1
Exhibit 10.27
EXECUTION COPY
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$372,000,000
CREDIT AGREEMENT
among
Aircraft Braking Systems Corporation
and
Engineered Fabrics Corporation,
as Borrowers,
The Several Lenders
from Time to Time Parties Hereto,
▇▇▇▇▇▇ BROTHERS INC.,
as Arranger,
▇▇▇▇▇▇ COMMERCIAL PAPER INC.,
as Syndication Agent
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent
Dated as of October 15, 1997
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS..................................................... 1
1.1 Defined Terms................................................... 1
1.2 Other Definitional Provisions................................... 23
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS................................. 24
2.1 Term Loan Commitments........................................... 24
2.2 Procedure for Term Loan Borrowing............................... 24
2.3 Repayment of Term Loans......................................... 24
2.4 Revolving Credit Commitments.................................... 26
2.5 Procedure for Revolving Credit Borrowing........................ 26
2.6 Repayment of Loans; Evidence of Debt............................ 27
2.7 Commitment Fees, etc. .......................................... 28
2.8 Termination or Reduction of Revolving Credit Commitments........ 28
2.9 Optional Prepayments............................................ 28
2.10 Mandatory Prepayments and Commitment Reductions................. 29
2.11 Conversion and Continuation Options............................. 30
2.12 Minimum Amounts and Maximum Number of Eurodollar Tranches....... 31
2.13 Interest Rates and Payment Dates................................ 31
2.14 Computation of Interest and Fees................................ 31
2.15 Inability to Determine Interest Rate............................ 32
2.16 Pro Rata Treatment and Payments................................. 32
2.17 Requirements of Law............................................. 34
2.18 Taxes........................................................... 35
2.19 Indemnity....................................................... 36
2.20 Change of Lending Office........................................ 37
2.21 Maximum Liability............................................... 37
2.22 Illegality...................................................... 37
SECTION 3. LETTERS OF CREDIT............................................... 38
3.1 L/C Commitment.................................................. 38
3.2 Procedure for Issuance of Letter of Credit...................... 38
3.3 Commissions, Fees and Other Charges............................. 39
3.4 L/C Participations.............................................. 39
3.5 Reimbursement Obligation of the Borrowers....................... 40
3.6 Obligations Absolute............................................ 40
3.7 Letter of Credit Payments....................................... 41
3.8 Applications.................................................... 41
SECTION 4. REPRESENTATIONS AND WARRANTIES.................................. 41
4.1 Financial Condition............................................. 41
4.2 No Change....................................................... 42
4.3 Corporate Existence; Compliance with Law........................ 42
4.4 Corporate Power; Authorization; Enforceable Obligations......... 43
4.5 No Legal Bar.................................................... 43
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4.6 No Material Litigation.......................................... 43
4.7 No Default...................................................... 43
4.8 Ownership of Property; Liens.................................... 43
4.9 Intellectual Property........................................... 44
4.10 No Burdensome Restrictions...................................... 44
4.11 Taxes........................................................... 44
4.12 Federal Regulations............................................. 44
4.13 Labor Matters................................................... 44
4.14 ERISA........................................................... 45
4.15 Investment Company Act; Other Regulations....................... 45
4.16 Subsidiaries.................................................... 45
4.17 Use of Proceeds................................................. 45
4.18 Environmental Matters........................................... 46
4.19 Accuracy of Information, etc.................................... 46
4.20 Security Documents.............................................. 47
4.21 Solvency........................................................ 47
4.22 Senior Indebtedness............................................. 48
4.23 Regulation H.................................................... 48
SECTION 5. CONDITIONS PRECEDENT............................................ 48
5.1 Conditions to Initial Extension of Credit....................... 48
5.2 Conditions to Each Extension of Credit.......................... 52
SECTION 6. AFFIRMATIVE COVENANTS........................................... 53
6.1 Financial Statements............................................ 53
6.2 Certificates; Other Information................................. 54
6.3 Payment of Obligations.......................................... 55
6.4 Conduct of Business and Maintenance of Existence, etc. ......... 56
6.5 Maintenance of Property; Insurance.............................. 56
6.6 Inspection of Property; Books and Records; Discussions.......... 56
6.7 Notices......................................................... 56
6.8 Environmental Laws.............................................. 57
6.9 Interest Rate Protection........................................ 57
6.10 Additional Collateral, etc...................................... 57
6.11 Environmental Audit............................................. 59
6.12 Corporate Separateness.......................................... 59
6.13 Government Contracts............................................ 59
SECTION 7. NEGATIVE COVENANTS.............................................. 59
7.1 Financial Condition Covenants................................... 60
7.2 Limitation on Indebtedness...................................... 62
7.3 Limitation on Liens............................................. 63
7.4 Limitation on Fundamental Changes............................... 64
7.5 Limitation on Sale of Assets.................................... 64
7.6 Limitation on Dividends......................................... 65
7.7 Limitation on Capital Expenditures.............................. 66
7.8 Limitation on Investments, Loans and Advances................... 66
7.9 Limitation on Optional Payments and Modifications
of Debt Instruments, etc...................................... 67
7.10 Limitation on Transactions with Affiliates...................... 67
7.11 Limitation on Sales and Leasebacks.............................. 67
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7.12 Limitation on Negative Pledge Clauses........................... 68
7.13 Limitation on Restrictions on Subsidiary Distributions.......... 68
7.14 Limitation on Lines of Business................................. 68
7.15 Limitation on Changes in Fiscal Year............................ 68
7.16 Subsidiaries.................................................... 68
SECTION 8. EVENTS OF DEFAULT............................................... 68
SECTION 9. THE AGENTS...................................................... 72
9.1 Appointment..................................................... 72
9.2 Delegation of Duties............................................ 72
9.3 Exculpatory Provisions.......................................... 72
9.4 Reliance by Administrative Agent................................ 73
9.5 Notice of Default............................................... 73
9.6 Non Reliance on Agents and Other Lenders........................ 73
9.7 Indemnification................................................. 74
9.8 Agent in Its Individual Capacity................................ 74
9.9 Successor Agents................................................ 74
9.10 Authorization to Release Liens.................................. 75
9.11 Arranger........................................................ 75
SECTION 10. MISCELLANEOUS................................................... 76
10.1 Amendments and Waivers.......................................... 76
10.2 Notices......................................................... 76
10.3 No Waiver; Cumulative Remedies.................................. 77
10.4 Survival of Representations and Warranties...................... 78
10.5 Payment of Expenses............................................. 78
10.6 Successors and Assigns; Participations and Assignments.......... 79
10.7 Adjustments; Set off............................................ 81
10.8 Counterparts.................................................... 82
10.9 Severability.................................................... 82
10.10 Integration..................................................... 82
10.11 GOVERNING LAW................................................... 82
10.12 Submission To Jurisdiction; Waivers............................. 82
10.13 Acknowledgements................................................ 83
10.14 WAIVERS OF JURY TRIAL........................................... 83
10.15 Confidentiality................................................. 83
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ANNEXES:
A Pricing Grid
B Sources and Uses
SCHEDULES:
1.1A Commitments
1.1B Mortgaged Property
4.4 Consents, Authorizations, Filings and Notices
4.6 Litigation
4.16 Subsidiaries
4.20(a) UCC Filing Jurisdictions
4.20(b) Mortgage Filing Jurisdictions
7.2(d) Existing Indebtedness
7.2(f) Guarantee Obligations
7.3(f) Existing Liens
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Mortgage
E Form of Assignment and Acceptance
F-1 Form of Legal Opinion of ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
F-2 Form of Legal Opinion of General Counsel
G-1 Form of Term Note
G-2 Form of Revolving Credit Note
H-1 Form of ABS Subordination Agreement
H-2 Form of EF Subordination Agreement
I Form of Exemption Certificate
J Form of Intercreditor Agreement
K Form of Settlement Agreement
L Form of K&F Agreement
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CREDIT AGREEMENT, dated as of October 15, 1997, among AIRCRAFT
BRAKING SYSTEMS CORPORATION ("ABS") and ENGINEERED FABRICS CORPORATION ("EF"),
each a Delaware corporation (ABS and EF collectively, the "Borrowers";
individually, a "Borrower"), the several banks and other financial institutions
or entities from time to time parties to this Agreement (the "Lenders"), ▇▇▇▇▇▇
BROTHERS INC., as arranger (in such capacity, the "Arranger"), ▇▇▇▇▇▇ COMMERCIAL
PAPER INC., as syndication agent (in such capacity, the "Syndication Agent"),
and THE FIRST NATIONAL BANK OF CHICAGO, as administrative agent (in such
capacity, the "Administrative Agent").
W I T N E S S E T H:
WHEREAS, the Borrowers' parent, K&F Industries, Inc., a Delaware
corporation ("K&F") intends (i) to enter into a recapitalization transaction
(the "Recapitalization") on terms and conditions satisfactory to the Arranger
and the Syndication Agent, (ii) to issue senior subordinated notes (as further
defined herein, the "Senior Subordinated Notes") in an aggregate principal
amount equal to $185,000,000 and (iii) to have its subsidiaries, the Borrowers,
enter into the senior secured credit facilities provided for herein in an
aggregate principal amount equal to $372,000,000. The proceeds of such
financings will be used: (a) to finance a tender and consent solicitation in
respect of $140,000,000 in aggregate principal amount (plus accrued interest and
applicable premiums) of K&F's 10.375% Senior Subordinated Notes due 2004 (the
"2004 Notes"), (b) to redeem $70,000,000 in aggregate principal amount (plus
accrued interest and applicable premiums) of K&F's 11.875% Senior Secured Notes
due 2003 (the "Senior Secured Notes"), (c) to refinance the aggregate principal
amount outstanding (plus accrued interest) under the Borrowers' existing amended
and restated credit agreement (the "Existing Credit Agreement"), (d) to finance
the repurchase of approximately $230,000,000 of K&F's outstanding capital stock,
and (e) to pay fees and expenses in connection with the transactions
(collectively, the "Transactions") described above. The sources and uses of
funds in connection with the Transactions shall be as set forth on Annex B
hereto;
WHEREAS, the Lenders are willing to make such senior secured credit
facilities available upon and subject to the terms and conditions hereinafter
set forth;
NOW, THEREFORE, in consideration of the premises and the agreements
hereinafter set forth, the parties hereto hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in
this Section 1.1 shall have the respective meanings set forth in this Section
1.1.
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"Adjustment Date": as defined in the Pricing Grid.
"Administrative Agent": as defined in the preamble hereto.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 10% or more of
the securities having ordinary voting power for the election of directors
(or persons performing similar functions) of such Person or (b) direct or
cause the direction of the management and policies of such Person, whether
by contract or otherwise.
"Agents": the collective reference to the Syndication Agent, the
Administrative Agent and the Collateral Agent.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time, and, for purposes of the Guarantee
and Collateral Agreement, as renewed, refunded, refinanced or replaced.
"Applicable Margin": for each Type of Loan, the rate per annum set
forth under the relevant column heading below:
Base Rate Eurodollar
Loans Loans
--------- ----------
Revolving Credit Loans 1.25% 2.25%
Tranche A Term Loans 1.25% 2.25%
Tranche B Term Loans 1.375% 2.375%
; provided that on and after the first Adjustment Date occurring after the
completion of one full fiscal quarter of the Borrowers after the Closing
Date, the Applicable Margin with respect to Revolving Credit Loans,
Tranche A Term Loans and Tranche B Term Loans will be determined pursuant
to the Pricing Grid.
"Application": an application, in such form as the Issuing Lender
may specify from time to time, requesting the Issuing Lender to open a
Letter of Credit.
"Asset Sale": any Disposition of Property or series of related
Dispositions of Property (excluding any such Disposition permitted by
clause (a), (b), (c) or (d) of Section 7.5) which yields gross proceeds to
K&F, the Borrowers or any of their Subsidiaries (valued at the initial
principal amount thereof in the case of non-cash proceeds consisting of
notes or other debt securities and valued at fair market value in the case
of other non-cash proceeds) in excess of $50,000.
"Assignee": as defined in Section 10.6(c).
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"Assignment and Acceptance": as defined in Section 10.6(c).
"Assignor": as defined in Section 10.6(c).
"Available Revolving Credit Commitment": as to any Revolving Credit
Lender at any time, an amount equal to the excess, if any, of (a) such
Lender's Revolving Credit Commitment over (b) such Lender's Revolving
Extensions of Credit.
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the Reference
Lender as its prime rate in effect at its principal office in New York
City (the Prime Rate not being intended to be the lowest rate of interest
charged by the Reference Lender in connection with extensions of credit to
debtors); "Base CD Rate" shall mean the sum of (a) the product of (i) the
Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which
is one and the denominator of which is one minus the C/D Reserve
Percentage and (b) the C/D Assessment Rate; and "Three-Month Secondary CD
Rate" shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if
such day shall not be a Business Day, the next preceding Business Day) by
the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of
the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day, the average of
the secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately 10:00
A.M., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Reference Lender
from three New York City negotiable certificate of deposit dealers of
recognized standing selected by it. Any change in the Base Rate due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate shall be effective as of the opening of business on
the effective day of such change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate, respectively.
"Base Rate Loans": Loans the rate of interest applicable to which is
based upon the Base Rate.
"BLS": ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
"BLS Group": (i) BLS, (ii) BLS's spouse and descendants
(collectively, "relatives"), (iii) a trust of which there are no
beneficiaries other than BLS, or relatives of BLS, or a charitable
institution or organization, (iv) a partnership, corporation or limited
liability company of which there are no other partners, stockholders or
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members, as applicable, other than BLS or the relatives of BLS, (v) a
legal representative or guardian of BLS or a relative of BLS if BLS or
such relative becomes mentally incompetent, (vi) any person succeeding BLS
or a relative of BLS by will or by the laws of descent, (vii) any
individual who is employed by, a consultant to, or a director of, K&F or
any of its Subsidiaries, and (viii) any individual who is a consultant or
advisor to BLS with respect to the investment by BLS in K&F.
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Borrowing Date": any Business Day specified by the Borrowers as a
date on which the Borrowers request the relevant Lenders to make Loans
hereunder.
"Business": as defined in Section 4.18.
"Business Day": (i) for all purposes other than as covered by clause
(ii) below, a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to
close and (ii) with respect to all notices and determinations in
connection with, and payments of principal and interest on, Eurodollar
Loans, any day which is a Business Day described in clause (i) and which
is also a day for trading by and between banks in Dollar deposits in the
interbank eurodollar market.
"Business Properties": as defined in Section 4.18.
"Capital Expenditures": for any period, with respect to any Person,
the aggregate of all expenditures by such Person and its Subsidiaries for
the acquisition, construction, or leasing (pursuant to a capital lease) of
fixed or capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) which should be
capitalized under GAAP on a consolidated balance sheet of such Person and
its Subsidiaries.
"Capital Lease Obligations": as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
GAAP and, for the purposes of this Agreement, the amount of such
obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase any
of the foregoing.
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"Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurodollar time
deposits or overnight bank deposits having maturities of six months or
less from the date of acquisition issued by any Lender or by any
commercial bank organized under the laws of the United States of America
or any state thereof having combined capital and surplus of not less than
$500,000,000; (c) commercial paper of an issuer rated at least A-2 by
Standard & Poor's Ratings Services ("S&P") or P-2 by ▇▇▇▇▇'▇ Investors
Service, Inc. ("Moody's"), or carrying an equivalent rating by a
nationally recognized rating agency, if both of the two named rating
agencies cease publishing ratings of commercial paper issuers generally,
and maturing within six months from the date of acquisition; (d)
repurchase obligations of any Lender or of any commercial bank satisfying
the requirements of clause (b) of this definition, having a term of not
more than 30 days with respect to securities issued or fully guaranteed or
insured by the United States government; (e) securities with maturities of
one year or less from the date of acquisition issued or fully guaranteed
by any state, commonwealth or territory of the United States, by any
political subdivision or taxing authority of any such state, commonwealth
or territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by S&P or A
by Moody's; (f) securities with maturities of six months or less from the
date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of
this definition; or (g) shares of money market mutual or similar funds
which invest exclusively in assets satisfying the requirements of clauses
(a) through (f) of this definition.
"C/D Assessment Rate": for any day as applied to any Base Rate Loan,
the annual assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund maintained by the Federal Deposit
Insurance Corporation (the "FDIC") classified as well-capitalized and
within supervisory subgroup "B" (or a comparable successor assessment risk
classification) within the meaning of 12 C.F.R. ss. 327.4 (or any
successor provision) to the FDIC (or any successor) for the FDIC's (or
such successor's) insuring time deposits at offices of such institution in
the United States.
"C/D Reserve Percentage": for any day as applied to any Base Rate
Loan, that percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board, for determining the maximum reserve
requirement for a Depositary Institution (as defined in Regulation D of
the Board as in effect from time to time) in respect of new non-personal
time deposits in Dollars having a maturity of 30 days or more.
"Closing Date": the date on which the conditions precedent set forth
in Section 5.1 shall have been satisfied, which date is October 15, 1997.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
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"Collateral": all Property of the Loan Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Collateral Agent": The First National Bank of Chicago, in its
capacity as collateral agent under the Guarantee and Collateral Agreement
and the Intercreditor Agreement.
"Commitment": as to any Lender, the sum of the Tranche A Term Loan
Commitment, the Tranche B Term Loan Commitment and the Revolving Credit
Commitment of such Lender.
"Commitment Fee Rate": 1/2 of 1% per annum; provided that on and
after the first Adjustment Date occurring after the completion of one full
fiscal quarter of the Borrowers after the Closing Date, the Commitment Fee
Rate will be determined pursuant to the Pricing Grid.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrowers within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Borrowers and which is treated as a single employer under Section 414 of
the Code.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit B.
"Confidential Information Memorandum": the Confidential Information
Memorandum dated September 1997 and furnished to the Lenders.
"Consolidated Adjusted Net Worth": at any date, the sum of (a) all
amounts which would, in conformity with GAAP, be included on a
consolidated balance sheet of K&F and its Subsidiaries under stockholders'
equity at such date, (b) the liability accrued in accordance with FASB 106
on the December 31, 1996 balance sheet of K&F and its Subsidiaries, which
liability is $77,439,000, and (c) the aggregate amount of the adjustment
to the stockholders' equity and retained earnings of K&F and its
Subsidiaries as a result of the Recapitalization and the expenses paid in
connection with the Transactions, including, but not limited to, the cost
of the exercise of options outstanding on the Closing Date in accordance
with GAAP, which amount is $260,881,373.
"Consolidated Cash Interest Coverage Ratio": at any date, the ratio
of Consolidated EBITDA for the four full fiscal quarters ended on such
date to Consolidated Cash Interest Expense for the four full fiscal
quarters ended on such date.
"Consolidated Cash Interest Expense": for any period, total cash
interest expense (including that attributable to Capital Lease
Obligations) of K&F and its Subsidiaries for such period paid or currently
payable with respect to all outstanding
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Indebtedness of K&F and its Subsidiaries (including, without limitation,
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and net costs under
Interest Rate Protection Agreements to the extent such net costs are
allocable to such period in accordance with GAAP), minus total net cash
interest income of K&F and its Subsidiaries for such period.
"Consolidated Current Assets": at any date, all amounts (other than
cash and Cash Equivalents) which would, in conformity with GAAP, be set
forth opposite the caption "total current assets" (or any like caption) on
a consolidated balance sheet of K&F and its Subsidiaries at such date.
"Consolidated Current Liabilities": at any date, all amounts which
would, in conformity with GAAP, be set forth opposite the caption "total
current liabilities" (or any like caption) on a consolidated balance sheet
of K&F and its Subsidiaries at such date, but excluding (a) the current
portion of any Funded Debt of K&F and its Subsidiaries and (b) without
duplication of clause (a) above, all Indebtedness consisting of Revolving
Credit Loans to the extent otherwise included therein.
"Consolidated EBITDA": for any period, Consolidated Net Income for
such period plus, without duplication and to the extent reflected as a
charge in the statement of such Consolidated Net Income for such period,
the sum of (a) total income tax expense, (b) interest expense,
amortization or writeoff of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with
Indebtedness (including the Loans), (c) depreciation and amortization
expense, (d) amortization of intangibles (including, but not limited to,
goodwill) and organization costs, (e) any extraordinary or non-recurring
expenses or losses (including, whether or not otherwise includable as a
separate item in the statement of such Consolidated Net Income for such
period, losses on sales of assets outside of the ordinary course of
business) and (f) any other non-cash charges, and minus, to the extent
included in the statement of such Consolidated Net Income for such period,
the sum of (a) interest income, (b) any extraordinary or non-recurring
income or gains (including, whether or not otherwise includable as a
separate item in the statement of such Consolidated Net Income for such
period, gains on the sales of assets outside of the ordinary course of
business) and (c) any other non-cash income, all as determined on a
consolidated basis.
"Consolidated Lease Expense": for any period, the aggregate rental
obligations of K&F and its Subsidiaries determined on a consolidated basis
payable in respect of such period under leases of real and/or personal
property (net of income from sub-leases thereof, but excluding taxes,
insurance, maintenance and similar expenses which the lessee is obligated
to pay under the terms of said leases), whether or not such obligations
are reflected as liabilities or commitments on a consolidated balance
sheet of K&F and its Subsidiaries or in the notes thereto, excluding,
however, Capital Lease Obligations.
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"Consolidated Leverage Ratio": at any date, the ratio of (a) Total
Funded Indebtedness of K&F and its Subsidiaries on a consolidated basis on
such date to (b) Consolidated EBITDA for the four full fiscal quarters
ended on such date.
"Consolidated Net Income": for any period, the consolidated net
income (or loss) of K&F and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP; provided that, except for purposes of
determining compliance with Section 7.1(d) at any time, there shall be
excluded (a) the income (or deficit) of any Person accrued prior to the
date it becomes a Subsidiary of K&F or is merged into or consolidated with
K&F or any of its Subsidiaries, (b) the income (or deficit) of any Person
(other than a Subsidiary of K&F) in which K&F or any of its Subsidiaries
has an ownership interest, except to the extent that any such income is
actually received by K&F or such Subsidiary in the form of dividends or
similar distributions and (c) the undistributed earnings of any Subsidiary
of K&F (other than the Borrowers and the Subsidiary Guarantors) to the
extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms
of any Contractual Obligation (other than under any Loan Document) or
Requirement of Law applicable to such Subsidiary.
"Consolidated Working Capital": at any date, the excess of
Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
"Default": any of the events specified in Section 8, whether or not
any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Disposition": with respect to any Property, any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition
thereof; and the terms "Dispose" and "Disposed of" shall have correlative
meanings.
"Dollars" and "$": dollars in lawful currency of the United States.
"Domestic Subsidiary": any Subsidiary of K&F organized under the
laws of any jurisdiction within the United States.
"ECF Percentage": 75%; provided, that, with respect to each fiscal
year of K&F ending on or after December 31, 1998, the ECF percentage shall
be reduced to 50% if the Consolidated Leverage Ratio of the period of four
consecutive fiscal quarters ending on the last day of such fiscal year is
less than or equal to 4.00 to 1.0.
"Environmental Laws": any and all foreign, Federal, state, local or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, requirements of
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any Governmental Authority or other Requirements of Law (including common
law) regulating, relating to or imposing liability or standards of conduct
concerning protection of human health or the environment, as now or may at
any time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect thereto) dealing
with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board)
maintained by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
determined on the basis of the rate for deposits in Dollars for a period
equal to such Interest Period commencing on the first day of such Interest
Period appearing on Page 3750 of the Telerate screen as of 11:00 A.M.,
London time, two Business Days prior to the beginning of such Interest
Period. In the event that such rate does not appear on Page 3750 of the
Telerate Service (or otherwise on such service), the "Eurodollar Base
Rate" for purposes of this definition shall be determined by reference to
such other comparable publicly available service for displaying eurodollar
rates as may be agreed upon by the Administrative Agent and the Borrowers
or, in the absence of such agreement, by reference to the rate at which
the Administrative Agent is offered Dollar deposits at or about 11:00
A.M., New York City time, two Business Days prior to the beginning of such
Interest Period in the interbank eurodollar market where its eurodollar
and foreign currency and exchange operations are then being conducted for
delivery on the first day of such Interest Period for the number of days
comprised therein.
"Eurodollar Loans": Loans the rate of interest applicable to which
is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined for
such day in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%):
Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar Loans
the then current Interest Periods with respect to all of which begin on
the same date and end on
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the same later date (whether or not such Loans shall originally have been
made on the same day).
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of time,
or both, has been satisfied.
"Excess Cash Flow": for each fiscal year of K&F and its Subsidiaries
commencing with the fiscal year ending December 31, 1998, the excess, if
any, of (a) the sum, without duplication, of Consolidated EBITDA for such
fiscal year minus Capital Expenditures of K&F and its Subsidiaries (net of
the Net Cash Proceeds from any sale and leaseback transaction excluded
from Section 2.10(b) by Section 7.11(b)) to the extent paid in cash in
such fiscal year minus, without duplication, development participation
payments, minus, gains on Asset Sales to the extent such gain is reflected
(A) in Consolidated EBITDA for such fiscal year and (B) in a mandatory
prepayment made pursuant to Section 2.10(b) (with due consideration given
to the $1,000,000 exception contained in the proviso thereto), minus
increases in Consolidated Working Capital for such fiscal year, plus
decreases in Consolidated Working Capital for such fiscal year, plus
increases in Other Long-Term Liabilities for such fiscal year, minus
decreases in Other Long-Term Liabilities for such fiscal year (other than
prepayments of FASB No. 106 liabilities), over (b) the sum, without
duplication, of (A) the aggregate amount of scheduled repayments of the
Term Loans pursuant to Section 2.3 during such period, (B) any principal
payments or prepayments resulting in a permanent reduction of any other
Indebtedness of K&F or its Subsidiaries made during such period in
accordance with the terms hereof, including, without limitation, any
payment to the Pension Plans that would increase a long-term asset, (C)
Consolidated Cash Interest Expense, (D) any taxes paid or payable for such
period and (E) the amount of any optional reductions in revolving credit
commitments, other than the Revolving Credit Commitments, with a
corresponding prepayment of revolving credit loans, other than the
Revolving Credit Loans, in accordance with the terms hereof; provided that
for purposes of determining Excess Cash Flow in any fiscal year payments
or prepayments in respect of the Intercompany Loans shall not be taken
into account.
"Excess Cash Flow Application Date": as defined in Section 2.10(c).
"Excluded Foreign Subsidiaries": any Foreign Subsidiary the pledge
of all of whose Capital Stock as Collateral would, in the good faith
judgment of the Borrowers, result in adverse tax consequences to the
Borrowers.
"Facility": each of (a) the Tranche A Term Loan Commitments and the
Tranche A Term Loans made thereunder (the "Tranche A Term Loan Facility"),
(b) the Tranche B Term Loan Commitments and the Tranche B Term Loans made
thereunder (the "Tranche B Term Loan Facility") and (c) the Revolving
Credit Commitments and the extensions of credit made thereunder (the
"Revolving Credit Facility").
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"Federal Funds Effective Rate"; for any day, the weighted average of
the rates on overnight federal funds transactions with members of the
Federal Reserve System arranged by federal funds brokers, as published on
the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
the Reference Lender from three federal funds brokers of recognized
standing selected by it.
"Foreign Subsidiary": any Subsidiary of K&F that is not a Domestic
Subsidiary.
"Funded Debt": as to any Person, all Indebtedness of such Person
that matures more than one year from the date of its creation or matures
within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year from such date or
arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year
from such date, including, without limitation, all current maturities and
current sinking fund payments in respect of such Indebtedness whether or
not required to be paid within one year from the date of its creation and,
in the case of the Borrowers, Indebtedness in respect of the Loans.
"Funding Office": the office specified from time to time by the
Administrative Agent as its funding office by notice to the Borrowers and
the Lenders.
"GAAP": generally accepted accounting principles in the United
States as in effect from time to time set forth in the opinions and
pronouncements of the Accounting Principles Board and the American
Institute of Certified Public Accountants and the statements and
pronouncements of the Financial Accounting Standards Board and the rules
and regulations of the Securities and Exchange Commission, or in such
other statements by such other entity as may be in general use by
significant segments of the accounting profession, which are applicable to
the circumstances of K&F as of the date of determination, except that for
purposes of Section 7.1, GAAP shall be determined on the basis of such
principles in effect on the date hereof and consistent with those used in
the preparation of the most recent audited financial statements delivered
pursuant to Section 4.1(b). In the event that any "Accounting Change" (as
defined below) shall occur and such change results in a change in the
method of calculation of financial covenants, standards or terms in this
Agreement, then K&F and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating K&F's financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been made.
Until such time as such an amendment shall have been executed and
delivered by K&F, the Administrative Agent and the Required Lenders, all
financial covenants, standards and terms in this Agreement shall continue
to be calculated or construed as if such Accounting Changes had not
occurred.
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"Accounting Changes" refers to changes in accounting principles
required by the promulgation of any rule, regulation, pronouncement or
opinion by the Financial Accounting Standards Board of the American
Institute of Certified Public Accountants or, if applicable, the
Securities and Exchange Commission (or successors thereto or agencies with
similar functions).
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government (including, without limitation, any securities
exchange or self-regulatory organization, the National Association of
Insurance Commissioners).
"Guarantee and Collateral Agreement": the Guarantee and Collateral
Agreement to be executed and delivered by K&F, the Borrowers and each
Subsidiary Guarantor, substantially in the form of Exhibit A, as the same
may be amended, supplemented or otherwise modified from time to time.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued
a reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any Property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor, (iii) to purchase Property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the
stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum
reasonably anticipated liability in respect thereof as determined by the
Borrowers in good faith.
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"Guarantors": the collective reference to K&F and the Subsidiary
Guarantors.
"Incur": as defined in Section 7.2.
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of Property or services (other
than current trade payables incurred in the ordinary course of such
Person's business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title retention
agreement with respect to Property acquired by such Person (even though
the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such
Property), (e) all Capital Lease Obligations of such Person, (f) all
obligations of such Person, contingent or otherwise, as an account party
under acceptance, letter of credit or similar facilities, (g) all
Guarantee Obligations of such Person in respect of obligations of the kind
referred to in clauses (a) through (f) above, (h) all obligations of the
kind referred to in clauses (a) through (g) above secured by (or for which
the holder of such obligation has an existing right, contingent or
otherwise, to be secured by) any Lien on Property (including, without
limitation, accounts and contract rights) owned by such Person, whether or
not such Person has assumed or become liable for the payment of such
obligation, and (i) the net liabilities (that is, fractional exposure) of
such Person or its Subsidiaries in respect of Interest Rate Protection
Agreements.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, copyrights, copyright licenses, patents,
patent licenses, trademarks, trademark licenses, technology, know-how and
processes, and all rights to ▇▇▇ at law or in equity for any infringement
or other impairment thereof, including the right to receive all proceeds
and damages therefrom.
"Intercompany Loans": (a) the loan in the original principal amount
of $48,400,000 made by K&F to EF on or about April 28, 1989 and (b) the
loan in the original principal amount of $304,600,000 made by K&F to ABS
on or about April 28, 1989.
"Intercreditor Agreement": the Intercreditor Agreement, dated as of
the date hereof, among the PBGC, the Administrative Agent, the Collateral
Agent, each of the
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Borrowers and K&F, substantially in the form of Exhibit J, as amended,
supplemented or otherwise modified from time to time.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day
of each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the
last day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day which is three months,
or a whole multiple thereof, after the first day of such Interest Period
and the last day of such Interest Period and (d) as to any Loan (other
than any Revolving Credit Loan that is a Base Rate Loan), the date of any
repayment or prepayment made in respect thereof.
"Interest Period": as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six
months thereafter, as selected by the Borrowers in their notice of
borrowing or notice of conversion, as the case may be, given with respect
thereto; and (b) thereafter, each period commencing on the last day of the
next preceding Interest Period applicable to such Eurodollar Loan and
ending one, two, three or six months thereafter, as selected by the
Borrowers by irrevocable notice to the Administrative Agent not less than
three Business Days prior to the last day of the then current Interest
Period with respect thereto; provided that, all of the foregoing
provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month
in which event such Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond
the Revolving Credit Termination Date or beyond the date final
payment is due on the Term Loans shall end on the Revolving Credit
Termination Date or such due date, as applicable;
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month; and
(iv) the Borrowers shall select Interest Periods so as not to
require a payment or prepayment of any Eurodollar Loan during an
Interest Period for such Loan.
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"Interest Rate Protection Agreement": any interest rate protection
agreement, interest rate futures contract, interest rate option, interest
rate cap or other interest rate hedge arrangement, to or under which K&F
or any of its Subsidiaries is a party or a beneficiary on the date hereof
or becomes a party or a beneficiary after the date hereof.
"Issuing Lender": The First National Bank of Chicago, in its
capacity as issuer of any Letter of Credit.
"K&F": as defined in the recitals hereto.
"K&F Agreement": the agreement by K&F in favor of the Administrative
Agent, dated as of the date hereof, substantially in the form of Exhibit
L, as the same may be amended, supplemented or otherwise modified from
time to time.
"L/C Commitment": $20,000,000.
"L/C Fee Payment Date": the last day of each March, June, September
and December and the last day of the Revolving Credit Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of (a)
the aggregate then undrawn and unexpired amount of the then outstanding
Letters of Credit and (b) the aggregate amount of drawings under Letters
of Credit which have not then been reimbursed pursuant to Section 3.5.
"L/C Participants": the collective reference to all the Revolving
Credit Lenders other than the Issuing Lender.
"▇▇▇▇▇▇ Investors": those certain merchant banking partnerships
affiliated with ▇▇▇▇▇▇ Brothers Holdings Inc.
"Letters of Credit": as defined in Section 3.1(a).
"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement
or preferential arrangement of any kind or nature whatsoever (including,
without limitation, any conditional sale or other title retention
agreement and any capital lease having substantially the same economic
effect as any of the foregoing).
"Loan": any loan made by any Lender pursuant to this Agreement.
"Loan Documents": this Agreement, the Security Documents,
Subordination Agreements, the K&F Agreement and the Notes.
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"Loan Parties": K&F, the Borrowers and each Subsidiary of K&F which
is a party to a Loan Document.
"Majority Facility Lenders": with respect to any Facility, the
holders of more than 50% of the aggregate unpaid principal amount of the
Tranche A Term Loans, the Tranche B Term Loans or the Total Revolving
Extensions of Credit, as the case may be, outstanding under such Facility
(or, in the case of the Revolving Credit Facility, prior to any
termination of the Revolving Credit Commitments, the holders of more than
50% of the Total Revolving Credit Commitments).
"Majority Revolving Credit Facility Lenders": the Majority Facility
Lenders in respect of the Revolving Credit Facility.
"Material Adverse Effect": a material adverse effect on (a) the
Recapitalization and the other Transactions, (b) the business, assets,
property, condition (financial or otherwise) or prospects of K&F and its
Subsidiaries taken as a whole or the Borrowers and their Subsidiaries
taken as a whole or (c) the validity or enforceability of this Agreement
or any of the other Loan Documents or the rights or remedies of the Agents
or the Lenders hereunder or thereunder.
"Material Environmental Amount": an amount payable by the Borrowers
and/or its Subsidiaries in excess of $1,000,000 for remedial costs,
compliance costs, compensatory damages, punitive damages, fines, penalties
or any combination thereof.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated
as such in or under any Environmental Law, including, without limitation,
asbestos, polychlorinated biphenyls and urea-formaldehyde insulation.
"Mortgaged Properties": the real properties listed on Schedule 1.1B,
as to which the Administrative Agent for the benefit of the Lenders shall
be granted a Lien pursuant to the Mortgages.
"Mortgages": each of the mortgages and deeds of trust made by any
Loan Party in favor of, or for the benefit of, the Administrative Agent
for the benefit of the Lenders, substantially in the form of Exhibit D
(with such changes thereto as shall be advisable under the law of the
jurisdiction in which such mortgage or deed of trust is to be recorded),
as the same may be amended, supplemented or otherwise modified from time
to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
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"Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Asset Sale or Recovery Event, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied
to the repayment of Indebtedness secured by a Lien expressly permitted
hereunder on any asset which is the subject of such Asset Sale or Recovery
Event (other than any Lien pursuant to a Security Document) and other
customary fees and expenses actually incurred in connection therewith and
net of taxes paid or reasonably estimated to be payable as a result
thereof (after taking into account any available tax credits or deductions
and any tax sharing arrangements) and (b) in connection with any issuance
or sale of equity securities or debt securities or instruments or the
incurrence of loans, the cash proceeds received from such issuance or
incurrence, net of attorneys' fees, investment banking fees, accountants'
fees, underwriting discounts and commissions and other customary fees and
expenses actually incurred in connection therewith.
"Non-Excluded Taxes": as defined in Section 2.18(a).
"Non-U.S. Lender": as defined in Section 2.18(d).
"Notes": the collective reference to any promissory note evidencing
Loans.
"Obligations": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
Reimbursement Obligations and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to either of the Borrowers,
whether or not a claim for post-filing or post-petition interest is
allowed in such proceeding) the Loans and all other obligations and
liabilities of either of the Borrowers to the Administrative Agent or to
any Lender (or, in the case of Interest Rate Protection Agreements, any
affiliate of any Lender), whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter incurred,
which may arise under, out of, or in connection with, this Agreement, any
other Loan Document, the Letters of Credit, any Interest Rate Protection
Agreement entered into with any Lender or any affiliate of any Lender or
any other document made, delivered or given in connection herewith or
therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without
limitation, all fees, charges and disbursements of counsel to the
Administrative Agent or to any Lender that are required to be paid by
either of the Borrowers pursuant hereto) or otherwise.
"Offering Memorandum": the Offering Memorandum dated October 9, 1997
in respect of the Senior Subordinated Notes.
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"Other Long-Term Liabilities": at any date, all amounts which would,
in conformity with GAAP, be included on a consolidated balance sheet of
K&F and the Subsidiaries under the item "Other Long-Term Liabilities",
including, without limitation, amounts accrued under FASB No. 106.
"Other Taxes": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
arising from any payment made hereunder or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement.
"Participant": as defined in Section 10.6(b).
"Payment Office": the office specified from time to time by the
Administrative Agent as its payment office by notice to the Borrowers and
the Lenders.
"Pension Plans": as defined in the Settlement Agreement.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which any Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pricing Grid": the pricing grid attached hereto as Annex A.
"Pro Forma Balance Sheet": as defined in Section 4.1(a).
"Projections": as defined in Section 6.2(c).
"Property": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Recapitalization Documentation": as defined in Section 5.1(b).
"Recovery Event": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding
relating to any asset of K&F, the Borrowers or any of their Subsidiaries.
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"Reference Lender": Citibank, N.A.
"Register": as defined in Section 10.6(d).
"Regulation G": Regulation G of the Board as in effect from time to
time.
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Reimbursement Obligation": the obligation of the Borrowers to
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn
under Letters of Credit.
"Reinvestment Deferred Amount": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by K&F, the Borrowers or
any of their Subsidiaries in connection therewith which are not applied to
prepay the Term Loans or reduce the Revolving Credit Commitments pursuant
to Section 2.10(b) as a result of the delivery of a Reinvestment Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
which the Borrowers have delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
Officer stating that no Event of Default has occurred and is continuing
and that the Borrowers (directly or indirectly through a Subsidiary)
intend and expect to use all or a specified portion of the Net Cash
Proceeds of an Asset Sale or Recovery Event to acquire assets useful in
their business.
"Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire
assets useful in the Borrowers' business.
"Reinvestment Prepayment Date": with respect to any Reinvestment
Event, the earlier of (a) the date occurring twelve months after such
Reinvestment Event and (b) the date on which the Borrowers shall have
determined not to, or shall have otherwise ceased to, acquire assets
useful in the Borrowers' business with all or any portion of the relevant
Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(b)
of ERISA, other than those events as to which the thirty day notice period
is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC Reg. ss.
2615.
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"Required Lenders": the holders of more than 50% of (a) until the
Closing Date, the Commitments and (b) thereafter, the sum of (i) the
aggregate unpaid principal amount of the Term Loans and (ii) the Total
Revolving Credit Commitments or, if the Revolving Credit Commitments have
been terminated, the Total Revolving Extensions of Credit.
"Required Prepayment Lenders": the Majority Facility Lenders in
respect of each Facility.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
"Responsible Officer": the chief executive officer, president or
chief financial officer of a Loan Party, but in any event, with respect to
financial matters, the chief financial officer of a Loan Party.
"Revolving Credit Commitment": as to any Lender, the obligation of
such Lender, if any, to make Revolving Credit Loans and participate in
Letters of Credit, in an aggregate principal and/or face amount not to
exceed the amount set forth under the heading "Revolving Credit
Commitment" opposite such Lender's name on Schedule 1.1A or in the
Assignment and Acceptance pursuant to which such Lender became a party
hereto, as the same may be changed from time to time pursuant to the terms
hereof. The original amount of the Total Revolving Credit Commitments is
$50,000,000.
"Revolving Credit Commitment Period": the period from and including
the Closing Date to the Revolving Credit Termination Date.
"Revolving Credit Lender": each Lender which has a Revolving Credit
Commitment or which has made Revolving Credit Loans.
"Revolving Credit Loans": as defined in Section 2.4.
"Revolving Credit Percentage": as to any Revolving Credit Lender at
any time, the percentage which such Lender's Revolving Credit Commitment
then constitutes of the Total Revolving Credit Commitments (or, at any
time after the Revolving Credit Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such
Lender's Revolving Credit Loans then outstanding constitutes of the
aggregate principal amount of the Revolving Credit Loans then
outstanding).
"Revolving Credit Termination Date": the sixth anniversary of the
Closing Date, which date is October 15, 2003.
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"Revolving Extensions of Credit": as to any Revolving Credit Lender
at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans made by such Lender then outstanding
and (b) such Lender's Revolving Credit Percentage of the L/C Obligations
then outstanding.
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement, the Mortgages, the Intercreditor Agreement and all
other security documents hereafter delivered to the Administrative Agent
granting a Lien on any Property of any Person to secure the obligations
and liabilities of any Loan Party under any Loan Document.
"Senior Subordinated Note Indenture": the Indenture entered into by
K&F in connection with the issuance of the Senior Subordinated Notes,
together with all instruments and other agreements entered into by K&F in
connection therewith, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with Section 7.9.
"Senior Subordinated Notes": the senior subordinated notes of K&F
issued on the Closing Date pursuant to the Senior Subordinated Note
Indenture in an aggregate principal amount of $185,000,000 on terms and
conditions satisfactory to the Syndication Agent.
"Settlement Agreement": the Settlement Agreement, dated as of
October 15, 1997, between K&F and the PBGC, substantially in the form of
Exhibit K, as the same may be amended, supplemented or otherwise modified
from time to time.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of
any date of determination, (a) the amount of the "present fair saleable
value" of the assets of such Person will, as of such date, exceed the
amount of all "liabilities of such Person, contingent or otherwise", as of
such date, as such quoted terms are determined in accordance with
applicable federal and state laws governing determinations of the
insolvency of debtors, (b) the present fair saleable value of the assets
of such Person will, as of such date, be greater than the amount that will
be required to pay the liability of such Person on its debts as such debts
become absolute and matured, (c) such Person will not have, as of such
date, an unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they
mature. For purposes of this definition, (i) "debt" means liability on a
"claim", and (ii) "claim" means any (x) right to payment, whether or not
such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent, matured, unmatured, disputed, undisputed, legal, equitable,
secured or unsecured or (y) right to an equitable remedy for breach of
performance if such breach gives rise to a right to payment, whether or
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not such right to an equitable remedy is reduced to judgment, fixed,
contingent, matured or unmatured, disputed, undisputed, secured or
unsecured.
"Stockholders Agreement": the Stockholders Agreement, dated as of
October 15, 1997, among K&F, BLS and the ▇▇▇▇▇▇ Investors, as amended,
supplemented or otherwise modified from time to time.
"Subordination Agreements": collectively, the ABS Subordination
Agreement and the EF Subordination Agreement, each dated as of the date
hereof, to be executed and delivered by K&F and ABS or EF, respectively,
in favor of the Administrative Agent for the benefit of the Lenders in
respect of the Intercompany Loans, substantially in the form of Exhibits
H-1 and H-2, respectively, as the same may be amended, supplemented or
otherwise modified from time to time.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors
or other managers of such corporation, partnership or other entity are at
the time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a "Subsidiary"
or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of K&F.
"Subsidiary Cash Interest Coverage Ratio": at any date, the ratio of
(i) Consolidated EBITDA for the four full fiscal quarters ended on such
date, plus the amount of operating expenses of K&F during such period,
determined in accordance with GAAP, to (ii) interest paid on the Loans
(the "Subsidiary Interest Expense") during such period, minus total net
cash interest income of the Borrowers and their Subsidiaries for such
period.
"Subsidiary Guarantor": each Subsidiary of the Borrowers other than
any Excluded Foreign Subsidiary.
"Term Loans": the collective reference to the Tranche A Term Loans
and Tranche B Term Loans.
"Term Loan Lenders": the collective reference to the Tranche A Term
Loan Lenders and the Tranche B Term Loan Lenders.
"Total Funded Indebtedness": at any date, the difference between (I)
the sum (without duplication) of (a) the Indebtedness of K&F and its
Subsidiaries for borrowed money on such date, (b) all obligations of K&F
and its Subsidiaries on such date in respect of Capital Leases and (c) all
Guarantee Obligations of K&F and its Subsidiaries on such date in respect
of borrowed money, in each case determined on a consolidated
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basis in accordance with GAAP and (II) the unencumbered cash balances of
K&F and its Subsidiaries on such date.
"Total Revolving Credit Commitments": at any time, the aggregate
amount of the Revolving Credit Commitments at such time.
"Total Revolving Extensions of Credit": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Credit
Lenders at such time.
"Tranche A Term Loan": as defined in Section 2.1.
"Tranche A Term Loan Commitment": the obligation of such Lender, if
any, to make a Tranche A Term Loan to the Borrowers hereunder in a
principal amount not to exceed the amount set forth under the heading
"Tranche A Term Loan Commitment" opposite such Lender's name on Schedule
1.1A or in the Assignment and Acceptance pursuant to which such Lender
became a party hereto. The original aggregate amount of the Tranche A Term
Loan Commitments is $50,000,000.
"Tranche A Term Loan Lender": each Lender which has a Tranche A Term
Loan Commitment or which has made a Tranche A Term Loan.
"Tranche A Term Loan Percentage": as to any Lender at any time, the
percentage which such Lender's Tranche A Term Loan Commitment then
constitutes of the aggregate Tranche A Term Loan Commitments (or, at any
time after the Closing Date, the percentage which the aggregate principal
amount of such Lender's Tranche A Term Loans then outstanding constitutes
of the aggregate principal amount of the Tranche A Term Loans then
outstanding).
"Tranche A Termination Date": the sixth anniversary of the Closing
Date, which date is October 15, 2003.
"Tranche B Term Loan": as defined in Section 2.1.
"Tranche B Term Loan Commitment": the obligation of such Lender, if
any, to make a Tranche B Term Loan to the Borrowers hereunder in a
principal amount not to exceed the amount set forth under the heading
"Tranche B Term Loan Commitment" opposite such Lender's name on Schedule
1.1A or in the Assignment and Acceptance pursuant to which such Lender
became a party hereto. The original aggregate amount of the Tranche B Term
Loan Commitments is $272,000,000.
"Tranche B Term Loan Lender": each Lender which has a Tranche B Term
Loan Commitment or which has made a Tranche B Term Loan.
"Tranche B Term Loan Percentage": as to any Lender at any time, the
percentage which such Lender's Tranche B Term Loan Commitment then
constitutes of
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the aggregate Tranche B Term Loan Commitments (or, at any time after the
Closing Date, the percentage which the aggregate principal amount of such
Lender's Tranche B Term Loans then outstanding constitutes of the
aggregate principal amount of the Tranche B Term Loans then outstanding).
"Tranche B Termination Date": the eighth anniversary of the Closing
Date, which date is October 15, 2005.
"Transferee": as defined in Section 10.15.
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time.
"United States": the United States of America.
"Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other
Wholly Owned Subsidiaries.
"Wholly Owned Subsidiary Guarantor": any Subsidiary Guarantor that
is a Wholly Owned Subsidiary of K&F.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Loan Documents or any certificate or other document made
or delivered pursuant hereto or thereto.
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to K&F, the Borrowers and their Subsidiaries not
defined in Section 1.1 and accounting terms partly defined in Section 1.1, to
the extent not defined, shall have the respective meanings given to them under
GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
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2.1 Term Loan Commitments. Subject to the terms and conditions
hereof, (a) each Tranche A Term Loan Lender severally agrees to make a term loan
(a "Tranche A Term Loan") to the Borrowers on the Closing Date in an amount not
to exceed the amount of the Tranche A Term Loan Commitment of such Lender and
(b) each Tranche B Term Loan Lender severally agrees to make a term loan (a
"Tranche B Term Loan") to the Borrowers on the Closing Date in an amount not to
exceed the amount of the Term Loan Commitment of such Lender. The Term Loans may
from time to time be Eurodollar Loans or Base Rate Loans, as determined by the
Borrowers and notified to the Administrative Agent in accordance with Sections
2.2 and 2.11. Any Term Loans borrowed on the Closing Date shall be borrowed by
ABS and EF in a proportion of 17 to 1, respectively.
2.2 Procedure for Term Loan Borrowing. The Borrowers shall give the
Administrative Agent irrevocable notice (which notice must be received by the
Administrative Agent prior to 10:00 A.M., New York City time, one Business Day
prior to the anticipated Closing Date) requesting that the Term Loan Lenders
make the Term Loans on the Closing Date and specifying the amount to be
borrowed. The Term Loans shall initially be Base Rate Loans. Upon receipt of
such notice the Administrative Agent shall promptly notify each Term Loan Lender
thereof. Not later than 12:00 Noon, New York City time, on the Closing Date each
Term Loan Lender shall make available to the Administrative Agent at the Funding
Office an amount in immediately available funds equal to the Term Loan or Term
Loans to be made by such Lender. The Administrative Agent shall make available
to the Borrowers the aggregate of the amounts made available to the
Administrative Agent by the Term Loan Lenders in immediately available funds.
2.3 Repayment of Term Loans. (a) The Tranche A Term Loan of each
Tranche A Term Loan Lender shall mature in 25 consecutive quarterly
installments, commencing on December 31, 1997 and ending on the Tranche A
Termination Date, each of which shall be in an amount equal to such Lender's
Tranche A Term Loan Percentage multiplied by the amount set forth below opposite
such installment:
Installment Principal Amount
----------- ----------------
December 31, 1997 $ 125,000
March 31, 1998 125,000
June 30, 1998 125,000
September 30, 1998 125,000
December 31, 1998 125,000
March 31, 1999 125,000
June 30, 1999 125,000
September 30, 1999 125,000
December 31, 1999 125,000
March 31, 2000 125,000
June 30, 2000 125,000
September 30, 2000 125,000
December 31, 2000 125,000
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March 31, 2001 125,000
June 30, 2001 125,000
September 30, 2001 125,000
December 31, 2001 125,000
March 31, 2002 125,000
June 30, 2002 125,000
September 30, 2002 125,000
December 31, 2002 125,000
March 31, 2003 11,843,750
June 30, 2003 11,843,750
September 30, 2003 11,843,750
Tranche A Termination
Date 11,843,750
(b) The Tranche B Term Loan of each Tranche B Term Loan Lender
shall mature in 32 consecutive quarterly installments, commencing on December
31, 1997 and ending on the Tranche B Termination Date, each of which shall be in
an amount equal to such Lender's Tranche B Term Loan Percentage multiplied by
the amount set forth below opposite such installment:
Installment Principal Amount
----------- ----------------
December 31, 1997 $ 250,000
March 31, 1998 250,000
June 30, 1998 250,000
September 30, 1998 250,000
December 31, 1998 250,000
March 31, 1999 250,000
June 30, 1999 250,000
September 30, 1999 250,000
December 31, 1999 250,000
March 31, 2000 250,000
June 30, 2000 250,000
September 30, 2000 250,000
December 31, 2000 250,000
March 31, 2001 250,000
June 30, 2001 250,000
September 30, 2001 250,000
December 31, 2001 250,000
March 31, 2002 250,000
June 30, 2002 250,000
September 30, 2002 250,000
December 31, 2002 250,000
March 31, 2003 250,000
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June 30, 2003 250,000
September 30, 2003 250,000
December 31, 2003 250,000
March 31, 2004 250,000
June 30, 2004 250,000
September 30, 2004 250,000
December 31, 2004 66,250,000
March 31, 2005 66,250,000
June 30, 2005 66,250,000
Tranche B Termination
Date 66,250,000
2.4 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("Revolving Credit Loans") to the Borrowers from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding which, when added to such Lender's Revolving
Credit Percentage of the sum of the L/C Obligations then outstanding does not
exceed the amount of such Lender's Revolving Credit Commitment. During the
Revolving Credit Commitment Period the Borrowers may use the Revolving Credit
Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in
part, and reborrowing, all in accordance with the terms and conditions hereof.
The Revolving Credit Loans may from time to time be Eurodollar Loans or Base
Rate Loans, as determined by the Borrowers and notified to the Administrative
Agent in accordance with Sections 2.5 and 2.11, provided that no Revolving
Credit Loan shall be made as a Eurodollar Loan after the day that is one month
prior to the Revolving Credit Termination Date.
(b) The Borrowers shall repay all outstanding Revolving Credit Loans
on the Revolving Credit Termination Date.
2.5 Procedure for Revolving Credit Borrowing. The Borrowers may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day, provided that the Borrowers shall give
the Administrative Agent irrevocable notice (which notice must be received by
the Administrative Agent prior to 12:00 Noon, New York City time, (a) three
Business Days prior to the requested Borrowing Date, in the case of Eurodollar
Loans, or (b) one Business Day prior to the requested Borrowing Date, in the
case of Base Rate Loans), specifying (i) the amount and Type of Revolving Credit
Loans to be borrowed, (ii) the requested Borrowing Date and (iii) in the case of
Eurodollar Loans, the respective amounts of each such Type of Loan and the
respective lengths of the initial Interest Period therefor. Each borrowing under
the Revolving Credit Commitments shall be in an amount equal to (x) in the case
of Base Rate Loans, $1,000,000 or a whole multiple thereof (or, if the then
aggregate Available Revolving Credit Commitments are less than $1,000,000, such
lesser amount) and (y) in the case of Eurodollar Loans, $5,000,000 or a whole
multiple of $1,000,000 in excess thereof. Upon receipt of any such notice from
the Borrowers, the Administrative Agent shall promptly notify each Revolving
Credit Lender thereof. Each Revolving Credit Lender will make the amount of its
pro rata share of each borrowing
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available to the Administrative Agent for the account of the Borrowers at the
Funding Office prior to 12:00 Noon, New York City time, on the Borrowing Date
requested by the Borrowers in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Borrowers by the
Administrative Agent in like funds as received by the Administrative Agent.
2.6 Repayment of Loans; Evidence of Debt. (a) The Borrowers hereby,
jointly and severally, unconditionally promise to pay to the Administrative
Agent for the account of the appropriate Revolving Credit Lender or Term Loan
Lender, as the case may be, (i) the then unpaid principal amount of each
Revolving Credit Loan of such Revolving Credit Lender on the Revolving Credit
Termination Date (or such earlier date on which the Loans become due and payable
pursuant to Section 8) and (ii) the principal amount of each Term Loan of such
Term Loan Lender in installments according to the amortization schedule set
forth in Section 2.3 (or on such earlier date on which the Loans become due and
payable pursuant to Section 8). The Borrowers hereby further agree to pay
interest on the unpaid principal amount of the Loans from time to time
outstanding from the date hereof until payment in full thereof at the rates per
annum, and on the dates, set forth in Section 2.13.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrowers to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent, on behalf of the Borrowers, shall
maintain the Register pursuant to Section 10.6(d), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such Loan, the Type thereof and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrowers to each Lender hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrowers and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.6(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrowers therein recorded; provided that the failure of any
Lender or the Administrative Agent to maintain the Register or any such account,
or any error therein, shall not in any manner affect the obligation of the
Borrowers to repay (with applicable interest) the Loans made to such Borrowers
by such Lender in accordance with the terms of this Agreement.
(e) The Borrowers agree that, upon the request to the Administrative
Agent by any Lender, the Borrowers will execute and deliver to such Lender (i) a
promissory note of the Borrowers evidencing any Term Loans or Revolving Credit
Loans, as the case may be, of such Lender, substantially in the forms of Exhibit
G-1 or G-2, respectively, with appropriate insertions as to date and principal
amount.
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2.7 Commitment Fees, etc. (a) The Borrowers agree to pay to the
Administrative Agent for the account of each Revolving Credit Lender a
commitment fee for the period from and including the Closing Date to the last
day of the Revolving Credit Commitment Period, computed at the Commitment Fee
Rate on the average daily amount of the Available Revolving Credit Commitment of
such Lender during the period for which payment is made, payable quarterly in
arrears on the last day of each March, June, September and December and on the
Revolving Credit Termination Date, commencing on the first of such dates to
occur after the date hereof.
(b) The Borrowers agree to pay to the Arranger and the Syndication
Agent the fees in the amounts and on the dates previously agreed to in writing
by the Borrowers and the Arranger and the Syndication Agent.
(c) The Borrowers agree to pay to the Administrative Agent the fees
in the amounts and on the dates from time to time agreed to in writing by the
Borrowers and the Administrative Agent.
2.8 Termination or Reduction of Revolving Credit Commitments. The
Borrowers shall have the right, upon not less than three Business Days' notice
to the Administrative Agent, to terminate the Revolving Credit Commitments or,
from time to time, to reduce the amount of the Revolving Credit Commitments;
provided that no such termination or reduction of Revolving Credit Commitments
shall be permitted if, after giving effect thereto and to any prepayments of the
Revolving Credit Loans made on the effective date thereof, the Total Revolving
Extensions of Credit would exceed the Total Revolving Credit Commitments. Any
such reduction shall be in an amount equal to $1,000,000, or a whole multiple
thereof, and shall reduce permanently the Revolving Credit Commitments then in
effect.
2.9 Optional Prepayments. The Borrowers may at any time and from
time to time prepay the Loans, in whole or in part, without premium or penalty,
upon irrevocable notice delivered to the Administrative Agent at least three
Business Days prior thereto in the case of Eurodollar Loans and at least one
Business Day prior thereto in the case of Base Rate Loans, which notice shall
specify the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans or Base Rate Loans; provided that if a Eurodollar Loan is
prepaid on any day other than the last day of the Interest Period applicable
thereto, the Borrowers shall also pay any amounts owing pursuant to Section
2.19. Upon receipt of any such notice the Administrative Agent shall promptly
notify each relevant Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified therein,
together with (except in the case of Revolving Credit Loans which are Base Rate
Loans) accrued interest to such date on the amount prepaid. Partial prepayments
of Term Loans and Revolving Credit Loans shall be in an aggregate principal
amount of $1,000,000 or a whole multiple thereof. Optional prepayments of the
Term Loans in accordance with this Section 2.9 shall be applied to the
installments thereof in inverse order of maturity and may not be reborrowed.
Optional prepayments of the Loans may not be refused by the Lenders.
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2.10 Mandatory Prepayments and Commitment Reductions. (a) Unless the
Required Prepayment Lenders shall otherwise agree, if any Indebtedness shall be
Incurred by K&F, the Borrowers or any of their Subsidiaries (excluding any
Indebtedness Incurred in accordance with Section 7.2), an amount equal to 100%
of the Net Cash Proceeds thereof shall be applied on the date of such Incurrence
toward the prepayment of the Term Loans and the reduction of the Revolving
Credit Commitments as set forth in Section 2.10(d).
(b) Unless the Required Prepayment Lenders shall otherwise agree, if
on any date K&F, the Borrowers or any of their Subsidiaries shall receive Net
Cash Proceeds from any Asset Sale or Recovery Event then, unless a Reinvestment
Notice shall be delivered in respect thereof, an amount equal to 100% of such
Net Cash Proceeds shall be applied on such date toward the prepayment of the
Term Loans and the reduction of the Revolving Credit Commitments as set forth in
Section 2.10(d); provided that, notwithstanding the foregoing, (i) the aggregate
Net Cash Proceeds of Asset Sales and Recovery Events that may be excluded from
the foregoing requirement pursuant to a Reinvestment Notice shall not exceed (A)
$1,000,000, in the case of Assets Sales, and (B) so long as such Recovery Event
is not the result of a loss or condemnation that could reasonably be expected to
have a Material Adverse Effect and the Reinvestment Deferred Amount with respect
to such Recovery Event is invested to replace the lost or condemned asset with
an identical or similar asset, $20,000,000 in the case of a Recovery Event, in
each case, in any fiscal year of the Borrowers and (ii) on each Reinvestment
Prepayment Date, an amount equal to the Reinvestment Prepayment Amount with
respect to the relevant Reinvestment Event shall be applied toward the
prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.10(d).
(c) Unless the Required Prepayment Lenders shall otherwise agree,
if, for any fiscal year of the Borrowers commencing with the fiscal year ending
December 31, 1998, there shall be Excess Cash Flow, the Borrowers shall, on the
relevant Excess Cash Flow Application Date (as defined below), apply the ECF
Percentage of such Excess Cash Flow, after subtracting the amount of any
optional prepayments (with, in the case of an optional prepayment of a Revolving
Credit Loan, a corresponding reduction in the Revolving Credit Commitments),
toward the prepayment of the Term Loans and the reduction of the Revolving
Credit Commitments as set forth in Section 2.10(d), provided that the Tranche B
Term Loan Lenders shall have the right to refuse all or any portion of any
prepayment made under this paragraph (c) and 50% of the amount so refused shall
be applied, first, to the payment in full of the Tranche A Term Loans, second,
to the prepayment in full of the Tranche B Term Loans and, third, to the
permanent reduction of the Revolving Credit Commitments. Each such prepayment
and commitment reduction shall be made on a date (an "Excess Cash Flow
Application Date") no later than five days after the earlier of (i) the date on
which the financial statements of the Borrowers referred to in Section 6.1(a),
for the fiscal year with respect to which such prepayment is made, are required
to be delivered to the Lenders and (ii) the date such financial statements are
actually delivered.
(d) Except as otherwise provided in paragraph (c) above, amounts to
be applied in connection with prepayments and Commitment reductions made
pursuant to Section 2.10
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shall be applied, first, to the prepayment of the Term Loans and, second, to
reduce permanently the Revolving Credit Commitments. Any such reduction of the
Revolving Credit Commitments shall be accompanied by prepayment of the Revolving
Credit Loans to the extent, if any, that the Total Revolving Extensions of
Credit exceed the amount of the Total Revolving Credit Commitments as so
reduced, provided that if the aggregate principal amount of Revolving Credit
Loans then outstanding is less than the amount of such excess (because L/C
Obligations constitute a portion thereof), the Borrowers shall, to the extent of
the balance of such excess, replace outstanding Letters of Credit and/or deposit
an amount in cash in a cash collateral account established with the
Administrative Agent for the benefit of the Lenders on terms and conditions
satisfactory to the Administrative Agent. Except as otherwise provided in
paragraph (c) above, each prepayment of the Term Loans as set forth in this
Section 2.10 shall be applied to the Tranche A Term Loans and the Tranche B Term
Loans pro rata and to the installments thereof in inverse order of maturity and
may not be reborrowed. The application of any prepayment pursuant to Section
2.10 shall be made first to Base Rate Loans and second to Eurodollar Loans. Each
prepayment of the Loans under Section 2.10 (except in the case of Revolving
Credit Loans that are Base Rate Loans) shall be accompanied by accrued interest
to the date of such prepayment on the amount prepaid.
2.11 Conversion and Continuation Options. (a) The Borrowers may
elect from time to time to convert Eurodollar Loans to Base Rate Loans by giving
the Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto. The Borrowers
may elect from time to time to convert Base Rate Loans to Eurodollar Loans by
giving the Administrative Agent at least three Business Days' prior irrevocable
notice of such election (which notice shall specify the length of the initial
Interest Period therefor), provided that no Base Rate Loan under a particular
Facility may be converted into a Eurodollar Loan (i) when any Event of Default
has occurred and is continuing and the Administrative Agent or the Majority
Facility Lenders in respect of such Facility have determined in its or their
sole discretion not to permit such conversions or (ii) after the date that is
one month prior to the final scheduled termination or maturity date of such
Facility. Upon receipt of any such notice the Administrative Agent shall
promptly notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrowers giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans, provided
that no Eurodollar Loan under a particular Facility may be continued as such (i)
when any Event of Default has occurred and is continuing and the Administrative
Agent has or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such continuations or
(ii) after the date that is one month prior to the final scheduled termination
or maturity date of such Facility, and, provided, further, that if the Borrowers
shall fail to give any required notice as described above in this paragraph or
if such continuation is not permitted pursuant to the preceding proviso such
Loans shall be automatically converted to Base Rate Loans on the last day of
such then
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expiring Interest Period. Upon receipt of any such notice the Administrative
Agent shall promptly notify each relevant Lender thereof.
2.12 Minimum Amounts and Maximum Number of Eurodollar Tranches.
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Eurodollar Loans
hereunder and all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, (a) after giving effect
thereto, the aggregate principal amount of the Eurodollar Loans comprising each
Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of
$1,000,000 in excess thereof and (b) no more than ten Eurodollar Tranches shall
be outstanding at any one time.
2.13 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan or
Reimbursement Obligation shall not be paid when due (whether at the stated
maturity, by acceleration or otherwise), all outstanding Loans and Reimbursement
Obligations (whether or not overdue) shall bear interest at a rate per annum
which is equal to (x) in the case of the Loans, the rate that would otherwise be
applicable thereto pursuant to the foregoing provisions of this Section 2.13
plus 2% or (y) in the case of Reimbursement Obligations, the rate applicable to
Base Rate Loans under the Revolving Credit Facility plus 2%, and (ii) if all or
a portion of any interest payable on any Loan or Reimbursement Obligation or any
commitment fee or other amount payable hereunder shall not be paid when due
(whether at the stated maturity, by acceleration or otherwise), such overdue
amount shall bear interest at a rate per annum equal to the rate applicable to
Base Rate Loans under the relevant Facility plus 2% (or, in the case of any such
other amounts that do not relate to a particular Facility, the Base Rate plus
4%), in each case, with respect to clauses (i) and (ii) above, from the date of
such non-payment until such amount is paid in full (as well after as before
judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date, provided that interest accruing pursuant to paragraph (c) of this Section
2.13 shall be payable from time to time on demand.
2.14 Computation of Interest and Fees. (a) Interest, fees and
commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to Base Rate
Loans the rate of interest on which is calculated on the basis of the Prime
Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed. The Administrative
Agent shall as soon as practicable notify the Borrowers and the relevant Lenders
of each determination of a Eurodollar Rate. Any change in the interest rate on a
Loan resulting from a
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change in the Base Rate or the Eurocurrency Reserve Requirements shall become
effective as of the opening of business on the day on which such change becomes
effective. The Administrative Agent shall as soon as practicable notify the
Borrowers and the relevant Lenders of the effective date and the amount of each
such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrowers and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrowers, deliver to the
Borrowers a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.13(a).
2.15 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrowers in the
absence of manifest error) that, by reason of circumstances affecting the
relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that the
Eurodollar Rate determined or to be determined for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (as
conclusively certified by such Lenders) of making or maintaining their
affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrowers and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans under the relevant Facility requested
to be made on the first day of such Interest Period shall be made as Base Rate
Loans, (y) any Loans under the relevant Facility that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as Base Rate Loans and (z) any outstanding Eurodollar Loans under the
relevant Facility shall be converted, on the first day of such Interest Period,
to Base Rate Loans. Until such notice has been withdrawn by the Administrative
Agent, no further Eurodollar Loans under the relevant Facility shall be made or
continued as such, nor shall the Borrowers have the right to convert Loans under
the relevant Facility to Eurodollar Loans.
2.16 Pro Rata Treatment and Payments. (a) Each borrowing by the
Borrowers from the Lenders hereunder, each payment by the Borrowers on account
of any commitment fee and any reduction of the Commitments of the Lenders shall
be made pro rata according to the respective Tranche A Term Loan Percentages,
Tranche B Term Loan Percentages or Revolving Credit Percentages, as the case may
be, of the relevant Lenders.
(b) Each payment (including each prepayment) by the Borrowers on
account of principal of and interest on the Term Loans shall be made pro rata
according to the respective outstanding principal amounts of the Term Loans then
held by the Term Loan Lenders. The
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amount of each principal prepayment of the Term Loans shall be applied to reduce
the then remaining installments of the Tranche A Term Loans and Tranche B Term
Loans, as the case may be, pro rata based upon the then remaining principal
amount thereof. Amounts prepaid on account of the Tranche B Term Loans may not
be reborrowed.
(c) Each payment (including each prepayment) by the Borrowers on
account of principal of and interest on the Revolving Credit Loans shall be made
pro rata according to the respective outstanding principal amounts of the
Revolving Credit Loans then held by the Revolving Credit Lenders.
(d) All payments (including prepayments) to be made by the Borrowers
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the Lenders, at the Payment Office, in Dollars and in immediately
available funds. Payments received after such time shall be deemed to have been
received on the next Business Day. The Administrative Agent shall distribute
such payments to the Lenders promptly upon receipt in like funds as received. If
any payment hereunder (other than payments on the Eurodollar Loans) becomes due
and payable on a day other than a Business Day, such payment shall be extended
to the next succeeding Business Day. If any payment on a Eurodollar Loan becomes
due and payable on a day other than a Business Day, the maturity thereof shall
be extended to the next succeeding Business Day unless the result of such
extension would be to extend such payment into another calendar month, in which
event such payment shall be made on the immediately preceding Business Day. In
the case of any extension of any payment of principal pursuant to the preceding
two sentences, interest thereon shall be payable at the then applicable rate
during such extension.
(e) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrowers a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this Section 2.16(e) shall be conclusive in
the absence of manifest error. If such Lender's share of such borrowing is not
made available to the Administrative Agent by such Lender within three Business
Days of such Borrowing Date, the Administrative Agent shall promptly notify the
Borrowers and shall also be entitled to recover such amount with interest
thereon at the rate per annum applicable to Base Rate Loans under the relevant
Facility, payable within 2 days from demand, from the Borrowers.
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(f) Unless the Administrative Agent shall have been notified in
writing by the Borrowers prior to the date of any payment being made hereunder
that the Borrowers will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrowers are making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective pro rata shares
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrowers within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrowers.
2.17 Requirements of Law. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any Application or any
Eurodollar Loan made by it, or change the basis of taxation of payments to
such Lender in respect thereof (except for Non-Excluded Taxes covered by
Section 2.18 and changes in the rate of tax on the overall net income of
such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or issuing or participating in
Letters of Credit, or to reduce any amount receivable hereunder in respect
thereof, then, in any such case, the Borrowers shall promptly pay such Lender,
upon its demand, any additional amounts necessary to compensate such Lender (or
an after-tax basis) for such increased cost or reduced amount receivable. If any
Lender becomes entitled to claim any additional amounts pursuant to this Section
2.17, it shall promptly notify the Borrowers (with a copy to the Administrative
Agent) of the event by reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any
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request or directive regarding capital adequacy (whether or not having the force
of law) from any Governmental Authority made subsequent to the date hereof shall
have the effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder or under or
in respect of any Letter of Credit to a level below that which such Lender or
such corporation could have achieved but for such adoption, change or compliance
(taking into consideration such Lender's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, after submission by such Lender to the Borrowers (with a
copy to the Administrative Agent) of a written request therefor setting forth
the basis of such Lender's determination, the Borrowers shall pay to such Lender
such additional amount or amounts as will compensate such Lender (on an
after-tax basis) for such reduction; provided that the Borrowers shall not be
required to compensate a Lender pursuant to this paragraph for any amounts
incurred more than six months prior to the date that such Lender notifies the
Borrowers of such Lender's intention to claim compensation therefor. If a Lender
becomes entitled to claim any additional amounts pursuant to this paragraph, it
shall promptly notify the Borrowers.
(c) A certificate as to any additional amounts payable pursuant to
this Section 2.17 submitted by any Lender to the Borrowers (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrowers pursuant to this Section 2.17 shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.18 Taxes. (a) All payments made by either of the Borrowers under
this Agreement shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on any Agent or any Lender as a result of a
present or former connection between such Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political
subdivision or taxing authority thereof or therein (other than any such
connection arising solely from such Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement or any other Loan Document). If any such non-excluded taxes,
levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") or Other Taxes are required to be withheld from any
amounts payable to any Agent or any Lender hereunder, the amounts so payable to
such Agent or such Lender shall be increased to the extent necessary to yield to
such Agent or such Lender (after payment of all Non-Excluded Taxes and Other
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement, provided, however, that the Borrowers
shall not be required to increase any such amounts payable to any Lender with
respect to any Non-Excluded Taxes (i) that are attributable to such Lender's
failure to comply with the requirements of paragraph (d) or (e) of this Section
or (ii) that are United States withholding taxes imposed on amounts payable to
such Lender at the time the Lender becomes a party to this Agreement, except to
the extent that such Lender's assignor (if any) was
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entitled, at the time of assignment, to receive additional amounts from the
Borrowers with respect to such Non-Excluded Taxes pursuant to Section 2.18(a).
(b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
either of the Borrowers, as promptly as possible thereafter the Borrowers shall
send to the Administrative Agent for the account of the relevant Agent or
Lender, as the case may be, a certified copy of an original official receipt
received by either of the Borrowers showing payment thereof. If either of the
Borrowers fail to pay any Non-Excluded Taxes or Other Taxes when due to the
appropriate taxing authority or fails to remit to the Agents the required
receipts or other required documentary evidence, the Borrowers shall indemnify
the Administrative Agent and the Lenders for any incremental taxes, interest or
penalties that may become payable by any Agent or any Lender as a result of any
such failure. The agreements in this Section 2.18 shall survive the termination
of this Agreement and the payment of the Loans and all other amounts payable
hereunder.
(d) Each Lender (or Transferee) that is not a citizen or resident of
the United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States (or any jurisdiction
thereof), or any estate or trust that is subject to federal income taxation
regardless of the source of its income (a "Non-U.S. Lender") shall deliver to
the Borrowers and the Administrative Agent (or, in the case of a Participant, to
the Lender from which the related participation shall have been purchased) two
copies of either U.S. Internal Revenue Service Form 1001 or Form 4224, or, in
the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding
tax under Section 871(h) or 881(c) of the Code with respect to payments of
"portfolio interest" a statement substantially in the form of Exhibit J and a
Form W-8, or any subsequent versions thereof or successors thereto properly
completed and duly executed by such Non-U.S. Lender claiming complete exemption
from, or a reduced rate of, U.S. federal withholding tax on all payments by the
Borrowers under this Agreement and the other Loan Documents. Such forms shall be
delivered by each Non-U.S. Lender on or before the date it becomes a party to
this Agreement (or, in the case of any Participant, on or before the date such
Participant purchases the related participation). In addition, each Non-U.S.
Lender shall deliver such forms promptly upon the obsolescence or invalidity of
any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender
shall promptly notify the Borrowers at any time it determines that it is no
longer in a position to provide any previously delivered certificate to the
Borrowers (or any other form of certification adopted by the U.S. taxing
authorities for such purpose). Notwithstanding any other provision of this
Section 2.18(d), a Non-U.S. Lender shall not be required to deliver any form
pursuant to this Section 2.18(d) that such Non-U.S. Lender is not legally able
to deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the
Borrowers are located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrowers (with a
copy to the Administrative Agent), at the time or times
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prescribed by applicable law or reasonably requested by the Borrowers, such
properly completed and executed documentation prescribed by applicable law as
will permit such payments to be made without withholding or at a reduced rate,
provided that such Lender is legally entitled to complete, execute and deliver
such documentation and in such Lender's reasonable judgment such completion,
execution or submission would not materially prejudice the legal position of
such Lender.
2.19 Indemnity. The Borrowers agree, jointly and severally, to
indemnify each Lender and to hold each Lender harmless from any loss or expense
which such Lender may sustain or incur as a consequence of (a) default by the
Borrowers in making a borrowing of, conversion into or continuation of
Eurodollar Loans after the Borrowers have given a notice requesting the same in
accordance with the provisions of this Agreement, (b) default by the Borrowers
in making any prepayment after the Borrowers have given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loans on a day which is not the last day of an Interest
Period with respect thereto. Such indemnification may include an amount equal to
the excess, if any, of (i) the amount of interest which would have accrued on
the amount so prepaid, or not so borrowed, converted or continued, for the
period from the date of such prepayment or of such failure to borrow, convert or
continue to the last day of such Interest Period (or, in the case of a failure
to borrow, convert or continue, the Interest Period that would have commenced on
the date of such failure) in each case at the applicable rate of interest for
such Loans provided for herein (excluding, however, the Applicable Margin
included therein, if any) over (ii) the amount of interest (as reasonably
determined by such Lender) which would have accrued to such Lender on such
amount by placing such amount on deposit for a comparable period with leading
banks in the interbank eurodollar market. A certificate as to any amounts
payable pursuant to this Section 2.19 submitted to the Borrowers by any Lender
shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
2.20 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.17 or 2.18(a)
with respect to such Lender, it will, if requested by the Borrowers, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided further that nothing in this Section 2.20 shall
affect or postpone any of the obligations of any Borrowers or the rights of any
Lender pursuant to Section 2.17 or 2.18(a).
2.21 Maximum Liability. Notwithstanding anything in this Agreement
to the contrary, the maximum liability of each Borrower hereunder in respect of
the other Borrower's obligations and liabilities hereunder, whether on account
of principal, interest, fees, reimbursement obligations, indemnities, costs,
expenses or otherwise shall not exceed such other Borrower's Maximum Liability.
As used herein, "Maximum Liability" for any Borrower shall mean the maximum
amount of liability which such Borrower is permitted to
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incur in respect of the obligations and liabilities of the other Borrower
hereunder in accordance with applicable Federal and state laws relating to
insolvency of debtors.
2.22 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be cancelled and (b)
such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 2.19.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions hereof, the
Issuing Lender, in reliance on the agreements of the other Revolving Credit
Lenders set forth in Section 3.4(a), agrees to issue letters of credit ("Letters
of Credit") for the account of the Borrowers on any Business Day during the
Revolving Credit Commitment Period in such form as may be approved from time to
time by the Issuing Lender; provided that the Issuing Lender shall have no
obligation to issue any Letter of Credit if, after giving effect to such
issuance, (i) the L/C Obligations would exceed the L/C Commitment or (ii) the
aggregate amount of the Available Revolving Credit Commitments would be less
than zero. Each Letter of Credit shall (i) be denominated in Dollars, German
Deutschemarks, French Francs or British pounds and (ii) expire no later than the
earlier of (x) the first anniversary of its date of issuance and (y) the date
which is five Business Days prior to the Revolving Credit Termination Date,
provided that (A) any Letter of Credit with a one-year term may provide for the
renewal thereof for additional one-year periods (which shall in no event extend
beyond the date referred to in clause (y) above) and (B) any Letter of Credit
denominated in a currency other than Dollars shall be issued and shall remain
outstanding pursuant to procedures and on terms (including the effect of
exchange rate fluctuations) to be agreed upon by the Borrowers and the Issuing
Lender (which procedures and terms shall not be inconsistent with the procedures
and terms of this Agreement). The Dollar equivalent (determined by the
Administrative Agent in good faith according to customary methods and
procedures) of any Letter of Credit denominated in a currency other than Dollars
shall be monitored at the discretion of the Administrative Agent (but not less
frequently than monthly); provided that the reimbursement obligations of the
Revolving Credit Lenders shall be limited as set forth in Section 3.4. If at any
time the Total Revolving Extensions of Credit shall exceed the Total Revolving
Credit Commitments then, upon notice from the Administrative Agent, the
Borrowers shall prepay Revolving Credit Loans, replace outstanding Letters of
Credit or collateralize outstanding Letters of Credit on terms and conditions
satisfactory to the Administrative Agent to the extent necessary so that the
Total Revolving Extensions of Credit do not exceed the Total Revolving Credit
Commitments.
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(b) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of New
York.
(c) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or cause
the Issuing Lender or any L/C Participant to exceed any limits imposed by, any
applicable Requirement of Law.
3.2 Procedure for Issuance of Letter of Credit. The Borrowers may
from time to time request that the Issuing Lender issue a Letter of Credit by
delivering to the Issuing Lender at its address for notices specified herein an
Application therefor, completed to the satisfaction of the Issuing Lender, and
such other certificates, documents and other papers and information as the
Issuing Lender may request. Upon receipt of any Application, the Issuing Lender
will process such Application and the certificates, documents and other papers
and information delivered to it in connection therewith in accordance with its
customary procedures and shall promptly issue the Letter of Credit requested
thereby (but in no event shall the Issuing Lender be required to issue any
Letter of Credit earlier than three Business Days after its receipt of the
Application therefor and all such other certificates, documents and other papers
and information relating thereto) by issuing the original of such Letter of
Credit to the beneficiary thereof or as otherwise may be agreed to by the
Issuing Lender and the Borrowers. The Issuing Lender shall furnish a copy of
such Letter of Credit to the Borrowers promptly following the issuance thereof.
The Issuing Lender shall promptly furnish to the Administrative Agent, which
shall in turn promptly furnish to the Lenders, notice of the issuance of each
Letter of Credit (including the amount thereof).
3.3 Commissions, Fees and Other Charges. (a) The Borrowers will pay
a commission on all outstanding Letters of Credit at a per annum rate equal to
the Applicable Margin then in effect with respect to Eurodollar Loans under the
Revolving Credit Facility shared ratably among the Revolving Credit Lenders and
payable quarterly in arrears on each L/C Fee Payment Date after the issuance
date. In addition, the Borrowers shall pay to the Issuing Lender for its own
account a fronting fee of 1/8 of 1% per annum of the undrawn and unexpired
amount of the Letter of Credit, payable quarterly in arrears on each L/C Fee
Payment Date after the Issuance Date.
(b) In addition to the foregoing fees and commissions, the Borrowers
shall pay or reimburse the Issuing Lender for such normal and customary costs
and expenses as are incurred or charged by the Issuing Lender in issuing,
negotiating, effecting payment under, amending or otherwise administering any
Letter of Credit.
3.4 L/C Participations. (a) The Issuing Lender irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce the Issuing
Lender to issue Letters of Credit hereunder, each L/C Participant irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such L/C
Participant's own account and risk an undivided interest equal to such L/C
Participant's Revolving Credit Percentage in the Issuing Lender's obligations
and rights under each Letter of Credit issued hereunder and the amount of each
draft paid by the Issuing Lender
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thereunder. Each L/C Participant unconditionally and irrevocably agrees with the
Issuing Lender that, if a draft is paid under any Letter of Credit for which the
Issuing Lender is not reimbursed in full by the Borrowers in accordance with the
terms of this Agreement, such L/C Participant shall pay to the Issuing Lender
upon demand at the Issuing Lender's address for notices specified herein an
amount in Dollars equal to such L/C Participant's Revolving Credit Percentage of
the amount of such draft, or any part thereof, which is not so reimbursed;
provided that a Revolving Credit Lender shall not be obligated to make Revolving
Credit Loans and participate in Letters of Credit in an aggregate amount in
excess of such Lender's Revolving Credit Commitment.
(b) If any amount required to be paid by any L/C Participant to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any payment made by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such L/C Participant shall pay to the Issuing Lender on demand an amount
equal to the product of (i) such amount, times (ii) the daily average Federal
Funds Effective Rate during the period from and including the date such payment
is required to the date on which such payment is immediately available to the
Issuing Lender, times (iii) a fraction the numerator of which is the number of
days that elapse during such period and the denominator of which is 360. If any
such amount required to be paid by any L/C Participant pursuant to Section
3.4(a) is not made available to the Issuing Lender by such L/C Participant
within three Business Days after the date such payment is due, the Issuing
Lender shall be entitled to recover from such L/C Participant, on demand, such
amount with interest thereon calculated from such due date at the rate per annum
applicable to Base Rate Loans under the Revolving Credit Facility. A certificate
of the Issuing Lender submitted to any L/C Participant with respect to any
amounts owing under this Section shall be conclusive in the absence of manifest
error.
(c) Whenever, at any time after the Issuing Lender has made payment
under any Letter of Credit and has received from any L/C Participant its pro
rata share of such payment in accordance with Section 3.4(a), the Issuing Lender
receives any payment related to such Letter of Credit (whether directly from the
Borrowers or otherwise, including proceeds of collateral applied thereto by the
Issuing Lender), or any payment of interest on account thereof, the Issuing
Lender will distribute to such L/C Participant its pro rata share thereof;
provided, however, that in the event that any such payment received by the
Issuing Lender shall be required to be returned by the Issuing Lender, such L/C
Participant shall return to the Issuing Lender the portion thereof previously
distributed by the Issuing Lender to it.
3.5 Reimbursement Obligation of the Borrowers. The Borrowers agree,
jointly and severally, to reimburse the Issuing Lender on each date on which the
Issuing Lender notifies the Borrowers of the date and amount of a draft
presented under any Letter of Credit and paid by the Issuing Lender for the
amount of (a) such draft so paid and (b) any taxes, fees, charges or other costs
or expenses incurred by the Issuing Lender in connection with such payment. Each
such payment shall be made to the Issuing Lender at its address for notices
specified herein in lawful money of the United States and in immediately
available funds. Interest shall be payable on any and all amounts remaining
unpaid by the Borrowers under this
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Section from the date such amounts become payable (whether at stated maturity,
by acceleration or otherwise) until payment in full at the rate set forth in
Section 2.13(c). Each drawing under any Letter of Credit shall (unless an event
of the type described in clause (i) or (ii) of Section 8(f) shall have occurred
and be continuing with respect to the Borrowers, in which case the procedures
specified in Section 3.4 for funding by L/C Participants shall apply) constitute
a request by the Borrowers to the Administrative Agent for a borrowing pursuant
to Section 2.5 of Base Rate Loans in the amount of such drawing. The Borrowing
Date with respect to such borrowing shall be the date of such drawing.
3.6 Obligations Absolute. The Borrowers' obligations under this
Section 3 shall be absolute and unconditional under any and all circumstances
and irrespective of any setoff, counterclaim or defense to payment which the
Borrowers may have or have had against the Issuing Lender, any beneficiary of a
Letter of Credit or any other Person. The Borrowers also agree with the Issuing
Lender that the Issuing Lender shall not be responsible for, and the Borrowers'
Reimbursement Obligations under Section 3.5 shall not be affected by, among
other things, the validity or genuineness of documents or of any endorsements
thereon, even though such documents shall in fact prove to be invalid,
fraudulent or forged, or any dispute between or among the Borrowers and any
beneficiary of any Letter of Credit or any other party to which such Letter of
Credit may be transferred or any claims whatsoever of the Borrowers against any
beneficiary of such Letter of Credit or any such transferee. The Issuing Lender
shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted from the gross negligence or willful misconduct of
the Issuing Lender. The Borrowers agree that any action taken or omitted by the
Issuing Lender under or in connection with any Letter of Credit or the related
drafts or documents, if done in the absence of gross negligence or willful
misconduct and in accordance with the standards or care specified in the Uniform
Commercial Code of the State of New York, shall be binding on the Borrowers and
shall not result in any liability of the Issuing Lender to the Borrowers.
3.7 Letter of Credit Payments. If any draft shall be presented for
payment under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrowers of the date and amount thereof. The responsibility of the Issuing
Lender to the Borrowers in connection with any draft presented for payment under
any Letter of Credit shall, in addition to any payment obligation expressly
provided for in such Letter of Credit, be limited to determining that the
documents (including each draft) delivered under such Letter of Credit in
connection with such presentment are substantially in conformity with such
Letter of Credit.
3.8 Applications. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the provisions
of this Section 3, the provisions of this Section 3 shall apply.
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SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement
and to make the Loans and issue or participate in the Letters of Credit, each of
the Borrowers hereby represents and warrants to each Agent and each Lender that:
4.1 Financial Condition. (a) The unaudited pro forma consolidated
balance sheet of K&F and its consolidated Subsidiaries as at September 30, 1997
(including the notes thereto) (the "Pro Forma Balance Sheet"), copies of which
have heretofore been furnished to each Lender, has been prepared in accordance
with GAAP giving effect (as if such events had occurred on such date) to (i) the
consummation of the Recapitalization and the other Transactions, (ii) the Loans
to be made and the Senior Subordinated Notes to be issued on the Closing Date
and the use of proceeds thereof and (iii) the payment of fees and expenses in
connection with the foregoing. The Pro Forma Balance Sheet has been prepared
based on the best information available to K&F as of the date of delivery
thereof, and presents fairly on a pro forma basis the estimated financial
position of K&F and its consolidated Subsidiaries as at September 30, 1997,
assuming that the events specified in the preceding sentence had actually
occurred at such date.
(b) The audited consolidated and consolidating balance sheets of K&F
and its consolidated Subsidiaries as at March 31, 1996 and December 31, 1996,
and the related consolidated and consolidating statements of income and of cash
flows for the fiscal years ended on such dates, reported on by and accompanied
by an unqualified report from Deloitte & Touche, LLP, present fairly the
consolidated and consolidating financial condition of K&F and its Subsidiaries
as at such date, and the consolidated and consolidating results of its
operations and its consolidated and consolidating cash flows for the respective
fiscal years then ended. The unaudited consolidated and consolidating balance
sheet of K&F and its consolidated Subsidiaries as at June 30, 1997, and the
related unaudited consolidated and consolidating statements of income and cash
flows for the six-month period ended on such date, certified by a Responsible
Officer of K&F, present fairly the consolidated and consolidating financial
condition of K&F and its consolidated Subsidiaries as at such date, and the
consolidated and consolidating results of its operations and its consolidated
and consolidating cash flows for the six-month period then ended (subject to
normal year-end audit adjustments). All such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
aforementioned firm of accountants or Responsible Officer, as the case may be,
and disclosed therein). Neither K&F nor any of its consolidated Subsidiaries
have any material Guarantee Obligations, contingent liabilities and liabilities
for taxes, or any long-term leases or unusual forward or long-term commitments,
including, without limitation, any interest rate or foreign currency swap or
exchange transaction or other obligation in respect of derivatives, which are
not reflected in the most recent financial statements referred to in this
paragraph (b). During the period from December 31, 1996 to and including the
date hereof there has been no Disposition by K&F or its Subsidiaries of any
material part of its business or Property.
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4.2 No Change. Since December 31, 1996 there has been no development
or event which has had or could reasonably be expected to have a Material
Adverse Effect. Since December 31, 1996 there has been no material adverse
change in the business, operations, property or financial or other condition of
either of the Borrowers nor has either Borrower incurred any material
obligation, contingent or otherwise, which has had a Material Adverse Effect and
during the period from December 31, 1996 to and including the date of this
Agreement, no dividends or other distributions have been declared, paid or made
upon the Capital Stock of K&F or any Subsidiary nor has any of the Capital Stock
of K&F or any Subsidiary been redeemed, retired, purchased or otherwise acquired
for value by K&F or any of its Subsidiaries, except pursuant to the
Recapitalization.
4.3 Corporate Existence; Compliance with Law. Each of the Borrowers
and its respective Subsidiaries (a) is duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (b) has
the corporate power and authority, and the legal right, to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements of
Law except to the extent that the failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations. Each
Loan Party has the corporate power and authority, and the legal right, to make,
deliver and perform the Loan Documents to which it is a party and, in the case
of the Borrowers, to borrow hereunder. Each Loan Party has taken all necessary
corporate action to authorize the execution, delivery and performance of the
Loan Documents to which it is a party and, in the case of the Borrowers, to
authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the Recapitalization or the other Transactions and the
borrowings hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or any of the Loan Documents, except (i)
consents, authorizations, filings and notices that, when required, have been
obtained or made and are in full force and effect and (ii) the filings referred
to in Section 4.20(b). Each Loan Document has been duly executed and delivered
on behalf of each Loan Party party thereto. This Agreement constitutes, and each
other Loan Document upon execution will constitute, a legal, valid and binding
obligation of each Loan Party party thereto, enforceable against each such Loan
Party in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
4.5 No Legal Bar. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder
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and the use of the proceeds thereof will not violate any Requirement of Law or
any Contractual Obligation of either of the Borrowers or any of the Subsidiaries
and will not result in, or require, the creation or imposition of any Lien on
any of their respective properties or revenues pursuant to any Requirement of
Law or any such Contractual Obligation (other than the Liens created by the
Security Documents) the consequences of which violation, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect.
4.6 No Material Litigation. Except as set forth in Schedule 4.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of either of the
Borrowers, threatened by or against either of the Borrowers or any of the
Subsidiaries or against any of their respective properties or revenues (a) with
respect to any of the Loan Documents or any of the transactions contemplated
hereby or thereby, or (b) which could reasonably be expected to have a Material
Adverse Effect.
4.7 No Default. Neither of the Borrowers nor any of their
Subsidiaries is in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Each of the Borrowers and their
Subsidiaries has title in fee simple to, or a valid leasehold interest in, all
its real property, and good title to, or a valid leasehold interest in, all its
other Property, and none of such Property is subject to any Lien except as
permitted by Section 7.3. K&F and its Subsidiaries have (a) title in fee simple
to no real property other than as specified on Schedule 1.1B and (b) a valid
leasehold interest in no real property other than as specified on Schedule 1.1B,
provided that the Borrowers may revise the information set forth on Schedule
1.1B from time to time upon notice to the Administrative Agent.
4.9 Intellectual Property. Each of the Borrowers and their
Subsidiaries owns, or is licensed to use, all Intellectual Property necessary
for the conduct of its business as currently conducted that are material to the
condition (financial or other), business, or operations of the Borrowers and the
Subsidiaries taken as a whole. Except as set forth on Schedule 4.6, to the best
of each Borrower's knowledge after reasonable inquiry, no material claim has
been asserted and is pending by any Person challenging or questioning the use of
any Intellectual Property or the validity or effectiveness of any Intellectual
Property, nor do the Borrowers know of any valid basis for any such claim. The
use of Intellectual Property by the Borrowers and the Subsidiaries does not
infringe on the rights of any Person in any material respect.
4.10 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation of the Borrowers or any of their Subsidiaries exists that
could reasonably be expected to have a Material Adverse Effect.
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4.11 Taxes. Each of the Borrowers and their Subsidiaries has filed
or caused to be filed all Federal, state and other material tax returns which
are required to be filed and has paid all taxes shown to be due and payable on
said returns or on any assessments made against it or any of its Property and
all other taxes, fees or other charges imposed on it or any of its Property by
any Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which reserves in conformity with GAAP have been provided on the
books of either Borrower or any Subsidiaries, as the case may be); no tax Lien
has been filed, and, to the knowledge of each of the Borrowers, no claim is
being asserted, with respect to any such tax, fee or other charge.
4.12 Federal Regulations. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation G or Regulation U as now
and from time to time hereafter in effect or for any purpose which violates the
provisions of the Regulations of the Board. If requested by any Lender or the
Administrative Agent, the Borrowers will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-3 or FR Form U-1 referred to in Regulation G or
Regulation U, as the case may be.
4.13 Labor Matters. There are no strikes or other labor disputes
against the Borrowers or any of the Subsidiaries pending or, to the knowledge of
the Borrowers, threatened that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. Hours worked by and
payment made to employees of the Borrowers and the Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Requirement of
Law dealing with such matters that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect. All payments due from
the Borrowers or any of the Subsidiaries on account of employee health and
welfare insurance that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect if not paid have been paid or accrued
as a liability on the books of the Borrowers or the relevant Subsidiary.
4.14 ERISA. Neither a Reportable Event (other than the
Recapitalization) nor an "accumulated funding deficiency" (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred during the
five-year period prior to the date on which this representation is made or
deemed made with respect to any Plan, and each Plan has complied in all material
respects with the applicable provisions of ERISA and the Code. No termination of
a Single Employer Plan has occurred, and no Lien in favor of the PBGC or a Plan
has arisen, during such five-year period. The present value of all accrued
benefits under each Single Employer Plan (based on those assumptions used to
fund such Plans) did not, as of the last annual valuation date prior to the date
on which this representation is made or deemed made, exceed the value of the
assets of such Plan allocable to such accrued benefits by more than $8,000,000.
Neither of the Borrowers nor any Commonly Controlled Entity has had a complete
or partial withdrawal from any Multiemployer Plan which has resulted or could
reasonably be expected to result in a material liability under ERISA, and
neither of the
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Borrowers nor any Commonly Controlled Entity would become subject to any
material liability under ERISA if either of the Borrowers or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as of
the valuation date most closely preceding the date on which this representation
is made or deemed made. No such Multiemployer Plan is in Reorganization or
Insolvent.
4.15 Investment Company Act; Other Regulations. No Loan Party is an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the Board) which limits its ability to incur Indebtedness.
4.16 Subsidiaries. The Subsidiaries listed on Schedule 4.16
constitute all the direct and indirect Subsidiaries of K&F at the date hereof,
(b) each such Subsidiary was incorporated on the date and in the jurisdiction
set forth opposite such Subsidiary's name on such Schedule 4.16 and (c) the
approximate book value of the assets of each such Subsidiary is set forth
opposite such Subsidiary's name on Schedule 4.16, provided that the Borrowers
may revise the information set forth on Schedule 4.16 upon notice to the
Administrative Agent.
4.17 Use of Proceeds. The proceeds of the Term Loans shall be used
to finance a portion of the Recapitalization and the other Transactions and to
pay related fees and expenses. The proceeds of the Revolving Credit Loans and
the Letters of Credit, shall be used to finance the Transactions and to finance
the working capital and general corporate needs of the Borrowers and their
Subsidiaries in the ordinary course of business.
4.18 Environmental Matters. Except as in the aggregate could not
reasonably be expected to result in the payment of a Material Environmental
Amount:
(a) The facilities and properties owned, leased or operated by K&F,
the Borrowers or any of their Subsidiaries (the "Business Properties") do not
contain, and have not previously contained, any Materials of Environmental
Concern in amounts or concentrations or under circumstances which (i) constitute
or constituted a violation of, or (ii) could give rise to liability under, any
Environmental Law.
(b) The Business Properties and all operations at the Business
Properties are in material compliance, and have in the last five years been in
material compliance, with all applicable Environmental Laws, and there is no
contamination at, under or about the Business Properties or violation of any
Environmental Law with respect to the Business Properties or the business
operated by K&F, the Borrowers or any of their Subsidiaries (the "Business")
which could reasonably be expected to materially interfere with the continued
operations of the Properties or that could reasonably be expected to result in a
material liability under the Environmental Laws. Neither K&F, the Borrowers nor
any of their Subsidiaries has assumed any liability of any other Person under
Environmental Laws.
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(c) Neither K&F, the Borrowers nor any of their Subsidiaries has
received or is aware of any notice of violation, alleged violation,
non-compliance, liability or potential liability regarding environmental matters
or compliance with Environmental Laws with regard to any of the Business
Properties or the Business, nor does K&F or the Borrowers have knowledge or
reason to believe that any such notice will be received or is being threatened.
(d) To the knowledge of K&F, the Borrowers or any of their
Subsidiaries, Materials of Environmental Concern have not been transported or
disposed of from the Business Properties in violation of, or in a manner or to a
location which could give rise to liability under, any Environmental Law, nor
have any Materials of Environmental Concern been generated, treated, stored or
disposed of at, on or under any of the Business Properties in violation of, or
in a manner that could give rise to liability under, any applicable
Environmental Law.
(e) No judicial proceeding or governmental or administrative action
is pending or, to the knowledge of K&F, the Borrowers or any of their
Subsidiaries, threatened, under any Environmental Law to which K&F, the
Borrowers or any of their Subsidiaries is or will be named as a party with
respect to the Business Properties or the Business, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other orders,
or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Business Properties or the Business.
(f) There has been no release or threat of release of Materials of
Environmental Concern at or from the Business Properties, or arising from or
related to the operations of K&F, the Borrowers or any of their Subsidiaries in
connection with the Business Properties or otherwise in connection with the
Business, in violation of or in amounts or in a manner that could give rise to
liability under Environmental Laws.
For purposes of Section 8(b) of this Agreement, each of the
foregoing representations and warranties contained in this Section 4.18 that are
qualified by the knowledge of any party shall be deemed not to be so qualified.
4.19 Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum, the Offering Memorandum or any other document,
certificate or statement furnished to the Administrative Agent or the Lenders or
any of them, by or on behalf of any Loan Party for use in connection with the
transactions contemplated by this Agreement or the other Loan Documents,
contained as of the date such statement, information, document or certificate
was so furnished (or, in the case of the Confidential Information Memorandum, as
of the date of this Agreement), any untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements
contained herein or therein, when taken as a whole, not misleading. The
projections and pro forma financial information contained in the materials
referenced above are based upon good faith estimates and assumptions believed by
management of the Borrowers to be reasonable at the time made, it being
recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact
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and that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a
material amount. As of the date hereof, the representations and warranties
contained in the Recapitalization Documentation are true and correct in all
material respects. There is no fact known to any Loan Party that could
reasonably be expected to have a Material Adverse Effect that has not been
expressly disclosed herein, in the other Loan Documents, in the Confidential
Information Memorandum or in any other documents, certificates and statements
furnished to the Administrative Agent and the Lenders for use in connection with
the transactions contemplated hereby and by the other Loan Documents.
4.20 Security Documents. (a) The Guarantee and Collateral Agreement
is effective to create in favor of the Administrative Agent, for the benefit of
the Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock
described in the Guarantee and Collateral Agreement, when stock certificates
representing such Pledged Stock are delivered to the Administrative Agent, and
in the case of the other Collateral described in the Guarantee and Collateral
Agreement, when financing statements in appropriate form are filed in the
offices specified on Schedule 4.20(a), the Guarantee and Collateral Agreement
shall constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Collateral and the proceeds
thereof, as security for the Obligations (as defined in the Guarantee and
Collateral Agreement), in each case prior and superior in right to any other
Person (except, in the case of Collateral other than Pledged Stock, Liens
permitted by Section 7.3).
(b) Each of the Mortgages is effective to create in favor of the
Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable Lien on the Mortgaged Properties described therein and proceeds
thereof, and when the Mortgages are filed in the offices specified on Schedule
4.20(b), each such Mortgage shall constitute a fully perfected Lien on, and
security interest in, all right, title and interest of the Loan Parties in the
Mortgaged Properties and the proceeds thereof, as security for the Obligations
(as defined in the relevant Mortgage), in each case prior and superior in right
to any other Person, except for Liens permitted by Section 7.3.
4.21 Solvency. Each Loan Party is, and after giving effect to the
Recapitalization and the incurrence of all Indebtedness and obligations being
incurred in connection herewith and therewith will be and will continue to be,
Solvent.
4.22 Senior Indebtedness. The Obligations constitute "Senior
Indebtedness" of the Borrowers under and as defined in the Senior Subordinated
Note Indenture. The obligations of K&F under the Guarantee and Collateral
Agreement constitute "Senior Indebtedness" of such Guarantor under and as
defined in the Senior Subordinated Note Indenture.
4.23 Regulation H. No Mortgage encumbers improved real property
which is located in an area that has been identified by the Secretary of Housing
and Urban Development
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as an area having special flood hazards and in which flood insurance has been
made available under the National Flood Insurance Act of 1968.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Initial Extension of Credit. The agreement of each
Lender to make the initial extension of credit requested to be made by it is
subject to the satisfaction, prior to or concurrently with the making of such
extension of credit on the Closing Date, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized officer of
each of the Borrowers, (ii) the Guarantee and Collateral Agreement,
executed and delivered by a duly authorized officer of K&F and the
Borrowers, (iii) the Intercreditor Agreement, executed and delivered by a
duly authorized officer of each party thereto, (iv) each of the
Subordination Agreements, executed and delivered by a duly authorized
officer of each party thereto, (v) the K&F Agreement, executed and
delivered by a duly authorized officer of K&F and (vi) for the account of
each relevant Lender, Notes conforming to the requirements hereof and
executed and delivered by a duly authorized officer of the Borrowers.
(b) Recapitalization, and the other Transactions. The following
transactions shall have been consummated, in each case on terms and
conditions reasonably satisfactory to the Lenders:
(i) The definitive documentation relating to the
Recapitalization (the "Recapitalization Documentation") shall be in
form and substance satisfactory to the Syndication Agent and the
Recapitalization Documentation shall be in full force and effect. No
provision of the Recapitalization Documentation shall have been
amended, supplemented, waived or otherwise modified in any respect
that is adverse to the Lenders without the prior written consent of
the Syndication Agent;
(ii) On or prior to the Closing Date, K&F shall have
issued $185,000,000 in Senior Subordinated Notes, which shall be
unsecured and shall have no scheduled principal payments payable
prior to the date which is ten years after the Closing Date. In
addition, the interest rate, covenants, defaults, subordination
provisions, remedies and all other terms of such Senior Subordinated
Notes shall be satisfactory to the Syndication Agent;
(iii) (1) K&F shall have consummated (A) the redemption
of $70,000,000 in aggregate principal amount of the Senior Secured
Notes and (B) the purchase of $140,000,000 in aggregate principal
amount of the 2004 Notes, in each case, pursuant to documentation
satisfactory to the Syndication Agent, and (2) no other existing
indebtedness of K&F and its subsidiaries shall be
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outstanding other than such indebtedness as may be permitted to
remain outstanding pursuant to this Agreement;
(iv) The other Transactions shall have been consummated
in a manner and pursuant to documentation satisfactory to the
Syndication Agent. The capital, tax and legal structure of each Loan
Party after the Transactions shall be satisfactory in all respects
(upon completion of the Syndication Agent's due diligence).
(c) Pro Forma Balance Sheet; Financial Statements. The Lenders shall
have received (i) the Pro Forma Balance Sheet, (ii) satisfactory audited
consolidated and consolidating financial statements of K&F for the two
most recent fiscal years ended prior to the Closing Date and (iii)
satisfactory unaudited interim consolidated and consolidating financial
statements of K&F for each quarterly period ended subsequent to the date
of the latest applicable financial statements delivered pursuant to clause
(ii) of this paragraph as to which such financial statements are
available, and such financial statements shall not, in the reasonable
judgment of the Lenders, reflect any material adverse change in the
consolidated financial condition of K&F, as reflected in the financial
statements or projections contained in the Confidential Information
Memorandum.
(d) Officer's Certificate. The Lenders shall have received a
certificate of the chief financial officer of K&F showing pro forma
compliance by K&F and its Subsidiaries with the financial covenants
provided for in Section 7.1.
(e) Approvals. All governmental and third party approvals (including
landlords' and other consents) necessary or, in the discretion of the
Syndication Agent, advisable in connection with the Recapitalization, the
other Transactions, the continuing operations of K&F, the Borrowers and
their Subsidiaries and the transactions contemplated hereby shall have
been obtained and be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened by
any competent authority which would restrain, prevent or otherwise impose
adverse conditions on the Recapitalization, the other Transactions, or the
financing contemplated hereby.
(f) Related Agreements. The Administrative Agent shall have received
(in a form reasonably satisfactory to the Syndication Agent), with a copy
for each Lender, true and correct copies, certified as to authenticity by
the Borrowers, of such other documents or instruments as may be reasonably
requested by the Syndication Agent, including, without limitation, the
Settlement Agreement, the Stockholders Agreement and any other debt
instrument, security agreement or other material contract to which the
Loan Parties may be a party.
(g) Termination of Existing Credit Agreement. The Agents shall have
received evidence satisfactory to the Agents that the Existing Credit
Agreement shall be
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simultaneously terminated, all amounts thereunder shall be simultaneously
paid in full and arrangements satisfactory to the Agents shall have been
made for the termination of Liens and security interests granted in
connection therewith.
(h) Fees. The Lenders, the Arranger, the Syndication Agent and the
Administrative Agent shall have received all fees required to be paid, and
all expenses for which invoices have been presented, including, without
limitation, the reasonable fees and disbursements of legal counsel, on or
before the Closing Date.
(i) Business Plan. The Lenders shall have received a satisfactory
business plan for fiscal years 1997-2004 and a satisfactory written
analysis of the business and prospects of the Borrowers and their
Subsidiaries for the period from the Closing Date through the final
maturity of the Tranche B Term Loans.
(j) Solvency Analysis. The Lenders shall have received a
satisfactory solvency opinion from an independent valuation firm
satisfactory to the Syndication Agent which shall document the solvency of
K&F and its Subsidiaries after giving effect to the Transactions and the
other transactions contemplated hereby. It is agreed that ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇ Incorporated is an acceptable valuation consultant.
(k) Lien Searches. The Administrative Agent shall have received the
results of a recent lien search in each of the jurisdictions where assets
of the Loan Parties are located, and such search shall reveal no liens on
any of the assets of the Borrowers or their Subsidiaries except for liens
permitted by Section 7.3 or liens to be discharged on or prior to the
Closing Date pursuant to documentation satisfactory to the Syndication
Agent.
(l) Closing Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of each Loan
Party, dated the Closing Date, substantially in the form of Exhibit C,
with appropriate insertions and attachments.
(m) Legal Opinions. The Administrative Agent shall have received the
following executed legal opinions:
(i) the legal opinion of ▇'▇▇▇▇▇▇▇▇ Graev & Karabell,
LLP, counsel to the Borrowers and their Subsidiaries, substantially
in the form of Exhibit F-1;
(ii) the legal opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq., general
counsel of the Borrowers and their Subsidiaries, substantially in
the form of Exhibit F-2; and
(iii) the legal opinion of local counsel in each of
Georgia and Ohio and of such other special and local counsel as may
be required by the Syndication Agent.
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Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Syndication Agent may
reasonably require.
(n) Pledged Stock; Stock Powers. The Administrative Agent shall have
received (i) the certificates representing the shares of Capital Stock
pledged pursuant to the Guarantee and Collateral Agreement, together with
an undated stock power for each such certificate executed in blank by a
duly authorized officer of the pledgor thereof and (ii) each promissory
note pledged to the Administrative Agent pursuant to the Guarantee and
Collateral Agreement endorsed (without recourse) in blank (or accompanied
by an executed transfer form in blank satisfactory to the Syndication
Agent) by the pledgor thereof.
(o) Filings, Registrations and Recordings. Each document (including,
without limitation, any Uniform Commercial Code financing statement)
required by the Security Documents or under law or reasonably requested by
the Administrative Agent to be filed, registered or recorded in order to
create in favor of the Administrative Agent, for the benefit of the
Lenders, a perfected Lien on the Collateral described therein, prior and
superior in right to any other Person (other than with respect to Liens
expressly permitted by Section 7.3), shall be in proper form for filing,
registration or recordation.
(p) Mortgages, etc. (i) The Administrative Agent shall have received
a Mortgage with respect to each Mortgaged Property, executed and delivered
by a duly authorized officer of each party thereto.
(ii) If requested by the Administrative Agent, the
Administrative Agent shall have received, and the title insurance company
issuing the policy referred to in Section 5.1(p)(iii) (the "Title
Insurance Company") shall have received, maps or plats of an as-built
survey of the sites of the Mortgaged Properties certified to the
Administrative Agent and the Title Insurance Company in a manner
satisfactory to them, dated a date satisfactory to the Administrative
Agent and the Title Insurance Company by an independent professional
licensed land surveyor satisfactory to the Administrative Agent and the
Title Insurance Company, which maps or plats and the surveys on which they
are based shall be made in accordance with the Minimum Standard Detail
Requirements for Land Title Surveys jointly established and adopted by the
American Land Title Association and the American Congress on Surveying and
Mapping in 1992, and, without limiting the generality of the foregoing,
there shall be surveyed and shown on such maps, plats or surveys the
following: (A) the locations on such sites of all the buildings,
structures and other improvements and the established building setback
lines; (B) the lines of streets abutting the sites and width thereof; (C)
all access and other easements appurtenant to the sites; (D) all roadways,
paths, driveways, easements, encroachments and overhanging projections and
similar encumbrances affecting the site, whether recorded, apparent from a
physical inspection of the sites or otherwise known to the surveyor; (E)
any encroachments on any adjoining property by the building structures and
improvements on the sites; (F) if the
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site is described as being on a filed map, a legend relating the survey to
said map; and (G) the flood zone designations, if any, in which the
Mortgaged Properties are located.
(iii) The Administrative Agent shall have received in respect
of each Mortgaged Property a mortgagee's title insurance policy (or
policies) or marked up unconditional binder for such insurance. Each such
policy shall (A) be in an amount satisfactory to the Administrative Agent;
(B) be issued at ordinary rates; (C) insure that the Mortgage insured
thereby creates a valid first Lien on such Mortgaged Property free and
clear of all defects and encumbrances, except as disclosed therein; (D)
name the Administrative Agent for the benefit of the Lenders as the
insured thereunder; (E) be in the form of ALTA Loan Policy - 1970 (Amended
10/17/70 and 10/17/84) (or equivalent policies); (F) contain such
endorsements and affirmative coverage as the Administrative Agent may
reasonably request and (G) be issued by title companies satisfactory to
the Administrative Agent (including any such title companies acting as
co-insurers or reinsurers, at the option of the Administrative Agent). The
Administrative Agent shall have received evidence satisfactory to it that
all premiums in respect of each such policy, all charges for mortgage
recording tax, and all related expenses, if any, have been paid.
(iv) If requested by the Administrative Agent, the
Administrative Agent shall have received (A) a policy of flood insurance
which (1) covers any parcel of improved real property which is encumbered
by any Mortgage, (2) is written in an amount not less than the outstanding
principal amount of the indebtedness secured by such Mortgage which is
reasonably allocable to such real property or the maximum limit of
coverage made available with respect to the particular type of property
under the National Flood Insurance Act of 1968, whichever is less, and (3)
has a term ending not later than the maturity of the Indebtedness secured
by such Mortgage and (B) confirmation that the Borrowers have received the
notice required pursuant to Section 208(e)(3) of Regulation H of the
Board.
(v) The Administrative Agent shall have received a copy of all
recorded documents referred to, or listed as exceptions to title in, the
title policy or policies referred to in Section 5.1(p)(iii) and a copy of
all other material documents affecting the Mortgaged Properties.
(q) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 6.5 and
Section 5.3 of the Guarantee and Collateral Agreement.
5.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit) is subject to
the satisfaction of the following conditions precedent:
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(a) Representations and Warranties. Each of the representations and
warranties made by any Loan Party in or pursuant to the Loan Documents
shall be true and correct on and as of such date as if made on and as of
such date.
(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by and issuance of a Letter of Credit on behalf of the Borrowers
hereunder shall constitute a representation and warranty by the Borrowers as of
the date of such extension of credit that the conditions contained in this
Section 5.2 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
The Borrowers hereby jointly and severally agree that, so long as
the Commitments remain in effect, any Letter of Credit remains outstanding or
any Loan or other amount is owing to any Lender or any Agent hereunder, each
Borrower shall and (except in the case of delivery of financial information,
reports and notices) shall cause each of its Subsidiaries to:
6.1 Financial Statements. Furnish to each Agent and each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year of K&F, commencing with the fiscal year ended
December 31, 1997, a copy of (i) the audited consolidated balance sheet of
K&F and its consolidated Subsidiaries as at the end of such year and the
related audited consolidated statements of income and of cash flows for
such year, certified by a Responsible Officer of K&F, setting forth in
each case in comparative form the figures for the previous year, reported
on without a "going concern" or like qualification or exception, or
qualification arising out of the scope of the audit, by Deloitte & Touche,
LLP or other independent certified public accountants of nationally
recognized standing not unacceptable to the Required Lenders and (ii) the
consolidating balance sheet of K&F and its consolidated Subsidiaries
(other than Foreign Subsidiaries) as at the end of such year and the
related consolidating statement of earnings for such year, setting forth
in each case in comparative form the figures for the previous year,
certified by a Responsible Officer of K&F as being fairly stated in all
material respects when considered in relation to the consolidated
financial statements of K&F and its consolidated Subsidiaries; and
(b) as soon as available, but in any event not later than 60 days
after the end of each of the first three quarterly periods of each fiscal
year of K&F, (i) the unaudited consolidated balance sheet of K&F and its
consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and of cash flows of K&F and
its consolidated Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter, certified by a Responsible
Officer of K&F (subject to normal year-end adjustments) and (ii) the
consolidating balance sheet of
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K&F and its consolidated Subsidiaries (other than Foreign Subsidiaries) as
at the end of each such quarter and the related consolidating statement of
earnings for the portion of the fiscal year through such date, setting
forth in each case in comparative form the figures for the previous year,
certified by a Responsible Officer of K&F (subject to normal year-end
audit adjustments); and
(c) as soon as available, but in any event within 30 days after the
end of each month (other than the third, sixth, ninth and twelfth such
month), beginning with the month ended October 31, 1997, the unaudited
consolidated balance sheet of K&F and its consolidated Subsidiaries, and
the unaudited consolidating balance sheet of K&F and its consolidated
Subsidiaries (other than Foreign Subsidiaries) as at the end of each such
month and the related unaudited consolidated and consolidating statements
of earnings and cash flow or similar statements for such monthly period
and the portion of the fiscal year through such date, setting forth in
each case in comparative form the figures for the previous year certified
by a Responsible Officer of K&F as being fairly stated in all material
respects (subject to normal year-end audit adjustments);
all such financial statements shall (i) contain such information as may be
necessary to calculate compliance with Sections 7.1 and 7.7 for the 12-month
period ending on the date of such balance sheets and (ii) be complete and
correct in all material respects and shall be prepared in reasonable detail and
in accordance with GAAP applied consistently throughout the periods reflected
therein and with prior periods (except as approved by such accountants or
officer, as the case may be, and disclosed therein).
6.2 Certificates; Other Information. Furnish to each Agent and each
Lender, or, in the case of clause (h), to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 6.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 6.1(a) and (b), (i) a certificate of a Responsible
Officer of K&F stating that, to the best of such Responsible Officer's
knowledge, each Loan Party during such period has observed or performed
all of its covenants and other agreements, and satisfied every condition,
contained in this Agreement and the other Loan Documents to which it is a
party to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate and (ii) in the case of
quarterly or annual financial statements, (x) a Compliance Certificate
containing all information necessary for determining compliance by K&F,
the Borrowers and their Subsidiaries with the provisions of this Agreement
referred to therein as of the last day of the fiscal quarter or fiscal
year of the Borrowers, as the case may be, and (y) to the extent not
previously
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disclosed to the Administrative Agent, a listing of any county or state
within the United States where any Loan Party keeps inventory or equipment
and of any Intellectual Property acquired by any Loan Party since the date
of the most recent list delivered pursuant to this clause (y) (or, in the
case of the first such list so delivered, since the Closing Date);
(c) as soon as available, and in any event no later than 90 days
after the end of each fiscal year of K&F, a detailed consolidated budget
of K&F and its consolidated Subsidiaries for the following fiscal year
(including a projected consolidated balance sheet of K&F and its
consolidated Subsidiaries as of the end of the following fiscal year, and
the related consolidated statements of projected cash flow, projected
changes in financial position and projected income), and, as soon as
available, significant revisions, if any, of such budget and projections
with respect to such fiscal year (collectively, the "Projections"), which
Projections shall in each case be accompanied by a certificate of a
Responsible Officer of K&F stating that such Projections are based on
reasonable estimates, information and assumptions and that such
Responsible Officer has no reason to believe that such Projections are
incorrect or misleading in any material respect; provided, that each
Lender recognizes that such Projections are not to be viewed as fact and
that actual results during the period or periods covered by such
Projections may differ from the projected results set forth therein by a
material amount;
(d) within 60 days after the end of each fiscal quarter of K&F, a
narrative discussion and analysis of the financial condition and results
of operations of K&F and its consolidated Subsidiaries for such fiscal
quarter and for the period from the beginning of the then current fiscal
year to the end of such fiscal quarter, as compared to the portion of the
Projections covering such periods and to the comparable periods of the
previous year;
(e) no later than 10 Business Days prior to the effectiveness
thereof, copies of substantially final drafts of any proposed amendment,
supplement, waiver or other modification with respect to the Senior
Subordinated Note Indenture;
(f) within five days after the same are sent, copies of all
financial statements and reports which K&F or either Borrower sends to the
holders of any class of its debt securities or public equity securities
and within five days after the same are filed, copies of all financial
statements and reports which K&F or the Borrowers may make to, or file
with, the Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(g) promptly after K&F's receipt thereof, a copy of any "management
letter" received by K&F from its independent certified public accountants;
and
(h) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
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6.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of the Borrowers or their Subsidiaries, as the case may be.
6.4 Conduct of Business and Maintenance of Existence, etc. (a) (i)
Continue to engage in business of the same general type as now conducted by it,
(ii) preserve, renew and keep in full force and effect its corporate existence
and (iii) take all reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business, except,
in each case, as otherwise permitted by Section 7.4 and except, in the case of
clause (iii) above, to the extent that failure to do so could not reasonably be
expected to have a Material Adverse Effect; and (b) comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
6.5 Maintenance of Property; Insurance. (a) Keep all Property useful
and necessary in its business in good working order and condition, ordinary wear
and tear excepted and (b) maintain with financially sound and reputable
insurance companies insurance on all its Property in at least such amounts and
against at least such risks (but including in any event public liability,
product liability and business interruption) as are usually insured against in
the same general area by companies engaged in the same or a similar business;
and furnish to each Lender, upon written request, full information as to the
insurance carried. Each of the Borrowers and the Subsidiaries shall retain the
right to self-insure all or a portion of the required coverages (other than
property insurance and product liability insurance relating to aircraft and
aerospace products; provided that deductibles consistent with past practice
shall not be considered self-insurance for purposes of this sentence) to the
extent such self-insurance is reasonable and customary.
6.6 Inspection of Property; Books and Records; Discussions. (a) Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities and (b) permit
representatives of any Lender during normal business hours and without any
unreasonable disruption to visit and inspect any of its properties and examine
and make abstracts from any of its books and records at any reasonable time and
as often as may reasonably be desired and to discuss the business, operations,
properties and financial and other condition of the Borrowers and their
Subsidiaries with officers and employees of the Borrowers and their Subsidiaries
and with its independent certified public accountants.
6.7 Notices. Promptly give notice to the Administrative Agent and
each Lender of:
(a) the occurrence of any Default or Event of Default;
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(b) any (i) default or event of default under any Contractual
Obligation of any Borrower or any of the Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between either of
the Borrowers or any of the Subsidiaries and any Governmental Authority,
which in either case, if not cured or if adversely determined, as the case
may be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting K&F, the Borrowers or any
of their Subsidiaries in which the amount involved is $2,000,000 or more
and not covered by insurance or in which injunctive or similar relief is
sought;
(d) the following events, as soon as possible and in any event
within 30 days after either of the Borrowers knows or has reason to know
thereof: (i) the occurrence of any Reportable Event with respect to any
Plan, a failure to make any required contribution to a Plan, the creation
of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any other action by
the PBGC or either of the Borrowers or any Commonly Controlled Entity or
any Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Plan; and
(e) any development or event which has had or could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section 6.7 shall be accompanied by a statement of
a Responsible Officer setting forth details of the occurrence referred to
therein and stating what action the relevant Loan Party proposes to take with
respect thereto.
6.8 Environmental Laws. (a) Comply in all material respects with,
and use reasonable efforts to ensure compliance in all material respects by all
tenants and subtenants, if any, with, all applicable Environmental Laws, and
obtain and comply in all material respects with and maintain, and ensure that
all tenants and subtenants obtain and comply in all material respects with and
maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws.
6.9 Interest Rate Protection. In the case of the Borrowers, within
90 days after the Closing Date, enter into Interest Rate Protection Agreements
to the extent necessary to provide that at least 30% of the aggregate principal
amount of the Term Loans is subject to either a fixed interest rate or interest
rate protection for a period of not less than three years,
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which Interest Rate Protection Agreements shall have terms and conditions
reasonably satisfactory to the Syndication Agent.
6.10 Additional Collateral, etc. (a) With respect to any Property
acquired after the Closing Date by the Borrowers or any Subsidiary (other than
an Excluded Foreign Subsidiary) (other than (x) any Property described in
paragraph (b), (c) or (d) below and (y) any Property subject to a Lien expressly
permitted by Section 7.3(g)) as to which the Administrative Agent, for the
benefit of the Lenders, does not have a perfected Lien, promptly (and in any
event within 30 days after the acquisition thereof) (i) execute and deliver to
the Administrative Agent such amendments to the Guarantee and Collateral
Agreement or such other documents as the Administrative Agent deems necessary or
advisable in order to grant to the Administrative Agent, for the benefit of the
Lenders, a security interest in such Property and (ii) take all actions
necessary or advisable to grant to the Administrative Agent, for the benefit of
the Lenders, a perfected first priority security interest in such Property,
including without limitation, the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the Guarantee and
Collateral Agreement or by law or as may be requested by the Administrative
Agent.
(b) With respect to any fee interest in any real estate having a
value (together with improvements thereof) of at least $1,000,000 acquired after
the Closing Date by either of the Borrowers or any Subsidiary (other than an
Excluded Foreign Subsidiary) (other than any such real estate subject to a Lien
expressly permitted by Section 7.3(g)), promptly (i) execute and deliver a first
priority mortgage or deed of trust, as the case may be, in favor of the
Administrative Agent, for the benefit of the Lenders, covering such real estate,
in form and substance reasonably satisfactory to the Administrative Agent, (ii)
if requested by the Administrative Agent, provide the Lenders with (x) title and
extended coverage insurance covering such real estate in an amount at least
equal to the purchase price of such real estate (or such other amount as shall
be reasonably specified by the Administrative Agent) as well as a current ALTA
survey thereof, together with a surveyor's certificate and (y) any consents or
estoppels reasonably deemed necessary or advisable by the Administrative Agent
in connection with such mortgage or deed of trust, each of the foregoing in form
and substance reasonably satisfactory to the Administrative Agent and (iii) if
requested by the Administrative Agent, deliver to the Administrative Agent legal
opinions relating to the matters described above, which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Administrative Agent.
(c) With respect to any new Subsidiary or any Subsidiary not a party
to the Guarantee and Collateral Agreement that owns assets or property with a
fair market value in excess of $100,000 (other than an Excluded Foreign
Subsidiary) created or acquired after the Closing Date by K&F (which, for the
purposes of this paragraph (c), shall include any existing Subsidiary that
ceases to be an Excluded Foreign Subsidiary), the Borrowers or any of their
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative Agent
deems necessary or advisable in order to grant to the Administrative Agent, for
the benefit of the Lenders, a perfected first priority security interest in the
Capital Stock of such new Subsidiary which is
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owned by K&F, the Borrowers or any of their Subsidiaries, (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers, in blank, executed and delivered by a duly authorized
officer of K&F, the Borrowers or such Subsidiary, as the case may be, (iii)
cause such new Subsidiary (A) to become a party to the Guarantee and Collateral
Agreement and (B) to take such actions necessary or advisable to grant to the
Administrative Agent for the benefit of the Lenders a perfected first priority
security interest in the Collateral described in the Guarantee and Collateral
Agreement with respect to such new Subsidiary, including, without limitation,
the filing of Uniform Commercial Code financing statements in such jurisdictions
as may be required by the Guarantee and Collateral Agreement or by law or as may
be requested by the Administrative Agent, and (iv) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(d) With respect to any new Excluded Foreign Subsidiary created or
acquired after the Closing Date by K&F, the Borrowers or any of their
Subsidiaries, promptly (i) execute and deliver to the Administrative Agent such
amendments to the Guarantee and Collateral Agreement as the Administrative Agent
deems necessary or advisable in order to grant to the Administrative Agent, for
the benefit of the Lenders, a perfected first priority security interest in the
Capital Stock of such new Subsidiary which is owned by K&F, the Borrowers or any
of their Subsidiaries (provided that in no event shall more than 65% of the
total outstanding Capital Stock of any such new Subsidiary be required to be so
pledged), (ii) deliver to the Administrative Agent the certificates representing
such Capital Stock, together with undated stock powers, in blank, executed and
delivered by a duly authorized officer of K&F, the Borrowers or such Subsidiary,
as the case may be and (iii) if requested by the Administrative Agent, deliver
to the Administrative Agent legal opinions relating to the matters described
above, which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Administrative Agent.
(e) Dissolve, liquidate or otherwise terminate the existence of
Texas Aircraft Braking Systems Corporation, a Texas corporation, that is a
Subsidiary of KBF, within 180 days after the Closing Date unless the Borrowers
have complied with the requirements of Section 6.10(c) with respect to such
Subsidiary.
(f) Deliver to the Administrative Agent within seven Business Days
of the Closing Date any shares of Capital Stock pledged pursuant to the
Guarantee and Collateral Agreement and any other instruments and stock powers
required to have been delivered pursuant to Section 5.1(n) that have not
previously been delivered to the Administrative Agent.
6.11 Environmental Audit. Within 45 days of the Closing Date,
furnish to the Lenders a satisfactory phase I environmental audit with respect
to the real property owned or leased by the Borrowers and their Subsidiaries
from a firm satisfactory to the Syndication Agent.
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6.12 Corporate Separateness. Take all such action as is necessary to
keep its operations separate and apart from those of K&F, of each other
Subsidiary and of each other Borrower, including, without limitation, insuring
that all customary formalities regarding the corporate existence of each of the
Borrowers and each Subsidiary, including holding regular meetings and
maintenance of current minute books, are followed; and maintain its own payroll
and separate books of account and pay its respective liabilities, including all
administrative expenses, from its own separate assets, and cause assets of each
Subsidiary to be separately identified and segregated.
6.13 Government Contracts. At such times as the Administrative Agent
may reasonably request, furnish the Administrative Agent with a list of all
contracts entered into between the United States Government and either of the
Borrowers.
SECTION 7. NEGATIVE COVENANTS
The Borrowers hereby jointly and severally agree that, so long as
the Commitments remain in effect, any Letter of Credit remains outstanding or
any Loan or other amount is owing to any Lender or any Agent hereunder, each
Borrower shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly:
7.1 Financial Condition Covenants.
(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage
Ratio of K&F and its Subsidiaries as at the day set forth below to exceed the
ratio set forth below opposite such day:
Consolidated
Date Leverage Ratio
---- --------------
December 31, 1997 7.00 to 1.00
March 31, 1998 7.00 to 1.00
June 30, 1998 7.00 to 1.00
September 30, 1998 7.00 to 1.00
December 31, 1998 7.00 to 1.00
March 31, 1999 7.00 to 1.00
June 30, 1999 7.00 to 1.00
September 30, 1999 7.00 to 1.00
December 31, 1999 6.75 to 1.00
March 31, 2000 6.55 to 1.00
June 30, 2000 6.35 to 1.00
September 30, 2000 6.15 to 1.00
December 30, 2000 6.00 to 1.00
March 31, 2001 5.80 to 1.00
June 30, 2001 5.60 to 1.00
September 30, 2001 5.40 to 1.00
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December 31, 2001 5.25 to 1.00
March 31, 2002 5.15 to 1.00
June 30, 2002 5.00 to 1.00
September 30, 2002 4.85 to 1.00
December 31, 2002 4.75 to 1.00
March 31, 2003 4.30 to 1.00
June 30, 2003 4.00 to 1.00
September 30, 2003 4.00 to 1.00
December 31, 2003 3.75 to 1.00
Thereafter 3.50 to 1.00
(b) Consolidated Cash Interest Coverage Ratio. Permit the
Consolidated Cash Interest Coverage Ratio of K&F and its Subsidiaries for any
day set forth below to be less than the ratio set forth below opposite such day:
Consolidated Cash Interest
Date Coverage Ratio
---- --------------------------
December 31, 1997 1.35 to 1.00
March 31, 1998 1.35 to 1.00
June 30, 1998 1.35 to 1.00
September 30, 1998 1.40 to 1.00
December 31, 1998 1.45 to 1.00
March 31, 1999 1.45 to 1.00
June 30, 1999 1.50 to 1.00
September 30, 1999 1.50 to 1.00
December 31, 1999 1.55 to 1.00
March 31, 2000 1.60 to 1.00
June 30, 2000 1.65 to 1.00
September 30, 2000 1.70 to 1.00
December 31, 2000 1.75 to 1.00
March 31, 2001 1.80 to 1.00
June 30, 2001 1.85 to 1.00
September 30, 2001 1.90 to 1.00
December 31, 2001 1.95 to 1.00
March 31, 2002 2.05 to 1.00
June 30, 2002 2.10 to 1.00
September 30, 2002 2.15 to 1.00
December 31, 2002 2.20 to 1.00
March 31, 2003 2.30 to 1.00
June 30, 2003 2.40 to 1.00
September 30, 2003 2.50 to 1.00
Thereafter 2.50 to 1.00
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(c) Subsidiary Cash Interest Coverage Ratio. Permit the Subsidiary
Cash Interest Coverage Ratio for any day set forth below to be less than the
ratio set forth below opposite such day:
Consolidated Cash
Date Interest Coverage Ratio
---- -----------------------
December 31, 1997 2.50 to 1.00
March 31, 1998 2.55 to 1.00
June 30, 1998 2.60 to 1.00
September 30, 1998 2.63 to 1.00
December 31, 1998 2.65 to 1.00
March 31, 1999 2.75 to 1.00
June 30, 1999 2.85 to 1.00
September 30, 1999 2.90 to 1.00
December 31, 1999 3.00 to 1.00
March 31, 2000 3.15 to 1.00
June 30, 2000 3.30 to 1.00
September 30, 2000 3.45 to 1.00
December 31, 2000 3.60 to 1.00
March 31, 2001 3.75 to 1.00
June 30, 2001 3.90 to 1.00
September 30, 2001 4.05 to 1.00
December 31, 2001 4.25 to 1.00
March 31, 2002 4.45 to 1.00
June 30, 2002 4.65 to 1.00
September 30, 2002 4.80 to 1.00
December 31, 2002 4.95 to 1.00
March 31, 2003 5.10 to 1.00
June 30, 2003 5.25 to 1.00
September 30, 2003 5.50 to 1.00
December 31, 2003 5.75 to 1.00
Thereafter 5.75 to 1.00
(d) Consolidated Adjusted Net Worth. Permit the Consolidated
Adjusted Net Worth of K&F and its Subsidiaries at any time during any fiscal
year of K&F and its Subsidiaries to be less than the sum of (i) $50,000,000 plus
(ii) 50% of Consolidated Net Income (excluding any consolidated net deficit for
any fiscal period of K&F and its Subsidiaries) on a cumulative basis since June
30, 1997 plus (iii) Net Cash Proceeds from the sale of Capital Stock of K&F on a
cumulative basis since the Closing Date.
7.2 Limitation on Indebtedness. Create, incur, assume or suffer to
exist (in each case, to "Incur") any Indebtedness, except:
(a) Indebtedness of any Loan Party pursuant to any Loan Document;
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(b) Indebtedness of either Borrower to any Subsidiary and of any
Subsidiary to either Borrower or any other Subsidiary;
(c) Indebtedness secured by Liens permitted by Section 7.3(g) in an
aggregate principal amount not to exceed $25,000,000 at any one time
outstanding, provided that during any fiscal year of either of the
Borrowers, the Borrowers and the Subsidiaries do not incur more than
$10,000,000 in aggregate principal amount of such other Indebtedness;
(d) Indebtedness outstanding on the date hereof and listed on
Schedule 7.2(d) and any refinancings, refundings, renewals or extensions
thereof (without any increase in the principal amount thereof), provided
that the aggregate principal amount owed pursuant to such Indebtedness is
not increased by such refinancings, refundings, renewals or extensions
thereof, and provided further that any refinancing, refunding, renewal or
extension of the Intercompany Loans shall be with K&F;
(e) Indebtedness in the aggregate not exceeding the lesser of the
unused L/C Commitment and the Revolving Credit Commitment in respect of
trade letters of credit and standby letters of credit issued for the
purpose of supporting (i) workers' compensation liabilities of the
Borrowers or any of the Subsidiaries as required by law, (ii) performance,
payment, deposit or surety obligations of the Borrowers or any of the
Subsidiaries and (iii) environmental liabilities of the Borrowers or any
of the Subsidiaries as required by law;
(f) Guarantee Obligations existing on the Closing Date and listed on
Schedule 7.2(f) and any renewals, extensions or refundings thereof in an
amount not exceeding the amount thereof immediately prior to such
renewals, extensions or refundings;
(g) Guarantee Obligations of either of the Borrowers or any
Subsidiary with respect to any obligation or liability of either of the
Borrowers or any Subsidiary;
(h) Guarantee Obligations incurred after the date hereof in an
aggregate principal amount not to exceed $1,000,000 at any time
outstanding;
(i) Indebtedness outstanding pursuant to the Settlement Agreement in
an aggregate principal amount not to exceed $4,500,000 plus the minimum
statutory contributions required by the terms thereof; and
(j) Indebtedness in respect of Capital Lease Obligations incurred in
a sale and leaseback transaction permitted by Section 7.11.
7.3 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its Property or revenues, whether now owned or hereafter
acquired, except for:
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(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrowers or their
Subsidiaries, as the case may be, in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature
incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the Property subject thereto or
materially interfere with the ordinary conduct of the business of the
Borrowers or any of their Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 7.3(f),
securing Indebtedness permitted by Section 7.2(d), provided that no such
Lien is spread to cover any additional Property after the Closing Date and
that the amount of Indebtedness secured thereby is not increased;
(g) Liens securing Indebtedness of the Borrowers or any other
Subsidiary incurred pursuant to Section 7.2(c) to finance the acquisition
of fixed or capital assets, provided that (i) such Liens shall be created
substantially simultaneously with the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any Property other
than the Property financed by such Indebtedness and (iii) the amount of
Indebtedness secured thereby is not increased;
(h) Liens created pursuant to the Security Documents;
(i) any interest or title of a lessor under any lease entered into
by the Borrowers or any other Subsidiary in the ordinary course of its
business and covering only the assets so leased, including, without
limitation, in connection with Indebtedness permitted by Section 7.2(j);
(j) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
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(k) judgment Liens in an aggregate amount not in excess of
$2,000,000; and
(l) Liens on goods the purchase price of which is financed by a
documentary letter of credit issued for the account of either of the
Borrowers or any of the Subsidiaries where such Lien secures the
obligations of such Borrower or such Subsidiary in respect of such letter
of credit.
7.4 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of, all or substantially all
of its Property or business, or make any material change in its present method
of conducting business, except:
(a) any Wholly Owned Subsidiary may be merged or consolidated with
or into either of the Borrowers (provided that a Borrower shall be the
continuing or surviving corporation) or with or into any Wholly Owned
Subsidiary (provided that the surviving entity is a Domestic Subsidiary if
the merged entity is a Domestic Subsidiary);
(b) any Subsidiary may Dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to either of the Borrowers or any
Subsidiary Guarantor; and
(c) as permitted by Section 7.5.
7.5 Limitation on Sale of Assets. Dispose of any of its Property or
business (including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary's Capital Stock to any Person,
except:
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
(b) the sale of inventory in the ordinary course of business and the
sale of Cash Equivalents from time to time;
(c) Dispositions permitted by Section 7.4(b);
(d) as permitted by Section 7.11;
(e) Asset Sales of any property or assets (other than inventory or
Cash Equivalents) for cash, provided that the Net Cash Proceeds thereof
shall be applied to the prepayment of the Term Loans and the permanent
reduction of the Revolving Credit Commitments as provided in subsection
2.10(b); and
(f) Asset Sales of any property or assets (other than inventory or
Cash Equivalents) in an amount not to exceed $1,000,000 per fiscal year so
long as the Net Cash Proceeds of such Asset Sale are reinvested in
accordance with Section 2.10(b).
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7.6 Limitation on Dividends. Declare or pay any dividend (other than
dividends payable solely in common stock of the Person making such dividend) on,
or make any payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or other
acquisition of, any shares of any class of Capital Stock of either of the
Borrowers or any Subsidiary or any warrants or options to purchase any such
Capital Stock, whether now or hereafter outstanding, make any other distribution
in respect thereof, either directly or indirectly, whether in cash or property
or in obligations of K&F, the Borrowers or any Subsidiary or make any loan or
advance or other payment to K&F (collectively, "Restricted Payments"), except,
so long as no Default or Event of Default would be in existence after giving
effect thereto:
(a) to the extent necessary to permit K&F to make the interest
payments on its permitted Indebtedness as provided in Section 2(c) of the
K&F Agreement;
(b) other payments contemplated by Section 2(c) of the K&F
Agreement;
(c) any Subsidiary may make Restricted Payments to either of the
Borrowers or any Subsidiary Guarantor;
(d) in an aggregate amount not to exceed $30,000,000 so long as the
Consolidated Leverage Ratio after giving effect thereto is less than 4.00
to 1.00;
(e) Restricted Payments in connection with the Recapitalization as
described on Annex B; and
(f) scheduled payments of principal and interest on the Intercompany
Loans.
7.7 Limitation on Capital Expenditures. Make or commit to make (by
way of the acquisition of securities of a Person or otherwise) any Capital
Expenditure (excluding any such asset acquired in connection with normal
replacement and maintenance programs properly charged to current operations but
including development participation payments) except for expenditures in the
ordinary course of business not exceeding, in the aggregate for the Borrowers
and their Subsidiaries during any of the fiscal years of the Borrowers set forth
below, the amount set forth opposite such fiscal year below:
Fiscal Year Ended Amount
----------------- ------
December 1997 $20,000,000
December 1998 $20,000,000
December 1999 $17,000,000
Thereafter $17,000,000
; provided that any such amount if not so expended in the fiscal year for which
it is permitted above may be carried over for expenditure in the next following
fiscal year, and provided
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further that any amount so carried forward shall be deemed to be the amount
expended first in the following fiscal year.
7.8 Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit (by way of guaranty or otherwise) or capital
contribution to, or purchase any stock, bonds, notes, debentures or other
securities of or any assets constituting all or a material part of a business
unit of, or make any other investment in, any Person, except:
(a) extensions of trade credit in the ordinary course of business;
(b) investments in Cash Equivalents;
(c) Guarantee Obligations permitted by Section 7.2;
(d) loans and advances to employees of K&F, the Borrowers or their
Subsidiaries in the ordinary course of business (including, without
limitation, for travel, entertainment and relocation expenses) in an
aggregate amount for K&F, the Borrowers and their Subsidiaries not to
exceed $750,000 at any one time outstanding;
(e) each of the Borrowers may make advances, loans or capital
contributions to, or investments in, Subsidiary Guarantors;
(f) to the extent permitted by Section 7.6;
(g) Capital Expenditures to the extent permitted by Section 7.7;
(h) investments made by the Borrowers or any of their Subsidiaries
with the proceeds of any Reinvestment Deferred Amount;
(i) loans and advances in the ordinary course of business to
customers, suppliers, franchises and licensees of the Borrowers and the
Subsidiaries in an aggregate principal amount not to exceed $2,000,000 at
any one time outstanding;
(j) acquisitions by either of the Borrowers or any of their
Subsidiaries in a business or assets in the same or similar line of
business as the Borrowers on the Closing Date in an aggregate amount
(valued at cost) not to exceed $20,000,000 during the term of this
Agreement so long as (i) the Consolidated Leverage Ratio prior to and
after giving effect thereto is less than 5.00 to 1.00 and (ii) no Default
or Event of Default shall have occurred and be continuing.
7.9 Limitation on Optional Payments and Modifications of Debt
Instruments, etc. (a) Make or offer to make any payment, prepayment, repurchase
or redemption of or otherwise defease or segregate funds with respect to the
Senior Subordinated Notes (other than scheduled interest payments required to be
made in cash), (b) amend, modify, waive or otherwise change, or consent or agree
to any amendment, modification, waiver or other
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change to, any of the terms of the Senior Subordinated Notes or the Settlement
Agreement (other than any such amendment, modification, waiver or other change
which (i) would extend the maturity or reduce the amount of any payment of
principal thereof or which would reduce the rate or extend the date for payment
of interest thereon and (ii) does not involve the payment of a consent fee), (c)
designate any Indebtedness as "Designated Senior Indebtedness" for the purposes
of the Senior Subordinated Note Indenture or (d) amend its certificate of
incorporation in any manner determined by the Administrative Agent to be adverse
to the Lenders without the prior written consent of the Required Lenders.
7.10 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of any service or the payment of any
management, advisory or similar fees, with any Affiliate (other than the
Borrowers or any Subsidiary Guarantor) unless such transaction is (a) otherwise
permitted under this Agreement, (b) in the ordinary course of business of K&F,
the Borrowers or such Subsidiary, as the case may be, and (c) upon fair and
reasonable terms no less favorable to K&F, the Borrowers or such Subsidiary, as
the case may be, than it would obtain in a comparable arm's length transaction
with a Person which is not an Affiliate, except for the repurchase of shares of,
or options to purchase shares of, K&F's common stock held by employees of K&F
(other than any member of the BLS Group) or any of its Subsidiaries pursuant to
the forms of agreements under which such employees purchase, or are granted the
option to purchase, shares of such common stock in an aggregate amount not to
exceed $3,000,000 in any fiscal year; provided that the amount available in any
given fiscal year shall be increased by the excess, if any, of (A) $3,000,000
over (B) the amount used pursuant to this clause in the immediately preceding
fiscal year.
7.11 Limitation on Sales and Leasebacks. Enter into any arrangement
with any Person providing for the leasing by either of the Borrowers or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by such Borrower or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of such Borrower or such
Subsidiary except:
(a) any sale and leaseback otherwise permitted by Section 7.5 or
7.12; and
(b) other sales and leaseback transactions in an aggregate amount
not to exceed $30,000,000, provided that the Net Cash Proceeds in excess
of $10,000,000 shall be applied to prepay the Term Loans and permanently
reduce the Revolving Credit Commitments as provided for pursuant to
Section 2.10(b).
7.12 Limitation on Negative Pledge Clauses. Enter into or suffer to
exist or become effective any agreement which prohibits or limits the ability of
the Borrowers or any of their Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired, other than (a) this Agreement and the other Loan Documents
and the Senior Subordinated Note Indenture, and (b) any agreements governing any
purchase money Liens or Capital Lease Obligations otherwise
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permitted hereby (in which case, any prohibition or limitation shall only be
effective against the assets financed thereby).
7.13 Limitation on Restrictions on Subsidiary Distributions. Enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any Subsidiary of the Borrowers to (a) pay
dividends or make any other distributions in respect of any Capital Stock of
such Subsidiary held by, or pay any Indebtedness owed to, the Borrowers or any
other Subsidiary of the Borrowers, (b) make loans or advances to the Borrowers
or any other Subsidiary of the Borrowers or (c) transfer any of its assets to
the Borrowers or any other Subsidiary of the Borrowers, except for such
encumbrances or restrictions existing under or by reason of (i) any restrictions
existing under the Loan Documents and (ii) any restrictions with respect to a
Subsidiary imposed pursuant to an agreement which has been entered into in
connection with the Disposition of all or substantially all of the Capital Stock
or assets of such Subsidiary.
7.14 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Borrowers and their Subsidiaries are engaged on the date of this Agreement
or which are reasonably related thereto.
7.15 Limitation on Changes in Fiscal Year. Permit the fiscal year of
the Borrower to end on a day other than December 31.
7.16 Subsidiaries. Have any Subsidiaries other than those listed on
Schedule 4.16 and other than Wholly Owned Subsidiaries.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) Any Borrower shall fail to pay any principal of any Loan or
Reimbursement Obligation when due in accordance with the terms hereof; or
any Borrower shall fail to pay any interest on any Loan or Reimbursement
Obligation, or any fee or other amount payable hereunder or under any
other Loan Document, within five days after any such interest or other
amount becomes due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by any Loan
Party herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) Any Loan Party shall default in the observance or performance of
any agreement contained in Section 6.7(a), Section 7, Section 5.6 of the
Guarantee and Collateral Agreement or Section 2 of the K&F Agreement; or
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(d) Any Loan Party shall default in the observance or performance of
any other agreement contained in this Agreement or any other Loan Document
(other than as provided in paragraphs (a) through (c) of this Section),
and such default shall continue unremedied for a period of 30 days; or
(e) K&F, either Borrower or any of their Subsidiaries shall (i)
default in making any payment of any principal of any Indebtedness
(including, without limitation, any Guarantee Obligation, but excluding
the Loans) on the scheduled or original due date with respect thereto; or
(ii) default in making any payment of any interest on any such
Indebtedness beyond the period of grace, if any, provided in the
instrument or agreement under which such Indebtedness was created; or
(iii) default in the observance or performance of any other agreement or
condition relating to any such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or
beneficiary) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or (in the case of
any such Indebtedness constituting a Guarantee Obligation) to become
payable; provided that a default, event or condition described in clause
(i), (ii) or (iii) of this paragraph (e) shall not at any time constitute
an Event of Default under this Agreement unless, at such time, one or more
defaults, events or conditions of the type described in clauses (i), (ii)
and (iii) of this paragraph (e) shall have occurred and be continuing with
respect to Indebtedness the outstanding principal amount of which exceeds
in the aggregate $500,000; or
(f) (i) K&F, either Borrower or any of their Subsidiaries shall
commence any case, proceeding or other action (A) under any existing or
future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to
have an order for relief entered with respect to it, or seeking to
adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution, composition
or other relief with respect to it or its debts, or (B) seeking
appointment of a receiver, trustee, custodian, conservator or other
similar official for it or for all or any substantial part of its assets,
or K&F, the Borrowers or any of their Subsidiaries shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against K&F, the Borrowers or any of their Subsidiaries any
case, proceeding or other action of a nature referred to in clause (i)
above which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced
against K&F, the Borrowers or any of their Subsidiaries any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial
part of its assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) K&F, the
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Borrowers or any of their Subsidiaries shall take any action in
furtherance of, or indicating its consent to, approval of, or acquiescence
in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v)
K&F, the Borrowers or any of their Subsidiaries shall generally not, or
shall be unable to, or shall admit in writing its inability to, pay its
debts as they become due; or
(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrowers or any Commonly Controlled Entity, (iii) a Reportable Event
(other than the Recapitalization) shall occur with respect to, or
proceedings shall commence to have a trustee appointed, or a trustee shall
be appointed, to administer or to terminate, any Single Employer Plan,
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to
result in the termination of such Plan for purposes of Title IV of ERISA,
(iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Borrowers or any Commonly Controlled Entity shall, or in
the reasonable opinion of the Required Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or
condition shall occur or exist with respect to a Plan; and in each case in
clauses (i) through (vi) above, such event or condition, together with all
other such events or conditions, if any, could, in the sole judgment of
the Required Lenders, reasonably be expected to have a Material Adverse
Effect; or
(h) One or more judgments or decrees shall be entered against either
Borrower or any of its Subsidiaries involving in the aggregate a liability
(not paid or fully covered by insurance as to which the relevant insurance
company has acknowledged coverage) of $2,000,000 or more, and all such
judgments or decrees shall not have been vacated, discharged, stayed or
bonded pending appeal within 60 days from the entry thereof; or
(i) Any of the Security Documents shall cease, for any reason, to be
in full force and effect, or any Loan Party or any Affiliate of any Loan
Party shall so assert, or any Lien created by any of the Security
Documents shall cease to be enforceable and of the same effect and
priority purported to be created thereby; or
(j) The guarantee contained in Section 2 of the Guarantee and
Collateral Agreement shall cease, for any reason, to be in full force and
effect or any Loan Party or any Affiliate of any Loan Party shall so
assert; or
(k) (i) The BLS Group shall cease to own and control, of record and
beneficially, directly, at least 25% of the Capital Stock with voting
power for the election of directors of K&F (determined on a fully diluted
basis); or (ii) BLS and the
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▇▇▇▇▇▇ Investors shall cease to control the election of a majority of the
Board of Directors of K&F or (iii) K&F shall cease to own and control, of
record and beneficially, directly, 100% of each class of outstanding
Capital Stock of each of the Borrowers free and clear of all Liens (other
than Liens created by the Guarantee and Collateral Agreement); or
(l) (i) The Senior Subordinated Notes shall cease, for any reason,
to be validly subordinated to the Obligations as provided in the Senior
Subordinated Note Indenture, or any Loan Party, any Affiliate of any Loan
Party, the trustee in respect of the Senior Subordinated Notes or the
holders of at least 25% in aggregate principal amount of the Senior
Subordinated Notes shall so assert or (ii) either of the Intercompany
Notes shall cease, for any reason, to be validly subordinated to the
Obligations, as provided in the applicable Subordination Agreement, or any
Loan Party or any Affiliate of any Loan Party shall so assert;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to either of the
Borrowers, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents (including, without
limitation, all amounts of L/C Obligations, whether or not the beneficiaries of
the then outstanding Letters of Credit shall have presented the documents
required thereunder) shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Majority Revolving Credit Facility
Lenders, the Administrative Agent may, or upon the request of the Majority
Revolving Credit Facility Lenders, the Administrative Agent shall, by notice to
the Borrowers declare the Revolving Credit Commitments to be terminated
forthwith, whereupon the Revolving Credit Commitments shall immediately
terminate; and (ii) with the consent of the Required Lenders, the Administrative
Agent may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to the Borrowers, declare the Loans hereunder (with accrued
interest thereon) and all other amounts owing under this Agreement and the other
Loan Documents (including, without limitation, all amounts of L/C Obligations,
whether or not the beneficiaries of the then outstanding Letters of Credit shall
have presented the documents required thereunder) to be due and payable
forthwith, whereupon the same shall immediately become due and payable. With
respect to all Letters of Credit with respect to which presentment for honor
shall not have occurred at the time of an acceleration pursuant to this
paragraph, the Borrowers shall at such time deposit in a cash collateral account
opened by the Administrative Agent an amount equal to the aggregate then undrawn
and unexpired amount of such Letters of Credit. Amounts held in such cash
collateral account shall be applied by the Administrative Agent to the payment
of drafts drawn under such Letters of Credit, and the unused portion thereof
after all such Letters of Credit shall have expired or been fully drawn upon, if
any, shall be applied to repay other obligations of the Borrowers hereunder and
under the other Loan Documents. After all such Letters of Credit shall have
expired or been fully drawn upon, all Reimbursement Obligations shall have been
satisfied and all other obligations of the Borrowers hereunder and under the
other Loan
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Documents shall have been paid in full, the balance, if any, in such cash
collateral account shall be returned to the Borrowers (or such other Person as
may be lawfully entitled thereto).
SECTION 9. THE AGENTS
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Agents as the agents of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes each Agent, in
such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the such Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against any Agent.
9.2 Delegation of Duties. Each Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
9.3 Exculpatory Provisions. Neither any Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except to the extent that any of the foregoing are found by
a final and nonappealable decision of a court of competent jurisdiction to have
resulted from its or such Person's own gross negligence or willful misconduct)
or (ii) responsible in any manner to any of the Lenders for any recitals,
statements, representations or warranties made by any Loan Party or any officer
thereof contained in this Agreement or any other Loan Document or in any
certificate, report, statement or other document referred to or provided for in,
or received by the Agents under or in connection with, this Agreement or any
other Loan Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document or
for any failure of any Loan Party a party thereto to perform its obligations
hereunder or thereunder. The Agents shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of any Loan Party.
9.4 Reliance by Administrative Agent. Each Agent shall be entitled
to rely, and shall be fully protected in relying, upon any instrument, writing,
resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or
teletype message, statement, order or other document or conversation believed by
it to be genuine and correct and to have been signed, sent or made by the proper
Person or Persons and upon advice and statements of legal
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counsel (including, without limitation, counsel to K&F or the Borrowers),
independent accountants and other experts selected by the Administrative Agent.
The Agents may deem and treat the payee of any Note as the owner thereof for all
purposes unless a written notice of assignment, negotiation or transfer thereof
shall have been filed with the Administrative Agent. Each Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Required Lenders (or, if so specified by this Agreement, all Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action. Each Agent shall in all
cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of the
Required Lenders (or, if so specified by this Agreement, all Lenders), and such
request and any action taken or failure to act pursuant thereto shall be binding
upon all the Lenders and all future holders of the Loans.
9.5 Notice of Default. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
such Agent has received notice from a Lender, K&F or the Borrowers referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default". In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to
such Default or Event of Default as shall be reasonably directed by the Required
Lenders (or, if so specified by this Agreement, all Lenders); provided that
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
9.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereinafter
taken, including any review of the affairs of a Loan Party or any affiliate of a
Loan Party, shall be deemed to constitute any representation or warranty by any
Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Loan Parties and their
affiliates and made its own decision to make its Loans hereunder and enter into
this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Loan Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent
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hereunder, no Agent shall have any duty or responsibility to provide any Lender
with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
any Loan Party or any affiliate of a Loan Party which may come into the
possession of such Agent or any of its officers, directors, employees, agents,
attorneys-in-fact or affiliates.
9.7 Indemnification. The Lenders agree to indemnify each Agent in
its capacity as such (to the extent not reimbursed by K&F or the Borrowers and
without limiting the obligation of K&F or the Borrowers to do so), ratably
according to their respective Revolving Credit Percentages, Tranche A Term Loan
Percentages and Tranche B Term Loan Percentages in effect on the date on which
indemnification is sought under this Section 9.7 (or, if indemnification is
sought after the date upon which the Commitments shall have terminated and the
Loans shall have been paid in full, ratably in accordance with such Percentages
immediately prior to such date), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against such Agent in any way relating to
or arising out of, the Commitments, this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by such Agent under or in connection with any of the foregoing; provided that no
Lender shall be liable for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements which are found by a final and nonappealable decision
of a court of competent jurisdiction to have resulted from such Agent's gross
negligence or willful misconduct. The agreements in this Section 9.7 shall
survive the payment of the Loans and all other amounts payable hereunder.
9.8 Agent in Its Individual Capacity. Each Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with any Loan Party as though such Agent was not an Agent. With respect
to its Loans made or renewed by it and with respect to any Letter of Credit
issued or participated in by it, each Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not an Agent, and the terms "Lender" and
"Lenders" shall include each Agent in its individual capacity.
9.9 Successor Agents. The Administrative Agent may resign as
Administrative Agent upon 10 days' notice to the Lenders and the Borrowers. If
the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall appoint
from among the Lenders a successor agent for the Lenders, which successor agent
shall (unless an Event of Default under Section 8(a) or Section 8(f) with
respect to either of the Borrowers shall have occurred and be continuing) be
approved by the Borrowers (which approval shall not be unreasonably withheld or
delayed), whereupon such successor agent shall succeed to the rights, powers and
duties of the Administrative Agent, and the term "Administrative Agent" shall
mean such successor agent effective upon such appointment and approval, and the
former Administrative Agent's rights,
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powers and duties as Administrative Agent shall be terminated, without any other
or further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor agent
has accepted appointment as Administrative Agent by the date that is 10 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become effective
and the Lenders shall assume and perform all of the duties of the Administrative
Agent hereunder until such time, if any, as the Required Lenders appoint a
successor agent as provided for above. The Collateral Agent may resign as
Collateral Agent upon 10 days' notice to the Lenders and the Borrowers. If the
Collateral Agent shall resign as Collateral Agent under the Loan Documents, then
the Required Lenders shall appoint from among the Lenders a successor agent for
the Lenders, which successor agent shall (unless an Event of Default under
Section 8(a) or Section 8(f) with respect to either of the Borrowers shall have
occurred and be continuing) be approved by the Borrowers (which approval shall
not be unreasonably withheld or delayed), whereupon such successor agent shall
succeed to the rights, powers and duties of the Collateral Agent, and the term
"Collateral Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Collateral Agent's rights, powers and
duties as Collateral Agent shall be terminated, without any other or further act
or deed on the part of such former Collateral Agent or any of the parties to
this Agreement or any holders of the Loans. If no successor agent has accepted
appointment as Collateral Agent by the date that is 10 days following a retiring
Collateral Agent's notice of resignation, the retiring Collateral Agent's
resignation shall nevertheless thereupon become effective and the Lenders shall
assume and perform all of the duties of the Collateral Agent under the Loan
Documents until such time, if any, as the Required Lenders appoint a successor
agent as provided for above. The Syndication Agent may, at any time, by notice
to the Lenders and the Administrative Agent, resign as Syndication Agent
hereunder, whereupon the duties, rights, obligations and responsibilities
hereunder shall automatically be assumed by, and inure to the benefit of, the
Administrative Agent, without any further act by the Syndication Agent, the
Administrative Agent or any Lender. After any retiring Agent's resignation as
Agent, the provisions of this Section 9 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and the other Loan Documents.
9.10 Authorization to Release Liens. The Administrative Agent is
hereby irrevocably authorized by each of the Lenders to release any Lien
covering any Property of the Borrowers or any of their Subsidiaries that is the
subject of a Disposition which is permitted by this Agreement or which has been
consented to in accordance with Section 10.1.
9.11 Arranger. The Arranger, in its capacity as such, shall not have
any duties or any responsibilities hereunder nor any fiduciary relationship with
any Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise exist
against the Arranger in its capacity as such.
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SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, any other Loan
Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section 10.1. The
Required Lenders and each Loan Party party to the relevant Loan Document may, or
(with the written consent of the Required Lenders) the Agents and each Loan
Party party to the relevant Loan Document may, from time to time, (a) enter into
written amendments, supplements or modifications hereto and to the other Loan
Documents for the purpose of adding any provisions to this Agreement or the
other Loan Documents or changing in any manner the rights of the Lenders or of
the Loan Parties hereunder or thereunder or (b) waive, on such terms and
conditions as the Required Lenders, or the Agents, as the case may be, may
specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such waiver and no such amendment, supplement or
modification shall (i) forgive or reduce the principal amount or extend or waive
the final scheduled date of maturity of any Loan, extend the scheduled date of
any amortization payment in respect of any Term Loan, reduce the stated rate of
any interest, fee or letter of credit commission payable hereunder or extend or
waive the scheduled date of any payment thereof, increase the amount or extend
the expiration date of any Lender's Revolving Credit Commitment, or amend,
modify or waive any material provision of Section 2.16, in each case without the
consent of each Lender directly affected thereby; (ii) amend, modify or waive
any provision of this Section 10.1 or reduce any percentage specified in the
definition of Required Lenders or Required Prepayment Lenders, consent to the
assignment or transfer by the Borrowers of any of its rights and obligations
under this Agreement and the other Loan Documents, release all or substantially
all of the Collateral or release all or substantially all of the Guarantors from
their obligations under the Guarantee and Collateral Agreement, in each case
without the written consent of all Lenders; (iii) amend, modify or waive any
condition precedent to any extension of credit under the Revolving Credit
Facility set forth in Section 5.2 (including, without limitation, in connection
with any waiver of an existing Default or Event of Default) without the written
consent of the Majority Revolving Credit Facility Lenders; (iv) reduce the
percentage specified in the definition of Majority Facility Lenders without the
written consent of all Lenders under each affected Facility; (v) amend, modify
or waive any provision of Section 9 without the written consent of the Agents;
or (vi) amend, modify or waive any provision of Section 3 without the written
consent of the Issuing Lender. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Loan Parties, the Lenders, the Administrative Agent and all
future holders of the Loans. In the case of any waiver, the Loan Parties, the
Lenders and the Administrative Agent shall be restored to their former position
and rights hereunder and under the other Loan Documents, and any Default or
Event of Default waived shall be deemed to be cured and not continuing; but no
such waiver shall extend to any subsequent or other Default or Event of Default,
or impair any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise
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expressly provided herein, shall be deemed to have been duly given or made when
delivered, or three Business Days after being deposited in the mail, postage
prepaid, or, in the case of telecopy notice, when received, addressed as follows
in the case of K&F, the Borrowers and the Administrative Agent, and as set forth
in an administrative questionnaire delivered to the Administrative Agent in the
case of the Lenders, or to such other address as may be hereafter notified by
the respective parties hereto:
The Borrowers: Aircraft Braking Systems Corporation
c/o K&F Industries, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
Telecopy (▇▇▇) ▇▇▇-▇▇▇▇
Engineered Fabrics Corporation
c/o K&F Industries, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Executive Vice President
Telecopy (▇▇▇) ▇▇▇-▇▇▇▇
The Syndication Agent: ▇▇▇▇▇▇ Commercial Paper Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
The Administrative Agent and
the Collateral Agent: NBD Bank
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
; provided that any notice, request or demand to or upon the either Agent or the
Lenders shall not be effective until received.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the either Agent or any Lender, any right,
remedy, power or privilege hereunder or under the other Loan Documents shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder
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preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
herein provided are cumulative and not exclusive of any rights, remedies, powers
and privileges provided by law.
10.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder.
10.5 Payment of Expenses. The Borrowers jointly and severally agree
(a) to pay or reimburse the Agents for all their reasonable out-of-pocket costs
and expenses incurred in connection with the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Loan Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements of counsel to the Administrative Agent, (b) to
pay or reimburse each Lender and the Agents for all its costs and expenses
incurred in connection with the enforcement or preservation of any rights under
this Agreement, the other Loan Documents and any such other documents,
including, without limitation, the fees and disbursements of counsel (including
the allocated fees and expenses of in-house counsel) to each Lender and of
counsel to the Agents, (c) to pay, indemnify, and hold each Lender and the
Agents harmless from, any and all recording and filing fees or any amendment,
supplement or modification of, or any waiver or consent under or in respect of,
this Agreement, the other Loan Documents and any such other documents, and (d)
to pay, indemnify, and hold each Lender and the Agents and their respective
officers, directors, trustees, employees, affiliates, agents and controlling
persons (each, an "indemnitee") harmless from and against any and all other
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the execution, delivery, enforcement, performance and administration of this
Agreement, the other Loan Documents and any such other documents, including,
without limitation, any of the foregoing relating to the use of proceeds of the
Loans or the violation of, noncompliance with or liability under, any
Environmental Law applicable to the operations of K&F, the Borrowers, any of
their Subsidiaries or any of the Business Properties and the reasonable legal
fees and expenses of counsel in connection with claims, actions or proceedings
by any indemnitee against any Borrower hereunder (all the foregoing in this
clause (d), collectively, the "indemnified liabilities"), provided that the
Borrowers shall have no obligation hereunder to any indemnitee with respect to
indemnified liabilities to the extent such indemnified liabilities (i) are found
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of such
indemnitee, (ii) arise from legal proceedings commenced against any Agent or any
such Lender by any security holder or creditor thereof arising out of and based
upon rights afforded any such security holder or creditor solely in its capacity
as such, or (iii) arise from legal proceedings commenced against any Agent or
any such Lender by any other Lender or by any Assignee (as defined in subsection
10.6(d)), any Agent or any such Lender. Without limiting the foregoing, and to
the extent permitted by applicable law, the Borrowers agree not to assert and to
cause its
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Subsidiaries not to assert, and hereby waive and agree to cause their
Subsidiaries to so waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Laws, that any of them might have by statute or
otherwise against any indemnitee. The agreements in this Section 10.5 shall
survive repayment of the Loans and all other amounts payable hereunder.
10.6 Successors and Assigns; Participations and Assignments. (a)
This Agreement shall be binding upon and inure to the benefit of K&F, the
Borrowers, the Lenders, the Agents, all future holders of the Loans and their
respective successors and assigns, except that the Borrowers may not assign or
transfer any of their rights or obligations under this Agreement without the
prior written consent of the Agents and each Lender.
(b) Any Lender may, without the consent of the Borrowers, in
accordance with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a "Participant") participating interests
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and the
Borrowers and the Agents shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and the other Loan Documents. In no event shall any Participant under
any such participation have any right to approve any amendment or waiver of any
provision of any Loan Document, or any consent to any departure by any Loan
Party therefrom, except to the extent that such amendment, waiver or consent
would reduce the principal of, or interest on, the Loans or any fees payable
hereunder, or postpone the date of the final maturity of the Loans, in each case
to the extent subject to such participation. The Borrowers agree that if amounts
outstanding under this Agreement and the Loans are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have the right of setoff in respect of its
participating interest in amounts owing under this Agreement to the same extent
as if the amount of its participating interest were owing directly to it as a
Lender under this Agreement, provided that, in purchasing such participating
interest, such Participant shall be deemed to have agreed to share with the
Lenders the proceeds thereof as provided in Section 10.7(a) as fully as if it
were a Lender hereunder. The Borrowers also agree that each Participant shall be
entitled to the benefits of Sections 2.17, 2.18 and 2.19 with respect to its
participation in the Commitments and the Loans outstanding from time to time as
if it was a Lender; provided that, in the case of Section 2.18, such Participant
shall have complied with the requirements of said Section and provided further
that no Participant shall be entitled to receive any greater amount pursuant to
any such Section than the transferor Lender would have been entitled to receive
in respect of the amount of the participation transferred by such transferor
Lender to such Participant had no such transfer occurred.
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(c) Any Lender (an "Assignor") may, in accordance with applicable
law and with notice to the Syndication Agent, with the consent of the Borrowers
and the Agents (which, in each case, shall not be unreasonably withheld or
delayed) (provided that no such consent need be obtained with respect to any
assignment (x) by or to the Syndication Agent for the 15 Business Day period
following the Closing Date in connection with the initial syndication of the
Facilities, (y) by a Lender to any Person under common management ("under common
management" being deemed for purposes of this agreement to include, in the case
of an investment fund, another fund having as its investment advisor the same
investment advisor or an affiliate thereof) with such Lender or (z) with respect
to any assignment to any Lender or an affiliate thereof, unless, in each case as
the result of such assignment a Lender would have Revolving Credit Commitments
and Loans exceeding 20% of the aggregate Revolving Credit Commitments and
Loans), to an additional bank, financial institution or other entity (an
"Assignee") all or any part of its rights and obligations under this Agreement
pursuant to an Assignment and Acceptance (an "Assignment and Acceptance"),
substantially in the form of Exhibit E, executed by such Assignee, such
Assignor, the Syndication Agent and the Administrative Agent (and, where the
consent of the Borrowers is required pursuant to the foregoing provisions, by
the Borrowers) and delivered to the Administrative Agent for its acceptance and
recording in the Register; provided that no such assignment to an Assignee
(other than any Lender or any affiliate thereof or to any Person under common
management with such Lender) shall be in an aggregate principal amount of less
than $5,000,000 (other than in the case of an assignment of all of a Lender's
interests under this Agreement), and, after giving effect thereto, the assigning
Lender shall have Revolving Credit Commitments and Loans aggregating at least
$5,000,000 (other than in the case of an assignment of all of a Lender's
interests under this Agreement), unless otherwise agreed by the Borrowers, the
Syndication Agent and the Administrative Agent. Any such assignment need not be
ratable as among the Facilities. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with a Commitment and/or Loans as set
forth therein, and (y) the Assignor thereunder shall, to the extent provided in
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of an
Assignor's rights and obligations under this Agreement, such assigning Lender
shall cease to be a party hereto, except for the obligations of the Borrowers
under Section 10.5 which shall survive such assignment). Notwithstanding any
provision of this Section 10.6, the consent of the Borrowers shall not be
required for any assignment which occurs at any time when any of the events
described in Sections 8(a) or 8(f) shall have occurred and be continuing.
(d) The Administrative Agent shall maintain at its address referred
to in Section 10.2 a copy of each Assignment and Acceptance delivered to it and
a register (the "Register") for the recordation of the names and addresses of
the Lenders and the Commitment of, and principal amount of the Loans owing to,
each Lender from time to time and any Notes evidencing such Loans. The entries
in the Register shall be conclusive, in the absence of manifest error, and the
Borrowers, the Administrative Agent and the Lenders shall treat each Person
whose name is recorded in the Register as the owner of the Loan and any Note
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evidencing such Loan recorded therein for all purposes of this Agreement. Any
assignment of any Loan whether or not evidenced by a Note shall be effective
only upon appropriate entries with respect thereto being made in the Register
(and each Note shall expressly so provide). Any assignment or transfer of all or
part of a Loan evidenced by a Note shall be registered on the Register only upon
surrender for registration of assignment or transfer of the Note evidencing such
Loan, accompanied by a duly executed Assignment and Acceptance, and thereupon
one or more new Notes in the same aggregate principal amount shall be issued to
the designated Assignee and the old Notes shall be returned by the
Administrative Agent to the Borrowers marked "cancelled". The Register shall be
available for inspection by the Borrowers or any Lender at any reasonable time
and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof or a Person under common management with
such Lender, by the Borrowers, the Administrative Agent and the Syndication
Agent) together with payment to the Administrative Agent of a registration and
processing fee of $4,000 (except that (y) no such registration and processing
fee shall be payable in the case of an Assignee which is already a Lender or is
an affiliate of a Lender or a Person under common management with a Lender and
(z) in the case of contemporaneous assignments by a Lender to up to two Persons
under common management, only a single fee in the amount of $4,000 shall be
payable), the Administrative Agent shall (i) promptly accept such Assignment and
Acceptance and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Lenders and the Borrowers. On or prior to such effective
date, the Borrowers, at their own expense, upon request, shall execute and
deliver to the Administrative Agent (in exchange for the Revolving Credit Note
and/or Term Notes, as the case may be, of the assigning Lender) a new Revolving
Credit Note and/or Term Notes, as the case may be, to the order of such Assignee
in an amount equal to the Revolving Credit Commitment and/or applicable Term
Loans, as the case may be, assumed or acquired by it pursuant to such Assignment
and Acceptance and, if the assigning Lender has retained a Revolving Credit
Commitment and/or Term Loans, as the case may be, upon request, a new Revolving
Credit Note and/or Term Notes, as the case may be, to the order of the assigning
Lender in an amount equal to the Revolving Credit Commitment and/or applicable
Term Loans, as the case may be, retained by it hereunder. Such new Notes shall
be dated the Closing Date and shall otherwise be in the form of the Note
replaced thereby.
(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section 10.6 concerning assignments of
Loans and Notes relate only to absolute assignments and that such provisions do
not prohibit assignments creating security interests, including, without
limitation, any pledge or assignment by a Lender of any Loan or Note to any
Federal Reserve Bank in accordance with applicable law.
10.7 Adjustments; Set-off. (a) Except to the extent that this
Agreement provides for payments to be allocated to the Lenders under a
particular Facility, if any Lender (a "Benefitted Lender") shall at any time
receive any payment of all or part of its Loans or the
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Reimbursement Obligations owing to it, or interest thereon, or receive any
collateral in respect thereof (whether voluntarily or involuntarily, by set-off,
pursuant to events or proceedings of the nature referred to in Section 8(f), or
otherwise), in a greater proportion than any such payment to or collateral
received by any other Lender, if any, in respect of such other Lender's Loans or
the Reimbursement Obligations owing to such other Lender, or interest thereon,
such Benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's Loan and/or
of the Reimbursement Obligations owing to each such other Lender, or shall
provide such other Lenders with the benefits of any such collateral, or the
proceeds thereof, as shall be necessary to cause such Benefitted Lender to share
the excess payment or benefits of such collateral or proceeds ratably with each
of the Lenders; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such Benefitted Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to K&F or the
Borrowers, any such notice being expressly waived by K&F and the Borrowers to
the extent permitted by applicable law, upon any amount becoming due and payable
by K&F or the Borrowers hereunder (whether at the stated maturity, by
acceleration or otherwise) to set off and appropriate and apply against such
amount any and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in any
currency, in each case whether direct or indirect, absolute or contingent,
matured or unmatured, at any time held or owing by such Lender or any branch or
agency thereof to or for the credit or the account of K&F or the Borrowers. Each
Lender agrees promptly to notify K&F, the Borrowers and the Administrative Agent
after any such setoff and application made by such Lender, provided that the
failure to give such notice shall not affect the validity of such setoff and
application.
10.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Agreement
signed by all the parties shall be lodged with the Borrowers and the
Administrative Agent.
10.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10.10 Integration. This Agreement and the other Loan Documents
represent the agreement of K&F, the Borrowers, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.
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10.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
10.12 Submission To Jurisdiction; Waivers. Each of K&F and each of
the Borrowers hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts
of the State of New York, the courts of the United States for the Southern
District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to K&F or
either of the Borrowers, as the case may be at its address set forth in
Section 10.2 or at such other address of which the Administrative Agent
shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to ▇▇▇ in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section 10.12 any special, exemplary, punitive or consequential
damages.
10.13 Acknowledgements. Each of K&F and each of the Borrowers hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to K&F or either of the Borrowers
arising out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between Administrative Agent and
Lenders, on one hand, and K&F and the Borrowers, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor;
and
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(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among K&F, the Borrowers and the Lenders.
10.14 WAIVERS OF JURY TRIAL. K&F, EACH OF THE BORROWERS, THE AGENTS
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
10.15 Confidentiality. Each of the Agents and each Lender agrees to
keep confidential all non-public information provided to it by any Loan Party
pursuant to this Agreement that is designated by such Loan Party as
confidential; provided that nothing herein shall prevent any Agent or any Lender
from disclosing any such information (a) to the Administrative Agent, any other
Lender or any affiliate of any Lender, (b) to any Participant or Assignee (each,
a "Transferee") or prospective Transferee or to any direct or indirect
contractual counterparties in swap agreements relating to the Loans or to the
professional advisors of such swap counterparties, in each case, which agrees to
comply with the provisions of this Section 10.15, (c) to the employees,
directors, trustees, agents, attorneys, accountants and other professional
advisors of such Lender or its affiliates, (d) upon the request or demand of any
Governmental Authority having jurisdiction over the such Agent or such Lender,
(e) in response to any order of any court or other Governmental Authority or as
may otherwise be required pursuant to any Requirement of Law, (f) if reasonably
requested or required to do so in connection with any litigation or similar
proceeding, (g) which has been publicly disclosed other than in breach of this
Section 10.15, (h) to the National Association of Insurance Commissioners or any
similar organization or any nationally recognized rating agency that requires
access to information about a Lender's investment portfolio in connection with
ratings issued with respect to such Lender, or (i) in connection with the
exercise of any remedy hereunder or under any other Loan Document.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
AIRCRAFT BRAKING SYSTEMS
CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:
ENGINEERED FABRICS CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:
▇▇▇▇▇▇ COMMERCIAL PAPER INC., as
Syndication Agent and as a Lender
By: /s/ ▇▇▇▇▇▇ ▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇
Title:
THE FIRST NATIONAL BANK OF CHICAGO,
as Administrative Agent, as Issuing
Lender and as a Lender
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
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Annex A
PRICING GRID
Consolidated Commitment
Leverage Applicable Margin Applicable Margin Fee
Ratio for Eurodollar Loans for Base Rate Loans Rate
Revolving Tranche A Tranche B Revolving Tranche A Tranche
Credit Term Term Credit Term B Term
Loans Loans Loans Loans Loans Loans
----------------------------------------------------------------------------------------------------
>= 5.50 to 1.00 2.250% 2.250% 2.375% 1.250% 1.250% 1.375% .500%
< 5.50 to 1.00 2.000% 2.000% 2.375% 1.000% 1.000% 1.375% .500%
but >= 5.00 to 1.00
< 5.00 to 1.00 1.750% 1.750% 2.250% 0.750% 0.750% 1.250% .375%
but >= 4.50 to 1.00
< 4.50 to 1.00 1.500% 1.500% 2.250% 0.500% 0.500% 1.250% .250%
Changes in the Applicable Margin with respect to Revolving Credit Loans, Tranche
A Term Loans, Tranche B Term Loans or in the Commitment Fee Rate resulting from
changes in the Consolidated Leverage Ratio shall become effective on the date
(the "Adjustment Date") on which financial statements are delivered to the
Lenders pursuant to Section 6.1 (but in any event not later than the 60th day
after the end of each of the first three quarterly periods of each fiscal year
or the 90th day after the end of each fiscal year, as the case may be) and shall
remain in effect until the next change to be effected pursuant to this
paragraph. If any financial statements referred to above are not delivered
within the time periods specified above, then, until such financial statements
are delivered, the Consolidated Leverage Ratio as at the end of the fiscal
period that would have been covered thereby shall for the purposes of this
definition be deemed to be greater than 5.50 to 1.00. In addition, at all times
while an Event of Default shall have occurred and be continuing, the
Consolidated Leverage Ratio shall for the purposes of this definition be deemed
to be greater than 5.50 to 1.00. Each determination of the Consolidated Leverage
Ratio pursuant to this definition shall be made with respect to the period of
four consecutive fiscal quarters of K&F and its Subsidiaries ending at the end
of the period covered by the relevant financial statements.
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Annex B
Sources and Uses
(in millions)
Sources Uses
------- ----
Senior Secured Credit $ 346 Payment to Existing Equity $ 230.3
Facilities
Senior Subordinated Debt 185 Refinance 10.75% Senior Subordinated 141.8
Notes due 2004
Refinance 11.875% Senior Secured 73.1
Notes due 200
Refinance Existing Credit Agreement 49.8*
Fees, Expenses & Premiums 36.0
------ --------
Total Sources $ 531 Total Uses $ 531
====== ========
Non-Cash Rollover $ 130 Non-Cash Rollover Equity $ 130
Equity
------ --------
$ 661 $ 661
====== ========
* Net of estimated cash on hand at closing of $5,000,000.
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SCHEDULE 1.1A
COMMITMENTS: LENDING OFFICES AND ADDRESSES
Commitments
-----------
Name of Lender and Tranche A Tranche B
Information for Notices Revolving Credit Term Loans Term Loan
----------------------- ---------------- ---------- ---------