13D Filing: Whitebox Advisors and AM Castle & Co (CASLQ)

volume or manner of sale limitations and constitute less than 2.5% of the outstanding Common Stock on an as-converted basis and on an aggregate basis.

Underwritten Public Offering. Pursuant to the Registration Rights Agreement, among other things, any Investor holding Registrable Securities whose resale is covered by an effective registration statement filed pursuant to the Registration Rights Agreement may request that the Issuer perform its obligations under the Registration Rights Agreement in the form of a firm commitment underwritten public offering. The Issuer, however, will not be obligated to conduct an underwritten public offering unless the aggregate proceeds reasonably anticipated to be generated, net of underwriting discounts and commissions, equals or exceeds $10 million or unless such Underwritten Offering includes all of the Registrable Securities then owned by the requesting Investors.

The Registration Rights Agreement includes customary indemnification provisions.

The foregoing summary of the Registration Rights Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Registration Rights Agreement filed herewith as Exhibit 5, which is incorporated herein by reference.

On the Effective Date and pursuant to the Plan, the Issuer issued to the Reporting Persons $46,036,103 aggregate principal amount of Convertible Notes, in respect of claims under the 2018 Notes and the 2019 Notes and for cash pursuant to a commitment agreement, dated as of June 16, 2017 (as amended, the “Commitment Agreement”), by and among the Issuer, the Reporting Persons and certain other creditors of the Issuer.  The Convertible Notes are convertible at the election of the holder at any time into shares of Common Stock, cash or a combination of Common Stock and cash, at the option of the Issuer. The Reporting Persons disclaim beneficial ownership of any shares of Common Stock that they might receive upon conversion of the Convertible Notes.

Pursuant to the Plan, on the Effective Date, the Issuer entered into an Indenture (the “Convertible Notes Indenture”) with Wilmington Savings Fund Society, FSB (“WSFS, FSB”), as trustee and collateral agent (“Indenture Agent”) and, pursuant thereto, issued the Convertible Notes.

The Convertible Notes are five year senior obligations of the Issuer and certain of its subsidiaries, secured by a lien on all or substantially all of the assets of the Issuer, its domestic subsidiaries and certain of its foreign subsidiaries, which lien the Indenture Agent has agreed will be junior to the lien of the agent for the Issuer’s senior credit agreement.

Convertible Notes that are deemed, in accordance with the Convertible Notes Indenture, to have been converted in connection with a “Fundamental Change” (as defined in the Convertible Notes Indenture) are convertible, for each $1.00 principal amount of the Convertible Notes, into that number of shares of Common Stock equal to the greater of (a) $1.00 divided by the then applicable conversion price and (b) $1.00 divided by the stock price with respect to such Fundamental Change, subject to other provisions of the Convertible Notes Indenture.

The Convertible Notes are guaranteed, jointly and severally, by certain subsidiaries of the Issuer.  The Convertible Notes and the related guarantees are secured by a lien on substantially all of the Issuer’s and the guarantors’ assets, subject to certain exceptions pursuant to certain collateral documents pursuant to the Convertible Notes Indenture.  The terms of the Convertible Notes contain numerous covenants imposing financial and operating restrictions on the Issuer’s business.  These covenants place restrictions on the Issuer’s ability and the ability of its subsidiaries to, among other things, pay dividends, redeem stock or make other distributions or restricted payments; incur indebtedness or issue certain stock; make certain investments; create liens; agree to certain payment restrictions affecting certain subsidiaries; sell or otherwise transfer or dispose assets; enter into transactions with affiliates; and enter into sale and leaseback transactions.