Document:

Exhibit 10.1

 

FIRST AMENDMENT

 

FIRST AMENDMENT, dated as of October 17, 2005
(this “Amendment”), to the CREDIT AGREEMENT, dated as of November 18,
2004 (as amended from time to time, the “Credit Agreement”), among
K&F INTERMEDIATE HOLDCO, INC., a Delaware corporation (“Holdings”),
K&F INDUSTRIES, INC. (f/k/a K&F ACQUISITION, INC.), a Delaware
corporation (the “Borrower”), the several banks and other financial
institutions or entities from time to time parties thereto (the “Lenders”),
LEHMAN BROTHERS INC. and J.P. MORGAN SECURITIES INC., as exclusive advisors,
joint lead arrangers and joint bookrunners, J.P. MORGAN SECURITIES INC., as
syndication agent, GOLDMAN SACHS CREDIT PARTNERS, L.P. and CITIGROUP GLOBAL
MARKETS INC., as co-documentation agents, and LEHMAN COMMERCIAL PAPER INC., as
administrative agent (in such capacity, the “Administrative Agent”).

 

W I  T  N  E  S
S  E  T  H :

 

WHEREAS, pursuant to the Credit Agreement, the
Lenders have agreed to make, and have made, certain loans and other extensions
of credit to the Borrower;

 

WHEREAS, the Borrower has requested certain
amendments to the Credit Agreement as more fully set forth herein; and

 

WHEREAS, the Lenders have agreed to such amendments
but only on the terms and conditions contained in this Amendment.

 

NOW, THEREFORE, the parties hereto hereby agree as
follows:

 

SECTION 1.           Defined Terms.  Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given
to them in the Credit Agreement.

 

SECTION 2.           Amendments to Section 1.1 of
the Credit Agreement.  

(a) Section 1.1 of the Credit Agreement is hereby amended by deleting
the definitions of “Applicable Margin,” “Commitment,” “Development
Participation Costs,” “Facility,” “Term Loan,” “Term Loan Lender” and “Term
Loan Percentage” in their respective entireties and substituting in lieu
thereof the following in the appropriate alphabetical order:

 

“Applicable Margin”:  for each Type of Loan under each Facility,
the rate per annum set forth opposite such Facility under the relevant column
heading below:

 

 

	
   

  	
   

  	
  Base Rate

  Loans

  	
   

  	
  Eurodollar

  Loans

  	
   

  
	
  Revolving Credit Facility

  (including Swing Line Loans)

  	
   

  	
  1.50

  	
  %

  	
  2.50

  	
  %

  
	
  Tranche C
  Term Loan Facility

  	
   

  	
  1.25

  	
  %

  	
  2.25

  	
  %

  

 

provided, that (i) on and after the first Adjustment Date occurring after
the completion of two full fiscal quarters of the Borrower after the Closing
Date, the Applicable Margin with respect to the Revolving Credit Facility will
be determined pursuant to the Pricing Grid and (ii) on and after the first
Adjustment Date occurring after the completion of one full fiscal quarter of
the Borrower after the Tranche C Closing Date, the Applicable Margin with
respect to the Tranche C Term Loan Facility will be determined pursuant to the
Pricing Grid and provided  further that, notwithstanding the
foregoing, if at any time the Borrower shall obtain, and at all times during
which the Borrower shall maintain, (i) either a senior implied rating or a
corporate family rating from Moody’s of B1 or better and (ii) a corporate
credit rating from S&P of B+ or better, the Applicable Margin with respect
to the Tranche C Term Loans shall be (x) 2.00% in the case of Eurodollar Loans
and (y) 1.00% in the case of Base Rate Loans, effective as of the day after the
date on which such ratings are obtained.

 

“Commitment”: 
with respect to any Lender, each of the Tranche C Term Loan
Commitment and the Revolving Credit Commitment of such Lender.

 

“Development Participation Payments”:  cash funding to original equipment
manufacturers to fund the co-development of aircraft wheels, brakes and brake
control systems for new aircraft platforms.

 

“Facility”: 
each of (a) the Tranche C Term Loan Commitments and the
Tranche C Term Loans made thereunder (the “Tranche C Term Loan
Facility”) and (b) the Revolving Credit Commitments and the extensions
of credit made thereunder (the “Revolving Credit Facility”).

 

“Term Loan”: 
the Tranche C Term Loans.

 

“Term Loan Lender”:  each Lender that has a Tranche C Term Loan
Commitment or is the holder of a Tranche C Term Loan.

 

“Term Loan Percentage”:  as to any Tranche C Term Loan Lender at
any time, the percentage which such Lender’s Tranche C Term Loan
Commitment then constitutes of the aggregate Tranche C Term Loan
Commitments (or, at any time after the Tranche C Closing Date, the
percentage which the aggregate principal amount of such Lender’s Tranche C
Term Loans then outstanding constitutes of the aggregate principal amount of
the Tranche C Term Loans then outstanding).

 

(b)           Section 1.1 of the Credit
Agreement is hereby further amended by inserting the following new definitions
in the appropriate alphabetical order:

 

2

 

“First Amendment”:  the First Amendment, dated as of October 17,
2005, to this Agreement.

 

“First Amendment Lender Addendum”:  each First Amendment Lender Addendum,
substantially in the form of Exhibit B to the First Amendment, executed
and delivered pursuant to the First Amendment.

 

“Tranche C Closing Date”:  the First Amendment Effective Date as defined
in Section 10 of the First Amendment, which date is October 17, 2005.

 

“Tranche C Term Loan”:  as defined in Section 2.24(a).

 

“Tranche C Term Loan Commitment”:  as to any Tranche C Term Loan Lender,
the obligation of such Lender, if any, to make a Tranche C Term Loan to
the Borrower hereunder on the Tranche C Closing Date in a principal amount
not to exceed the amount set forth under the heading “Tranche C Term Loan
Commitment” opposite such Lender’s name on Schedule 1 to the First
Amendment Lender Addendum delivered by such Lender.  The original aggregate amount of the
Tranche C Term Loan Commitment is $456,000,000.

 

“Tranche C Term Loan Lender”:  each Lender that has a Tranche C Term
Loan Commitment or that holds a Tranche C Term Loan.

 

SECTION 3.           Amendment to Section 2.11 of
the Credit Agreement.  Section 2.11
of the Credit Agreement is hereby amended by (i) deleting the phrase “The
Borrower” in the first line of clause (a) thereof and substituting in lieu
thereof the words “Subject to subsection (c) below, the Borrower” and
(ii) inserting the following new clause (c) at the end thereof:

 

“(c) In the event that, on or
prior to the first anniversary of the First Amendment Effective Date, any
Term Loan Lender receives a Repricing Prepayment (as defined below), then at
the time thereof, the Borrower shall pay to such Term Loan Lender a prepayment
premium equal to 1.0% of the amount of such Repricing Prepayment.   As used herein, with respect to any Term Loan
Lender, a “Repricing Prepayment” is the amount of principal of the Term Loans
of such Term Loan Lender that is prepaid by the Borrower pursuant to Section 2.11
or 2.12 substantially concurrently with the incurrence by the Borrower or any
of its Subsidiaries of new replacement term loans hereunder (other than the
Tranche C Term Loans) that have interest rate margins lower than the Applicable
Margin then in effect for the Term Loans so prepaid.”

 

SECTION 4.           Amendment to Section 2 of the
Credit Agreement (Amount and Terms of Commitments).  Section 2 of the Credit Agreement is
hereby amended by adding the following new Section 2.24 in the appropriate
numerical order:

 

“2.24       Tranche C
Term Loan Facility.

 

(a)           Tranche C
Term Loans.  Subject to the terms and
conditions hereof, each Tranche C Term Loan Lender severally agrees to
make a term loan (a “Tranche C Term Loan”) to the Borrower on the
Tranche C Closing Date in an amount not to exceed the

 

3

 

Tranche C Term Loan Commitment of such
Lender.  The Tranche C Term Loan may
from time to time be Eurodollar Loans or Base Rate Loans, as determined by the
Borrower and notified to the Administrative Agent in accordance with
Sections 2.24(b) and 2.13.

 

(b)           Procedure
for Tranche C Term Loan Borrowing. 
The Borrower may borrow under the Tranche C Term Loan Commitment on
the Tranche C Closing Date, provided that, the Borrower shall
deliver to the Administrative Agent a Borrowing Notice (which Borrowing Notice
must be received by the Administrative Agent prior to 10:00 A.M., New York
City time, one Business Day prior to the Tranche C Closing Date),
specifying the amount of Tranche C Term Loans to be borrowed.  Upon receipt of such Borrowing Notice the
Administrative Agent shall promptly notify each Tranche C Term Loan Lender
thereof.  Not later than 12:00 Noon,
New York City time, on the Tranche C Closing Date, each Tranche C
Term Loan Lender shall make available to the Administrative Agent at the
Funding Office an amount in immediately available funds equal to the
Tranche C Term Loan or Tranche C Term Loans to be made by such
Lender; provided, however, that, at the option of each
Tranche C Term Loan Lender that holds a Term Loan immediately prior to
giving effect to this Amendment and notwithstanding Section 2.18, all or a
portion of the aggregate amount of such Term Loans of such Tranche C Term
Loan Lender may be converted to Tranche C Term Loans in satisfaction of the
foregoing funding requirement.  Subject
to the immediately preceding sentence and notwithstanding Section 2.18,
the Administrative Agent shall use the amounts made available to the
Administrative Agent by the Tranche C Term Loan Lenders to repay the
amounts due under the Term Loans outstanding on the Tranche C Closing Date.

 

(c)           Notwithstanding
anything to the contrary in the Credit Agreement, the Interest Period and
respective Eurodollar Rate in effect on the Tranche C Closing Date in respect
of the Term Loans outstanding on the Tranche C Closing Date that are being
converted to Tranche C Term Loans on the Tranche C Closing Date (the “Current
Interest Period”) will continue to be in effect for such Loans following
the Tranche C Closing Date, and, notwithstanding the definition of “Interest
Period,” the initial Interest Period of any new Tranche C Term Loan funded on
the Tranche C Closing Date will end on the last day of the Current Interest
Period, the Eurodollar Rate applicable during such initial Interest Period to
any such new Loans will be the same as the Eurodollar Rate in effect on the
Tranche C Closing Date in respect of the Term Loans that are being converted
and, as of the Tranche C Closing Date (and notwithstanding the definition of “Eurodollar
Tranche”), all Tranche C Term Loans will be deemed to be within the same
Eurodollar Tranche.

 

(d)           The
Tranche C Term Loan of each Tranche C Term Loan Lender shall mature
in 29 consecutive quarterly installments, commencing on December 31, 2005,
each of which shall be in an amount equal to such Lender’s Term Loan Percentage
multiplied by the percentage set forth below opposite such installment of the
aggregate amount of the Tranche C Term Loans made on the Tranche C Closing
Date:

 

4

 

	
  Quarterly Installment

  	
   

  	
  Percentage

  
	
   

  	
   

  	
   

  
	
  December 31,
  2005

  	
   

  	
  0.25%

  
	
  March 31, 2006

  	
   

  	
  0.25%

  
	
  June 30,
  2006

  	
   

  	
  0.25%

  
	
  September 30,
  2006

  	
   

  	
  0.25%

  
	
  December 31,
  2006

  	
   

  	
  0.25%

  
	
  March 31,
  2007

  	
   

  	
  0.25%

  
	
  June 30,
  2007

  	
   

  	
  0.25%

  
	
  September 30,
  2007

  	
   

  	
  0.25%

  
	
  December 31,
  2007

  	
   

  	
  0.25%

  
	
  March 31,
  2008

  	
   

  	
  0.25%

  
	
  June 30,
  2008

  	
   

  	
  0.25%

  
	
  September 30,
  2008

  	
   

  	
  0.25%

  
	
  December 31,
  2008

  	
   

  	
  0.25%

  
	
  March 30,
  2009

  	
   

  	
  0.25%

  
	
  June 30,
  2009

  	
   

  	
  0.25%

  
	
  September 30,
  2009

  	
   

  	
  0.25%

  
	
  October 31,
  2009

  	
   

  	
  0.25%

  
	
  March 31, 2010

  	
   

  	
  0.25%

  
	
  June 30,
  2010

  	
   

  	
  0.25%

  
	
  September 30,
  2010

  	
   

  	
  0.25%

  
	
  December 31,
  2010

  	
   

  	
  0.25%

  
	
  March 31,
  2011

  	
   

  	
  0.25%

  
	
  June 30,
  2011

  	
   

  	
  0.25%

  
	
  September 30,
  2011

  	
   

  	
  0.25%

  
	
  December 31,
  2011

  	
   

  	
  0.25%

  
	
  March 31,
  2012

  	
   

  	
  23.25%

  
	
  June 30,
  2012

  	
   

  	
  23.25%

  
	
  September 30,
  2012

  	
   

  	
  23.25%

  
	
  November 18,
  2012

  	
   

  	
  All
  amounts outstanding in respect of the Tranche C Term Loans”

  

 

SECTION 5.           Amendment to Section 4.17 of
the Credit Agreement.  Section 4.17
of the Credit Agreement is hereby amended by adding immediately at the end
thereof the sentence, “The proceeds of the Tranche C Term Loans shall be
used to prepay the Term Loans outstanding on the Tranche C Closing Date.”

 

SECTION 6.           Amendment to Section 7.7 of
the Credit Agreement.  Section 7.7
of the Credit Agreement is hereby amended by deleting the phrase “Developmental
Participation Costs” each place it appears in clause (b) thereof and
substituting in lieu thereof “Development Participation Payments”.

 

SECTION 7.           General Amendment to the Credit
Agreement.  The Credit Agreement is
hereby amended by deleting the phrase “Development Participation Costs” each
time in appears and substituting in lieu thereof “Development Participation
Payments”.

 

5

 

SECTION 8.           Amendment to Annex A of the Credit
Agreement.  Annex A of the Credit
Agreement is hereby amended by deleting Annex A in its entirety and
substituting in lieu thereof the following new Annex A:

 

PRICING GRID FOR REVOLVING CREDIT LOANS, SWING LINE LOANS

AND TERM LOANS

 

	
   

  	
   

  	
  Applicable Margin for 

  Eurodollar Loans

  	
   

  	
  Applicable Margin for 

  Base Rate Loans

  	
   

  
	
  Consolidated

  Leverage Ratio

  	
   

  	
  Revolving Credit

  Loans

  	
   

  	
  Term Loans

  	
   

  	
  Revolving Credit

  Loans

  	
   

  	
  Term Loans

  	
   

  
	
  >
  6.00 to 1.00

  	
   

  	
  2.50

  	
  %

  	
  2.25

  	
  %

  	
  1.50

  	
  %

  	
  1.25

  	
  %

  
	
  < 6.00 to 1.00

  but > 5.50 to 1.00

  	
   

  	
  2.25

  	
  %

  	
  2.00

  	
  %

  	
  1.25

  	
  %

  	
  1.00

  	
  %

  
	
  < 5.50 to 1.00

  but > 4.50 to 1.00

  	
   

  	
  2.00

  	
  %

  	
  2.00

  	
  %

  	
  1.00

  	
  %

  	
  1.00

  	
  %

  
	
  < 4.50 to 1.00

  	
   

  	
  1.75

  	
  %

  	
  2.00

  	
  %

  	
  0.75

  	
  %

  	
  1.00

  	
  %

  

 

Changes in the Applicable
Margin with respect to the Loans 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 45th 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 6.00 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 Pricing Grid be deemed to be greater than 6.00
to 1.00.  Each determination of the
Consolidated Leverage Ratio pursuant to this Pricing Grid shall be made for the
periods and in the manner contemplated by Section 7.1(a).

 

SECTION 9.           Joinder.  From and after the First Amendment Effective
Date, pursuant to Section 10.1 of the Credit Agreement, each
Tranche C Term Loan Lender executing and delivering a First Amendment
Lender Addendum, substantially in the form of Exhibit B hereto (a “First
Amendment Lender Addendum”), shall become a party to the Credit Agreement
and have the rights and obligations of a Lender thereunder and under the other
Loan Documents and shall be bound by the other provisions thereof.

 

SECTION 10.         Conditions to Effectiveness.  This Amendment shall become effective upon
the date (the “First Amendment Effective Date”) on which the
Administrative Agent shall have received:

 

6

 

(a)           This Amendment, executed and
delivered by a duly authorized officer of the Borrower.

 

(b)           An Acknowledgment and Consent,
substantially in the form of Exhibit A hereto, duly executed and delivered
by each Guarantor.

 

(c)           A First Amendment Lender Addendum,
executed and delivered by each Tranche C Term Loan Lender.

 

(d)           A Lender Consent Letter,
substantially in the form of Exhibit C (a “Lender Consent Letter”),
authorizing the Administrative Agent to execute this Amendment, duly executed
and delivered by the Required Lenders (as defined in the Credit Agreement prior
to giving effect to this Amendment), it being agreed that the execution of the
First Amendment Lender Addendum shall be deemed to constitute delivery of a
Lender Consent Letter by a Lender, in its capacity as a Lender under the Credit
Agreement (without giving effect to this Amendment).

 

(e)           Subject to Section 2.24(b) of
the Credit Agreement (as amended), satisfactory evidence that the outstanding
principal amount of, and all accrued and unpaid interest on, the Term Loans
outstanding on the Tranche C Closing Date shall have been paid in full with the
proceeds of the Tranche C Term Loans in the case of principal amounts.

 

(f)            The Administrative Agent shall have
received all fees required to be paid, and all expenses for which invoices have
been presented supported by customary documentation (including reasonable fees,
disbursements and other charges of counsel to the Administrative Agent), on or
before the First Amendment Effective Date.

 

(g)           On or before the First Amendment
Effective Date, all corporate and other proceedings taken or to be taken in
connection with this Amendment shall be reasonably satisfactory in form and
substance to Administrative Agent and its counsel, and Administrative Agent and
such counsel shall have received all such counterpart originals or certified
copies of such documents as Administrative Agent may reasonably request.

 

(h)           The Administrative Agent shall have
received a certificate of the Borrower, dated the First Amendment Effective
Date, in form and substance reasonably satisfactory to the Administrative
Agent.

 

(i)            The Administrative Agent shall have
received the legal opinion of Gibson, Dunn & Crutcher LLP, counsel to
the Loan Parties, in form and substance reasonably satisfactory to the
Administrative Agent.

 

(j)            All material governmental and third
party approvals necessary in connection with the Tranche C Term Loan
Facility, the continuing operations of the Borrower and its Subsidiaries and
the transactions contemplated hereby shall have been obtained and be in full force
and effect.

 

7

 

SECTION 11.         Representations and Warranties.  The Borrower hereby represents and warrants
to the Administrative Agent and each Lender that (before and after giving
effect to this Amendment):

 

(a)           Each Loan Party has the corporate
power and authority, and the legal right, to make, deliver and perform this
Amendment and the Acknowledgment and Consent (the “Amendment Documents”)
to which it is a party and, in the case of the Borrower, to borrow under the
Credit Agreement as amended hereby.  Each
Loan Party has taken all necessary corporate or other action to authorize the
execution, delivery and performance of the Amendment Documents to which it is a
party and, in the case of the Borrower, to authorize the borrowings on the
terms and conditions of the Credit Agreement as amended by this Amendment (the “Amended
Credit 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
Amendment Documents, the borrowings under the Amended Credit Agreement or the
execution, delivery, performance, validity or enforceability of this Amendment
or the Acknowledgment and Consent, except (i) consents, authorizations,
filings and notices which have been obtained or made and are in full force and
effect and (ii) the filings referred to in Section 4.20 of the Credit
Agreement.  Each Amendment Document has
been duly executed and delivered on behalf of each Loan Party that is a party
thereto.  Each Amendment Document and the
Amended Credit Agreement constitutes a legal, valid and binding obligation of
each Loan Party that is a 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).

 

(b)           The execution, delivery and
performance of the Amendment Documents, the borrowings under the Amended Credit
Agreement and the use of the proceeds thereof will not violate any material
Requirement of Law or any material Contractual Obligation of the Borrower or
any of its 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).

 

(c)           Each of the representations and
warranties made by any Loan Party herein or in or pursuant to the Loan
Documents is true and correct on and as of the First Amendment Effective Date
as if made on and as of such date (except that any representation or warranty
which by its terms is made as of an earlier date shall be true and correct as
of such earlier date).

 

(d)           The Borrower and the other Loan
Parties have performed in all material respects all agreements and satisfied
all conditions which this Amendment and the other Loan Documents provide shall
be performed or satisfied by the Borrower or the other Loan Parties on or
before the First Amendment Effective Date.

 

(e)           After giving effect to this
Amendment, no Default or Event of Default has occurred and is continuing, or
will result from the consummation of the transactions contemplated by this
Amendment.

 

8

 

SECTION 12.         Payment of Expenses.  The Borrower agrees to pay or reimburse the
Administrative Agent for all of its reasonable out-of-pocket costs and expenses
incurred in connection with this Amendment, any other documents prepared in
connection herewith and the transactions contemplated hereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent.

 

SECTION 13.         No Other Amendment or Waivers;
Confirmation.  Except as expressly
provided hereby, all of the terms and provisions of the Credit Agreement and
the other Loan Documents are and shall remain in full force and effect.  The amendments, waivers and acknowledgement
contained herein shall not be construed as an amendment or waiver of any other
provision of the Credit Agreement or the other Loan Documents or for any
purpose except as expressly set forth herein or a consent to any further or
future action on the part of the Borrower that would require the waiver or
consent of the Administrative Agent or the Lenders.

 

SECTION 14.         GOVERNING LAW; MISCELLANEOUS.  (a)  THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

 

(b)           On and after the First Amendment
Effective Date, each reference in the Credit Agreement to “this Agreement”, “hereunder”,
“hereof”, “herein”, or words of like import referring to the Credit Agreement,
and each reference in the other Loan Documents to the “Credit Agreement”, “thereunder”,
“thereof”, or words of like import referring to the Credit Agreement shall mean
and be a reference to the Amended Credit Agreement.

 

(c)           This Amendment may be executed by one
or more of the parties to this Agreement on any number of separate
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. A set of the copies of this Amendment,
the Acknowledgment and Consent, the First Amendment Lender Addenda and the
Lender Consent Letters signed by all the parties shall be lodged with the
Borrower and the Administrative Agent. 
This Amendment may be delivered by facsimile transmission of the
relevant signature pages hereof.

 

(d)           The execution and delivery of the
Lender Consent Letter by any Lender shall be binding upon each of its
successors and assigns (including assignees of its Loans in whole or in part
prior to effectiveness hereof).

 

9

 

IN WITNESS
WHEREOF, the parties hereto have caused this Amendment to be duly executed and
delivered by their respective proper and duly authorized officers as of the day
and year first above written.

 

	
   

  	
  K&F
  INTERMEDIATE HOLDCO, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Dirkson R. Charles

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Dirkson
  R. Charles

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President and

  
	
   

  	
   

  	
   

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  K&F
  INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Dirkson R. Charles

  	
   

  
	
   

  	
   

  	
  Name:

  	
  Dirkson
  R. Charles

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President and

  
	
   

  	
   

  	
   

  	
  Chief
  Financial Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  LEHMAN
  COMMERCIAL PAPER INC., as

  
	
   

  	
  Administrative
  Agent

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ V. Paul Arzoulan

  	
   

  
	
   

  	
   

  	
  Name:

  	
  V.
  Paul Arzoulan

  
	
   

  	
   

  	
  Title:

  	
  Authorized
  Signatory

  
					

 

 

EXHIBIT A TO

FIRST AMENDMENT

 

ACKNOWLEDGMENT AND CONSENT

 

Reference is made to the First Amendment, dated as
of October 17, 2005 (the “Amendment”), to the Credit Agreement,
dated as of November 18, 2004 (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), among K&F
INTERMEDIATE HOLDCO, INC., a Delaware corporation (“Holdings”), K&F
INDUSTRIES, INC. (f/k/a K&F ACQUISITION, INC.), a Delaware corporation (the
“Borrower”), the several banks and other financial institutions or
entities from time to time parties thereto (the “Lenders”), LEHMAN
BROTHERS INC. and J.P. MORGAN SECURITIES INC., as exclusive advisors, joint lead
arrangers and joint bookrunners, J.P. MORGAN SECURITIES INC., as syndication
agent, GOLDMAN SACHS CREDIT PARTNERS, L.P. and CITIGROUP GLOBAL MARKETS INC.,
as co-documentation agents, and LEHMAN COMMERCIAL PAPER INC., as administrative
agent (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein, capitalized
terms used herein and defined in the Credit Agreement are used herein as
therein defined.

 

Each
of the undersigned parties to the Guarantee and Collateral Agreement hereby (a) consents
to the transactions contemplated by the Amendment and (b) acknowledges and
agrees that the guarantees and grants of security interests made by such party
contained in the Guarantee and Collateral Agreement are, and shall remain, in
full force and effect after giving effect to the Amendment.

 

 

IN
WITNESS WHEREOF, the parties hereto have caused this Acknowledgment and Consent
to be duly executed and delivered by their respective proper and duly
authorized officers as of October     , 2005.

 

	
   

  	
   

  	
  K&F INTERMEDIATE HOLDCO, INC.

  
	
   

  	
   

  	
  K&F INDUSTRIES, INC.

  
	
   

  	
   

  	
  AIRCRAFT BRAKING SYSTEMS CORPORATION

  
	
   

  	
   

  	
  ENGINEERED FABRICS CORPORATION

  
	
   

  	
   

  	
  AIRCRAFT BRAKING SERVICES, INC.

  

 

	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  

 

 

EXHIBIT B TO

FIRST AMENDMENT

 

FORM OF FIRST AMENDMENT
LENDER ADDENDUM

 

Reference is made to the First Amendment, dated as
of October 17, 2005 (the “Amendment”), to the Credit Agreement,
dated as of November 18, 2004 (as amended, supplemented or otherwise
modified from time to time, the “Credit Agreement”), among K&F
INTERMEDIATE HOLDCO, INC., a Delaware corporation (“Holdings”), K&F
INDUSTRIES, INC. (f/k/a K&F ACQUISITION, INC.), a Delaware corporation (the
“Borrower”), the several banks and other financial institutions or
entities from time to time parties thereto (the “Lenders”), LEHMAN
BROTHERS INC. and J.P. MORGAN SECURITIES INC., as exclusive advisors, joint
lead arrangers and joint bookrunners, J.P. MORGAN SECURITIES INC., as
syndication agent, GOLDMAN SACHS CREDIT PARTNERS, L.P. and CITIGROUP GLOBAL
MARKETS INC., as co-documentation agents, and LEHMAN COMMERCIAL PAPER INC., as
administrative agent (in such capacity, the “Administrative Agent”).  Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement.

 

Upon execution and delivery of this Lender Addendum
by the parties hereto as provided in Section 9 of the First Amendment, the
undersigned hereby becomes a Lender thereunder having the Tranche C Term
Loan Commitments set forth in Schedule 1 hereto, effective as of the
Tranche C Closing Date.

 

Schedule 1 hereto sets forth the portion, if
any, of the undersigned’s Tranche C Term Loan Commitment that the undersigned
wishes to satisfy by converting to Tranche C Term Loans an equivalent portion
of the undersigned’s Term Loans outstanding on the Tranche C Closing Date.

 

The undersigned consents to the conversion and
repayment provisions set forth in Section 2.24(b) of the Credit
Agreement.

 

THIS FIRST AMENDMENT LENDER ADDENDUM SHALL BE
GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.

 

This First Amendment Lender Addendum may be executed
by one or more of the parties hereto on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.  Delivery of an
executed signature page hereof by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.

 

IN WITNESS WHEREOF, the parties hereto have caused
this First Amendment Lender Addendum to be duly executed and delivered by their
proper and duly authorized officers as of this      
day of October, 2005.

 

	
   

  	
   

  
	
   

  	
  Name of Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   Name:

  
	
   

  	
   

  	
   Title:

  

 

 

	
  Accepted and agreed:

  
	
   

  
	
  K&F
  INDUSTRIES, INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  
	
   

  
	
  LEHMAN COMMERCIAL PAPER INC., as

  
	
  Administrative Agent

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

Schedule 1

to Exhibit B

 

COMMITMENTS AND NOTICE
ADDRESS

[To Be Provided For Each
Fund] 

 

 

	
  1.

  	
  Name of Lender:

  	
   

  	
   

  
	
   

  	
  Notice Address:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Attention:

  	
   

  	
   

  
	
   

  	
  Telephone:

  	
   

  	
   

  
	
   

  	
  Facsimile:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  For new Lenders only: Tranche C Term Loan
  Commitment: $                                

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  For existing Lenders only: Outstanding Term Loans to be converted to Tranche C Term Loans (list
  each fund amount separately): 
  $                                

  

 

 

EXHIBIT C TO

FIRST AMENDMENT

 

FORM OF LENDER CONSENT
LETTER

 

K&F INDUSTRIES, INC.

CREDIT AGREEMENT

DATED AS OF NOVEMBER 18,
2004

 

To:          Lehman Commercial Paper Inc.,

   as
Administrative Agent

745 Seventh Avenue

Bank Loans –16th
Floor

New York, New York 10019

Attention:                                 

 

Ladies
and Gentlemen:

 

Reference is made to the CREDIT AGREEMENT, dated as
of November 18, 2004 (as amended, supplemented or otherwise modified from
time to time, the “Credit Agreement” ; the terms defined therein being used herein as therein defined),
among K&F INTERMEDIATE HOLDCO, INC., a Delaware corporation (“Holdings”),
K&F INDUSTRIES, INC. (f/k/a K&F ACQUISITION, INC.), a Delaware
corporation (the “Borrower”), the several banks and other financial
institutions or entities from time to time parties thereto (the “Lenders”),
LEHMAN BROTHERS INC. and J.P. MORGAN SECURITIES INC., as exclusive advisors,
joint lead arrangers and joint bookrunners, J.P. MORGAN SECURITIES INC., as
syndication agent, GOLDMAN SACHS CREDIT PARTNERS, L.P. and CITIGROUP GLOBAL
MARKETS INC., as co-documentation agents, and LEHMAN COMMERCIAL PAPER INC., as
administrative agent (in such capacity, the “Administrative Agent”).

 

The Borrower has requested that the Required Lenders
consent to amend the provisions of the Credit Agreement solely on the terms
described in the First Amendment, dated as of October 17, 2005,
substantially in the form delivered to the undersigned Lender on or prior to
the date hereof (the “Amendment”).

 

Pursuant to Section 10.1 of the Credit
Agreement, the undersigned Lender hereby consents to the execution by the
Administrative Agent of the Amendment.

 

	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  (NAME OF LENDER)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
  Dated: October 
        , 2005Relm - Exhibit 4.3

Exhibit 4.3

RELM WIRELESS CORPORATION

BY-LAWS

(AS AMENDED ON SEPTEMBER 19, 2005)

ARTICLE I

SHAREHOLDERS

1.1

Meetings.

1.1.1

Place. Meetings of the shareholders shall be held at such place as may be designated by the board of directors.

1.1.2

Annual Meeting. Unless otherwise fixed by the board of directors, an annual meeting of the shareholders for the election of directors and for other business shall be held at 10:00 a.m. local time on the 4th Thursday of April in each year or, if that day is a legal holiday, on the next following business day.

1.1.3

Special Meetings. Special meetings of the shareholders may be called at any time by the president, the board of directors or the holders of at least one-fifth of the outstanding shares of stock of the corporation entitled to vote at the meeting.

1.1.4

Notice. Written notice of the time and place of all meetings of shareholders and of the general nature of the business to be transacted at each special meeting of shareholders shall be given to each shareholder entitled to vote at the meeting at least ten (10) days before the date of the meeting unless a greater period of notice is required by law in a particular case.

1.1.5

Quorum. The presence in person or by proxy of the holders of a majority of the outstanding shares of stock of the corporation entitled to vote on a particular matter shall constitute a quorum for the purpose of considering such matter.  If a quorum is not present no business shall be transacted except to adjourn to a future time.

1.1.6

Adjourned Meetings. Those shareholders entitled to vote who attend a meeting called for the election of directors that has been previously adjourned for lack of a quorum, although less than a quorum as fixed in these bylaws, shall nevertheless constitute a quorum for the purposes of electing directors. Those shareholders entitled to vote who attend a meeting of shareholders that has been previously adjourned for one or more periods aggregating at least fifteen (15) days because of an absence of a quorum, although then less than a quorum as fixed in these by-laws, shall nevertheless constitute a quorum for the purpose of acting upon any matter set forth in the notice of the meeting if the notice states that those shareholders who attend the adjourned meeting shall nevertheless constitute a quorum for purpose of acting upon the matter.

1.1.7

Participation. One or more shareholders may participate in a shareholders’ meeting by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other.

1.1.8

Voting Rights. Except as otherwise provided herein, the articles of incorporation or by-laws, every shareholder shall have the right at every shareholders’ meeting to one vote for every share standing in his name on the books of the corporation which is entitled to vote at such meeting. Every shareholder may vote either in person or by proxy.

ARTICLE II

DIRECTORS

2.1

Number and Term. Subject to the provisions of applicable law, the board of directors shall have authority to (a) determine the number of directors to constitute the board, and (b) fix the terms of office of the directors and classify the directors with respect to the time for which they shall severally hold office. Except as otherwise fixed by the board of directors under the authority given above, the number of directors shall be five (5) and each director elected to the board shall hold office until the next annual meeting of the shareholders unless he sooner resigns or is removed or disqualified.

2.2

Powers. All corporate powers shall be exercised by or under authority of, and the business and affairs of the corporation shall be managed under the direction of, the board of directors.

2.3

Meetings.

2.3.1

Place. Meetings of the board of directors shall be held at such place as may be designated by the board or in the notice of the meeting.

2.3.2

Regular Meetings. Regular meetings of the board of directors shall be held at such times as the board may designate.  Notice of regular meetings need not be given.

2.3.3

Special Meetings. Special meetings of the board of directors may be called at any time by the president and shall be called by him on the written request of one-third of the directors. Notice (which need not be written) of the time and place of each special meeting shall be given to each director at least two days before the meeting.

2.3.4

Quorum. A majority of all the directors in office shall constitute a quorum for the transaction of business at any meeting and except as otherwise provided herein the acts of a majority of the directors present at any meeting at which a quorum is present shall be the acts of the board of directors.

2.3.5

Participation. One or more directors may participate in a meeting of the board or a committee of the board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other.

2

2.4

Vacancies. Vacancies in the board of directors shall be filled by vote of a majority of the remaining members of the board.

2.5

Committees. The board of directors may by resolution adopted by a majority of the whole board designate one or more committees, each committee to consist of two or more directors and such alternate members (also directors) as may be designated by the board. To the extent provided in such resolution, any such committee shall have and exercise the powers of the board of directors. Unless otherwise determined by the board, in the absence or disqualification of any member of a committee the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another director to act at the meeting in the place of any such absent or disqualified member.

2.6

Limitation on Directors’ Liability. Except as otherwise provided by law, a director shall not be personally liable for monetary damages as such for any action taken, or failure to take any action, unless:

2.6.1

The director has breached or failed to perform the duties of his office as provided in the Nevada General Corporation Law (the “NGCL”); and

2.6.2

The breach or failure to perform constitutes self-dealing, willful misconduct or recklessness.

ARTICLE III

OFFICERS

3.1

Election. The board of directors shall elect a president, treasurer, secretary and such other officers as it deems advisable. Any number of offices may be held by the same person.

3.2

Authority, Duties and Compensation. The officers shall have such authority and perform such duties and serve for such compensation as may be determined by or under the direction of the board of directors. Except as otherwise provided by the board (a) the president shall be the chief executive officer of the corporation, shall have general supervision over the business and operations of the corporation, may perform any act and execute any instrument for the conduct of such business and operations and shall preside at all meetings of the board and shareholders, (b) the other officers shall have the duties usually related to their offices, and (c) the vice president (or vice presidents in the order determined by the board) shall in the absence of the president have the authority and perform the duties of the president.

3

ARTICLE IV

INDEMNIFICATION

4.1

Right to Indemnification.

4.1.1

Third Party Claims. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that he is or was a representative of the corporation, or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise (including employee benefit plans), against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action or proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interest of the corporation and, with respect to any criminal proceedings, had no reasonable cause to believe his conduct was unlawful. The termination of any action or proceeding by judgment, order, settlement or conviction upon a plea nolo contendere or its equivalent shall not of itself create a presumption that the person did not act in good faith and in a manner that he reasonably believed to be in, or not opposed to, the best interest of the corporation and, with respect to any criminal proceeding, had reasonable cause to believe that his conduct was unlawful.

4.1.2

Derivative Actions. The corporation shall indemnify any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action by or in the right of the corporation to procure judgment in its favor by reason of the fact that he is or was a representative of the corporation or is or was serving at the request of the corporation as a representative of another domestic or foreign corporation for profit or not-for-profit, partnership, joint venture, trust or other enterprise, against expenses (including attorneys’ fees) actually and reasonably incurred by him in connection with the defense or settlement of the action if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interest of the corporation; provided that no indemnification shall be made under this section in respect of any claim, issue or matter as to which the person has been adjudged to be liable to the corporation unless and only to extent that a court of competent jurisdiction determines that, despite the adjudication of liability but in view of the circumstances of the case, the person is fairly and reasonably entitled to indemnity for the expenses that such court deems proper.

4.2

Procedure for Effecting Indemnification. Unless ordered by a court, any indemnification made under Sections 4.1.1 or 4.1.2 shall be made by the corporation only as authorized in this specific case upon a determination that indemnification of the representative is proper in the circumstances because he has met the applicable standard of conduct set forth in those sections. Such determination shall be made:

4.2.1

By the Board of Directors by a majority vote of a quorum consisting of directors who are not parties to the action or proceeding;

4

4.2.2

If such a quorum is not obtainable or if obtainable and a majority vote of a quorum of disinterested directors so directs, by independent legal counsel in a written opinion;

4.2.3

By the shareholders; or 

4.2.4

In such other manner, if any, as shall be permitted by NGCL.

4.3

Advancement of Expenses. Expenses (including attorneys’ fees) incurred in defending any action or proceeding referred to in this Article may be made by the corporation in advance of the final disposition of the action or proceeding upon receipt of an undertaking by or on behalf of the representative to repay the amount if it is ultimately determined that he is not entitled to be indemnified by the corporation as authorized in this Article or otherwise.

ARTICLE V

SHARES

5.1

Share Certificates. Every shareholder of record shall be entitled to a share certificate representing the shares held by him. Every share certificate shall bear the corporate seal (which may be a facsimile) and the signature of the president or a vice president and the secretary or an assistant secretary.

5.2

Transfers. Transfers of share certificates and the shares represented thereby shall be made on the books of the corporation only by the registered holder or by duly authorized attorney. Transfer shall be made only on surrender of the share certificate or certificates.

ARTICLE VI

AMENDMENTS

Except as otherwise provided by applicable law, these By-Laws may be amended at any regular or special meeting of the board of directors by the vote of a majority of all the directors in office or at any annual or special meeting of shareholders by the vote of the holders of a majority of the outstanding stock entitled to vote. Notice of any such meeting of shareholders shall set forth the proposed change or a summary thereof.

5

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