Exhibit 4.18
SEVENTH AMENDMENT TO AMENDED AND RESTATED
RECEIVABLE AND INVENTORY FINANCING AGREEMENT
THIS SEVENTH AMENDMENT TO AMENDED AND RESTATED RECEIVABLE AND INVENTORY
FINANCING AGREEMENT (this "Amendment") is made and entered into as of the 1st
day of December, 1997, between SHEFFIELD STEEL CORPORATION, f/k/a HMK INDUSTRIES
OF OKLAHOMA, INC., successor by merger to SHEFFIELD STEEL CORPORATION-SAND
SPRINGS, f/k/a SHEFFIELD STEEL CORPORATION and SHEFFIELD STEEL CORPORATION -
JOLIET (the "Company"), and NATIONSBANK, N.A., a national banking association,
formerly known as NationsBank, N.A. (South) and also formerly known as
NationsBank of Georgia, N.A. (the "Lender").
W I T N E S S E T H :
- - - - - - - - - -
WHEREAS, heretofore, the Company and its predecessors and Affiliates, and the
Lender, made and entered into a certain Receivable and Inventory Financing
Agreement, dated as of January 16, 1992 (hereinafter, as previously amended, the
"Agreement"), pursuant to which the Lender agreed to certain financial
accommodations on the terms and conditions stated therein; and
WHEREAS, the Company and the Lender desire to amend the Agreement as set forth
herein.
NOW, THEREFORE, in consideration of the foregoing premises, and other good and
valuable consideration, the receipt and legal sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
1. All capitalized terms used herein and not otherwise expressly defined
herein shall have the respective meanings given to such terms in the Agreement.
2. The Agreement is amended as follows:
(a) Delete the definitions of "Banking Day" and "Prime Rate" contained in
Section 1.1 and replace them with the following:
"Banking Day" shall mean a day for dealings by and between banks
(excluding Saturday, Sunday and any day which shall be a legal holiday in the
City of Atlanta, Georgia, or a day on which banking institutions in the City
of Atlanta, Georgia are authorized to close) and, if relating to a Eurodollar
Rate Loan, on which dealings are carried on in the London interbank market.
"Prime Rate" shall mean the rate of interest announced by the Lender in
Atlanta, Georgia, from time to time as its "Prime Rate". The Prime Rate shall
be adjusted on the first day of each month based on the Prime Rate in effect
at the
-1-
close of business on the last Banking Day of the immediately preceding
calendar month.
(b) Add the following new definitions in appropriate alphabetical order to
Section 1.1:
"Applicable Margin" shall mean an amount determined in accordance with
Annex I attached hereto based upon the Company's ratio of EBITDA to Cash
Interest as of the date of the determination. Adjustments to the Applicable
Margin shall be effective as of the first day of the calendar month after
the Lender's receipt of the Company's financial statements as of the last
day of each fiscal quarter (commencing with the financial statements for
the fiscal quarter ending on or about October 31, 1997) during each fiscal
year in conformance with Section 8.3(a), together with the officer's
certificate described in Section 8.3(a) setting forth the calculations
necessary to determine the ratio referred to above. The calculations of the
Applicable Margin made at fiscal year end shall be subject to adjustment
upon the Lender's receipt of the Company's audited financial statements in
conformance with Section 8.3(b). In the event the Company fails to timely
provide the financial statements and certificates referred to above, and
without prejudice to any additional rights under Section 11, the maximum
Applicable Margin shall apply to all Eurodollar Rate Loans and Prime Rate
Loans until the first day of the calendar month after the Lender's receipt
of such financial statements and certificates, unless the Lender has agreed
to extend the time for delivery of such financial statements.
"Dollar" and "$" shall mean freely transferable United States dollars.
"Eurodollar Rate" shall mean, with respect to any Eurodollar Rate Loan
for the Interest Period applicable thereto, a simple per annum interest
rate determined pursuant to the following formula:
Eurodollar Rate = Interbank Offered Rate
--------------------------------------------
1 - Eurodollar Reserve Percentage
The Eurodollar Rate shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.
"Eurodollar Rate Basis" shall mean a simple interest rate per annum
equal to the Eurodollar Rate plus the Applicable Margin.
----
"Eurodollar Rate Loan" shall mean any Loan which bears interest at the
time in question based on the Eurodollar Rate Basis.
"Eurodollar Reserve Percentage" shall mean, for any day, that
percentage (expressed as a decimal) which is in effect from time to time
under Regulation D of the Board of Governors of the Federal Reserve System,
as such
-2-
regulation may be amended from time to time or any successor regulation, as
the maximum reserve requirement (including, without limitation, any basic,
supplemental, emergency, special, or marginal reserves) applicable to any
member bank with respect to Eurocurrency liabilities as that term is
defined in Regulation D (or against any other category of liabilities that
includes deposits by reference to which the interest rate of Eurodollar
Rate Loans is determined), whether or not the Lender has any Eurocurrency
liabilities subject to such reserve requirement at that time. Eurodollar
Rate Loans shall be deemed to constitute Eurocurrency liabilities and as
such shall be deemed subject to reserve requirements without benefit of
credits for proration, exceptions or offsets that may be available from
time to time to the Lender.
"Interbank Offered Rate" shall mean, with respect to any Eurodollar
Rate Loan for the Interest Period applicable thereto, the average (rounded
upward to the nearest one-sixteenth (1/16) of one percent) per annum rate
of interest determined by the office of the Lender then determining such
rate (each such determination to be conclusive and binding) as of two
Banking Days prior to the first day of such Interest Period, as the
effective rate at which deposits in immediately available funds in Dollars
are being, have been, or would be offered or quoted by the Lender to major
banks in the applicable interbank market for Eurodollar deposits at any
time during the Banking Day which is the second Banking Day immediately
preceding the first day of such Interest Period, for a term comparable to
such Interest Period and in an amount comparable to the amount of the
Eurodollar Rate Loan. If no such offers or quotes are generally available
for such amount, then the Lender shall be entitled to determine the
Interbank Offered Rate by estimating in its reasonable judgment the per
annum rate (as described above) that would be applicable if such quotes or
offers were generally available.
"Interest Period" shall mean, in connection with any Eurodollar Rate
Loan, the term of such Loan selected by the Company or otherwise determined
in accordance with this Agreement, which may have a duration of one (1),
two (2), three (3) or six (6) months. Notwithstanding the foregoing,
however, (i) any applicable Interest Period which would otherwise end on a
day which is not a Banking Day shall end on the next succeeding Banking Day
unless such Banking Day falls in another calendar month, in which case such
Interest Period shall end on the next preceding Banking Day, (ii) any
applicable Interest Period which begins on a day for which there is no
numerically corresponding day in the calendar month during which such
Interest Period is to end shall (subject to clause (i) above) end on the
last day of such calendar month, and (iii) no Interest Period shall extend
beyond the maturity of the Loans or such earlier date as would interfere
hereunder with the repayment obligations of the Company.
"Prime Rate Basis" shall mean a simple interest rate per annum equal
to the Prime Rate plus the Applicable Margin.
----
-3-
"Prime Rate Loan" shall mean any Loan which bears interest at the time
in question based on the Prime Rate Basis.
(c) Delete Section 2.2 and replace it with the following:
2.2 INTEREST.
(a) Choice of Interest Rate, Etc. Each Loan shall, at the option
of the Company, be made as a Prime Rate Loan or a Eurodollar Rate Loan.
Each Prime Rate Loan shall bear interest at the Prime Rate Basis. Each
Eurodollar Rate Loan shall bear interest at the applicable Eurodollar Rate
Basis. Any notice given to the Lender in connection with a requested Loan
hereunder shall be given prior to 12:00 noon (Eastern Time) in order for
such Banking Day to count toward the minimum number of Banking Days
required. If the Company fails to give the Lender timely notice of its
selection of a Eurodollar Rate Basis, or if for any reason a determination
of a Eurodollar Rate Basis for any Loan is not timely concluded, the Prime
Rate Basis shall apply to such Loan.
(b) Prime Rate Loans.
(i) Initial Loans. The Company shall give the Lender, in
the case of Prime Rate Loans, irrevocable telephonic notice, confirmed
immediately by a written notice, on the date specified in the notice
for such Prime Rate Loan; provided, however, that the failure by the
Company to confirm any notice shall not invalidate any notice so
given.
(ii) Repayments and Reborrowings. The Company may repay a
Prime Rate Loan at any time and (A) reborrow all or a portion of the
principal amount thereof as one or more Eurodollar Rate Loans, or (B)
not reborrow all or any portion of such Prime Rate Loan.
(c) Eurodollar Rate Loans.
(i) Initial Loans. The Company shall give the Lender, in
the case of Eurodollar Rate Loans, at least two (2) Banking Days'
irrevocable telephonic notice, confirmed immediately by a written
notice, which notice shall include the proposed Interest Period;
provided, however, that the failure of the Company to confirm any
notice shall not invalidate any notice so given. The Lender, whose
determination shall be conclusive, shall determine the available
Eurodollar Rate Basis and shall notify the Company of such Eurodollar
Rate Basis.
(ii) Repayments and Reborrowings. At least two (2) Banking
Days' prior to the maturity date for a Eurodollar Rate Loan, the
Company shall give the Lender written notice (or telephonic notice
confirmed immediately by a written notice) specifying whether all
-4-
or a portion of any Eurodollar Rate Loan outstanding on such maturity
date (A) is to be repaid and then reborrowed in whole or in part as a
Eurodollar Rate Loan, (B) is to be repaid and then reborrowed in whole
or in part as a Prime Rate Loan, or (C) is to be repaid and not
reborrowed. The Company's failure to give a proper notice shall be
deemed a request to reborrow the entire maturing amount as a Prime
Rate Loan. Upon such maturity date such Eurodollar Rate Loan will,
subject to the provisions hereof, be so repaid and, as applicable,
reborrowed. Each repayment shall be in an amount not less than US Five
Hundred Thousand Dollars (US$500,000.00). The Company's failure to
give a proper notice shall be deemed a request to reborrow the entire
maturing amount as a Prime Rate Loan.
(iii) Limitation on Eurodollar Rate Loans. Each Eurodollar
Rate Loan shall be in a minimum amount of US One Million Dollars
(US$1,000,000.00) or integral multiples of US One Hundred Thousand
Dollars (US$100,000.00) in excess thereof. Notwithstanding anything to
the contrary contained herein, no more than two (2) Eurodollar Rate
Loans may be outstanding under this Agreement at any one time.
(iv) Prepayment. Eurodollar Rate Loans may be prepaid
prior to the applicable maturity date, upon four (4) Banking Days'
prior written notice to the Lender, provided that the Company shall
reimburse the Lender, on demand, for any loss or out-of-pocket expense
incurred by the Lender in connection with such prepayment. Any notice
of prepayment of a Eurodollar Rate Loan shall be irrevocable. Each
prepayment of any of the Eurodollar Rate Loan shall be in an amount
not less than US Five Hundred Thousand Dollars (US$500,000.00).
(d) Certain Fees. As additional consideration for the credit
facility established in Section 2.1 hereof, the Company agrees to pay the
Lender a facility fee payable on the first day of each month equal to 0.5%
per annum of the average unused portion of the facility during the prior
month minus $5,000,000.00. As compensation for delays in the collection and
-----
clearance of checks, each month the Lender will charge the Company's
account with respect to each remittance received against Receivables during
the month for an amount equal to interest on the amount of such remittance
at the Prime Rate Basis then in effect for the period beginning with the
day following the day of receipt of such remittance and ending at the end
of the second Banking Day following the day of such receipt. In the event
of termination of this Agreement by either party hereto, the Lender's
entitlement to this charge shall continue so long as any obligations
hereunder are outstanding.
(e) General. Interest on the Loans shall be due and payable
monthly, on the first day of each month. The final payment of all accrued
and unpaid interest shall be due and payable on the date that the
outstanding principal amount of the Loans is paid or due and payable in
full. After an Event of Default,
-5-
interest on the Loans shall also be due and payable, upon demand from time
to time by the Lender. The Lender shall advise the Company of the amount of
interest due and payable as of the days set forth above, and the Company
shall pay the same when due or the Lender may, in its discretion, charge
such amount to the Company's account under this Agreement. Upon the entire
outstanding principal amount of the Loans becoming due and payable or if
any payment of principal or interest is not timely made, interest shall
accrue on the unpaid principal balance of the Loans or on such defaulted
principal payment, from the date that the Loans became so due and payable,
or that the defaulted payment was not timely made, at an annual rate of
three percent (3%) plus the Prime Rate. Such interest shall continue to
accrue until the date of payment of all principal and accrued but unpaid
interest or such defaulted payment, as applicable, and shall be due and
payable upon demand from time to time by the Lender.
(d) Add the following new Sections 2.9, 2.10, 2.11, and 2.12:
2.9 EURODOLLAR RATE BASIS DETERMINATION INADEQUATE OR
UNFAIR. Notwithstanding anything contained herein which may be construed
to the contrary, if with respect to any proposed Eurodollar Rate Loan for
any Interest Period, the Lender determines that deposits in Dollars (in the
applicable amount) are not being offered to the Lender in the relevant
market for such Interest Period on a basis sufficient to permit a fair
establishment of the Eurodollar Rate, the Lender shall forthwith give
notice thereof to the Company, whereupon until the Lender notifies the
Company that the circumstances giving rise to such situation no longer
exist, the obligations of the Lender to make such Eurodollar Rate Loans
shall be suspended.
2.10 ILLEGALITY. If any applicable law, rule or
regulation, or any change therein, or any interpretation or change in
interpretation or administration thereof by any governmental authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Lender with any request or
directive (whether or not having the force of law) of any such authority,
central bank or comparable agency, shall make it unlawful or impossible for
the Lender to make, maintain or fund its Eurodollar Rate Loans, the Lender
shall so notify the Company. Upon receipt of such notice, notwithstanding
anything contained herein, the Company shall repay in full the then-
outstanding principal amount of each affected Eurodollar Rate Loan,
together with accrued interest thereon either (a) on the last day of the
then current Interest Period applicable to such Eurodollar Rate Loan if the
Lender may lawfully continue to maintain and fund such Eurodollar Rate Loan
to such day or (b) immediately if the Lender may not lawfully continue to
fund and maintain such Eurodollar Rate Loan, whereupon the Company shall
borrow a Prime Rate Loan from the Lender, and the Lender shall make such
Prime Rate Loan, in the amount of the Eurodollar Rate Loans to be repaid.
-6-
2.11 INCREASED COSTS.
(a) If any applicable law, rule or regulation, or any
change therein, or any interpretation or change in interpretation or
administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof
or compliance by the Lender with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency:
(i) shall subject the Lender to any tax, duty or
other charge with respect to its obligation to make Eurodollar Rate
Loans, or shall change the basis of taxation or other charges or
payments to the Lender of the principal of or interest on its
Eurodollar Rate Loans (except for changes in the rate of tax on the
overall net income of the Lender imposed by the jurisdiction in which
the Lender's principal executive office is located); or
(ii) shall impose, modify or deem applicable any
reserve (including, without limitation, any imposed by the Board of
Governors of the Federal Reserve System, but excluding any included in
an applicable domestic reserve percentage), special deposit, capital
adequacy, assessment or other requirement or condition against assets
of, deposits with or for the account of, or commitments or credit
extended by, the Lender or shall impose on the Lender or the
Eurodollar borrowing market any other condition affecting its
obligation to make such Eurodollar Rate Loans;
and the result of any of the foregoing is to increase the cost to the
Lender of making or maintaining any such Eurodollar Rate Loans, or to
reduce the net amount of any sum received or receivable by the Lender under
this Agreement then, on demand by the Lender, the Company agrees to pay to
the Lender such additional amount or amounts as will compensate the Lender
for such increased costs or reduced returns.
(b) A certificate of the Lender claiming compensation
under this Section 2.11 and setting forth the additional amount or amounts
to be paid to it hereunder and calculations therefor shall be conclusive in
the absence of manifest error. In determining such amount, the Lender may
use any reasonable averaging and attribution methods. Concurrently with
prepaying such Eurodollar Rate Loans, the Company shall borrow a Prime Rate
Loan from the Lender, and the Lender shall make such Prime Rate Loan in the
amount of the outstanding Eurodollar Rate Loans.
2.12 EFFECT ON OTHER ADVANCES. If notice has been given
pursuant to Section 2.9, 2.10 or 2.11 suspending the obligation of the
Lender to make any Eurodollar Rate Loan, or requiring Eurodollar Rate Loans
of
-7-
the Lender to be repaid or prepaid, then, unless and until the Lender
notifies the Company that the circumstances giving rise to such repayment
no longer apply, all Loans which would otherwise be made by the Lender as
Eurodollar Rate Loans shall be made instead as Prime Rate Loans.
(e) Add, immediately following the signature pages, ANNEX I in the
form of Exhibit A attached hereto.
3. Restatement of Representations and Warranties. The Company hereby
---------------------------------------------
reaffirms each and every representation and warranty heretofore made by it under
or in connection with the execution and delivery of the Agreement and the
documents executed in connection therewith (including, without limitation, those
representations and warranties set forth in Section 7 of the Financing
Agreement) as fully as though such representations and warranties had been made
on the date hereof and with specific reference to this Amendment.
4. No Default. To induce the Lender to enter into this Amendment the
----------
Company hereby, as of the date hereof, and after giving effect to the terms
hereof, (i) represents and warrants that there exists no Event of Default (or
any event which, with the giving of notice or the passage of time, or both,
would constitute an Event of Default), and (ii) agrees that there exists no
right of offset, defense, counterclaim, claim or objection in favor of the
Company as against the Lender arising out of or with respect to any of the
Obligations.
5. Effect of Amendment. Except as expressly set forth hereinafter, the
-------------------
Agreement and documents executed in connection therewith shall be and remain in
full force and effect and shall constitute the legal, valid, binding and
enforceable obligations of the Company to the Lender and the Company hereby
restates, ratifies and reaffirms each and every term and condition set forth in
the Agreement and documents executed in connection therewith effective as of the
date hereof.
6. Counterparts. This Amendment 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 counterparts, taken together, shall constitute but one and the same
instrument.
7. Successors and Assigns. This Amendment shall be binding upon and
----------------------
inure to the benefit of the successors and permitted assigns of the parties
hereto.
8. Section References. Section titles and references used in this
------------------
Amendment shall be without substantive meaning or content of any kind whatsoever
and are not a part of the agreements among the parties hereto evidenced hereby.
9. Costs, Expenses, Taxes and Fees. The Company agrees to pay on demand
-------------------------------
all costs and expenses of the Lender in connection with the preparation,
execution, delivery and enforcement of this Amendment and any other transactions
-8-
contemplated hereby, including, without limitation, the fees and out-of-pocket
expenses of legal counsel to the Lender.
10. Further Assurances. The Company agrees to take such further action as
------------------
the Lender shall reasonably request in connection herewith to evidence the
amendments herein contained to the Financing Agreement.
11. Governing Law. This Amendment shall be governed by, and construed in
-------------
accordance with, the laws of the State of Georgia.
-9-
IN WITNESS WHEREOF, the Company and the Lender have caused this Amendment
to be duly executed under seal, all as of the date first above written.
SHEFFIELD STEEL CORPORATION, F/K/A HMK INDUSTRIES OF
OKLAHOMA, INC., SUCCESSOR BY MERGER TO SHEFFIELD STEEL
CORPORATION-SAND SPRINGS, F/K/A SHEFFIELD STEEL
CORPORATION and SHEFFIELD STEEL CORPORATION - JOLIET
By: /s/ Stephen R. Johnson VP-CFO
------------------------------------------------
(Title)
Attest: /s/ Cheryl Kaiser
--------------------------------------------
[CORPORATE SEAL]
NATIONSBANK, N.A., F/K/A NATIONSBANK, N.A. (SOUTH),
F/K/A NATIONSBANK OF GEORGIA, N.A.
By: /s/ Stuart A. Hall, Vice President
------------------------------------------------
(Title)
-10-