Exhibit 10.29
[Execution]
AMENDMENT NO. 3 AND CONSENT
TO
LOAN AND SECURITY AGREEMENT
October 8, 2003
Congress Financial Corporation (Southern)
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Re: Loan and Security Agreement, dated October 11, 2000
Ladies and Gentlemen:
Congress Financial Corporation (Southern) ("Lender") and Valentec ▇▇▇▇▇,
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 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 and Amendment No. 2 to Loan and Security
Agreement, dated as of October 11, 2002 (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"). Galion, Inc., an Ohio
corporation ("Galion"), ceased to be a Borrower under the Loan Agreement and
Lender agreed to release its security interest in and lien upon the issued and
outstanding stock of Galion and all of the assets
of Galion as set forth in Consent to Sale of Galion Stock, dated December 20,
2002, by and among Lender, Borrowers, Guarantors and Galion. All capitalized
terms used herein shall have the meaning assigned thereto in the Loan Agreement,
unless otherwise defined herein.
Borrowers and Guarantors have requested that Lender agree to amend the
Loan Agreement to, among other things, provide for the making of additional
Loans and extend the Renewal Date, 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) Amendments to Definitions.
(A) The definition of "Applicable Margin" in Section 1.7
of the Loan Agreement is hereby amended by deleting the chart contained therein
and replacing it with the following:
Fixed Charge Applicable Prime Applicable
"Excess Availability Coverage Ratio Rate Margin Eurodollar Margin
-------------------- -------------- ----------- -----------------
(a) $15,000,000 or Equal to or greater 0% 1.75%
more than 2.50 to 1.00
(b) Equal to or greater Equal to or greater 0% 2.00%
than $10,000,000 than 2.00 to 1.00 but
but less than less than 2.50 to
$15,000,000 1.00
(c) Equal to or greater Equal to or greater .25% 2.25%
than $5,000,000 but than 1.25 to 1.OO but
less than less than 2.00 to
$10,000,000 1.00
(d) Less than Less than 1.25 to .50% 2.50%"
$5,000,000 1.00
(B) The definition of "Eligible Accounts" in Section
1.34 of the Loan Agreement is hereby amended by:
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(1) (x) deleting the reference to "each of TRW and
Autoliv" in clause (v) of Section 1.34(o) of the Loan Agreement replacing it
with "TRW", (y) deleting the reference to "owned" and replacing it with "owed"
and (z) adding a new clause (vi) on to the end of Section 1.34(o) as follows:
"and (vi) in the case of Autoliv, thirty-five (35%) percent of
all Accounts of Borrowers owed at such time by all Account
Debtors;"
(2) adding the following new clause (v) on to the
end of such Section as follows:
"(v) notwithstanding anything to the contrary set forth in
subsection (p) of this Section 1.34, in the case of Breed,
Autoliv, TRW and any other Account Debtor to the extent such
other Account Debtor is approved in writing by Lender in its
sole discretion, and so long as such Accounts are otherwise
Eligible Accounts, and such Accounts either (i) meet the
requirements of subsection (p) of this Section 1.34 or, (ii)
(A) with respect to such Account Debtors not subject to prox
dating, such Accounts are not unpaid more than (1) thirty (30)
days after the original due date for them, or (2) one hundred
twenty (120) days after the date of the original invoice for
them and (B) with respect to such Account Debtors subject to
prox dating, such Accounts are not unpaid more than (1)
forty-five (45) days after the original due date for them, or
(2) one hundred thirty-five (135) days after the original
invoice date for them."
(C) The definition of "Excess Availability" in Section
1.44 of the Loan Agreement is hereby amended by deleting "the amount equal to:
(A) the Maximum Credit (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(i), 6.3(b)(iv) and
9.9(g)(ii) hereof) minus the then outstanding amount of Loans and Letter of
Credit Accommodations provided to the other Borrowers" and replacing it with
"the Revolving Loan Limit of such Borrower."
(D) The definition of "Financing Agreements" in Section
1.55 of the Loan Agreement is hereby amended by adding the following immediately
before the period at the end of such Section: ";provided, that, Financing
Agreements shall not include any Hedge Agreements."
(E) The definition of "Indebtedness" in Section 1.65 of
the Loan Agreement is hereby amended by deleting the parenthetical ("marked to
market") in clause (h) thereof and adding the following parenthetical at the end
of such clause before the period: "(determined in accordance with procedures
customary in the relevant market and practices of the counterparty under such
agreements)."
(F) The definition of "Interest Rate" in Section 1.71 of
the Loan Agreement is hereby amended by deleting such definition in its entirety
and replacing it with the following:
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"1.71 'Interest Rate' shall mean:
(a) Subject to clauses (b) and (c) of this definition below:
(i) as to Prime Rate Loans consisting of Revolving Loans and
Existing Term Loans, a rate equal to the Prime Rate,
(ii) as to Eurodollar Rate Loans consisting of Revolving Loans
and Existing Term Loans, a rate equal to two (2.00%) percent per
annum in excess of the Adjusted Eurodollar Rate (in each case, based
on the Eurodollar Rate applicable for the Interest Period selected
by a Borrower as in effect three (3) Business Days after the date of
receipt by Lender of the request of such Borrower for such
Eurodollar Rate Loans in accordance with the terms hereof, whether
such rate is higher or lower than any rate previously quoted to such
Borrower),
(iii) as to the New Term Loan B, a rate equal to three (3%)
percent per annum in excess of the Prime Rate.
(b) Subject to clause (c) of this definition below, the
Interest Rate payable by Borrowers in respect of Revolving Loans and
Existing Term Loans (but not the New Term Loan B) shall be increased
or decreased, as the case may be, (i) as to Prime Rate Loans, to the
rate equal to the Applicable Margin on a per annum basis in excess
of the Prime Rate, and (ii) as to Eurodollar Rate Loans, to the rate
equal to the Applicable Margin on a per annum basis in excess of the
Adjusted Eurodollar Rate; provided. that, the effective date of any
such increase or decrease shall be the first day of the second month
of each fiscal quarter (commencing with the fiscal quarter beginning
September 28, 2003).
(c) Notwithstanding anything to the contrary contained in
clauses (a) and (b) of this definition, the Applicable Margin
otherwise used to calculate the Interest Rate for Prime Rate Loans
and Eurodollar Rate Loans consisting of Revolving Loans and Existing
Term Loans shall be the highest percentage set forth in the
definition of the term Applicable Margin for each category of Loans
(without regard to the amount of Excess Availability or the Fixed
Charge Coverage Ratio) plus two (2%) percent per annum and the
Interest Rate for the New Term Loan B shall be a rate equal to five
(5%) percent per annum in excess of the Prime Rate, at Lender's
option, (i) for the period (A) from and after the effective date of
termination or non-renewal hereof until Lender has received full and
final payment of all outstanding and unpaid Obligations
(notwithstanding entry of a judgment against a Borrower) and (B)
from and after the date of the occurrence of an Event of Default for
so long as such Event of Default is continuing, and (ii) on
Revolving Loans to any Borrower at any time outstanding in excess of
the Borrowing Base of such Borrower or the Revolving Loan Limit of
such Borrower (whether or not such excess(es) arise or are made with
or without
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Lender's knowledge or consent and whether made before or after
an Event of Default).
(G) The definition of "Obligations" in Section 1.86 of
the Loan Agreement is hereby amended by (i) inserting "(a)" immediately before
"any and all Revolving Loans" and (ii) inserting the following immediately
before the period at the end of such Section:
"and (b) for purposes only of Section 5.1 hereof and subject
to the priority in right of payment set forth in Section 6.4
hereof, all obligations, liabilities and indebtedness of every
kind, nature and description owing by any Borrower or
Guarantor to an Affiliate of Lender arising under or pursuant
to a Hedge Agreement reasonably acceptable to Lender entered
into by any Borrower or Guarantor with such Affiliate after
the effective date of Amendment No. 3 (and whether or not such
counterparty continues to be an Affiliate of Lender after the
date of the applicable Hedge Agreement); provided, that, (i)
such obligations, liabilities and indebtedness shall only be
included within the Obligations if, Lender shall have entered
into an agreement, in form and substance satisfactory to
Lender, with such Affiliate that is a counterparty to such
Hedge Agreement, as acknowledged and agreed to by Borrowers
and Guarantors, providing for the delivery to Lender by such
counterparty of information with respect to the amount of such
obligations and providing for other rights of Lender and such
Affiliate in connection with such Hedge Agreement, (ii) in no
event shall the party to such Hedge Agreement to whom such
obligations, liabilities or indebtedness are owing be deemed a
Lender for purposes hereof to the extent of and as to such
obligations, liabilities or indebtedness other than for
purposes of Section 5.1 hereof and (iii) in no event shall the
obligations, liabilities and indebtedness arising under the
Hedge Agreements arising prior to the effective date of
Amendment No. 3 and listed on Exhibit A to Amendment No. 3
constitute Obligations."
(H) The definition of "Maximum Credit" in Section 1.80
of the Loan Agreement is hereby deleted in its entirety and replaced with the
following:
"1.80 'Maximum Credit' shall mean the amount of US
$43,820,000."
(I) The definition of "Mortgages" in Section 1.82 of the
Loan Agreement is hereby deleted in its entirety and replaced with the
following:
"1.82 'Mortgage' shall mean the Open-End Mortgage and
Security Agreement, dated of even date herewith, by SCFT in
favor of Lender with respect to the Real Property and related
assets of SCFT located in Greenville, South Carolina, as the
same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced."
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(J) The definition of "Reference Bank" in Section
1.103 of the Loan Agreement is hereby amended to delete the reference to "First
Union National Bank" therein and to replace it with "Wachovia Bank, National
Association, its successors or assigns".
(K) The definition of "Reserves" in Section 1.105
of the Loan Agreement is hereby amended by inserting immediately before the
period at the end of clause (i) thereof the following: "; or (j) to reflect the
obligations, liabilities or indebtedness (contingent or otherwise) of any
Borrower or Guarantor to any Affiliate of Lender (determined in accordance with
procedures customary in the relevant market and practices of such Affiliate)
arising under or in connection with any Hedge Agreement of any Borrower or
Guarantor with such Affiliate entered into after the effective date of Amendment
No. 3 and not listed on Exhibit A to Amendment No. 3 or as such Affiliate may
otherwise require in connection therewith to the extent that such obligations,
liabilities or indebtedness constitute Obligations."
(L) The definition of "Term Promissory Note" in
Section 1.112 of the Loan Agreement is hereby amended by deleting "term
promissory note, dated on or about the date hereof, made by a Borrower" and
replacing it with "term promissory note made by one or more Borrowers".
(ii) Additional Definitions. The following terms shall have
the meanings given to them below and the Loan Agreement shall be deemed and is
hereby amended to include, in addition and not in limitation, the following
definitions:
"Amendment No. 3" shall mean Amendment No. 3 and Consent to Loan and
Security Agreement, dated October 8, 2003, by and among Lender, Borrowers and
Guarantors.
"Annualized Factor" shall mean, with respect to the Leverage Ratio
for any period, (a) 4,if such period is of one fiscal quarter, (b) 2, if such
period of two fiscal quarters, (c) 4/3, if such period of three fiscal quarters
and (d) 1, if such period is a period of four fiscal quarters.
"Designated Subsidiary" shall mean ASCI Holdings Germany (DE), Inc.,
a Delaware corporation; provided, that, the foregoing Person shall be a
Designated Subsidiary only if and for so long as such Person is (i) disregarded
for purposes of the calculation of tax liability of Safety and its Subsidiaries
under the Code and (ii) wholly owned, directly or indirectly, by one or more
Subsidiaries of Safety which are not incorporated or formed under the laws of
any State of the United States of America.
"Excess Cash Flow" shall mean, with respect to any fiscal year, an
amount equal to: (a) EBITDA of Safety and its Subsidiaries for such fiscal year,
minus (b) Capital Expenditures of Safety and its Subsidiaries paid in cash
during such fiscal year, minus (c) Interest Expense of Safety and its
Subsidiaries paid in cash during such fiscal year, minus (d) regularly scheduled
payments (as determined at the beginning of the respective period) of principal
of Indebtedness for borrowed money and Indebtedness with respect to Capital
Leases paid in cash during such fiscal year, minus (e) Taxes of Safety and its
Subsidiaries due and owing and paid in cash in such fiscal year.
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"Existing German Borrower Term Loan" shall have the meaning set
forth in Section 2.3(a) hereof.
"Existing German Term Loan Balance" shall have the meaning set forth
in Section 2.3(d) hereof.
"Existing German Borrower Term Note" shall mean the Term Promissory
Note, dated November __, 2000, made by German Borrower in favor of Lender in the
original principal amount of US$1,328,000, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
"Existing SCFT Term Loan" shall have the meaning set forth in
Section 2.3(a) hereof.
"Existing SCFT Term Loan Balance" shall have the meaning set forth
in Section 2.3(b) hereof.
"Existing SCFT Term Note" shall mean the Term Promissory Note, dated
October 11, 2000, made by SCFT in favor of Lender in the original principal
amount of US$2,700,000, as the same now exists or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced.
"Existing Term Loans" shall have the meaning set forth in Section
2.3(a) hereof.
"Existing UK Borrower Term Loan" shall have the meaning set forth in
Section 2.3(a) hereof.
"Existing UK Borrower Term Loan Balance" shall have the meaning set
forth in Section 2.3(c) hereof.
"Existing UK Borrower Term Note" shall mean the Term Promissory
Note, dated October 11, 2000, made by UK Borrower in favor of Lender in the
original principal amount of US$1,020,000, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
"Foreign Entities" shall mean all Borrowers and Guarantors which are
incorporated or formed under the laws of a jurisdiction outside of the United
States of America.
"Funded Indebtedness" shall mean, with respect to Safety and its
Subsidiaries, as of the date of determination thereof (without duplication), (a)
all obligations of Safety or any of its Subsidiaries for borrowed money of any
kind or nature, including funded debt, and with respect to any Hedge Agreements
of any Borrower or Guarantor with an Affiliate of Lender (determined in
accordance with procedures customary in the relevant market and practices of
such Affiliate), regardless of whether the same is evidenced by any note,
debenture, bond or other instrument, (b) all obligations of Safety or any of its
Subsidiaries to pay the deferred purchase price of property or services (other
than current trade accounts payable under normal trade terms and
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which arise in the ordinary course of business), (c) all obligations of Safety
or any of its Subsidiaries to acquire or for the acquisition or use of any fixed
asset, including obligations under Capital Leases (other than, in any such case,
any portion thereof representing interest or deemed interest or payments in
respect of taxes, insurance, maintenance or service), or improvements which are
payable over a period longer than one year, regardless of the term thereof or
the Person or Persons to whom the same are payable, (d) all Indebtedness of
others to the extent guaranteed by Safety or any of its Subsidiaries and (e) all
obligations of Safety or any of its Subsidiaries in respect of letters of
credit, bankers acceptances or similar instruments issued or accepted by banks
or other financial institutions for the account of Safety or any of its
Subsidiaries; provided, that, Funded Indebtedness shall not include any
obligations of Safety or any of its Subsidiaries owing to Safety or any of its
other Subsidiaries.
"Hedge Agreement" shall mean any agreement that is a rate swap
agreement, basis swap, forward rate agreement, commodity swap, interest rate
option, forward foreign exchange agreement, spot foreign exchange agreement,
rate cap agreement, rate floor agreement, rate collar agreement, currency swap
agreement, cross-currency rate swap agreement, currency option or any other
similar agreement (including any option to enter into any of the foregoing or a
master agreement for any the foregoing together with all supplements thereto)
for the purpose of protecting against or managing exposure to fluctuations in
interest or exchange rates, currency valuations or commodity prices; sometimes
being collectively referred to herein as "Hedge Agreements".
"Hildesheim Property" shall mean the Real Property of German
Borrower located at ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
"Leverage Ratio" shall mean, for any period, as of the date of
determination thereof, the ratio of (a) the outstanding amount of Funded
Indebtedness of Safety and its Subsidiaries as of the last day of such period to
(b) the Annualized Factor for such period multiplied by EBITDA of Safety and its
Subsidiaries for such period.
"New Term Loan B" shall mean the term loan made (or to be made) by
Lender to US Borrowers as provided for in Section 2.3(e) hereof.
"New Term Loan B Limit" shall mean an amount equal to (a)
$4,500,000 less (b) the product of (i) $125,000 multiplied by the number of
months (rounded upward to the nearest full month), if any, that have elapsed
during the period beginning with the date that is the six month anniversary of
the affective date of Amendment No. 3 and ending on the date which the New Term
Loan B is made; provided, that, the "New Term Loan B Limit" shall be $4,500,000
if (i) Borrowers request the New Term Loan B at any time after June 30, 2005,
(ii) Lender has received all of the audited and unaudited consolidated
financials statements of Safety and its consolidated Subsidiaries required to be
delivered to Lender on or prior to the date of such request, in accordance with
Section 9.6(a)(ii) hereof, all in form and substance satisfactory to Lender, and
(iii) (A) if such request is made at any time on or prior to June 30, 2006, the
Adjusted Pre-Tax Income of Safety and its consolidated Subsidiaries shall have
been not less than $8,200,000 for the fiscal year ended March 26, 2005 as
reflected in such audited consolidated
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financial statements and (B) if such request is made at any time after June 30,
2006, the Adjusted Pre-Tax Income of Safety and its consolidated Subsidiaries
shall have been not less than $8,750,000 for the fiscal year ended March 25,
2006 as reflected in such audited financial statements.
"New Term Loan B Promissory Note" shall mean the promissory note
made by US Borrowers in favor of Lender in connection with the New Term Loan B
made (or to be made) pursuant to Section 2.3(e) hereof, as the same now exists
or may hereafter be amended, modified, supplemented, extended, renewed, restated
or replaced.
"Restated German Borrower Term Note" shall mean the Amended and
Restated Term Promissory Note made by German Borrower in favor of Lender in the
original principal amount of US$l,144,000, as the same now exists or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.
"Restated SCFT Term Note" shall mean the Amended and Restated Term
Promissory Note made by SCFT in favor of Lender in the original principal amount
of US$2,672,000, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.
"Restated Term Notes" shall mean the collective reference to the
Restated SCFT Term Note, the Restated UK Borrower Term Note and the Restated
German Borrower Term Note; each sometimes individually referred to herein as a
"Restated Term Note".
"Restated UK Borrower Term Note" shall mean the Amended and Restated
Term Promissory Note made by UK Borrower in favor of Lender in the original
principal amount of US$504,000, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.
"Revolving Loan Limit" shall mean, as to each Borrower, at any time,
the amount equal to US$35,000,000 minus the outstanding principal amount of the
Revolving Loans and Letter of Credit Accommodations provided to the other
Borrowers.
"Total Debt" shall mean, on any date, all items of indebtedness or
liabilities which in accordance with GAAP would be included in determining total
liabilities as shown on the liabilities side of a balance sheet of a Person,
excluding any trade accounts payable which are not more than thirty (30) days
past due.
"US Entities" shall mean all Borrowers and Guarantors which are
incorporated or formed under the laws of a jurisdiction in the United States of
America.
(b) Revolving Loans.
(i) Section 2.l(a) of the Loan Agreement is hereby amended by
deleting "Loan Limit" and replacing it with "Revolving Loan Limit".
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(ii) Section 2.1 (c) of the Loan Agreement is hereby amended
by (A) deleting "and (iii)" and replacing it with ", (iii) the aggregate
principal amount of Revolving Loans and Letter of Credit Accommodations
outstanding at any time to each Borrower shall not exceed the lesser of the
Revolving Loan Limit of such Borrower or the Borrowing Base of such Borrower,
(iv) the aggregate principal amount of Loans and Letter of Credit Accommodations
outstanding any time to each Borrower shall not exceed the Loan Limit of such
Borrower and (v) and (B) inserting immediately after "the Maximum Credit as at
any time in effect," the following phrase: "or the aggregate principal amount of
Revolving Loans and Letter of Credit Accommodations outstanding at any time to
each Borrower exceeds the Revolving Loan Limit of such Borrower or the Borrowing
Base of such Borrower,".
(c) Letter of Credit Accommodations.
(i) Section 2.2(b) of the Loan Agreement is hereby amended by
deleting "percent per annum or such daily outstanding balance" and replacing it
with "percent per annum on such daily outstanding balance".
(ii) Section 2.2(d) of the Loan Agreement is hereby amended by
deleting "US$3,000,000" and replacing it with "US$5,000,000".
(d) Term Loans. Section 2.3 of the Loan Agreement is hereby amended
by deleting such Section in its entirety and replacing it with the following:
"2.3 Term Loans.
(a) Prior to the date of Amendment No. 3, subject to and
upon the terms and conditions contained herein, Lender made
Term Loans to (i) SCFT in the original principal amount of
US$2,700,000 (the "Existing SCFT Term Loan"), (ii) Valentec
International in the original principal amount of US$887,000,
(iii) UK Borrower in the original principal amount of
US$1,020,000 (the "Existing UK Borrower Term Loan") and (iv)
German Borrower in the original principal amount of
US$1,328,000 (the "Existing German Borrower Term Loan" and,
together with the Existing SCFT Term Loan and the Existing UK
Borrower Term Loan, the "Existing Term Loans").
(b) SCFT hereby acknowledges, confirms and agrees that,
as of the date of Amendment No. 3 and immediately before
giving effect to Amendment No. 3, SCFT is indebted to Lender
for the Obligations evidenced by the Existing SCFT Term Note
in the principal amount equal to US$1,080,000 (the "Existing
SCFT Term Loan Balance"), plus accrued interest and fees
thereon. On the effective date of Amendment No. 3, subject to
the terms and conditions contained herein and in the other
Financing Agreements, Lender agrees to fund an additional Term
Loan to SCFT in the original principal amount of US$1,592,000
which, together with the Existing SCFT Term Loan Balance,
shall be consolidated and evidenced by and be due and payable
pursuant to the terms of the Restated SCFT Term Note.
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(c) UK Borrower hereby acknowledges, confirms and agrees
that, as of the date of Amendment No. 3, UK Borrower is
indebted to Lender for the Obligations evidenced by the
Existing UK Borrower Term Note in the principal amount equal
to US$313,200 (the "Existing UK Borrower Term Loan Balance"),
plus accrued interest and fees thereon. On the effective date
of Amendment No. 3, subject to the terms and conditions
contained herein and in the other Financing Agreements, Lender
agrees to fund an additional Term Loan to UK Borrower in the
original principal amount of US$190,800 which, together with
the Existing UK Borrower Term Loan Balance, shall be
consolidated and evidenced by and be due and payable pursuant
to the terms of the Restated UK Borrower Term Note.
(d) German Borrower hereby acknowledges, confirms and
agrees that, as of the date of Amendment No. 3 and immediately
before giving effect to Amendment No. 3, German Borrower is
indebted to Lender for the Obligations evidenced by the
Existing German Borrower Term Note in the original principal
amount equal to US$590,104 (the "Existing German Borrower Term
Loan Balance"), plus accrued interest and fees thereon. On the
effective date of Amendment No. 3, subject to the terms and
conditions contained herein and in the other Financing
Agreements, Lender agrees to fund an additional term loan to
German Borrower in the original principal amount of US$553,896
which, together with the Existing German Borrower Term Loan
Balance, shall be consolidated and evidenced by and be due and
payable pursuant to the terms of the Restated German Borrower
Term Note.
(e) Subject to the terms and conditions contained herein
(including, without limitation, Section 4.4 hereof) and upon
the request of SCFT, Lender agrees to make a one-time Term
Loan to US Borrowers on a joint and several basis, in an
amount not to exceed US$4,500,000 at any time commencing upon
the effective date of Amendment No. 3 to but excluding the
Renewal Date, which shall be evidenced by and be due and
payable pursuant to the New Term Loan B Promissory Note and
shall be secured by all of the Collateral.
(f) Each of the Existing Term Loans (as consolidated
with the additional Term Loans made in accordance with
Sections 2.3(b) through (d) hereof) is (i) evidenced by a
Restated Term Note in the original principal amount thereof
(as so consolidated), duly executed and delivered by the
applicable Borrower, (ii) to be repaid, together with interest
and other amounts, in accordance with this Agreement, such
Restated Term Note and the other Financing Agreements and
(iii) secured by the Collateral. The principal amount of each
of the Existing Term Loans (as consolidated with the
additional Term Loans made in accordance with Sections 2.3(b)
through (d) hereof) shall be repaid in sixty (60) equal and
consecutive monthly installments (or earlier as provided
herein) payable on the first day of each month commencing
November 1, 2003; provided, that, the entire unpaid principal
amount of each Existing Term Loan (as so consolidated) and all
accrued and unpaid interest thereon shall be due and payable
upon the effective
- 11 -
date of termination or non-renewal of the Financing
Agreements. The amount of each such monthly installment shall
be equal to US$44,533 with respect to the Existing Term Loan
(as so consolidated) to SCFT, US$8,400 with respect to the
Existing Term Loan (as so consolidated) to UK Borrower and
US$19,067 with respect to the Existing Term Loan (as so
consolidated) to German Borrower.
(g) The principal amount of the New Term Loan B shall be
repaid in thirty-six (36) equal and consecutive monthly
installments (or earlier as provided herein) in the amount of
one-thirty sixth of the original principal amount of the New
Term Loan B payable on the first day of each month commencing
with the first full month immediately following the date on
which the New Term Loan B is made; provided, that, the entire
outstanding principal amount of the New Term Loan B and all
accrued and unpaid interest thereon shall become due and
payable upon the effective date of termination or non-renewal
of the Financing Agreements.
(h) The Restated SCFT Term Note shall supercede,
replace, amend and restate the Existing SCFT Term Note. The
Restated UK Borrower Term Note shall supercede, replace, amend
and restate the Existing UK Borrower Term Note. The Restated
German Borrower Term Note shall supercede, replace, amend and
restate the Existing German Borrower Term Note. The amendment
and restatement contained in each of the Restated Term Notes
shall not, in any manner, be construed to constitute payment
of, or impair, limit, cancel or extinguish, or constitute a
novation in respect of, any of the Obligations evidenced by or
arising under the Financing Agreements, and the liens and
security interests securing such Obligations shall not in any
manner be impaired, limited, terminated, waived or released."
(e) Mandatory Prepayments. Section 2.4 of the Loan Agreement is
hereby amended by deleting such Section in its entirety and replacing it with
the following:
"2.4 Mandatory Prepayments. Notwithstanding anything to
the contrary contained in Section 2.3 hereof, not later than
ninety-five (95) days after the end of each fiscal year of
Safety and its Subsidiaries, commencing with the fiscal year
ending March 27, 2004, Borrowers shall prepay the New Term
Loan B in an amount equal to fifty (50%) percent of the Excess
Cash Flow for such fiscal year, together with interest to such
date on the amount prepaid. Amounts prepaid pursuant to this
Section shall be applied to the installments of the New Term
Loan B in the inverse order of maturity. Amounts so prepaid
may not be reborrowed."
(f) Interest. Section 3.l(b) of the Loan Agreement is hereby amended
by adding the following sentence at the beginning of such Section: "The New
Term Loan B shall at all times be a Prime Rate Loan".
(g) Conditions Precedent to New Term Loan B. Section 4 of the Loan
Agreement is hereby amended by adding the following at the end of such Section:
- 12 -
"4.4 Conditions Precedent to New Term Loan B. Unless the
New Term Loan B is made on the effective date of Amendment No.
3, each of the following is an additional condition precedent
to Lender making the New Term Loan B (in addition to any other
condition precedent set forth in this Agreement):
(a)(i) The sum of (A) the amount of the New Term Loan B
requested to be borrowed by Borrowers plus (B) the Total Debt
of Safety and its Subsidiaries as set forth in the financial
statements most recently delivered by Borrowers to Lender
pursuant to Section 9.6(a) hereof, together with the related
certification of the chief financial officer of Safety
required under Section 9.6(a), shall not exceed (ii) four
multiplied by the difference between (A) EBITDA of Safety and
its Subsidiaries for the most recently ended twelve-month
period as set forth in the financial statements most recently
delivered by Borrowers to Lender pursuant to Section 9.6(a)
hereof, together with the related certification of the chief
financial officer of Safety required under Section 9.6(a)
thereof and (B) the Capital Expenditures of Safety and its
Subsidiaries during the most recent twelve-month period as set
forth in such financial statements;
(b) the amount of the New Term Loan B requested to be
borrowed by the Borrowers shall not exceed the lesser of (i)
ten (10%) percent of the Maximum Credit or (ii) twenty-five
(25%) percent of the Adjusted Tangible Net Worth of Safety and
its Subsidiaries;
(c) on the date the New Term Loan B is borrowed and
immediately after giving effect thereto, the aggregate Excess
Availability of Borrowers shall not be less than the US Dollar
Equivalent of US$10,000,000;
(d) if the New Term Loan B is borrowed after the six
month anniversary of the effective date of Amendment No. 3,
the amount of the New Term Loan B requested to be borrowed by
the Borrowers shall not exceed the New Term Loan B Limit; and
(e) if the New Term Loan B is borrowed after the six
month anniversary of the effective date of Amendment No. 3,
Lender shall have received financial projections of Safety and
its Subsidiaries (including but not limited to, any purchase
order and backlog information as Lender may reasonably
request) for the succeeding two year period (prepared on a
quarterly basis), which shall be in form and substance
satisfactory to Lender, and which demonstrate that Safety and
its Subsidiaries will be in compliance with all of the
financial covenants set forth in Section 9.16 hereof during
such two year period, together with a certificate executed by
the Chief Financial Officer of Safety, certifying that such
projections indicate that Safety and its Subsidiaries will be
in compliance with all of the financial covenants set forth in
Section 9.16 hereof during such two year period and that such
projections and the assumptions set forth therein are
reasonable in
- 13 -
light of all facts and circumstances known to such Chief
Financial Officer at the time of the delivery of such
projectons to Lender."
(h) Payments. Section 6.4 of the Loan Agreement is hereby amended by
deleting clauses third and fourth from the second sentence of such Section and
replacing them with the following:
"third, to pay or prepay principal due in respect of the Loans
and to pay Obligations arising under or pursuant to any Hedge
Agreement of Borrowers or Guarantors with an Affiliate of
Lender (up to the amount of any then effective Reserve
established in respect of such Obligations), on a pro rata
basis; fourth, to pay or prepay any other Obligations
(excluding Obligations arising under or pursuant to any Hedge
Agreement); and fifth, to pay any Obligations arising under or
pursuant to any Hedge Agreement between any Borrower or
Guarantor and an Affiliate of Lender (except to the extent
provided for in clause third above);"
(i) Collateral Reporting. Section 7.1(d) of the Loan Agreement is hereby
amended by deleting "shipper or Lender" and replacing it with "shipper or
agent."
(i) Inventory Covenants. Section 7.3(d) of the Loan Agreement is hereby
amended by deleting such Section and replacing it with the following:
(d) upon Lender's request, Borrowers shall, at their expense,
no more than once in any twelve (12) month period, but at any
time or times as Lender may request if an Event of Default
shall exist or the aggregate Excess Availability of Borrowers
shall be less than the US Dollar Equivalent of US$5,000,000,
deliver or cause to be delivered to Lender written reports or
appraisals as to the Inventory in form, scope and methodology
reasonably acceptable to Lender and by an appraiser acceptable
to Lender, addressed to Lender, and upon which Lender is
expressly permitted to rely;"
(k) Subsidiaries. Section 8.1 of the Loan Agreement is hereby amended by
adding the following after the period at the end of such Section: "No Designated
Subsidiary operates any business or owns any material assets other than the
shares of capital stock in its Subsidiaries."
(l) Financial Statements. (i) Section 9.6 of the Loan Agreement is hereby
amended by deleting clause (a) of such Section in its entirety and replacing it
with the following:
"(a) Each Borrower and Guarantor shall, and shall cause
any Subsidiary to, keep proper books and records in which true
and complete entries shall be made of all dealings or
transactions of or in relation to the Collateral and the
businesses of Borrowers and Guarantors and their Subsidiaries
in accordance with GAAP and Borrowers and Guarantors shall
furnish or cause to be furnished to Lender: (i) within thirty
(30) days after the end of each fiscal month, monthly
unaudited consolidated financial statements and unaudited
consolidating financial statements
- 14 -
(including in each case balance sheets and statements of
income and loss on a consolidating basis), all in reasonable
detail, fairly presenting in all material respects the
financial position and the results of the operations of Safety
and its consolidated Subsidiaries as of the end of and through
such fiscal month, accompanied by a compliance certificate
substantially in the form of Exhibit D hereto, along with a
schedule in form and substance satisfactory to Lender of the
calculations used in determining, as of the end of such month,
whether Borrowers and Guarantors are in compliance with the
covenants set forth in Section 9.16 hereof, along with a
schedule in form and substance satisfactory to Lender of the
calculations used in determining the Fixed Charge Coverage
Ratio as of the last day of the immediately preceding Test
Period and (ii) within ninety five (95) days after the end of
each fiscal year, audited consolidated financial statements
and unaudited consolidating financial statements of Safety and
its consolidated Subsidiaries (including in each case balance
sheets, statements of income and loss, statements of cash flow
and statements of shareholders' equity), and the accompanying
notes thereto, all in reasonable detail, fairly presenting in
all material respects the financial position and the results
of the operations of Safety and its consolidated Subsidiaries
as of the end of and for such fiscal year, together with the
opinion of independent certified public or chartered
accountants, as appropriate, which accountants shall be an
independent accounting firm selected by Borrowers and
reasonably acceptable to Lender, that such financial
statements have been prepared in accordance with GAAP, and
present fairly in all material respects the results of
operations and financial condition of Safety and its
consolidated Subsidiaries as of the end of and for the fiscal
year then ended, accompanied by a compliance certificate
substantially in the form of Exhibit D hereto, along with a
schedule in form and substance satisfactory to Lender of the
calculations used in determining, as of the end of such year,
whether Borrowers and Guarantors are in compliance with the
covenants set forth in Section 9.16 hereof, along with a
schedule in form and substance satisfactory to Lender of the
calculations used in determining the Fixed Charge Coverage
Ratio as of the last day of the immediately preceding Test
Period, along with a schedule in form and substance
satisfactory to Lender of the calculations used in determining
the amount of Excess Cash Flow for such fiscal year.
Notwithstanding anything to the contrary herein, if the
outstanding principal amount of the New Term Loan B is zero on
the date on which such certification is required to be
delivered, then no certification (or related calculation) with
respect to the matters set forth in Sections 9.16(b) through
(e) hereof shall be required to be delivered pursuant to this
Section 9.6(a)."
(ii) Section 9.6(d) of the Loan Agreement is hereby amended by
inserting the following phrase immediately before the period at the end of the
first sentence of such Section: "(including, without limitation, information
with respect to Indebtedness permitted under Section 9.9(e) hereof)."
(m) Sale of Assets.
- 15 -
(i) Section 9.7(c)(ii) of the Loan Agreement is hereby amended
by deleting such clause in its entirety and replacing it with "(ii) the
disposition or transfer (which may include transfers or dispositions to an
Affiliate of Safety subject to the provisions of Section 9.12 hereof) of
worn-out or obsolete Equipment so long as any proceeds are paid to Lender for
application to the Obligations and such dispositions or transfers do not involve
Equipment having an aggregate fair market value in excess of $5,000,000 for all
such Equipment so disposed of or transferred in any fiscal year."
(ii) Section 9.7(c)(iv)(A) of the Loan Agreement is hereby
amended by deleting "first, the Term Loans (if any) in the inverse order of
maturity and second, the Revolving Loans" and replacing it with "first, the New
Term Loan B (if any) in the inverse order of maturity, second, the Existing Term
Loans in the inverse order of maturity and third, the Revolving Loans."
(iii) Section 9.7(c) of the Loan Agreement is hereby amended
by adding a new Subsection (v) on to the end thereof as follows:
"and (v) the voluntary termination by any Borrower or
Guarantor of any Hedge Agreement".
(n) Encumbrances.
(i) Section 9.8(f) of the Loan Agreement is hereby amended by
deleting "US$l,000,000" and replacing it with "US$2,000,000".
(ii) Section 9.8(i) of the Loan Agreement is hereby amended by
deleting such Section and replacing it with the following:
"(i) [Intentionally Deleted]; and"
(o) Hedge Agreements. Section 9.9 of the Loan Agreement is hereby amended
by deleting clause (e) of such Section and replacing it with the following:
(e) Indebtedness of Borrowers or Guarantors or any of their
respective Subsidiaries under or pursuant to any Hedge Agreement
entered into in the ordinary course of business; provided, that, (i)
such arrangements are with banks or other financial institutions
that have combined capital and surplus and undivided profits of not
less than the US Dollar Equivalent of US$250,000,000 and are not for
speculative purposes and (ii) such Indebtedness shall be unsecured
except to the extent such Indebtedness constitutes Obligations as
provided herein;
(p) Indebtedness.
(i) Section 9.9(g) of the Loan Agreement is hereby amended by
deleting such Section and replacing it with the following:
- 16 -
"(g) [Intentionally Deleted]; and"
(ii) Section 9.9 of the Loan Agreement is hereby amended by
(a) deleting the period at the end of the clause (h) thereof and replacing it
with ";and" and (b) adding at the end of such Section a new clause (i) as
follows:
(i) the unsecured Indebtedness of any Borrower or
Guarantor permitted under Sections 9.10(s) and 9.lO(t)
hereof."
(q) Loans, Investments and Guarantees.
(i) Section 9.10 of the Loan Agreement is hereby amended by
deleting clause (j) of such Section and replacing it with the following:
"(i) any investments of any Borrower, Guarantor or any
of their respective Subsidiaries in Hedge Agreements permitted
under Section 9.9(e); provided, that, such arrangements are
with banks and other financial institutions that have combined
capital and surplus and undivided profits of not less than the
US Dollar Equivalent of US$250,000,000 and are not for
speculative purposes;"
(ii) Section 9.10(n) of the Loan Agreement is hereby amended
by (A) deleting "$500,000" and replacing it with "the US Dollar Equivalent of
US$5,000,000".
(iii) Section 9.10 of the Loan Agreement is hereby amended by
(1) deleting the period at the end of clause (9) thereof and replacing it with a
semicolon and (2) adding at the end of such Section the following:
"(r) any unsecured guaranties by Safety in favor of
Wachovia Bank, National Association or any of its Affiliates
of any unsecured Indebtedness of any Borrower or other
Guarantor owing to Wachovia Bank, National Association or any
of its Affiliates to the extent such Indebtedness is permitted
under Section 9.9(e) hereof;
(s) investments after the date hereof by any Borrower or
Guarantor by capital contribution in any direct wholly-owned
Subsidiary of such Borrower or Guarantor, or the formation or
acquisition after the date hereof by any Borrower or Guarantor
of any direct wholly-owned Subsidiary of such Borrower or
Guarantor after the date hereof; provided, that, as to any
such investments, or the formation or acquisition of any such
Subsidiary, each of the following conditions is satisfied as
determined by Lender:
(i) as of the date of any such investment or the
formation or acquisition of such Subsidiary or any payments in
connection with the formation or acquisition of such
Subsidiary, and in each case after giving effect thereto, no
Event of Default shall exist or have occurred and be
continuing,
- 17 -
(ii) as of the date of any such investment or the
formation or acquisition of such Subsidiary or any payments in
connection with the formation or acquisition of such
Subsidiary, and in each case after giving effect thereto, the
average aggregate Excess Availability of Borrowers for the
immediately preceding ninety (90) days shall have been not
less than the US Dollar Equivalent of US$7,000,000 and as of
the date of any such investment or formation or acquisition or
any payment in connection therewith and after giving effect
thereto, the aggregate Excess Availability of Borrowers shall
be not less than the US Dollar Equivalent of US$7,000,000,
(iii) the Person receiving such investment or the
Subsidiary formed or acquired, as the case may be, shall be
engaged in a business substantially related, ancillary or
complementary to the business of Borrowers or Guarantors
permitted in this Agreement,
(iv) in the case of an investment by capital
contribution, at Lender's option, the original stock
certificate or other instrument evidencing such capital
contribution (or such other evidence as may be issued in the
case of a limited liability company or an entity incorporated
or formed under the laws of a jurisdiction outside of the
United States of America), if any, shall be promptly delivered
to Lender, together with such stock power, assignment or
endorsement as Lender may reasonably request, and promptly
upon Lender's request, the Borrower or Guarantor making such
investment shall execute and deliver to Lender a pledge and
security agreement, in form and substance satisfactory to
Lender, granting to Lender a first priority pledge of,
security interest in and lien upon all (which, in the case of
a pledge subject to the provisions of Section 5.2(ii), shall
not exceed sixty-five (65%) percent) of the issued and
outstanding shares of such stock or other instrument or
interest (and, in the case of a limited liability company or
an entity incorporated or formed under the laws of a
jurisdiction outside of the United States of America, take
such other actions as Lender shall require with respect to
Lender's security interests therein); provided, that, any
Person which is not incorporated or formed under the laws of
any State of the United States of America or any Designated
Subsidiary shall not be liable for, or be required to execute
a guarantee of, nor be deemed a guarantor of, the Obligations
of any US Borrower nor shall any of such Person's assets
secure the Obligations of any other Borrower or Obligor except
that this proviso shall not preclude any Subsidiary of Safety
from guaranteeing, and being a guarantor of, and pledging its
assets to secure, the Obligations of its direct or indirect
Subsidiaries and any Subsidiary of Safety which is not
incorporated under the laws of any State of the United States
of America,
(v) in the case of the formation or acquisition by
a Borrower or Guarantor of any Subsidiary, as to any such
Subsidiary, (A) the Borrower or Guarantor forming such
Subsidiary shall cause any such Subsidiary to execute and
deliver to Lender, the following (each in form and substance
reasonably satisfactory to Lender), (1) an absolute and
unconditional guarantee of payment of the Obligations, (2) a
security or similar agreement granting to Lender a first
priority security interest and lien (except as otherwise
consented to in writing by Lender) upon all of the assets of
any such
- 18 -
Subsidiary, and (3) such other agreements, documents and
instruments as Lender may reasonably require, including, but
not limited to, supplements and amendments hereto and other
loan agreements or instruments evidencing Indebtedness of such
new Subsidiary to Lender and (B) the Borrower or Guarantor
forming such Subsidiary shall (1) execute and deliver to
Lender, a pledge and security agreement, in form and substance
reasonably satisfactory to Lender, granting to Lender a first
priority pledge of and lien on all (or, in the case of a
pledge subject to the provisions of Section 5.2(ii), 65%) of
the issued and outstanding shares of Capital Stock of any such
Subsidiary, and (C) deliver the original stock certificates
evidencing such shares of Capital Stock (or such other
evidence as may be issued in the case of a limited liability
company or an entity incorporated or formed under the laws of
a jurisdiction outside of the United States of America),
together with stock powers with respect thereto duly executed
in blank (or the equivalent thereof in the case of a limited
liability company in which such interests are certificated or
an entity incorporated or formed under the laws of a
jurisdiction outside of the United States of America), or
otherwise take such actions as Lender shall reasonably require
with respect to Lender's security interests therein);
provided, that, in no event shall any Person which is not
incorporated or formed under the laws of a jurisdiction in the
United States of America or any Designated Subsidiary be
required to guaranty or pledge its assets to secure the
Obligations of US Borrowers,
(vi) the aggregate amount paid or payable by
Borrowers and Guarantors in connection with any such
investment, formation or acquisition, plus the aggregate
amount paid or payable by Borrowers or Guarantors in
connection with the purchase of any assets or property
permitted under Section 9.1O(t) hereof, shall not exceed (A)
the US Dollar Equivalent of US$5,000,000 in cash during any
fiscal year plus (B) the US Dollar Equivalent of US$2,000,000
during any fiscal year in the form of unsecured promissory
notes issued by Borrowers and Guarantors incurred in
connection with such investments, formations, acquisitions
under this Section 9.1O(s) or purchases permitted under
Section 9.10(t) hereof, so long as such unsecured promissory
notes shall be on terms and conditions in all respects
acceptable to Lender and Borrowers and Guarantors shall
deliver such further information, and any agreements,
documents and instruments with respect to such unsecured
promissory notes as Lender may reasonably request, and
(vii) Lender shall have received (A) not less than
six (6) Business Days' prior written notice thereof setting
forth in reasonable detail the nature and terms thereof, (B)
true, correct and complete copies of all material agreements,
documents and instruments relating thereto and (C) such other
information with respect thereto as Lender may reasonably
request; and
(t) the purchase by any Borrower or Guarantor of all or
a substantial part of the assets or property (other than
Capital Stock) of any Person, provided, that, each of the
following conditions is satisfied as determined by Lender:
- 19 -
(i) as of the date of such purchase and after
giving effect thereto, no Event of Default shall exist or have
occurred and be continuing,
(ii) as of the date of any payment in connection
with such purchase and after giving effect thereto, the
average aggregate Excess Availability of Borrowers for the
immediately preceding ninety (90) days shall have been not
less than the US Dollar Equivalent of US$7,000,000 and as of
the date of any such payment and after giving effect thereto,
the aggregate Excess Availability of Borrowers shall be not
less than the US Dollar Equivalent of US$7,000,000,
(iii) Lender shall have received not less than six
(6) Business Days' prior written notice of the proposed
purchase and such information with respect thereto as Lender
may reasonably request, including (A) the proposed date and
amount of such purchase, (B) a proposed list and description
of the assets to be purchased, and (C) the total proposed
purchase price for the assets to be purchased (and the terms
of payment of such purchase price),
(iv) promptly upon Lender's request, the Borrower
or Guarantor purchasing such assets shall deliver, or cause to
be delivered to Lender, true, correct and complete copies of
all material agreements, documents and instruments relating to
such purchase,
(v) the assets being acquired by any Borrower or
Guarantor shall be substantially consistent with, and related,
ancillary or complementary to, the business of Borrowers or
Guarantors permitted in this Agreement,
(vi) the assets acquired by any Borrower or
Guarantor shall be free and clear of any security interest,
mortgage, pledge, lien, charge or other encumbrance (other
than those permitted in this Agreement) and Lender shall have
received evidence satisfactory to it of the same,
(vii) the acquisition by any Borrower or Guarantor
of such assets shall not violate in any material respect any
law or regulation or any order or decree of any court or
Governmental Authority and shall not and will not conflict in
any material respect with or result in the breach of, or
constitute a default under, any material agreement, document
or instrument to which such Borrower or Guarantor or any
Affiliate is a party or may be bound, or result in the
creation or imposition of, or the obligation to grant, any
lien, charge or encumbrance upon any of the property of such
Borrower or Guarantor or violate any provision of the
certificate of incorporation, by-laws, certificate of
formation, operating agreement or other organizational
documentation of such Borrower or Guarantor,
(viii) such purchase shall be in a bona fide arms'
length transaction with a person that is not an Affiliate of
any Borrower or Guarantor,
- 20 -
(ix) no Borrower or Guarantor shall become
obligated with respect to any Indebtedness, nor shall any of
its property become subject to any security interest or lien,
pursuant to such acquisition unless such Borrower or Guarantor
could incur such Indebtedness or create such security interest
or lien hereunder or under the other Financing Agreements;
provided, that, Borrowers or Guarantors may incur unsecured
Indebtedness as evidenced by promissory notes to the seller of
the assets being acquired, in the aggregate amount in any
fiscal year not to exceed the US Dollar Equivalent of
US$2,000,000 (minus any unsecured Indebtedness incurred
pursuant to Section 9.1O(s)(vi) hereof) so long as such
unsecured Indebtedness is on terms and conditions in all
respects acceptable to Lender and Borrowers and Guarantors
shall deliver such further information, and any agreements,
documents and instruments with respect to such Indebtedness as
Lender may reasonably request,
(x) Lender shall have received, in form and
substance satisfactory to Lender, (A) evidence that Lender has
valid and perfected security interests in and liens upon all
purchased assets, (B) UCC financing statements or other
similar registrations, (C) all Collateral Access Agreements
and other consents, waivers, acknowledgments and other
agreements from third persons which Lender may reasonably deem
necessary or desirable in order to permit, protect and perfect
its security interests in and liens upon the assets purchased,
(D) the agreement of the seller consenting to the collateral
assignment by the Borrower or Guarantor purchasing such assets
of all rights and remedies and claims for damages of such
Borrower or Guarantor relating to the Collateral under the
agreements, documents and instruments relating to such
acquisition and (E) such other agreements, documents and
instruments as Lender may reasonably request in connection
therewith,
(xi) the aggregate amount paid or payable by
Borrowers and Guarantors in connection with any such purchase,
plus the aggregate amount paid or payable in connection with
any investment, formation or acquisition permitted under
Section 9.10(s) hereof, shall not exceed (A) the US Dollar
Equivalent of US$5,000,000 in cash during any fiscal year plus
(B) the US Dollar Equivalent of US$2,000,000 during any fiscal
year in the form of unsecured promissory notes issued by
Borrowers and Guarantors incurred in connection with such
investments, formations, acquisitions under Section 9.10(s)
hereof or purchases under this Section 9.lO(t), so long as
such unsecured promissory notes shall be on terms and
conditions in all respects acceptable to Lender and Borrowers
and Guarantors shall deliver such further information, and any
agreements, documents and instruments with respect to such
unsecured promissory notes as Lender may reasonably request,
and
(xii) in no event shall any Accounts or Inventory
so acquired by any Borrower pursuant to any such purchase be
deemed Eligible Accounts or Eligible Inventory unless and
until Lender, at its option, shall have conducted a field
examination with respect thereto (and at Lender's option, at
Borrowers' expense, obtained an appraisal of such Inventory by
an appraiser reasonably acceptable to Lender and in form,
scope and methodology reasonably acceptable to Lender and
addressed to Lender and upon
- 21 -
which Lender is expressly permitted to rely, which appraisal
shall be in addition to any appraisals which Lender may obtain
pursuant to Section 7.3 hereof) and then only to the extent
the criteria for Eligible Accounts and Eligible Inventory set
forth herein are satisfied with respect thereto in accordance
with this Agreement (or such other or additional criteria as
Lender may, at its option, establish with respect thereto in
accordance with this Agreement and subject to such Reserves as
Lender may establish in accordance with this Agreement), and
upon the request of Lender the Accounts and Inventory acquired
by such Borrower or Guarantor pursuant to such purchase shall
at all times after such acquisition be separately identified
and reported to Lender in a manner satisfactory to Lender."
(r) Dividends and Redemptions. Section 9.11 of the Loan Agreement is
hereby amended by deleting "any Subsidiary of a Borrower or Guarantor may pay
dividends or other distributions to such Borrower or Guarantor" and replacing it
with the following:
"for the following:
(a) any Subsidiary of a Borrower or Guarantor may pay
dividends or other distributions to such Borrower or
Guarantor;
(b) not later than thirty (30) days after the effective
date of Amendment No. 3, Safety may pay cash dividends, from
funds legally available therefor, to its shareholders and may
repurchase shares of its Capital Stock for cash from its
shareholders, provided, that, with respect to the payment of
such dividend or the payment in respect of such repurchase (A)
as of the date of such payment and after giving effect
thereto, no Event of Default shall have occurred and be
continuing, (B) as of the date of any such payment and after
giving effect thereto, and after giving effect to all other
Loans and financial accommodations to be provided on the
effective date of Amendment No. 3, the aggregate Excess
Availability of Borrowers shall not be less than the US Dollar
Equivalent of US$10,000,000 and (C) such dividend or
repurchase is not violation of applicable law or any agreement
to which Safety is a party or by which Safety is bound; and
(c) not earlier than one hundred (100) days after the
end of each fiscal year of Safety and its Subsidiaries,
commencing with the fiscal year ending March 26, 2005, Safety
may pay cash dividends, from funds legally available therefor,
to its shareholders and may repurchase shares of its Capital
Stock for cash from its shareholders in an aggregate amount
not to exceed US$4,500,000 (or, if the outstanding principal
amount of the New Term Loan B is greater than zero,
US$1,000,000) during any fiscal year; provided, that, with
respect to the payment of any such dividend or the payment in
respect of any such repurchase (A) as of the date of any such
payment and after giving effect thereto, no Event of Default
shall have occurred and be continuing, (B) as of the date of
any such payment and after giving effect thereto, the
aggregate Excess Availability of Borrowers shall not be less
than the US Dollar Equivalent of US$7,000,000 (or, if the
outstanding amount of the New
- 22 -
Term Loan B is greater than zero, US$l0,000,000) and the
aggregate Excess Availability of Borrowers for each of the
ninety consecutive days prior to the date of any such payment
shall not be less than the US Dollar Equivalent of
US$7,000,000 (or, if the outstanding principal amount of the
New Term Loan B is greater than zero, US$10,000,000) and (C)
such dividend or repurchase is not in violation of applicable
law or any agreement to which Safety is a party or by which
Safety is bound."
(s) Financial Covenants. Section 9.16 of the Loan Agreement is
hereby amended by deleting such Section in its entirety and replacing it with
the following:
"9.16 Financial Covenants.
(a) Adjusted Tangible Net Worth. Notwithstanding
anything to the contrary contained in the Net Worth Adjustment
Letter, dated October 11, 2000, by and among Borrowers,
Guarantors and Lender, Safety and its Subsidiaries shall at
all times maintain Adjusted Tangible Net Worth of not less
than US$43,200,000.
(b) EBITDA. Safety and its Subsidiaries shall not, for
any period set forth below (each, a "Section 9.16(b) Test
Period"), permit their EBITDA, on a consolidated basis, to be
less than the amount set forth below opposite such Section
9.16(b) Test Period, provided, that, if the outstanding
principal amount of the New Term Loan B is zero on the last
day of any 9.16(b) Test Period, then Safety and its
Subsidiaries shall not be required to comply with the terms of
this Section 9.16(b) for such Section 9.16(b) Test Period:
Period Minimum EBITDA
------ --------------
09/28/03 - 12/27/03 $4,200,000
09/28/03 - 3/27/04 $9,700,000
09/28/03 - 6/26/04 $15,400,000
09/28/03 - 9/25/04 $18,100,000
12/28/03 - 12/25/04 $18,100,000
03/28/04 - 3/26/05 $18,100,000
- 23 -
06/27/04 - 06/25/05 and each $19,300,000
twelve month period ending on
the last day of each fiscal quarter
thereafter
(c) Fixed Charge Coverage Ratio. The Fixed Charge
Coverage Ratio, for each twelve-month period ending on the
last day of any fiscal quarter, commencing with the quarter
ending on December 27, 2003 (each, a "Section 9.16(c) Test
Period"), shall not be less than 1:00 to 1:00; provided, that,
if the outstanding principal amount of the New Term Loan B is
zero on the last day of any Section 9.16(c) Test Period, then
Safety and its Subsidiaries shall not be required to comply
with the terms of this Section 9.16(c) for such Section
9.16(c) Test Period.
(d) Leverage Ratio. The Leverage Ratio, for each
twelve-month period ending on the last day of each fiscal
quarter, commencing with the quarter ending on December 27,
2003 (each, a "Section 9.16(d) Test Period"), shall not be
greater than 2.45:l.00; provided, that, if the outstanding
principal amount of the New Term Loan B is zero on the last
day of any 9.16(d) Test Period, then Safety and its
Subsidiaries shall not be required to comply with the terms of
this Section 9.16(d) for such Section 9.16(d) Test Period.
(e) Capital Expenditures. Safety and its Subsidiaries
shall not, directly or indirectly, make (whether through
Capital Leases, purchases or otherwise) Capital Expenditures
in an aggregate amount in excess of the US Dollar Equivalent
of US$15,000,000 in any fiscal year, beginning with the fiscal
year ending March 27, 2004; provided, that, (i) Safety and its
Subsidiaries shall not, directly or indirectly, make (whether
through Capital Leases, purchases or otherwise) Capital
Expenditures in an aggregate amount in excess of the US Dollar
Equivalent of US$20,000,000 in any two (2) consecutive fiscal
years, and (ii) if the outstanding principal amount of the New
Term Loan B is zero on the last day of any fiscal year, then
Safety and its Subsidiaries shall not be required to comply
with the terms of this Section 9.16(e) for such fiscal year.
(f) Notwithstanding anything to the contrary above, if
an Event of Default occurs as a result of the failure to
comply with Sections 9.16(b) through (d) hereof for any
Section 9.16(b) Test Period, Section 9.16(c) Test Period or
Section 9.16(d) Test Period (each, a "Section 9.16 Test
Period") and Borrowers and Guarantors repay the entire
outstanding principal amount New Term Loan B and any other
Obligations arising in connection therewith in cash or other
immediately available funds within fifteen (15) Business Days
of the last day of such Section 9.16 Test Period, and no other
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 be continuing (after
giving effect to such repayment of New Term Loan B or
otherwise) as of such repayment date, then Lender shall
- 24 -
promptly provide Borrowers and Guarantors with a written
waiver of the Events of Default arising as a result of the
failure of Safety and its Subsidiaries to comply with the
financial covenants set forth in Sections 9.16(b) through (d)
hereof for such Section 9.16 Test Period."
(t) Designated Subsidiaries. Section 9 of the Loan Agreement is
hereby amended by adding the following new Section 9.25 at the end thereof:
"9.25 Designated Subsidiaries. Borrowers and Guarantors shall
not permit any Designated Subsidiary to operate any business
or own any material assets other than the shares of capital
stock in its subsidiaries.
(u) Remedies.
(i) Section 10.2(b)(i) of the Loan Agreement is amended and
restated as follows:
"(i) accelerate the payment of Obligations (other than the
Obligations set forth in Section 1.86(b) hereof, which shall
become due and payable in accordance with the applicable Hedge
Agreement) and demand immediate payment thereof to Lender
(provided, that, upon the occurrence of any Event of Default
described in Section 10.1(g) and 10.1(h), all Obligations
(other than the Obligations set forth in Section 1.86(b)
hereof which shall become due and payable in accordance with
the applicable Hedge Agreement) shall automatically become
immediately due and payable,"
(ii) Section 10.2(b) of the Loan Agreement is hereby amended
to add a new subsection (viii) at the end of the first sentence before the
period:
"and/or (viii) send to any counterparty under a Hedge
Agreement a notice that such counterparty should only follow
the instructions of Lender with respect to such Hedge
Agreement."
(v) Amendments and Waivers. Section 11.3 of the Loan Agreement is
hereby amended to add the following provision at the end of the first sentence
of such Section:
"provided, that, any amendment to the priority of the
application of payments set forth in Section 6.4 hereof which
would have the effect of further subordinating the obligations
and liabilities of any Borrower or Guarantor to any Affiliate
of Lender which constitute Obligations must be consented to by
such Affiliate of Lender."
(w) Term. Section 12.l(a) of the Loan Agreement is hereby amended by
(a) deleting "ending on October 9, 2003" and replacing it with "ending on
October 8, 2006" and (b) adding the following immediately before the period at
the end of the third sentence of such Section: "and for any Obligations arising
under or pursuant to any Hedge Agreement between any Borrower or
- 25 -
Guarantor and any Affiliate of Lender in such amounts as the other party to such
Hedge Agreement may require (unless such Obligations arising under or pursuant
to any Hedge Agreement are paid in full in cash and terminated in a manner
satisfactory to such other party).".
(x) Early Termination Fee. (i) Section 12.l(c) of the Loan Agreement
is hereby amended by deleting the chart contained therein and replacing it with
the following:
"Amount Period
------- ------
(i) One and one-half (1 1/2%) From the date of the initial Loan
percent of hereunder to and excluding October 8, 2004
the Maximum Credit
(ii) three-quarters of one (3/4) From October 8, 2004 to and excluding
(1%) percent of the Maximum October 8, 2005
Credit
(iii) one-half of one (1/2%) percent From October 8, 2005 to June 29, 2006
of the Maximum Credit or if the term of this Agreement is
extended, at any time prior to the one
hundredth day before the end of the then
current term"
(ii) Section 12.1 of the Loan Agreement is hereby amended by adding
at the end thereof a new clause (d) as follows:
"(d) Notwithstanding anything to contrary contained in Section
12.l(c) above, in the event of the termination of this Agreement by
Borrowers and the full and final repayment of all of the Obligations
and the receipt by Lender of cash collateral all as provided in
Section 12.l(a) above, if such repayment is either (i) made with the
proceeds of initial loans and advances to Borrowers pursuant to a
revolving credit facility provided by Wachovia Bank, National
Association or its Affiliates (or for which Wachovia Bank, National
Association or one of its Affiliates is acting as agent) to
Borrowers to replace the financing arrangements provided for herein
or (ii) made in connection with a transfer or an acquisition
described in clause (a) or (c) of the definition of Change of
Control set forth in Section 1.21 of this Agreement and Lender has
failed to consent to such transfer or acquisition within thirty (30)
days after Lender has received a written request from Safety for
such consent (together with such information with respect thereto as
Lender shall reasonably request), then Borrowers shall not be
required to pay the early termination fee provided for in Section
12.l(c) above."
(y) Exhibits to Loan Agreement. The Loan Agreement is hereby amended
by adding at the end thereof a new Exhibit D to the Loan Agreement in the form
of Exhibit B attached hereto.
- 26 -
(z) Schedules to Loan Agreement. The Loan Agreement is hereby
amended by deleting Schedules 6.6, 8.4, 8.7(b), 8.7(c), 8.8, 8.10 and 8.11 and
replacing each with the information set forth in Exhibit C attached hereto.
(aa) Information Certificates. The Information Certificates of each
Borrower and Guarantor, which are annexed to the Loan Agreement as Exhibit A,
are hereby amended as provided in Exhibit D attached hereto.
(ab) Wachovia. All references to the phrase "First Union National
Bank or one if its affiliates" or the phrase "First Union National Bank or any
of its affiliates" in the Loan Agreement shall be amended by replacing each such
reference with "Wachovia Bank, National Association or its successors or assigns
or any of their respective Affiliates".
2. Consent.
(a) Subject to the terms and conditions contained herein,
notwithstanding anything to the contrary set forth in Section 9.10 of the Loan
Agreement, Lender hereby consents to (i) the formation by UK Borrower of a
wholly owned subsidiary, Automotive Safety Components International RO S.R.L., a
company organized under the laws of Romania (the "New Romanian Subsidiary") and
(ii) the investments made by Borrowers and Guarantors in the New Romanian
Subsidiary to the extent set forth in Exhibit E attached hereto.
(b) Subject to the terms and conditions contained herein,
notwithstanding anything to the contrary sent forth in Section 9.9 of the Loan
Agreement, Lender hereby consents to the repayment by German Borrower of the
entire amount of the secured Indebtedness owing to Deutsche Bank, in the
aggregate amount not to exceed $1,800,000, which Indebtedness is secured by the
Hildesheim Property, provided, that, (i) such repayment shall have been made on
or prior to February 15, 2004, (ii) Lender shall have received all agreements,
documents and instruments related directly or indirectly to such repayment and
any other information requested by Lender, each in form and substance
satisfactory to Lender, (iii) Lender shall have received evidence, in form and
substance satisfactory to Lender, that Deutsche Bank is releasing any lien or
security interest in or upon the assets or properties of any Borrower or
Guarantor and any claims against such persons in exchange for such repayment,
(iii) on the date of any such repayment and after giving effect thereto, the
aggregate Excess Availability of Borrowers shall be not less than the US Dollar
Equivalent of US$7,000,000, (iv) on the date of the repayment and after giving
effect thereto, no Event of Default or act, condition or event shall exist or
have occurred which with notice or passage of time or both shall constitute an
Event of Default, and (v) nothing herein shall be deemed to be a consent by
Lender to any lien, security interest, encumbrances on, or any sale, assignment,
lease, transfer, abandonment or other disposition of, the Hildesheim Property
(other than the existing lien in favor of Deutsche Bank), or any new
Indebtedness of German Borrower secured by the Hildesheim Property or any
refinancing of the existing Indebtedness owed to Deutsche Bank as of the date
hereof.
3. Representations. Warranties and Covenants. Each Borrower and Guarantor,
jointly and severally, represents, warrants and covenants with and to Lender as
follows, which
- 27 -
representations, warranties and covenants are continuing and shall survive the
execution and delivery hereof, the truth 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, 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 (or similar organizational documents) of any Borrower
or Guarantor;
(b) this Amendment and each other document, agreement or instrument
executed and/or delivered by any Borrower and Guarantor in connection herewith
(collectively, together with this Amendment, the "Amendment Documents") have
been duly authorized, executed and delivered by all necessary action on the part
of each Borrower and Guarantor which is a party hereto and thereto and, if
necessary, their respective equity holders, and the agreements and obligations
of each Borrower and Guarantor contained herein and therein constitute legal,
valid and binding obligations of each Borrower and Guarantor enforceable against
such entities in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, moratorium or similar
laws limiting creditors' rights generally and by general equitable principles;
(c) no consent, approval or other action of, or filing with or
notice to any Governmental Authority is required in connection with the
execution, delivery and performance of any of the Amendment Documents by any
Borrower or Guarantor;
(d) none of the transactions contemplated by this Amendment No. 3 or
the other Amendment Documents is in contravention of any applicable law, or the
terms of any material agreement to which any Borrower or Guarantor is a party or
by which any property of any Borrower or Guarantor is bound;
(e) except as set forth in the amendments to the Information
Certificate as provided on Exhibit D hereto, all of the representations and
warranties set forth in the Loan Agreement and the other Financing Agreements,
each as amended hereby, are true and correct in all material respects on and as
of the date hereof as if made on the date hereof, except to the extent any such
representation or warranty is made as of a specified date, in which case such
representation or warranty shall have been true and correct as of such date; and
- 28 -
(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.
4. Conditions Precedent. The amendments set forth herein shall be
effective upon the satisfaction of each of the following conditions precedent in
a manner satisfactory to Lender:
(a) Lender shall have received an original of this Amendment, duly
authorized, executed and delivered by Borrowers and Guarantors;
(b) all requisite corporate action and proceedings in connection
with this Amendment and the other Amendment Documents shall be in form and
substance satisfactory 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;
(c) 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 be continuing;
(d) Lender shall have received, in form and substance satisfactory
to Lender, (i) the Restated German Borrower Term Note, duly authorized, executed
and delivered by German Borrower, (ii) the Restated SCFT Term Note, duly
authorized, executed and delivered by SCFT, (iii) the Restated UK Borrower Term
Note, duly authorized, executed and delivered by UK Borrower and (iv) the New
Term Loan B Promissory Note, duly authorized, executed and delivered by US
Borrowers;
(e) Lender shall have received an amended and restated fee letter,
in form and substance satisfactory to Lender (the "Amended Fee Letter"), duly
authorized, executed and delivered by Borrowers;
(f) Lender shall have received, in form and substance satisfactory
to Lender, from each Borrower and Guarantor that are US Entities, a Secretary's
Certificate with respect to the resolutions of the Managing Members or Board of
Directors (as applicable) evidencing the adoption and subsistence of resolutions
approving the execution, delivery and performance by such Borrower or Guarantor
of this Amendment and the other Amendment Documents;
(g) Lender shall have received a true and correct copy of any
consent, waiver or approval to or of this Amendment, which any Borrower or
Guarantor is required to obtain from any other Person, and such consent,
approval or waiver shall be in form and substance satisfactory to Lender;
(h) Lender shall have received, in form and substance satisfactory
to Lender, such opinions of counsel to Borrowers and Guarantors that are US
Entities with respect to the matters contemplated by this Amendment and the
other Amendment Documents, addressed to Lender, as Lender shall require;
- 29 -
(i) the aggregate Excess Availability of Borrowers as determined by
Lender, as of the effective date of this Amendment, shall be not less than US
Dollar Equivalent of US$10,000,000 after giving effect to the transactions
contemplated hereunder;
(j) Lender shall have received, in form and substance satisfactory
to Lender, Modification No. 1 to Open-End Mortgage and Security Agreement, duly
authorized, executed and delivered by SCFT;
(k) Lender shall have received, in form and substance satisfactory
to Lender, updated endorsements to the existing title insurance policy or new
title insurance policy issued by Chicago Title Insurance Corporation acceptable
to Lender (i) insuring the priority and amount of the Mortgage made by SCFT, as
amended, and (ii) containing any legally available endorsements, assurance or
affirmative coverage requested by Lender for protection of its interests;
(1) Lender shall have received a termination agreement, in form and
substance satisfactory to Lender, duly authorized, executed and delivered by
Existing Agent, Existing Lenders and the other parties to the Existing Credit
Agreement;
(m) Lender shall have received the fees due and payable on the
effective date of this Amendment as provided in the Amended Fee Letter;
(n) Lender shall have received a Swap Acknowledgment Agreement, in
form and substance satisfactory to Lender, duly authorized, executed and
delivered by Borrowers, Guarantors and Wachovia Bank, National Association;
(o) Lender shall have received the Amendment No. 1 to Security
Agreement, in form and substance satisfactory to Lender, duly authorized,
executed and delivered by Safety and KeyCorp Leasing, a Division of Key
Corporate Capital Inc.;
(p) Lender shall have received, in form and substance satisfactory
to Lender, a director's certificate executed by a director of UK Borrower (i)
certifying that all corporate action has been taken to enable the UK Borrower to
enter into, execute and perform its obligations under this Amendment and the
other Amendment Documents to which it is a party and to authorize the
transactions contemplated herein and therein, (ii) setting out the specimen
signatures of those persons authorized to execute this Amendment and the other
Amendment Documents on behalf of UK Borrower, and (iii) certifying that the
performance by UK Borrower of its rights and obligations under the Loan
Agreement (as amended by this Amendment) would not cause any borrowing limit
binding on it to be exceeded;
(q) Lender shall have received, in form and substance satisfactory
to Lender, (i) certified copies of the Articles of Association of each of German
Borrower and the general partner of German Borrower, (ii) certified excerpts
from the Commercial Register of each of German Borrower and the general partner
of German Borrower, (iii) a power of attorney executed by a person who is
registered as an authorized representative of German Borrower in the Commercial
Register of German Borrower, (iv) an amendment and restatement to the Pledge
- 30 -
of Bank Account, dated October 11, 2000, between German Borrower and Lender and
(v) a confirmation letter with respect to the Payment Guaranty, dated October
11, 2000, by German Borrower in favor of Lender; and
(r) Lender shall have received a letter agreement instructing Lender
to make certain payments directly to Existing Agent, in form and substance
satisfactory to Lender, duly authorized, executed and delivered by Borrowers.
5. Acknowledgment.
(a) Each of the US Entities hereby acknowledges, confirms and agrees
that each of the US Entities is jointly and severally indebted to Lender, as of
the opening of business on October 2, 2003, for Loans to Borrowers under the
Loan Agreement in the aggregate principal amount of the US Dollar Equivalent of
US$10,635,002.74, together with all interest accrued and accruing thereon, and
for Letter of Credit Accommodations under the Loan Agreement in the aggregate
amount of the US Dollar Equivalent of US$496,552.00, and all costs, expenses and
other charges now or hereafter owed by Borrowers to Lender in accordance with
the Loan Agreement, in each case without offset, defense or counterclaim of any
kind, nature or description whatsoever and all of which are, subject to the
terms of the Loan Agreement and the other Financing Agreements, unconditionally
owing by the US Entities to Lender.
(b) Each of the Foreign Entities hereby acknowledges, confirms and
agrees that each of the Foreign Entities is severally (and not jointly) indebted
to Lender, as of the opening of business on October 2, 2003, for Loans to UK
Borrower and German Borrower under the Loan Agreement in the aggregate principal
amount of the US Dollar Equivalent of US$3,099,995.93, together with all
interest accrued and accruing thereon, and for Letter of Credit Accommodations
under the Loan Agreement in the aggregate amount of the US Dollar equivalent of
US$496,552.00, and all costs, expenses and other charges now or hereafter owed
by UK Borrower and German Borrower to Lender in accordance with the Loan
Agreement, in each case without offset, defense or counterclaim of any kind,
nature or description whatsoever and all of which are, subject to the terms of
the Loan Agreement and the other Financing Agreements, unconditionally owing by
the Foreign Entities to Lender.
(c) To the extent set forth in Sections 5(a) and (b) hereof, each
Borrower and Guarantor hereby acknowledges, confirms and agrees that its
liability for the Obligations of the Borrowers and Guarantors to Lender as set
forth in the Loan Agreement and the other Financing Agreements is in full force
and effect as of the date hereof, and its respective obligations thereunder are,
subject to the terms of this Amendment, the Loan Agreement and the Financing
Agreements, unconditionally owing to Lender, without offset, defense or
counterclaim of any kind, nature or description whatsoever.
(d) Each Borrower and Guarantor hereby acknowledges, confirms and
agrees that:
(i) on the date hereof and after the consummation of the
transactions contemplated by this Amendment, the liability of Borrowers and
Guarantors to Lender to the
- 31 -
extent set forth in Sections 5(a) and (b) hereof shall continue to be and shall
be in full force and effect;
(ii) on the date hereof and after the consummation of the
transactions contemplated by this Amendment, the security interests in and liens
upon the assets and properties of each Borrower and Guarantor in favor of Lender
shall continue to be valid and perfected first priority liens and security
interests except as permitted in the Loan Agreement; and
(iii) without limiting the generality of the foregoing, the
transactions contemplated by this Amendment shall in no way limit, impair or
adversely affect the Obligations howsoever arising, or any security interest or
liens securing the same.
6. Additional Items To Be Delivered. Each Borrower and Guarantor hereby
agrees that, in addition to all other terms, conditions and provisions set forth
in the other Financing Agreements, Borrowers and Guarantors shall deliver or
cause to be delivered to Lender, the following, each in form and substance
satisfactory to Lender, as soon as possible, but in any event, by no later than
the dates listed below:
(a) by October 15, 2003, copies of all of the Material Contracts
listed on Exhibit F hereto; provided, that, it is understood and agreed that in
addition to, and not in limitation of any other rights and remedies Lender has
under the Financing Agreements, Lender may, at its option, establish such
additional criteria for eligibility, advance rates and other terms and
conditions in the Financing Agreement as may be appropriate in the good faith
determination of Lender upon its review of such Material Contracts;
(b) by October 31, 2003, an amendment to the Patent Collateral
Assignment and Security Agreement, dated October 11, 2000, by and between SCFT
and Lender, in form and substance satisfactory to Lender, and an amendment to
the Trademark Patent Collateral Assignment and Security Agreement, dated October
11, 2000, by and between SCFT and Lender, each as duly authorized, executed and
delivered by SCFT, with respect to patents and trademarks issued or created
after October 11, 2000 and to be identified in an amendment to the Information
Certificate for SCFT delivered herewith, which amendment shall be delivered to
Lender by no later than October 17, 2003;
(c) by November 30, 2003, evidence that the judgment entered on
October 19, 2000 in favor of J&R Coating Specialists, Inc. in the United States
District Court for the Western District of Texas in connection with Civil Acton
No. W-99-CV-078 in the amount of $233,288.34 has been paid and satisfied in full
or otherwise discharged and such plaintiff has released Safety and its
Subsidiaries, provided, that if Borrowers and Guarantors fail to deliver such
evidence to Lender by such date, such failure shall not constitute an Event of
Default, provided, however, Lender may, at its option, establish a Reserve in
the amount equal to $233,289 in respect of such failure which Reserve shall be
released upon delivery of such evidence to Lender;
(d) by December 31, 2003, evidence that the attachment registered
by the Low Cost Housing Fund (Instituto del Fondo Nacional de la Vivienda Para
Los Trabajadores -
- 32 -
INFONAVIT) in the Public Registry of Property and Commerce of Ensenada, Baja
California, Mexico against Automotive Safety Mexico has been released or
otherwise discharged or is no longer effective as to any assets of Safety or any
of its Subsidiaries; and
(e) by November 30, 2003, evidence that the pledge by Valentec of
certain assets in favor of General Electric Capital Corporation registered in
the Public Registry of Property and Commerce of Ensenada, Baja California,
Mexico has been released or otherwise discharged or is no longer effective as to
any assets of Safety or any of its Subsidiaries; provided, that, if Borrowers
and Guarantors fail to deliver such evidence to Lender by such date, such
failure shall not constitute an Event of Default, provided, however, Lender may,
at its option, establish a Reserve in the amount equal to $100,000 in respect of
such failure which Reserve shall be released upon delivery of such evidence to
Lender.
7. 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. Except as expressly provided for
in Section 6(c) and Section 6(e) hereof, the parties hereto acknowledge, confirm
and agree that the failure of Borrowers or Guarantors to comply with the
covenants, conditions and agreements contained herein shall constitute an Event
of Default under the Financing Agreements subject to the cure period set forth
in Section l0.1(a)(ii) of the Loan Agreement.
(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.
(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.
- 33 -
(f) 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 34 -
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed and delivered by their respective duly authorized officers as of
the date first written above.
SAFETY COMPONENTS FABRIC
TECHNOLOGIES, INC.
By: /s/ R. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: Treasurer
-------------------------------------
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL, INC.
By: /s/ R. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: Treasurer
-------------------------------------
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL GmbH & CO. KG
By: /s/ R. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: Authorized Person
-------------------------------------
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL LIMITED
By: /s/ R. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: Authorized Person
-------------------------------------
VALENTEC ▇▇▇▇▇, LLC (formerly known
as ▇▇▇▇▇▇▇▇ International Corporation, LLC)
By: /s/ R. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: Treasurer
-------------------------------------
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
SAFETY COMPONENTS INTERNATIONAL, INC.
By: /s/ R. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: Treasurer
-------------------------------------
ASCI HOLDINGS GERMANY (DE), INC.
By: /s/ R. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: Treasurer
-------------------------------------
ASCI HOLDINGS U.K. (DE), INC.
By: /s/ R. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: Treasurer
-------------------------------------
ASCI HOLDINGS MEXICO (DE), INC.
By: /s/ R. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: Treasurer
-------------------------------------
ASCI HOLDINGS CZECH (DE), INC.
By: /s/ R. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: Treasurer
-------------------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL, S.A. de C.V.
By: /s/ R. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: Treasurer
AUTOMOTIVE SAFETY COMPONENTS
INTERNATIONAL S.R.O.
By: /s/ R. ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
Title: Authorized Person
[SIGNATURES CONTINUED ON NEXT PAGE]
[SIGNATURES CONTINUED FROM PREVIOUS PAGE]
AGREED:
CONGRESS FINANCIAL CORPORATION
(SOUTHERN)
By: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Title: First Vice President
----------------------------