EXECUTION
AMENDMENT NO. 2 TO
LOAN AND SECURITY AGREEMENT
October 11, 2002
Congress Financial Corporation (Southern)
000 Xxxxxxxx Xxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Re: Loan and Security Agreement, dated October 11, 2000
Ladies and Gentlemen:
Congress Financial Corporation (Southern) ("Lender") and Galion, Inc.
("Galion"), Valentec Xxxxx, LLC, formerly known as Valentec International
Corporation, LLC ("Valentec"), Safety Components Fabric Technologies, Inc.
("SCFT"), Automotive Safety Components International, Inc. ("Automotive
International"), Automotive Safety Components International GmbH & Co. KG
("German Borrower"), Automotive Safety Components International Limited ("UK
Borrower" and together with Galion, Valentec, SCFT, Automotive International and
German Borrower, individually each a "Borrower" and collectively, "Borrowers"),
Safety Components International, Inc. ("Safety"), ASCI Holdings Germany (DE),
Inc. ("ASCI Germany"), ASCI Holdings U.K. (DE), Inc. ("ASCI UK"), ASCI Holdings
Mexico (DE), Inc. ("ASCI Mexico"), ASCI Holdings Czech (DE), Inc. ("ASCI
Czech"), Automotive Safety Components International, S.A. de C.V. ("Automotive
Safety Mexico") and Automotive Safety Components International s.r.o.
("Automotive Safety Czech" and together with Safety, ASCI Germany, ASCI UK, ASCI
Mexico, ASCI Czech and Automotive Safety Mexico, each individually a "Guarantor"
and collectively, "Guarantors") have entered into financing arrangements
pursuant to which Lender has made and may make loans and advances to Borrowers
as set forth in the Loan and Security Agreement, dated October 11, 2000, by and
among Lender, Borrowers and Guarantors, as amended by Amendment No. 1 and
Consent to Loan and Security Agreement, dated as of November 2, 2001, by and
among Borrowers, Guarantors and Lender (as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced, the
"Loan Agreement") and other agreements, documents and instruments referred to
therein or at any time executed and/or delivered in connection therewith or
related thereto, together with this Amendment (all of the foregoing, including
the Loan Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Financing Agreements"). All capitalized terms used
herein shall have the meaning assigned thereto in the Loan Agreement, unless
otherwise defined herein.
Borrowers have informed Lender that they intend to amend the Existing Loan
Agreements as more fully described in the Existing Notes Amendment Documents (as
hereinafter defined): (i) to extend the maturity date of the Indebtedness
arising under the Existing Loan Agreements, (ii) to provide for a prepayment of
the principal amount of such Indebtedness in the amount of $5,000,000, (iii) to
provide for certain quarterly principal prepayments in respect of such
Indebtedness, and (iv) to pay Existing Agent, for the benefit of Existing
Lenders, an extension fee in the amount of $270,000.
Borrowers and Guarantors have requested that Lender agree to amend the
Loan Agreement as set forth below, and Lender is willing to agree to such
requests subject to the terms and conditions contained herein.
In consideration of the forgoing and the agreements and covenants
contained herein, and for other good and valuable consideration, the adequacy
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Amendments
(a) Definitions.
(i) Additional Definitions. Section 1 of the Loan Agreement is
hereby amended by adding the following definitions in their proper alphabetical
order:
"Amendment No. 2" shall mean Amendment No. 2 to Loan and Security
Agreement, dated October 11, 2002, by and among Lender, Borrowers and
Guarantors.
"Existing Notes Amendment Documents" shall mean, collectively, the
following (as each now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) Amendment No. 1 to
Subordinated Secured Credit Agreement, dated of even date with Amendment No. 2,
by and among Safety, UK Borrower and German Borrower, as borrowers, certain of
their affiliates, as guarantors, Existing Lenders and Existing Agent, and (b)
all agreements, documents and instruments executed and /or delivered in
connection therewith.
(ii) Amendment to Definitions.
(A) The definition of "Excess Availability" in Section
1.44 of the Loan Agreement and the other Financing Agreements is hereby amended
by deleting the parenthetical phrase "(which shall be deemed to be $35,000,000
solely for purposes of computing the Applicable Margin pursuant to Section 1.7
and the amount of Excess Availability pursuant to Sections 4.1(l) and
6.3(b)(iv))" and replacing it with the following: "(which shall be deemed to be
$35,000,000 solely for purposes of computing the Applicable Margin pursuant to
Section 1.7 and the amount of Excess Availability pursuant to Sections 4.1(l),
6.3(b)(iv) and 9.9(g)(ii) hereof)".
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(B) All references to "Existing Loan Agreements" in the
Loan Agreement and the other Financing Agreements shall be deemed and each such
reference is hereby amended to include, in addition and not in limitation, the
Existing Loan Agreements as amended by the Existing Notes Amendment Documents.
(C) All references to "Financing Agreements" in the Loan
Agreement and the other Financing Agreements shall be deemed and each such
reference is hereby amended to include, in addition and not in limitation,
Amendment No. 2.
(D) All references to "Intercreditor Agreement" in the
Loan Agreement and the other Financing Agreements shall be deemed and each such
reference is hereby amended to include, in addition and not in limitation, the
Intercreditor Agreement as amended by Amendment No. 1 to Intercreditor and
Subordination Agreement, dated of even date herewith, by and among Lender,
Existing Agent and Existing Lenders.
(b) Indebtedness. Section 9.9 of the Loan Agreement is hereby
amended to delete clause (g) thereof and replace it with the following:
"(g) Indebtedness of Borrowers to the Existing Lenders
evidenced by or arising under the Existing Notes (as in effect on
the effective date of Amendment No. 2); provided, that:
(i) the principal amount of such Indebtedness shall not
exceed US$15,861,000, less the aggregate amount of all
repayments, repurchases or redemptions thereof, whether
optional or mandatory, and interest thereon shall not exceed
the rate provided for in the Existing Notes (including the
default rate referred to therein) as in effect on the
effective date of Amendment No. 2,
(ii) Borrowers and Guarantors shall not, directly or
indirectly, make any payments in respect of such Indebtedness,
except that Borrowers may make the following payments subject
to the terms of the Intercreditor Agreement: (A) regularly
scheduled payments of interest on such Indebtedness, (B) the
payment in full of the principal in respect of such
Indebtedness on or after October 10, 2003, (C) mandatory
prepayments of principal in respect of such Indebtedness in
accordance with the terms of Section 3.1 and clause (i) of
Section 3.2 of the Existing Credit Agreement (as in effect on
the effective date of Amendment No. 2 and after giving effect
to the Existing Notes Amendment Documents), (D) mandatory
prepayments of principal in respect of such Indebtedness in
accordance with the terms of clause (ii) of Section 3.2 of the
Existing Credit Agreement (as in effect on the effective date
of Amendment No. 2 and after giving effect to the Existing
Notes Amendment Documents), (E) the payment of
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an extension fee in the amount of $270,000 on or prior to the
effective date of Amendment No. 2, and (F) a principal
prepayment in respect of such Indebtedness in the amount of
$5,000,000 on the effective date of Amendment No. 2; provided,
that, (1) in each case, (aa) such payments and prepayments
shall be made in accordance with the terms of the Existing
Loan Agreements as in effect on the effective date of
Amendment No. 2 and after giving effect to the Existing Notes
Amendment Documents and (bb) no payments or prepayments may be
made during a Blockage Period (as defined in the Intercreditor
Agreement), and (2) in the case of any prepayment described in
clause (D) above, (aa) for each of the thirty (30) consecutive
days immediately prior to the date of any such prepayment, the
aggregate Excess Availability of Borrowers shall have been not
less than $5,000,000, (bb) as of the date of any such
prepayment and after giving effect thereto, the aggregate
Excess Availability of Borrowers shall be not less than
$5,000,000, and (cc) as of the date of any such prepayment and
after giving effect thereto, no Event of Default or act,
condition or event which with notice or passage of time or
both would constitute an Event of Default shall exist or have
occurred and is continuing; provided, that, in the case of any
prepayment described in clause (D) above which would have been
made in respect of any fiscal quarter under clause (ii) of
Section 3.2 of the Existing Credit Agreement (as in effect on
the effective date of Amendment No. 2 and after giving effect
to the Existing Notes Amendment Documents) but for the failure
to satisfy the conditions set forth in clauses (aa) and (bb)
above, a subsequent prepayment may thereafter be made with
respect to such fiscal quarter (or an initial prepayment may
thereafter be made with respect to such fiscal quarter in the
event that no prepayment has been made with respect thereto
because Consolidated EBITDA (as defined in the Existing Credit
Agreement) was less than $3,750,000 for such fiscal quarter)
in an amount equal to $1,000,000 less the amount previously
prepaid in respect of such fiscal quarter (a "Subsequent
Prepayment") so long as the aggregate Excess Availability of
Borrowers shall have been not less than $5,000,000 for each of
the thirty (30) consecutive days immediately prior to the date
of any Subsequent Prepayment and as of the date of any such
Subsequent Prepayment and after giving effect thereto, the
aggregate Excess Availability of Borrowers shall be not less
than $5,000,000,
(iii) such Indebtedness shall be subject to the
Intercreditor Agreement,
(iv) Lender shall have received true, correct and
complete copies of the Existing Loan Agreements (including the
Existing Notes Amendment Documents), as duly executed and
delivered by the parties thereto,
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(v) Borrowers and Guarantors shall not, directly or
indirectly, (A) amend, modify, alter or change any of the
terms of such Indebtedness or any of the Existing Notes or the
other Existing Loan Agreements, as in effect on the effective
date of Amendment No. 2, except that, Borrowers may, after
prior written notice to Lender, amend, modify, alter or change
the terms thereof so as to extend the maturity thereof or
defer the timing of any payments in respect thereof, or to
forgive or cancel any portion of such Indebtedness other than
pursuant to payments thereof, or to reduce the interest rate
or any fees in connection therewith, or (B) redeem, retire,
defease, purchase or otherwise acquire such Indebtedness, or
set aside or otherwise deposit or invest any sums for such
purpose, except for payments and prepayments expressly
permitted by Section 9.9(g)(ii) above,
(vi) Borrowers and Guarantors shall furnish to Lender
all notices or demands in connection with such Indebtedness
either received by a Borrower or Guarantor or on its behalf
promptly after the receipt thereof, or sent by a Borrower or
Guarantor or on its behalf concurrently with the sending
thereof, as the case may be, and
(vii) following the making of any prepayment of such
Indebtedness pursuant to Section 3.2 of the Existing Credit
Agreement, Borrowers and Guarantors shall furnish to Lender
written notice of any such prepayment and the amount thereof
together with such other information with respect thereto as
Lender may request."
(c) Term.
(i) Section 12.1(a) of the Loan Agreement is hereby amended to
delete the reference to the phrase "the date three (3) years from the date of
the initial Loan hereunder" in the first sentence of such Section and to replace
it with "October 9, 2003".
(ii) Section 12.1(c)(iii) of the Loan Agreement is hereby
amended to delete the reference to the phrase "the third anniversary thereof" in
such Section and to replace it with "October 9, 2003"
(d) Schedule 1.49. The reference to "Fleet Bank" on Schedule 1.49 to
the Loan Agreement is hereby deleted and replaced with "Fleet National Bank
(successor by merger to Fleet Bank)".
2. Representations, Warranties and Covenants. Each Borrower and Guarantor,
jointly and severally, represents, warrants and covenants with and to Lender as
follows, which representations, warranties and covenants are continuing and
shall survive the execution and delivery hereof, the truth
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and accuracy of, or compliance with each, together with the representations,
warranties and covenants in the other Financing Agreements, being a continuing
condition of the making or providing of any Loans or Letter of Credit
Accommodations by Lender to Borrowers:
(a) neither the execution and delivery of this Amendment, the
Existing Notes Amendment Documents or the documents, agreements or instruments
executed or delivered in connection therewith or related thereto, nor the
consummation of the transactions herein or therein contemplated, nor compliance
with the provisions hereof or thereof are in contravention of any law or
regulation or any order or decree of any court or Governmental Authority
applicable to Borrowers or Guarantors or any of their respective Subsidiaries in
any respect, or conflict with or result in the breach of, or constitutes a
default in any respect under any mortgage, deed of trust, security agreement,
agreement or instrument to which any Borrower or Guarantor is a party or may be
bound, or violates any provision of the Certificate of Incorporation or By-Laws
of any Borrower or Guarantor;
(b) the Existing Notes Amendment Documents and the transactions
contemplated under each have been duly, executed, delivered and performed in
accordance with their terms by the respective parties thereto in all respects,
including the satisfaction (not merely the waiver, except as have been disclosed
to Lender and consented in writing by Lender ) of all conditions precedent set
forth therein;
(c) this Amendment has been duly executed and delivered by Borrowers
and Guarantor and is in full force and effect as of the date of Amendment No. 2
and the agreements and obligations of Borrowers and Guarantor contained herein
constitute legal, valid and binding obligations of Borrowers and Guarantor
enforceable against Borrowers and Guarantor in accordance with their respective
terms;
(d) Lender shall have received true, correct and complete copies of
each of the Existing Notes Amendment Documents, duly authorized, executed and
delivered by the parties thereto;
(e) Borrowers and Guarantors have received all necessary consents
and approvals of third parties to the transactions contemplated by Amendment No.
2 and the Existing Notes Amendment Documents; and
(f) no Event of Default or act, condition or event which with notice
or passage or time or both would constitute an Event of Default, exists or has
occurred and is continuing.
3. Conditions Precedent. The amendments and consent set forth herein shall
be effective upon the satisfaction of each of the following conditions precedent
in a manner satisfactory to Lender:
(a) the receipt by Lender of an original of this Amendment, duly
authorized, executed and delivered by Borrowers and Guarantors;
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(b) the receipt by Lender of an original letter, dated of even date
herewith, duly authorized, executed and delivered by Borrowers and Guarantors
authorizing Lender to make certain payments to third parties with the proceeds
of the Loans on the date hereof;
(c) the receipt by Lender of an original of Amendment No. 1 to
Intercreditor and Subordination Agreement, duly authorized, executed and
delivered by Existing Agent and Existing Lenders;
(d) the receipt by Lender of true, correct and complete copies of
the Existing Notes Amendment Documents, duly authorized, executed and delivered
by the parties thereto, which shall be in form and substance satisfactory to
Lender;
(e) the receipt by Lender of an original letter, dated of even date
herewith, duly authorized, executed and delivered by Existing Agent, certifying
that all the conditions precedent set forth in the Existing Notes Amendment
Documents have been satisfied or waived, the Existing Notes Amendment Documents
are effective and such other further matters as Lender may request;
(f) all requisite corporate action and proceedings in connection
with this Amendment shall be satisfactory in form and substance to Lender, and
Lender shall have received all information and copies of all documents,
including records of requisite corporate action and proceedings which Lender may
have requested in connection therewith, such documents where requested by Lender
or its counsel to be certified by appropriate corporate officers or governmental
authorities; and
(g) no Event of Default or act, condition or event which with notice
or passage of time or both would constitute an Event of Default shall exist or
have occurred and is continuing
4. General.
(a) Effect of this Amendment. Except as expressly provided herein,
no other changes or modifications to the Financing Agreements are intended or
implied, and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
date hereof. To the extent any conflict exists between the terms of this
Amendment and the Financing Agreements, the terms of this Amendment shall
control.
(b) Additional Events of Default. The parties hereto acknowledge,
confirm and agree that the failure of any Borrower or Guarantor to comply with
the covenants, conditions and agreements contained herein shall constitute an
Event of Default under the Financing Agreements.
(c) Further Assurances. The parties hereto shall execute and deliver
such additional documents and take such additional actions as may be necessary
to effectuate the provisions and purposes of this Amendment.
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(d) Governing Law. The rights and obligations hereunder of each of
the parties hereto shall be governed by and interpreted and determined in
accordance with the internal laws of the State of New York (without giving
effect to principles of conflicts of laws or other rules of law that would
result in the application of the law of any jurisdiction other than the State of
New York).
(e) Binding Effect. This Amendment is binding upon and shall inure
to the benefit of Lender, Borrowers, Guarantors and their respective successors
and assigns. Any amendment or consent contained herein shall not be construed to
constitute an amendment or consent to any other or further action by Borrowers
or Guarantors or to entitle Borrowers or Guarantors to any other amendment or
consent. The Loan Agreement and this Amendment shall be read and construed as
one agreement.
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(d) Counterparts, etc. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original
but all of which when taken together shall constitute one and the same
instrument. In making proof of this Amendment, it shall not be necessary to
produce or account for more than one counterpart hereof signed by each of the
parties hereto. This Amendment may be executed and delivered by telecopier with
the same force and effect as if it were a manually executed and delivered
counterpart.
GALION, INC.
By:________________________________________
Title:_____________________________________
SAFETY COMPONENTS FABRIC
TECHNOLOGIES, INC.
By:________________________________________
Title:_____________________________________
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL, INC.
By:________________________________________
Title:_____________________________________
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL GmbH & Co. KG
By:________________________________________
Title:_____________________________________
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL LIMITED
By:________________________________________
Title:_____________________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PRIOR PAGE]
VALENTEC XXXXX, LLC (formerly known
as Valentec International Corporation, LLC)
By:________________________________________
Title:_____________________________________
SAFETY COMPONENTS
INTERNATIONAL, INC.
By:________________________________________
Title:_____________________________________
ASCI HOLDINGS GERMANY (DE), INC.
By:________________________________________
Title:_____________________________________
ASCI HOLDINGS U.K. (DE), INC.
By:________________________________________
Title:_____________________________________
ASCI HOLDINGS MEXICO (DE), INC.
By:________________________________________
Title:_____________________________________
ASCI HOLDINGS CZECH (DE), INC.
By:________________________________________
Title:_____________________________________
[SIGNATURES CONTINUE ON NEXT PAGE]
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[SIGNATURES CONTINUED FROM PRIOR PAGE]
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL, S.A. de C.V.
By:________________________________________
Title:_____________________________________
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL S.R.O.
By:________________________________________
Title:_____________________________________
AGREED:
CONGRESS FINANCIAL CORPORATION
(SOUTHERN)
By:___________________________
Title:________________________
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