EXHIBIT 10.3
AMENDMENT NO. 1 TO LOAN AGREEMENT
This Amendment No. 1 to Loan Agreement (this "Amendment") dated as of
September 30, 1996 is entered into with reference to the Loan Agreement dated as
of August 1, 1996 among Safety Components International, Inc., Automotive Safety
Components International, Inc. and ASCI Holdings Germany (DE), Inc. (as joint
and several "Borrowers"),and Bank of America National Trust and Savings
Association, as Bank (the "Loan Agreement"). Capitalized terms used but not
defined herein are used with the meanings set forth for those terms in the Loan
Agreement.
RECITALS
A. As of the Closing Date, Borrowers and Bank contemplated that the
Lockbox Agreements described in the Loan Agreement would be entered
into within 30 days following the Closing Date, that the lockbox
agreement with BofA Frankfurt (or another institution acceptable to
the Bank), the U.K. Facilities and the German Overdraft Facility
described in the Loan Agreement would be entered into within 60 days
following the Closing Date. Borrowers also entered into a letter
agreement providing for the fulfillment of certain conditions
precedent to the Closing Date in the period following the Closing Date
(the "Letter Agreement").
B. As of the date of this Amendment, such lockbox agreements, the U.K.
Facilities and the German Overdraft Facility have not been finalized
and certain of the obligations of Borrowers under the Letter Agreement
have not been satisfied.
C. Borrowers and the Bank desire to extend the time available for the
execution of such lockbox agreements, consummation of the U.K.
Facilities and the German Overdraft Facility and the period for
satisfaction of the obligations described in the Letter Agreement to
October 31, 1996.
D. Borrowers and the Bank wish to amend certain definitions contained in
the Loan Agreement.
-1-
NOW, THEREFORE, Borrowers and the Bank, hereby agree as follows:
1. Amended Definitions. The following definitions set forth in
-------------------
Section 1.1 of the Loan Agreement are hereby amended to read in full as follows:
"Fixed Charge Coverage Ratio" means, (a) as of the last day of
---------------------------
each calendar month ending during the period from October 31, 1996 through
and including February 28, 1997, the ratio of (i) Cash Flow for the period
beginning on the Closing Date and ending on that date, to (ii) Fixed
Charges for the same period, (b) as of the last day of each calendar month
ending during the period from March 1, 1997 through July 31, 1997, the
ratio of (i) Net Cash Flow for the period beginning on the Closing Date and
ending on that date, to (ii) Fixed Charges for the same period, and (c) as
of the last day of each subsequent calendar month, the ratio of (i) Net
Cash Flow for the twelve month period ending on that date, to (ii) Fixed
Charges for the same period.
"Liquidity Ratio" means, as of each date of determination, the
---------------
ratio of (a) Cash, Cash Equivalents and trade accounts receivable (other
than unbilled and scheduled accounts receivables and those due from
Affiliates) of SCI and its Subsidiaries, to (b) the current liabilities of
SCI and its Subsidiaries as of that date (other than the current portion of
-----
their long term Indebtedness) but including in any event, the principal
---------
amount of the Loans (but not any Letters of Credit) evidenced by the Line A
Note and the U.K. Revolver and the German Overdraft Facility (whether or
not then current), in each case determined in accordance with Generally
Accepted Accounting Principles, consistently applied.
2. Amendment to Section 3.2. Section 3.2 of the Loan Agreement is
------------------------
hereby amended to read in full as follows:
"Certain Fees. On the Closing Date, Borrowers shall pay facility fees and
------------
other fees to Bank of America for its services in arranging and structuring
this Agreement, the U.K. Facilities and the German Overdraft Facility, in
amounts set forth in the commitment letter heretofore issued to Borrowers
by Bank of America. It is understood that this Section shall not be
construed in derogation of Section 11.15. These fees are for the sole
-----
account of Bank of America, are fully earned on the dates when due, and are
nonrefundable, provided that the portion of such fees which is attributable
--------
to the U.K. Facility and the German Overdraft Facility shall be refunded to
the extent that such facilities have not
-2-
been consummated prior to October 31, 1996, unless such failure is due to
no fault of Bank."
3. Amendment to Section 6.22. Section 6.22 of the Loan Agreement is
-------------------------
hereby amended to read in full as follows:
"Post Closing Items. Fail to cause each of the following to occur prior to
------------------
October 31, 1996:
(a) termination of the Midland Facilities and all Liens and
Contingent Obligations associated therewith and consummation of the U.K.
Facilities with BofA London pursuant to documentation between ASCL and BofA
London (which documentation shall be solely acceptable to Bank);
(b) Consummation of the German Overdraft Facility with BofA
Frankfurt pursuant to documentation between Co. KG and BofA Frankfurt
(which documentation shall be solely acceptable to Bank);
(c) Consummation of Lockbox Agreements in form and substance
acceptable to Bank, and the sending of notice to all account debtors to
make their remittances to the related Lockboxes; and
(d) Consummation by Co. KG and BofA Frankfurt of a lockbox
agreement in form and substance acceptable to BofA Frankfurt with BofA
Frankfurt (or another institution acceptable to Bank), and the sending of
notice to each of Co. K.G.'s account debtors to make their remittances to
such Lockbox."
4. Extension of Time Periods Under the Letter Agreement. The period
----------------------------------------------------
for satisfaction of Borrowers' remaining obligations under the Letter Agreement
is hereby extended until October 31, 1996.
5. Counterparts. This Amendment may be executed in counterparts in
------------
accordance with Section 11.7 of the Loan Agreement.
----
-3-
6. Confirmation. In all other respects, the Loan Agreement is
------------
confirmed.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
SAFETY COMPONENTS INTERNATIONAL, INC., a Delaware corporation
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Title: Chief Financial Officer
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL, INC., a Delaware corporation
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Title: Chief Financial Officer
ASCI HOLDINGS GERMANY (DE), INC.,
a Delaware corporation
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Title: Chief Financial Officer
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Administrative Agent
By:
---------------------------
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Vice President
-4-
The following consent to the execution, delivery and performance of the
foregoing Amendment No. 1., and confirms that its guaranty of the obligations of
Borrowers remains in full force and effect, and without defense, counterclaim or
offset.
VALENTEC SYSTEMS, INC.
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Title: Chief Financial Officer
GALION, INC.
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Title: Chief Financial Officer
ASCI HOLDINGS U.K., INC.
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Title: Chief Financial Officer
ASCI HOLDINGS CZECH (DE), INC.
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Title: Chief Financial Officer
ASCI HOLDINGS MEXICO (DE), INC.
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇
---------------------------
Title: Chief Financial Officer
-5-