SAFETY COMPONENTS INTERNATIONAL INC
AMEND.2 TO LOANS AND SECURITY AGRMT
<DOCUMENT>
<TYPE>EX-10.27
<SEQUENCE>4
<FILENAME>d52461_ex10-27.txt
<DESCRIPTION>AMEND.2 TO LOANS AND SECURITY AGRMT
<TEXT>
                                                                       EXECUTION

                               AMENDMENT NO. 2 TO
                          LOAN AND SECURITY AGREEMENT

                                                 October 11, 2002

Congress Financial Corporation (Southern)
200 Galleria Parkway, Suite 1500
Atlanta, Georgia 30339

             Re: Loan and Security Agreement, dated October 11, 2000

Ladies and Gentlemen:

      Congress Financial Corporation (Southern) ("Lender") and Galion, Inc.
("Galion"), Valentec Wells, LLC, formerly known as Valentec International
Corporation, LLC ("Valentec"), Safety Components Fabric Technologies, Inc.
("SCFT"), Automotive Safety Components International, Inc. ("Automotive
International"), Automotive Safety Components International GmbH & Co. KG
("German Borrower"), Automotive Safety Components International Limited ("UK
Borrower" and together with Galion, Valentec, SCFT, Automotive International and
German Borrower, individually each a "Borrower" and collectively, "Borrowers"),
Safety Components International, Inc. ("Safety"), ASCI Holdings Germany (DE),
Inc. ("ASCI Germany"), ASCI Holdings U.K. (DE), Inc. ("ASCI UK"), ASCI Holdings
Mexico (DE), Inc. ("ASCI Mexico"), ASCI Holdings Czech (DE), Inc. ("ASCI
Czech"), Automotive Safety Components International, S.A. de C.V. ("Automotive
Safety Mexico") and Automotive Safety Components International s.r.o.
("Automotive Safety Czech" and together with Safety, ASCI Germany, ASCI UK, ASCI
Mexico, ASCI Czech and Automotive Safety Mexico, each individually a "Guarantor"
and collectively, "Guarantors") have entered into financing arrangements
pursuant to which Lender has made and may make loans and advances to Borrowers
as set forth in the Loan and Security Agreement, dated October 11, 2000, by and
among Lender, Borrowers and Guarantors, as amended by Amendment No. 1 and
Consent to Loan and Security Agreement, dated as of November 2, 2001, by and
among Borrowers, Guarantors and Lender (as the same now exists or may hereafter
be amended, modified, supplemented, extended, renewed, restated or replaced, the
"Loan Agreement") and other agreements, documents and instruments referred to
therein or at any time executed and/or delivered in connection therewith or
related thereto, together with this Amendment (all of the foregoing, including
the Loan Agreement, as the same now exist or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, being collectively
referred to herein as the "Financing Agreements"). All capitalized terms used
herein shall have the meaning assigned thereto in the Loan Agreement, unless
otherwise defined herein.


<PAGE>

      Borrowers have informed Lender that they intend to amend the Existing Loan
Agreements as more fully described in the Existing Notes Amendment Documents (as
hereinafter defined): (i) to extend the maturity date of the Indebtedness
arising under the Existing Loan Agreements, (ii) to provide for a prepayment of
the principal amount of such Indebtedness in the amount of $5,000,000, (iii) to
provide for certain quarterly principal prepayments in respect of such
Indebtedness, and (iv) to pay Existing Agent, for the benefit of Existing
Lenders, an extension fee in the amount of $270,000.

      Borrowers and Guarantors have requested that Lender agree to amend the
Loan Agreement as set forth below, and Lender is willing to agree to such
requests subject to the terms and conditions contained herein.

      In consideration of the forgoing and the agreements and covenants
contained herein, and for other good and valuable consideration, the adequacy
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

      1. Amendments

            (a) Definitions.

                  (i) Additional Definitions. Section 1 of the Loan Agreement is
hereby amended by adding the following definitions in their proper alphabetical
order:

            "Amendment No. 2" shall mean Amendment No. 2 to Loan and Security
Agreement, dated October 11, 2002, by and among Lender, Borrowers and
Guarantors.

            "Existing Notes Amendment Documents" shall mean, collectively, the
following (as each now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced): (a) Amendment No. 1 to
Subordinated Secured Credit Agreement, dated of even date with Amendment No. 2,
by and among Safety, UK Borrower and German Borrower, as borrowers, certain of
their affiliates, as guarantors, Existing Lenders and Existing Agent, and (b)
all agreements, documents and instruments executed and /or delivered in
connection therewith.

                  (ii) Amendment to Definitions.

                        (A) The definition of "Excess Availability" in Section
1.44 of the Loan Agreement and the other Financing Agreements is hereby amended
by deleting the parenthetical phrase "(which shall be deemed to be $35,000,000
solely for purposes of computing the Applicable Margin pursuant to Section 1.7
and the amount of Excess Availability pursuant to Sections 4.1(l) and
6.3(b)(iv))" and replacing it with the following: "(which shall be deemed to be
$35,000,000 solely for purposes of computing the Applicable Margin pursuant to
Section 1.7 and the amount of Excess Availability pursuant to Sections 4.1(l),
6.3(b)(iv) and 9.9(g)(ii) hereof)".


                                      -2-
<PAGE>

                        (B) All references to "Existing Loan Agreements" in the
Loan Agreement and the other Financing Agreements shall be deemed and each such
reference is hereby amended to include, in addition and not in limitation, the
Existing Loan Agreements as amended by the Existing Notes Amendment Documents.

                        (C) All references to "Financing Agreements" in the Loan
Agreement and the other Financing Agreements shall be deemed and each such
reference is hereby amended to include, in addition and not in limitation,
Amendment No. 2.

                        (D) All references to "Intercreditor Agreement" in the
Loan Agreement and the other Financing Agreements shall be deemed and each such
reference is hereby amended to include, in addition and not in limitation, the
Intercreditor Agreement as amended by Amendment No. 1 to Intercreditor and
Subordination Agreement, dated of even date herewith, by and among Lender,
Existing Agent and Existing Lenders.

            (b) Indebtedness. Section 9.9 of the Loan Agreement is hereby
amended to delete clause (g) thereof and replace it with the following:

                  "(g) Indebtedness of Borrowers to the Existing Lenders
            evidenced by or arising under the Existing Notes (as in effect on
            the effective date of Amendment No. 2); provided, that:

                        (i) the principal amount of such Indebtedness shall not
                  exceed US$15,861,000, less the aggregate amount of all
                  repayments, repurchases or redemptions thereof, whether
                  optional or mandatory, and interest thereon shall not exceed
                  the rate provided for in the Existing Notes (including the
                  default rate referred to therein) as in effect on the
                  effective date of Amendment No. 2,

                        (ii) Borrowers and Guarantors shall not, directly or
                  indirectly, make any payments in respect of such Indebtedness,
                  except that Borrowers may make the following payments subject
                  to the terms of the Intercreditor Agreement: (A) regularly
                  scheduled payments of interest on such Indebtedness, (B) the
                  payment in full of the principal in respect of such
                  Indebtedness on or after October 10, 2003, (C) mandatory
                  prepayments of principal in respect of such Indebtedness in
                  accordance with the terms of Section 3.1 and clause (i) of
                  Section 3.2 of the Existing Credit Agreement (as in effect on
                  the effective date of Amendment No. 2 and after giving effect
                  to the Existing Notes Amendment Documents), (D) mandatory
                  prepayments of principal in respect of such Indebtedness in
                  accordance with the terms of clause (ii) of Section 3.2 of the
                  Existing Credit Agreement (as in effect on the effective date
                  of Amendment No. 2 and after giving effect to the Existing
                  Notes Amendment Documents), (E) the payment of


                                      -3-
<PAGE>

                  an extension fee in the amount of $270,000 on or prior to the
                  effective date of Amendment No. 2, and (F) a principal
                  prepayment in respect of such Indebtedness in the amount of
                  $5,000,000 on the effective date of Amendment No. 2; provided,
                  that, (1) in each case, (aa) such payments and prepayments
                  shall be made in accordance with the terms of the Existing
                  Loan Agreements as in effect on the effective date of
                  Amendment No. 2 and after giving effect to the Existing Notes
                  Amendment Documents and (bb) no payments or prepayments may be
                  made during a Blockage Period (as defined in the Intercreditor
                  Agreement), and (2) in the case of any prepayment described in
                  clause (D) above, (aa) for each of the thirty (30) consecutive
                  days immediately prior to the date of any such prepayment, the
                  aggregate Excess Availability of Borrowers shall have been not
                  less than $5,000,000, (bb) as of the date of any such
                  prepayment and after giving effect thereto, the aggregate
                  Excess Availability of Borrowers shall be not less than
                  $5,000,000, and (cc) as of the date of any such prepayment and
                  after giving effect thereto, no Event of Default or act,
                  condition or event which with notice or passage of time or
                  both would constitute an Event of Default shall exist or have
                  occurred and is continuing; provided, that, in the case of any
                  prepayment described in clause (D) above which would have been
                  made in respect of any fiscal quarter under clause (ii) of
                  Section 3.2 of the Existing Credit Agreement (as in effect on
                  the effective date of Amendment No. 2 and after giving effect
                  to the Existing Notes Amendment Documents) but for the failure
                  to satisfy the conditions set forth in clauses (aa) and (bb)
                  above, a subsequent prepayment may thereafter be made with
                  respect to such fiscal quarter (or an initial prepayment may
                  thereafter be made with respect to such fiscal quarter in the
                  event that no prepayment has been made with respect thereto
                  because Consolidated EBITDA (as defined in the Existing Credit
                  Agreement) was less than $3,750,000 for such fiscal quarter)
                  in an amount equal to $1,000,000 less the amount previously
                  prepaid in respect of such fiscal quarter (a "Subsequent
                  Prepayment") so long as the aggregate Excess Availability of
                  Borrowers shall have been not less than $5,000,000 for each of
                  the thirty (30) consecutive days immediately prior to the date
                  of any Subsequent Prepayment and as of the date of any such
                  Subsequent Prepayment and after giving effect thereto, the
                  aggregate Excess Availability of Borrowers shall be not less
                  than $5,000,000,

                        (iii) such Indebtedness shall be subject to the
                  Intercreditor Agreement,

                        (iv) Lender shall have received true, correct and
                  complete copies of the Existing Loan Agreements (including the
                  Existing Notes Amendment Documents), as duly executed and
                  delivered by the parties thereto,


                                      -4-
<PAGE>

                        (v) Borrowers and Guarantors shall not, directly or
                  indirectly, (A) amend, modify, alter or change any of the
                  terms of such Indebtedness or any of the Existing Notes or the
                  other Existing Loan Agreements, as in effect on the effective
                  date of Amendment No. 2, except that, Borrowers may, after
                  prior written notice to Lender, amend, modify, alter or change
                  the terms thereof so as to extend the maturity thereof or
                  defer the timing of any payments in respect thereof, or to
                  forgive or cancel any portion of such Indebtedness other than
                  pursuant to payments thereof, or to reduce the interest rate
                  or any fees in connection therewith, or (B) redeem, retire,
                  defease, purchase or otherwise acquire such Indebtedness, or
                  set aside or otherwise deposit or invest any sums for such
                  purpose, except for payments and prepayments expressly
                  permitted by Section 9.9(g)(ii) above,

                        (vi) Borrowers and Guarantors shall furnish to Lender
                  all notices or demands in connection with such Indebtedness
                  either received by a Borrower or Guarantor or on its behalf
                  promptly after the receipt thereof, or sent by a Borrower or
                  Guarantor or on its behalf concurrently with the sending
                  thereof, as the case may be, and

                        (vii) following the making of any prepayment of such
                  Indebtedness pursuant to Section 3.2 of the Existing Credit
                  Agreement, Borrowers and Guarantors shall furnish to Lender
                  written notice of any such prepayment and the amount thereof
                  together with such other information with respect thereto as
                  Lender may request."

            (c) Term.

                  (i) Section 12.1(a) of the Loan Agreement is hereby amended to
delete the reference to the phrase "the date three (3) years from the date of
the initial Loan hereunder" in the first sentence of such Section and to replace
it with "October 9, 2003".

                  (ii) Section 12.1(c)(iii) of the Loan Agreement is hereby
amended to delete the reference to the phrase "the third anniversary thereof" in
such Section and to replace it with "October 9, 2003"

            (d) Schedule 1.49. The reference to "Fleet Bank" on Schedule 1.49 to
the Loan Agreement is hereby deleted and replaced with "Fleet National Bank
(successor by merger to Fleet Bank)".

      2. Representations, Warranties and Covenants. Each Borrower and Guarantor,
jointly and severally, represents, warrants and covenants with and to Lender as
follows, which representations, warranties and covenants are continuing and
shall survive the execution and delivery hereof, the truth


                                      -5-
<PAGE>

and accuracy of, or compliance with each, together with the representations,
warranties and covenants in the other Financing Agreements, being a continuing
condition of the making or providing of any Loans or Letter of Credit
Accommodations by Lender to Borrowers:

            (a) neither the execution and delivery of this Amendment, the
Existing Notes Amendment Documents or the documents, agreements or instruments
executed or delivered in connection therewith or related thereto, nor the
consummation of the transactions herein or therein contemplated, nor compliance
with the provisions hereof or thereof are in contravention of any law or
regulation or any order or decree of any court or Governmental Authority
applicable to Borrowers or Guarantors or any of their respective Subsidiaries in
any respect, or conflict with or result in the breach of, or constitutes a
default in any respect under any mortgage, deed of trust, security agreement,
agreement or instrument to which any Borrower or Guarantor is a party or may be
bound, or violates any provision of the Certificate of Incorporation or By-Laws
of any Borrower or Guarantor;

            (b) the Existing Notes Amendment Documents and the transactions
contemplated under each have been duly, executed, delivered and performed in
accordance with their terms by the respective parties thereto in all respects,
including the satisfaction (not merely the waiver, except as have been disclosed
to Lender and consented in writing by Lender ) of all conditions precedent set
forth therein;

            (c) this Amendment has been duly executed and delivered by Borrowers
and Guarantor and is in full force and effect as of the date of Amendment No. 2
and the agreements and obligations of Borrowers and Guarantor contained herein
constitute legal, valid and binding obligations of Borrowers and Guarantor
enforceable against Borrowers and Guarantor in accordance with their respective
terms;

            (d) Lender shall have received true, correct and complete copies of
each of the Existing Notes Amendment Documents, duly authorized, executed and
delivered by the parties thereto;

            (e) Borrowers and Guarantors have received all necessary consents
and approvals of third parties to the transactions contemplated by Amendment No.
2 and the Existing Notes Amendment Documents; and

            (f) no Event of Default or act, condition or event which with notice
or passage or time or both would constitute an Event of Default, exists or has
occurred and is continuing.

      3. Conditions Precedent. The amendments and consent set forth herein shall
be effective upon the satisfaction of each of the following conditions precedent
in a manner satisfactory to Lender:

            (a) the receipt by Lender of an original of this Amendment, duly
authorized, executed and delivered by Borrowers and Guarantors;


                                      -6-
<PAGE>

            (b) the receipt by Lender of an original letter, dated of even date
herewith, duly authorized, executed and delivered by Borrowers and Guarantors
authorizing Lender to make certain payments to third parties with the proceeds
of the Loans on the date hereof;

            (c) the receipt by Lender of an original of Amendment No. 1 to
Intercreditor and Subordination Agreement, duly authorized, executed and
delivered by Existing Agent and Existing Lenders;

            (d) the receipt by Lender of true, correct and complete copies of
the Existing Notes Amendment Documents, duly authorized, executed and delivered
by the parties thereto, which shall be in form and substance satisfactory to
Lender;

            (e) the receipt by Lender of an original letter, dated of even date
herewith, duly authorized, executed and delivered by Existing Agent, certifying
that all the conditions precedent set forth in the Existing Notes Amendment
Documents have been satisfied or waived, the Existing Notes Amendment Documents
are effective and such other further matters as Lender may request;

            (f) all requisite corporate action and proceedings in connection
with this Amendment shall be satisfactory in form and substance to Lender, and
Lender shall have received all information and copies of all documents,
including records of requisite corporate action and proceedings which Lender may
have requested in connection therewith, such documents where requested by Lender
or its counsel to be certified by appropriate corporate officers or governmental
authorities; and

            (g) no Event of Default or act, condition or event which with notice
or passage of time or both would constitute an Event of Default shall exist or
have occurred and is continuing

      4. General.

            (a) Effect of this Amendment. Except as expressly provided herein,
no other changes or modifications to the Financing Agreements are intended or
implied, and in all other respects the Financing Agreements are hereby
specifically ratified, restated and confirmed by all parties hereto as of the
date hereof. To the extent any conflict exists between the terms of this
Amendment and the Financing Agreements, the terms of this Amendment shall
control.

            (b) Additional Events of Default. The parties hereto acknowledge,
confirm and agree that the failure of any Borrower or Guarantor to comply with
the covenants, conditions and agreements contained herein shall constitute an
Event of Default under the Financing Agreements.

            (c) Further Assurances. The parties hereto shall execute and deliver
such additional documents and take such additional actions as may be necessary
to effectuate the provisions and purposes of this Amendment.


                                      -7-
<PAGE>

            (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.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]


                                      -8-
<PAGE>

            (d) Counterparts, etc. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original
but all of which when taken together shall constitute one and the same
instrument. In making proof of this Amendment, it shall not be necessary to
produce or account for more than one counterpart hereof signed by each of the
parties hereto. This Amendment may be executed and delivered by telecopier with
the same force and effect as if it were a manually executed and delivered
counterpart.

                                   GALION, INC.

                                   By:________________________________________

                                   Title:_____________________________________


                                   SAFETY COMPONENTS FABRIC
                                   TECHNOLOGIES, INC.

                                   By:________________________________________

                                   Title:_____________________________________


                                   AUTOMOTIVE SAFETY COMPONENTS
                                   INTERNATIONAL, INC.

                                   By:________________________________________

                                   Title:_____________________________________


                                   AUTOMOTIVE SAFETY COMPONENTS
                                   INTERNATIONAL GmbH & Co. KG

                                   By:________________________________________

                                   Title:_____________________________________


                                   AUTOMOTIVE SAFETY COMPONENTS
                                   INTERNATIONAL LIMITED

                                   By:________________________________________

                                   Title:_____________________________________

                       [SIGNATURES CONTINUE ON NEXT PAGE]


                                      -9-
<PAGE>

                     [SIGNATURES CONTINUED FROM PRIOR PAGE]

                                   VALENTEC WELLS, LLC (formerly known
                                   as Valentec International Corporation, LLC)

                                   By:________________________________________

                                   Title:_____________________________________


                                   SAFETY COMPONENTS
                                   INTERNATIONAL, INC.

                                   By:________________________________________

                                   Title:_____________________________________


                                   ASCI HOLDINGS GERMANY (DE), INC.

                                   By:________________________________________

                                   Title:_____________________________________


                                   ASCI HOLDINGS U.K. (DE), INC.

                                   By:________________________________________

                                   Title:_____________________________________


                                   ASCI HOLDINGS MEXICO (DE), INC.

                                   By:________________________________________

                                   Title:_____________________________________


                                   ASCI HOLDINGS CZECH (DE), INC.

                                   By:________________________________________

                                   Title:_____________________________________

                       [SIGNATURES CONTINUE ON NEXT PAGE]


                                      -10-
<PAGE>

                     [SIGNATURES CONTINUED FROM PRIOR PAGE]

                                   AUTOMOTIVE SAFETY COMPONENTS
                                   INTERNATIONAL, S.A. de C.V.

                                   By:________________________________________

                                   Title:_____________________________________


                                   AUTOMOTIVE SAFETY COMPONENTS
                                   INTERNATIONAL S.R.O.

                                   By:________________________________________

                                   Title:_____________________________________


AGREED:

CONGRESS FINANCIAL CORPORATION
(SOUTHERN)

By:___________________________

Title:________________________


                                      -11-

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