documents in the future, whether or not under similar circumstances.
     SECTION 5. Expenses. The Company hereby confirms its obligations under the
Note Agreement, whether or not the transactions hereby contemplated are
consummated, to pay, promptly after request by the holders of the Notes, all
reasonable out-of-pocket costs and expenses, including attorneys’ fees and
expenses, incurred by any holder of the Notes in connection with this letter or
the transactions contemplated hereby, in enforcing any rights under this letter,
or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this letter or the transactions
contemplated hereby. The obligations of the Company under this Section 5 shall
survive transfer by any holder of a Note of any Note and payment of any Note.

 

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A.M. Castle & Co.
September 5, 2006
Page 19
     SECTION 6. Reaffirmation. Each Guarantor hereby ratifies and reaffirms all
of its payment and performance obligations, contingent or otherwise, under the
Guaranty Agreement to which it is a party and each of the other Transaction
Documents to which it is a party. Each Guarantor hereby consents to the terms
and conditions of this letter and reaffirms its obligations and liabilities
under or with respect to the Note Agreement as amended by this letter.
     SECTION 7. Collateral Documents. The Company and the Guarantors have
heretofore executed and delivered certain Collateral Documents and concurrently
herewith are executing the Collateral Document Amendments. The Company and the
Guarantors hereby acknowledge and agree that the Liens created and provided for
by the Collateral Documents, as amended by the Collateral Document Amendments,
continue to secure, among other things, the obligations arising under the Note
Agreement as amended hereby; and the Collateral Documents, as amended by the
Collateral Document Amendments, and the rights and remedies of the holders of
the Notes and Collateral Agent thereunder, the obligations of the Company and
the Guarantors thereunder, and the Liens created and provided for thereunder
remain in full force and effect and shall not be affected, impaired or
discharged hereby. Nothing herein contained shall in any manner affect or impair
the priority of the liens and security interests created and provided for by the
Collateral Documents, as amended by the Collateral Document Amendments, as to
the indebtedness which would be secured thereby prior to giving effect to this
letter agreement.
     SECTION 8. Governing Law. THIS LETTER SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS OF SUCH STATE WHICH WOULD OTHERWISE CAUSE THIS
LETTER TO BE CONSTRUED OR ENFORCED OTHER THAN IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ILLINOIS.
     SECTION 9. Counterparts; Section Titles. This letter may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same
instrument. Delivery of an executed counterpart of a signature page to this
letter by facsimile shall be effective as delivery of a manually executed
counterpart of this letter. The section titles contained in this letter are and
shall be without substance, meaning or content of any kind whatsoever and are
not a part of the agreement between the parties hereto.
[signature page follows]

 

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                Very truly yours,    
 
                THE PRUDENTIAL INSURANCE COMPANY OF AMERICA    
 
           
 
  By:   /s/ G. Anthony Coletta    
 
           
 
      Vice President    
 
                PRUDENTIAL RETIREMENT INSURANCE            AND ANNUITY COMPANY  
 
 
           
 
  By:   Prudential Investment Management, Inc., as investment manager    
 
           
 
  By:   /s/ G. Anthony Coletta    
 
           
 
      Vice President    

         
 
        Agreed and Accepted:    
 
        A. M. CASTLE & CO.    
 
       
By:
  /s/ Lawrence A. Boik    
 
       
Name:
  Lawrence A. Boik    
Title:
  Vice President    

 

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                GUARANTORS:    
 
                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/ Lawrence A. Boik    
 
                Name:  Lawrence A. Boik         Title:    Vice President    
 
                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:    Vice President    

 

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                TRANSTAR INTERMEDIATE HOLDINGS #2, INC.    
 
           
 
  By:   /s/ Lawrence A. Boik    
 
                Name: Lawrence A. Boik         Title:   Vice President    
 
                TRANSTAR METALS HOLDINGS, INC.    
 
           
 
  By:   /s/ Lawrence A. Boik    
 
                Name: Lawrence A. Boik         Title:   Vice President    
 
                TRANSTAR INVENTORY CORP.    
 
           
 
  By:   /s/ Lawrence A. Boik    
 
                Name: Lawrence A. Boik         Title:   Vice President    
 
                TRANSTAR METALS CORP.    
 
           
 
  By:   /s/ Lawrence A. Boik    
 
                Name: Lawrence A. Boik         Title: Vice President    
 
                TRANSTAR MARINE CORP.    
 
           
 
  By:   /s/ Lawrence A. Boik    
 
                Name: Lawrence A. Boik         Title:   Vice President    

 

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A.M. Castle & Co.
September 5, 2006
Page 23
EXHIBIT A
JOINDER AGREEMENT NO. 1 TO GUARANTY AGREEMENT
Re: A. M. CASTLE & CO.
     This Joinder Agreement is made as of September 5, 2006, in favor of the
Holders (as such terms are defined in the Castle Guaranty, as hereinafter
defined).
A. Reference is made to the Guaranty Agreement made as of November 17, 2005 (as
such Guarantee may be supplemented, amended, restated or consolidated from time
to time, the “Castle Guaranty”) by certain Persons in favor of the Holders (as
defined in the Castle Guaranty), under which such Persons have guaranteed to the
Holders the due payment and performance by A. M. Castle & Co. (“Castle”) of the
Guarantied Obligations (as defined in the Castle Guaranty).
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 Holders 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 Transaction Documents in existence on the date of this
Joinder Agreement and is executing and delivering this Joinder Agreement to the
Holders pursuant to Section 5 of the Castle Guaranty.
     2. Effective from and after the date this Joinder Agreement is executed and
delivered to the Holders 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 Holders 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 time
to time (whether because of maturity, default, demand, acceleration or
otherwise) and

 

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A.M. Castle & Co.
September 5, 2006
Page 24
understands, agrees and confirms that the Holders may enforce the Castle
Guaranty and this Joinder Agreement against such New Guarantor for the benefit
of the Holders 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 any Holder,
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 Holder 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.
[signature page follows]

 

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     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.

             
 
                TRANSTAR INTERMEDIATE HOLDINGS #2, INC.,         a Delaware
corporation    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           
 
                TRANSTAR METALS HOLDINGS, INC., a Delaware corporation    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           
 
                TRANSTAR INVENTORY CORP., a Delaware corporation    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           
 
                TRANSTAR METALS CORP., a Delaware corporation    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           
 
                TRANSTAR MARINE CORP., a Delaware corporation    
 
           
 
  By:        
 
           
 
  Name:        
 
           
 
  Title:        
 
           

 

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SCHEDULE 2
For the Quarter/Year ended                                         (“Statement
Date”)
SCHEDULE 2
to the Compliance Certificate
($ in 000’s)

                      I.   Paragraph 5K — Subsequent Guarantors        
 
                        A.   Assets of the Canadian Subsidiary as a percentage
of Consolidated Total Assets                          %
 
                        B.   Assets of the Mexican Subsidiary as a percentage of
Consolidated Total Assets                          %
 
                        C.   Assets of the Foreign Subsidiaries (other than the
Canadian Subsidiary and the Mexican Subsidiary) as a percentage of Consolidated
Total Assets                          %
 
                    II.   Paragraph 6A — Adjusted Consolidated Net Worth.      
 
 
                        A.   Adjusted Consolidated Net Worth at Statement Date:
       
 
                   
 
      1.   Consolidated Stockholders Equity:   $                       
 
                   
 
      2.   Restricted Investments in excess of 10% of Consolidated Stockholders
Equity:   $                       
 
                   
 
      3.   Adjusted Consolidated Net Worth (Line I.A.1 less Line I.A.2):   $
                      
 
                        B.   Minimum Required Adjusted Consolidated Net Worth:  
$                       
 
                        1.   $                    :   $                       
 
                   
 
      2.   plus the sum of 40% of Consolidated Net Income (but only if a
positive number) earned in each completed fiscal year ending after December 31,
2005:   $                       
 
                   
 
      3.   plus 40% of Consolidated Net Income (but only if a positive number)
for the portion of the fiscal year to date:   $                       
 
                   
 
      4.   plus 75% of Net Cash Proceeds received by the Company from the
issuance of Equity Interests by the Company:   $                       

F-1

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      5.   Minimum Required Adjusted Consolidated Net Worth (I.B.1 plus I.B.2
plus I.B.3. plus I.B.4.):   $                       
 
                        D.   Excess (deficient) for covenant compliance (Line
I.A.3 less I.B.4):   $                       
 
                    III.   Paragraph 6B – Consolidated Debt to Consolidated
Total Capitalization.        
 
                        A.   Consolidated Debt:   $                       
 
                        B.   Consolidated Total Capitalization:   $
                      
 
                   
 
  C.   Consolidated Debt to Consolidated Total Capitalization (Line II.A. ) Line
II.B.):                        to 1.0
 
                        Minimum required:     0.55 to 1.0  
 
                    IV.   Paragraph 6C – Net Working Capital to Consolidated
Debt.        
 
                        A.   Net Working Capital:   $                       
 
                        B.   Consolidated Debt:   $                       
 
                   
 
  C.   Net Working Capital to Consolidated Debt: (Line III.A. ) Line III.B.)  
                     to 1.0
 
                        Minimum required:     1.0 to 1.0  

F-2

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SCHEDULE 6D
EXISTING LIENS

1.   Specific equipment of Transtar Metals Corp. is subject to Liens pursuant to
that certain Interim Financing Agreement, dated as of June 20, 2006, between
Transtar Metals Corp. and General Electric Capital Corporation and that certain
Master Lease Agreement, dated as of April 28, 2006, between Transtar Metals
Corp. and General Electric Capital Corporation.

Liens represented by the following financing statements:

2.   UCC Financing Statement Number 31773194, filed with the Delaware Secretary
of State on July 14, 2003. against Transtar Metals Corp. by NMHG Financial
Services, Inc. covering specific equipment.

3.   UCC Financing Statement Number 31100182, filed with the Delaware Secretary
of State on November 20, 2003, as amended April 15, 2003 and May 3, 2004,
against Transtar Metals Corp. by Fleet Capital Corporation covering specific
equipment.

4.   UCC Financing Statement Number 41795048, filed with the Delaware Secretary
of State on June 28, 2004, as amended September 10, 2004, against Transtar
Metals Corp. by De Lage Landen Financial Services covering specific equipment.

5.   UCC Financing Statement Number 51067249, filed with the Delaware Secretary
of State on April 7, 2004, as amended June 22, 2005, against Transtar Metals
Corp. and Transtar Metals Holdings, Inc. by California First Leasing Corporation
covering specific equipment.

6.   UCC Financing Statement Number 42457531, filed with the Delaware Secretary
of State on August 31, 2004, as amended October 25, 2004, against Transtar
Metals Corp. and Transtar Metals Holdings, Inc. by California First Leasing
Corporation covering specific equipment.

7.   UCC Financing Statement Number 42089540, filed with the Delaware Secretary
of State on July 26, 2004, against Transtar Metals Corp. by Greater Bay Bank
N.A. covering specific equipment.

8.   UCC Financing Statement Number 20047004746305, filed with the California
Secretary of State on November 19, 2004, against Transtar Metals Corp. by
Greater Bay Bank N.A. covering specific equipment.

9.   UCC Financing Statement Number 52553213, filed with the Delaware Secretary
of State on August 11, 2005, against Transtar Metals Holdings, Inc. by Raymond
Leasing Corporation covering specific equipment.

10.   UCC Financing Statement Number 50248865, filed with the Delaware Secretary
of State on January 24, 2005, against Transtar Metals Holdings, Inc. by Raymond
Leasing Corporation covering specific equipment.

11.   UCC Financing Statement Number 20047001453660, filed with the California
Secretary of State on October 25, 2005, against Transtar Metals Corp. by Raymond
Leasing Corporation covering specific equipment.

 

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12.   UCC Financing Statement Number 20047001500380, filed with the California
Secretary of State on October 26, 2005, against Transtar Metals Corp. by Raymond
Leasing Corporation covering specific equipment.

13.   UCC Financing Statement Number 200420860173, filed with the California
Secretary of State on July 19, 2004, against Transtar Metals Corp. by Wells
Fargo Financial Leasing, Inc. covering specific equipment.

14.   UCC Financing Statement Number 20067065119570, filed with the California
Secretary of State on April 3, 2006, against Transtar Metals Corp. by Accurate
Air Engineering, Inc. covering specific equipment.

15.   UCC Financing Statement Number 42425322, filed with the Delaware Secretary
of State on August 27, 2004, against Transtar Metals Corp. by American Express
Business Finance covering specific equipment.

16.   UCC Financing Statement Number 31148413, filed with the Delaware Secretary
of State on May 5, 2003, against Transtar Intermediate Holdings #2, Inc. by CIT
Communications Finance Corporation covering specific equipment. [Note — This
financing statement should have been filed against Transtar Intermediate
Holdings, Inc. (the former name of Transtar Metals Holdings, Inc.), but was
mistakenly filed against Transtar Intermediate Holdings #2, Inc.

17.   UCC Financing Statement Number 62152338, filed with the Delaware Secretary
of State on June 22, 2006, against Transtar Metals Corp. by General Electric
Capital Corporation covering specific equipment.

18.   UCC Financing Statement Number 31100141, filed with the Delaware Secretary
of State on April 25, 2003, against Transtar Marine Corp. Fleet Capital
Corporation covering specific equipment.

19.   A portion of the property at 26826 68th Avenue South, Kent, WA 98032 has
been subleased to Meridian Transportation Resources, L.L.C., pursuant to a
Sublease, dated March 18, 2003.

F-5

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SCHEDULE 6K
EXISTING OFF-BALANCE SHEET LIABILITIES
None.

 

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SCHEDULE 8A(1)
SUBSIDIARIES
AND OTHER EQUITY INVESTMENTS

Part (a)   Subsidiaries.

      Subsidiary   Jurisdiction of Organization
A. M. Castle & Co. (Canada) Inc.
  Ontario, Canada
Castle Metals de Mexico, S.A. de C.V.
  Mexico
Castle Foundation, Inc.
  Illinois
Castle IND MGR, Inc. (dissolution in process)
  Delaware
Castle SPFD, LLC (dissolution in process)
  Delaware
Datamet, Inc.
  Illinois
Hy-Alloy Steels Company
  Delaware
KSI, LLC
  Delaware
Keystone Services Inc.
  Indiana
Keystone Tube Company LLC
  Delaware
Metal Mart, LLC
  Delaware
Oliver Steel Plate Co.
  Delaware
Pacific Metals Company
  California
Total Plastics, Inc.
  Michigan
Advanced Fabricating Technology, LLC
  Delaware
Paramont Machine Company, LLC
  Delaware
Transtar Intermediate Holdings #2, Inc.
  Delaware
Transtar Metals Holdings, Inc.
  Delaware
Transtar Inventory Corp.
  Delaware
Transtar Metals Corp.
  Delaware
Transtar Marine Corp.
  Delaware
Transtar Metals Limited
  United Kingdom
Transtar Metals France
  France

Part (b)   Other Equity Investments.

          Entity   Equity Holder   Ownership
Interest
       
 
       
Depot Metal, LLC
  A. M. Castle & Co.   50.0%
(holder of 100% of equity interests of Kreher Steel Company, LLC)