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Exhibit 4.2    
  

CERTIFICATE OF DESIGNATIONS, PREFERENCES

AND RIGHTS OF SERIES A CONVERTIBLE PREFERRED STOCK

OF HOLLEY PERFORMANCE PRODUCTS INC.  

        Pursuant to Section 151 of the General Corporation Law of the State of Delaware: 

        HOLLEY PERFORMANCE PRODUCTS INC., a Delaware corporation (the "Corporation"), certifies that pursuant to the authority conferred on
the Board of Directors of the Corporation (the "Board of Directors") by Article IV of its Amended and Restated Certificate of Incorporation, and in accordance with the provisions of
Section 151 of the General Corporation Law of the State of Delaware (the "General Corporation Law"), its Board of Directors has adopted the following resolution by unanimous written consent,
creating a series of its preferred stock designated as Series A Convertible Preferred Stock (the "Series A Preferred Stock"); and 

        RESOLVED, that a series of the class of preferred stock, $1.00 par value per share, of the Corporation be hereby created, and that the
designation and amount thereof and the voting powers, preferences, and relative, participating, optional and other special rights of the shares of such series, and the qualifications, limitations or
restrictions thereof are set forth in this Certificate of Designations, Preferences and Rights of Series A Convertible Preferred Stock of Holley Performance Products Inc. (the
"Certificate of Designation") as follows: 

Section 1.    Certain Definitions  

        (a)  "Affiliate"
of any person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such Person. For the
purposes of this definition, "control" when used with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies
of such Person, whether through
the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. 

        (b)  "Beneficial
Owner" has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in
calculating the beneficial ownership of any particular "person" (as such term is used in Section 13(d)(3) of the Exchange Act), such "person" shall be deemed to have beneficial ownership of all
securities that such "person" has the right to acquire, whether such right is currently exercisable or is exercisable only upon the occurrence of a subsequent condition. 

        (c)  "Common
Stock" shall mean the Corporation's common stock, $1.00 par value per share. 

        (d)  "Continuing
Director" shall mean, as of any date of determination, any member of the Board of Directors of the Corporation who: (i) was a member of such Board of
Directors on the date hereof; or (ii) was nominated for election or elected to such Board of Directors with the approval of a majority of the Continuing Directors who were members of such Board
at the time of such nomination or election. 

        (e)  "Exchange
Act" shall mean the Securities and Exchange Act of 1934, as amended. 

        (f)    "Holdings"
shall mean KHPP Holdings, Inc., a Delaware corporation. 

        (g)  "Kohlberg"
shall mean Kohlberg & Co., L.L.C., a Delaware limited liability company, and its Affiliates. 

        (h)  "Liquidation
Event" shall mean any liquidation, dissolution or winding up of the Corporation whether voluntary or involuntary. 

        (i)    "Permitted
Holders" shall mean Holdings, Kohlberg or any of their respective controlled Affiliates. 

 

        (j)    "Person"
shall mean any individual, partnership, joint venture, corporation, trust, limited liability company, unincorporated organization or government or department or
agency thereof. 

        (k)  "Per
Share Price" is $100 per share of Series A Preferred Stock. 

        (l)    "Voting
Stock" of any Person as of any date shall mean the capital stock of such Person that is at the time entitled to vote in the election of the Board of Directors of
such Person. 

Section 2.    Designation and Amount  

        The Series A Preferred Stock created and authorized for issuance hereby shall be designated as Series A Convertible Preferred Stock, having a par
value per share equal to $1.00, and the number of shares constituting such series shall be one hundred fifty thousand (150,000). Such number of shares may be increased or decreased by resolution of
the Board of Directors; provided, that no decrease shall reduce the number of shares of Series A Preferred Stock to a number less than the number of shares then outstanding plus the number of
shares reserved for issuance upon the exercise of outstanding options, rights or warrants or upon the conversion of any outstanding securities issued by the Corporation convertible into
Series A Preferred Stock. 

Section 3.    Rank  

        The Series A Preferred Stock shall, with respect to rights upon a Liquidation Event, rank prior to the Common Stock and all other classes or series of
preferred stock, preference stock or any other capital stock or equity securities of the Corporation, whether now issued or hereafter created. 

Section 4.    Voting Rights  

        Except as otherwise expressly provided herein or by law, the holder of each share of Series A Preferred Stock shall have the right to one (1) vote
for each share of Common Stock into which such Series A Preferred Stock could then be converted, and with respect to such votes, such holder shall have full voting rights and powers equal to
the voting rights and powers of the holders of Common Stock, and shall be entitled, notwithstanding any provision hereof, to notice of any shareholders' meeting in accordance with the Bylaws of the
Corporation, and shall be entitled to vote, together with holders of Common Stock, with respect to any question upon which holders of Common Stock have the right to vote. Fractional votes shall not,
however, be permitted and any fractional voting rights available on an as-if-converted basis (after aggregating all shares into which shares of Series A Preferred Stock,
respectively, held by each holder could be converted) shall be rounded to the nearest whole number (with one-half being rounded upward). 

Section 5.    Liquidation Preference  

        (a)  Upon
a Liquidation Event, holders of Series A Preferred Stock shall be entitled to receive out of the assets of the Corporation, prior to and in preference of any
distribution or payment to the holders of Common Stock, an amount in cash per share of Series A Preferred Stock equal to the Per Share Price (the "Series A Liquidation Amount"). If, upon
the occurrence of such event, the assets thus distributed among the holders of Series A Preferred Stock shall be insufficient to permit the payment to such holders of the full aforesaid
preferential amounts, then the entire assets of the Corporation legally available for distribution shall be distributed ratably among the holders of the Series A Preferred Stock in proportion
to the preferential amount each such holder is entitled to receive. 

        (b)  After
the payment in full of the Series A Liquidation Amount to all holders of the Series A Preferred Stock, the remaining assets of the Corporation
available for distribution to shareholders of 

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the Corporation shall be distributed among the holders of the Common Stock and Series A Preferred Stock on a pro rata basis. 

Section 6.    Conversion  

        The holders of the Series A Preferred Stock shall have conversion rights as follows (the "Conversion Rights"): 

        (a)    Right to Convert into Common Stock.    Each share of the
Series A Preferred Stock shall be convertible, without the payment of any additional consideration by the holder thereof, at the option of the holder thereof, into a certain number of fully
paid and nonassessable shares of the Common Stock. The number of shares of Common Stock for which each share of the Series A Preferred Stock may be converted (the "Conversion Rate") shall be
determined by dividing (i) the Per Share Price by (ii) the Conversion Price (determined as hereinafter provided) in effect at the time of the conversion. The Conversion Price of the
Series A Preferred Stock shall initially be equal to $7,499.00 per share of Common Stock. The Conversion Price shall be subject to appropriate adjustment in the event of any stock split or
combination or similar event, as well as pursuant to other provisions set forth herein. 

        (b)    Automatic Conversion.    Each share of Series A
Preferred Stock shall automatically be converted into shares of Common Stock, at the then applicable Conversion Price, upon the first to occur of the following (i) the holders of at least two
thirds of the then outstanding Series A Preferred Stock consent to an automatic conversion, or (2) the effectiveness of the Corporation's underwritten initial public offering pursuant to
a registration statement under the Securities Act of 1933, as amended (the "Initial Public Offering"). 

        (c)    Mechanics of Conversion.    

        (i)    No
fractional share of Common Stock shall be issued upon conversion of the Series A Preferred Stock. In lieu of any fractional shares to which the holder would
otherwise be entitled, after aggregating all shares of Common Stock (including fractional shares thereof) issuable upon the conversion of all shares of Series A Preferred Stock held by the
holder which are to be converted, the Corporation shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock at the time (as determined in good faith by the
Board of Directors). 

        (ii)  Before
any holder of Series A Preferred Stock shall be entitled to convert the same into shares of Common Stock, and before the Corporation shall be obligated to
issue certificates for shares of Common Stock upon the automatic conversion of the Series A Preferred Stock as set forth in Section 6(b) hereof, such holder shall surrender the
certificate or certificates thereof, duly endorsed, at the office of the Corporation or of any transfer agent for the Series A Preferred Stock, and shall give written notice to the Corporation
at such office that such holder elects to convert the same and shall state therein the name or names in which such holder wishes the certificate or certificates for shares of Common Stock to be issued
(except that no such written notice of intent to convert shall be necessary in the event of an automatic conversion pursuant to Section 6(b) hereof). 

        (iii)  In
the event of the loss, theft or destruction of the holder's certificate or certificates, the holder shall notify the Corporation or its transfer agent that such
certificate or certificates have been lost, stolen or destroyed and shall execute an agreement satisfactory to the Corporation to indemnify the Corporation from any loss incurred by it in connection
with such certificate or certificates. The Corporation shall, as soon as practicable after delivery of certificates in accordance with Section 6(c)(ii), or, in the case of a lost, stolen or
destroyed certificate, the execution and delivery of the agreement and indemnity, issue and deliver at such office to such holder of Series A Preferred Stock, or to such holder's nominee or 

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nominees, a certificate or certificates for the number of shares of Common Stock to which such holder shall be entitled as aforesaid together with cash in lieu of any fraction of a share. Such
conversion shall be deemed to have been made immediately prior to the close of business on the date of such surrender of the shares of Series A Preferred Stock to be converted (except that in
the case of an automatic conversion pursuant to Section 6(b) hereof, such conversion shall be deemed to have been made as specified in the affirmative vote or written consent) and the person or
persons entitled to receive the shares of Common Stock, issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Common Stock on such date. 

        (d)    Reservation of Stock Issuable Upon Conversion.    The
Corporation shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for the purpose of effecting the conversion of the shares of the
Series A Preferred Stock and such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of all then outstanding shares of the Series A
Preferred Stock; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of all then outstanding shares of the Series A
Preferred Stock, the Corporation will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purpose. 

        (e)    Issue Taxes.    The Corporation shall pay any and all issue and
other taxes that may be payable in respect of any issue or delivery of shares of Common Stock on conversion of shares of Series A Preferred Stock pursuant hereto; provided, however, that the
Corporation shall not be obligated to pay any transfer taxes resulting from any transfer requested by any holder in connection with any such conversion. 

Section 7.    Change of Control  

        (a)  If
any Change of Control (as herein defined) is proposed to occur, at the option of the holders of the outstanding Series A Preferred Stock, the Corporation shall
redeem, at the Per Share Price (the "Redemption Price"), those outstanding shares of Series A Preferred Stock which the holders have elected to have the Corporation redeem. 

        (b)  The
Corporation will give written notice of any impending Change of Control, stating the substance and intended date of consummation thereof, not less than twenty
(20) days prior to the date of consummation thereof, to each holder of Series A Preferred Stock. 

        (c)  Holders
of Series A Preferred Stock must inform the Corporation of their intent to exercise their redemption rights within ten (10) days from the date they
receive notice of any impending Change of Control. Any holder of Series A Preferred Stock not responding within the required time shall forfeit all redemption rights under this
Section 7. 

        (d)  Immediately
prior to the consummation of such Change of Control, the Corporation shall redeem all shares of Series A Preferred Stock as to which redemption rights
under this paragraph have been exercised. 

        (e)  For
purposes of this Section 7, "Change of Control" shall mean the occurrence of any of the following: (i) the sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the assets of the Corporation or its Subsidiaries taken as a
whole to any "person" or "group" (as such terms are used in Section 13(d)(3) of the Exchange Act); (ii) the adoption of a plan relating to the liquidation or dissolution of the
Corporation; (iii) the consummation of any transaction (including, without limitation, any merger or consolidation) the result of which is that any "person" or "group" (as defined above), other
than one or more Permitted Holders, becomes the Beneficial Owner, directly or indirectly, of 

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more than 50% of the Voting Stock of the Corporation, measured by voting power rather than number of shares; (iv) the first day on which a majority of the members of the Board of Directors of
the Corporation are not Continuing Directors; or (v) the Corporation consolidates with, or merges with or into, any Person, or any Person consolidates with, or merges with or into, the
Corporation, in any such event pursuant to a transaction in which any of the outstanding Voting Stock of the Corporation is converted into or exchanged for cash, securities or other property, other
than any such transaction where the Voting Stock of the Corporation outstanding immediately prior to such transaction is converted into or exchanged for Voting Stock of the surviving or transferee
Person constituting a majority of the outstanding shares of such Voting Stock of such surviving or transferee Person immediately after giving effect to such issuance. 

        (f)    Notwithstanding
anything herein to the contrary, as long as any of the Corporation's 121/4% Senior Notes due 2007, Series B issued pursuant to the
Indenture (as defined below) are outstanding under the Indenture (the "Indenture"), dated as of September 20, 1999, by and among the Corporation, the Guarantors named in the Indenture and State
Street Bank and Trust Company, as trustee under the Indenture, as supplemented from time to time, the redemption provisions of this Section 7 shall only apply to the extent that such redemption
complies with the provisions of the Indenture. 

Section 8.    Notices  

        Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally, sent by facsimile transmission or sent by
certified, registered or express mail, postage prepaid. Any such notice shall be deemed given when so delivered personally or sent by facsimile or, if mailed, three days after deposit in the United
States mail, postage prepaid, return receipt requested, and addressed to each holder of record at its address appearing on the books of the Corporation. Notice to holders located outside the United
States shall be given by telecopy; provided, however, that such purchaser shall give the Corporation its telecopy number. 

        IN WITNESS WHEREOF, Holley Performance Products Inc. has caused this Certificate of Designations, Preferences and Rights of
Series A Convertible Preferred Stock to be duly executed by its Vice President and attested to by its Assistant Secretary this 11th day of October, 2002. 

	 	 	HOLLEY PERFORMANCE PRODUCTS INC.
	

 	
 	
By:	

/s/  CHRISTOPHER LACOVARA      
	 	 	 	

	 	 	Name:	Christopher Lacovara
	 	 	Title:	Vice President
	

ATTEST:	
 	

 	

 
	

/s/  EVAN WILDSTEIN      
 Evan Wildstein, Assistant Secretary	
 	

 	

 

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Exhibit 10.1    
  

FIRST AMENDMENT

AND

WAIVER

TO

LOAN AND SECURITY AGREEMENT  

        THIS FIRST AMENDMENT AND WAIVER TO LOAN AND SECURITY AGREEMENT (this "First Amendment") is made and entered into
as of October 11, 2002 by and among Holley Performance Products, Inc., a Delaware corporation ("Parent"), and each of Parent's
Subsidiaries identified on the signature pages hereof (such Subsidiaries, together with Parent, are referred to hereinafter each individually as a
"Borrower", and individually and collectively, jointly and severally, as the "Borrowers"), the Lenders
(as defined in the Loan Agreement referred to below) listed on the signatory pages hereof and Foothill Capital Corporation, a California corporation, in its capacity as arranger and administrative
agent (the "Agent"). 

WITNESSETH:  

        WHEREAS, the Borrowers, the Lenders and Agent are parties to that certain Loan and Security Agreement (the "Loan
Agreement"), dated as of July 30, 2002; 

        WHEREAS,
on September 11, 2002 and September 25, 2002, (1) KHPP Holdings, Inc., a Delaware corporation
("KHPP"), issued promissory notes in favor of KHPP Acquisition Company II, L.P., a Delaware limited partnership ("KHPP
Acquisition"), in an aggregate principal amount of $2,000,000 (the "Original KHPP Acquisition Notes"), and (2) Parent
issued promissory notes in favor of KHPP in an aggregate principal amount of $2,000,000 (the "Original KHPP Notes," and, collectively with the Original
KHPP Acquisition Notes, the "Original Notes"); 

        WHEREAS,
as a condition to entering into this First Amendment, (1) KHPP Acquisition and KHPP shall have entered into the KHPP Acquisition Investment Documents (as defined in  Section 2.01(a) hereof),
pursuant to which KHPP shall have received (a) an aggregate amount of $7,500,000 in respect
of issuing the Original KHPP Acquisition Notes and the KHPP Acquisition Note (as defined in Section 2.01(a) hereof) to KHPP Acquisition (the
"KHPP Acquisition Debt Investment") and (b) an infusion of equity capital from KHPP Acquisition in an aggregate amount of $7,500,000
(collectively with the KHPP Acquisition Debt Investment, the "KHPP Acquisition Investment") and (2) KHPP and Parent shall have entered into the
KHPP Investment Documents (as defined in Section 2.01(a) hereof), pursuant to which Parent shall have received (a) an aggregate amount of
$7,500,000 in respect of issuing the Original KHPP Notes and the KHPP Note (as defined in Section 2.01(a) hereof) to KHPP (the
"KHPP Debt Investment") and (b) an infusion of equity capital from KHPP in an aggregate amount of $7,500,000 (collectively with the KHPP Debt
Investment, the "KHPP Investment"); 

        WHEREAS,
as of October 9, 2002, Borrowers have the Availability set forth on the certificate attached hereto as Exhibit A;
and 

        WHEREAS,
the Borrowers, the Lenders and Agent wish to amend the Loan Agreement as herein provided; 

        NOW,
THEREFORE, in consideration of the agreements and provisions herein contained, the parties hereto do hereby agree as follows: 

        Section 1.    Definitions.    Any capitalized term used but not otherwise
defined
herein shall have the meanings ascribed to such terms in the Loan Agreement. 

        Section 2.    Amendments to Loan Agreement.    The Loan Agreement is hereby
amended,
effective as of the date this First Amendment becomes effective in accordance with Section 4 hereof, as follows: 

 

        2.01    Amendments to Section 1.1.    

        (a)  The
following defined terms are hereby added to Section 1.1 of the Loan Agreement: 

        "Investment Documents" means, collectively, the KHPP Investment Documents and the KHPP Acquisition Investment Documents. 

        "KHPP Acquisition Investment Documents" means, collectively, the KHPP Acquisition Note, the KHPP Acquisition Note Documents, the KHPP
Acquisition Preferred Stock Purchase Agreement and all documents, instruments and agreements from time to time delivered in accordance therewith or otherwise relating thereto. 

        "KHPP Acquisition Note" means the promissory note issued by KHPP in favor of KHPP Acquisition in the original principal amount of
$7,500,000, in form and substance satisfactory to Agent, dated as of October 11, 2002. 

        "KHPP Acquisition Note Documents" means all documents, instruments and agreements from time to time delivered in accordance with or
otherwise relating to the KHPP Acquisition Note. 

        "KHPP Acquisition Preferred Stock Purchase Agreement" means that certain preferred stock purchase agreement between KHPP Acquisition and
KHPP dated as of October 11, 2002, in form and substance satisfactory to Agent. 

        "KHPP Investment Documents" means, collectively, the KHPP Note, the KHPP Note Documents, the KHPP Preferred Stock Purchase Agreement and
all documents, instruments and agreements from time to time delivered in accordance therewith or otherwise relating thereto. 

        "KHPP Note" means the promissory note issued by Parent in favor of KHPP in the original principal amount of $7,500,000, in form and
substance satisfactory to Agent, dated as of October 11, 2002. 

        "KHPP Note Documents" means all documents, instruments and agreements from time to time delivered in accordance with or otherwise relating
to the KHPP Note. 

        "KHPP Preferred Stock Purchase Agreement" means that certain preferred stock purchase agreement between KHPP and Parent dated as of
October 11, 2002, in form and substance satisfactory to Agent. 

        "Side Letter" means the side letter agreement dated as of October 11, 2002, in form and substance satisfactory to Agent, executed
and delivered by Parent, Agent, KHPP Acquisition and KHPP. 

        (b)  The
definitions of "Base Rate Margin," "Base Rate Subline A Margin," Base Rate Subline B Margin" and Base Rate Subline C Margin" are hereby deleted in their entirety and
the following new defined terms are inserted in replacement thereof: 

        "Base Rate Margin" means 1.00; provided, however, that if Parent's EBITDA for fiscal year
2003 equals or exceeds $26,000,000, then, commencing on and as of the first day of the fiscal quarter of Parent next following the receipt by Agent of Parent's and its Subsidiaries' audited financial
statements for fiscal year 2003 pursuant to Section 6.3(b), "Base Rate Margin" shall mean 0.75. The determination of EBITDA for purposes of this
definition shall be based upon the fiscal year 2003 audited financial statements delivered to Agent pursuant to Section 6.3(b). Notwithstanding
the foregoing, if Parent fails to deliver to Agent the financial statements for fiscal year 2003 required pursuant to Section 6.3(b), then "Base
Rate Margin" shall mean 1.00. 

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        "Base Rate Subline A Margin" means 2.00; provided, however, that if Parent's EBITDA for
fiscal year 2003 equals or exceeds $26,000,000, then, commencing on and as of the first day of the fiscal quarter of Parent next following the receipt by Agent of Parent's and its Subsidiaries'
audited financial statements for fiscal year 2003 pursuant to Section 6.3(b), "Base Rate Subline A Margin" shall mean 1.75. The determination of
EBITDA for purposes of this definition shall be based upon the fiscal year 2003 audited financial statements delivered to Agent pursuant to  Section 6.3(b). Notwithstanding the foregoing, if Parent
fails to deliver to Agent the financial statements for fiscal year 2003 required
pursuant to Section 6.3(b), then "Base Rate Subline A Margin" shall mean 2.00. 

        "Base Rate Subline B Margin" means 8.75; provided, however, that if Parent's EBITDA for
fiscal year 2003 equals or exceeds $26,000,000, then, commencing on and as of the first day of the fiscal quarter of Parent next following the receipt by Agent of Parent's and its Subsidiaries'
audited financial statements for fiscal year 2003 pursuant to Section 6.3(b), "Base Rate Subline B Margin" shall mean 8.50. The determination of
EBITDA for purposes of this definition shall be based upon the fiscal year 2003 audited financial statements delivered to Agent pursuant to  Section 6.3(b). Notwithstanding the foregoing, if Parent
fails to deliver to Agent the financial statements for fiscal year 2003 required
pursuant to Section 6.3(b), then "Base Rate Subline B Margin" shall mean 8.75. 

        "Base Rate Subline C Margin" means 2.00; provided, however, that if Parent's EBITDA for
fiscal year 2003 equals or exceeds $26,000,000, then, commencing on and as of the first day of the fiscal quarter of Parent next following the receipt by Agent of Parent's and its Subsidiaries'
audited financial statements for fiscal year 2003 pursuant to Section 6.3(b), "Base Rate Subline C Margin" shall mean 1.75. The determination of
EBITDA for purposes of this definition shall be based upon the fiscal year 2003 audited financial statements delivered to Agent pursuant to  Section 6.3(b). Notwithstanding the foregoing, if Parent
fails to deliver to Agent the financial statements for fiscal year 2003 required
pursuant to Section 6.3(b), then "Base Rate Subline C Margin" shall mean 2.00. 

        (c)  The
definition of "Loan Documents" in Section 1.1 of the Loan Agreement is hereby amended by inserting the words
", the Side Letter," directly after the words "the Intercompany Subordination Agreement" and before the words "the Letters of Credit" in the fourth line thereof. 

        2.02    Amendment of
Section 3.2.    Section 3.2 of the Loan Agreement is hereby amended by deleting  Section 3.2(d) in it entirety. 

        2.03    Amendment to Section 6.    Section 6   of the Loan Agreement is hereby
amended by inserting the following as new Section 6.18: 

        "Section 6.18. Parent promptly will provide the Lenders with true and complete copies of any and all documents and other
information delivered to any Person pursuant to, or in connection with, the Investment Documents." 

        2.04    Amendment to
Section 7.1.    Section 7.1 of the Loan Agreement is hereby amended by inserting the following as new  Section 7.1(g)
: 

        "(g)
Indebtedness owed to KHPP pursuant to the KHPP Note Documents, so long as such Indebtedness is (i) not secured by any of the assets or properties of any Borrower or the
Guarantor and (ii) subject to the terms and provisions of the Side Letter." 

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        2.05    Amendment to
Section 7.8.    Section 7.8(a) of the Loan Agreement is hereby amended by deleting  Section 7.8(a) in its entirety and inserting the following new Section 7.8(a) in
replacement thereof: 

        "Except
(i) as specifically permitted by the Side Letter or (ii) in connection with a refinancing permitted by  Section 7.1(d), prepay, redeem, defease, purchase, or otherwise acquire any
Indebtedness of any Borrower prior to its scheduled maturity, other
than the Obligations in accordance with this Agreement, and" 

        2.06    Amendment to
Section 7.14.    Section 7.14 of the Loan Agreement is hereby amended by inserting the words "the KHPP
Investment Documents or" directly after the words "permitted by" and before the words "Section 7.11" in the first line thereof 

        2.07    Amendment to Section of Loan Agreement with the heading "Securities Accounts."    The
Section of the Loan Agreement with the heading "Securities Account" is hereby numbered as Section 7.19 of the Loan Agreement. 

        2.08    Amendments to Section 7.19.    

        (a)  Section 7.19 of the Loan Agreement is hereby renumbered as  Section 7.20 of the Loan Agreement. 

        (b)  Section 7.19(a)(i) of the Loan Agreement is hereby amended by deleting  Section 7.19(a)(i) in its entirety and inserting the following new 
Section 7.20(a)(i) in replacement thereof: 

	(i)
	Fixed Charge Coverage Ratio. A Fixed Charge Coverage Ratio, measured on a fiscal quarter-end
basis, of not less than the applicable Fixed Charge Coverage Ratio set forth in the following table for the applicable period set forth opposite thereto: 

	Applicable Fixed

Charge Coverage Ratio
 
	 	Applicable Period
 

	0.31:1	 	For the 12 month period ending June 30, 2003
	0.66:1	 	For the 12 month period ending September 30, 2003
	0.9:1	 	For the 12 month period ending December 31, 2003
	1:1	 	For the 12 month period ending each fiscal quarter thereafter

        2.09    Amendments to
Section 7.20.    Section 7.20 of the Loan Agreement is hereby renumbered as  Section 7.21 of
the Loan Agreement. 

        2.10    Amendment to Section 7 of the Loan
Agreement.    Section 7 of the Loan Agreement is hereby amended by inserting the following as new  Sections
7.22 and 7.23: 

        "Section 7.22.    KHPP Investment Documents.    Directly or indirectly amend, modify, alter or change any term
or condition of any KHPP Investment Document." 

        "Section 7.23.    Phase-II Environmental Report.    After January 1, 2004, Parent shall
deliver a phase-II environmental report with respect to each parcel comprising the Real Property Collateral, within ninety (90) days after Agent's request, the scope of the report
and the results thereof shall be acceptable to Agent." 

        2.11    Amendment to Section 8 of the Loan
Agreement.    Section 8 of the Loan Agreement is hereby amended by inserting the following as new  Section 8.14: 

        "Section 8.14.    If a default occurs under any Investment Document." 

        Section 3.    Representations and Warranties.    In order to induce Agent and
the
Lenders to enter into this First Amendment, each of the Borrowers hereby represents and warrants that: 

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        3.01    No Default.    At and as of the date of this First Amendment and at and as of the
Effective Date and both prior to and after giving effect to this First Amendment, no Default or Event of Default exists. 

        3.02    Representations and Warranties True and Correct.    At and as of the date of this
First Amendment and at and as of the Effective Date and both prior to and after giving effect to this First Amendment, each of the representations and warranties contained in the Loan Agreement and
the other Loan Documents is true and correct in all material respects. 

        3.03    Corporate Power, Etc.    Such Borrower (i) has all requisite corporate power
and authority to execute and deliver this First Amendment and the Side Letter and to consummate the transactions contemplated hereby and thereby and (ii) has taken all action, corporate or
otherwise, necessary to authorize the execution and delivery of this First Amendment and the Side Letter and the consummation of the transactions contemplated hereby and thereby. 

        3.04    No Conflict.    Neither the execution and delivery of this First Amendment and the
Side Letter, nor consummation of the transactions contemplated hereby or thereby will (i) conflict with or result in any breach or violation of any provision of the certificate of incorporation
or by-laws of such Borrower, (ii) result in any breach or violation of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination of, or accelerate the performance required by, or result in the creation of a Lien upon any of the properties or assets of such Borrower under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust, license, lease agreement or other instrument or obligation to which such Borrower is a party or to which any of its
properties or assets are subject, (iii) require any consent, approval, authorization or permit of, or filing with or notification to, any third party or any Governmental Authority, or
(iv) violate any order, writ, injunction, decree, judgment, ruling, law, statute, rule or regulation of any Governmental Authority. 

        3.05    Binding Effect.    This First Amendment and the Side Letter have been duly executed
and delivered by such Borrower and constitute the legal, valid and binding obligations of such Borrower, enforceable against such Borrower in accordance with their respective terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, now or hereafter in effect, relating to or affecting the enforcement of
creditors' rights generally, and (ii) the application of general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law). 

        3.06    Investment Documents.    Parent has delivered to the Lenders true and complete copies
of the Investment Documents. All of the representations and warranties of KHPP, KHPP Acquisition, Parent and any Borrower in the Investment Documents are true and correct in all respects. 

        Section 4.    Conditions.    This First Amendment and the effectiveness of the
amendments set forth in Section 2 hereof shall be effective as of October 11, 2002 (the "Effective
Date") upon the fulfillment by the Borrowers, in a manner satisfactory to Agent and the Lenders, of all of the following conditions precedent set forth in this  Section 4:

        4.01    Execution and Delivery of the First Amendment.    Each of the parties hereto shall
have executed an original counterpart of this First Amendment and shall have delivered (including by way of facsimile transmission) the same to Agent. 

        4.02    Execution and Delivery of the Side Letter.    Agent, KHPP Acquisition, KHPP and Parent
shall have executed an original counterpart of the Side Letter and shall have delivered (including by way of facsimile transmission) the same to Agent. 

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        4.03    KHPP Acquisition Investment.    The KHPP Acquisition Investment shall have occurred on
terms and conditions satisfactory to Agent, and Agent shall have been furnished with evidence, satisfactory to Agent and its counsel, of the KHPP Acquisition Investment having occurred. 

        4.04    KHPP Investment.    The KHPP Investment shall have occurred on terms and conditions
satisfactory to Agent, and Agent shall have been furnished with evidence, satisfactory to Agent and its counsel, of the KHPP Investment having occurred. 

        4.05    Investment Documents.    The Investment Documents shall have been executed by all of
the parties thereto, and Parent shall have delivered to Agent true and complete copies of the Investment Documents. Agent and its counsel shall have reviewed, and be satisfied in all respects with,
the Investment Documents. 

        4.06    Cancellation of Original Notes. The Original Notes shall have been cancelled and Agent shall
have received satisfactory evidence that the Original Notes shall have been cancelled and are of no further effect. 

        4.07    Delivery of Other Documents.    Agent shall have received all of the following, each
duly executed and dated the date hereof, in form and substance reasonably satisfactory to Agent: 

        (a)    Resolutions of the Borrowers.    Copies, duly certified by the secretary or assistant secretary of each
Borrower of (i) resolutions of the Board of Directors of such Borrower authorizing or ratifying the execution and delivery of this First Amendment, the Side Letter and the performance of the
transactions contemplated herein and therein, (ii) all documents evidencing other necessary corporate action, and (iii) all approvals or consents, if any, with respect to this First
Amendment. 

        (b)    Incumbency Certificates.    Certificates of the secretary or assistant secretary of each Borrower certifying
the names of the officers of such Borrower authorized to sign this First Amendment, the Side Letter and all other documents or certificates to be delivered hereunder or in connection herewith,
together with the true signatures of such officers. 

        (c)    Other.    All other such instruments, documents and agreements as Agent may reasonably request. 

        4.08    Closing Fee.    The Borrower shall have paid to Agent, for the benefit of the Lenders
(apportioned in accordance with each Lender's Pro Rata Share), a closing fee in the amount of $200,000. 

        4.09    Compliance with Terms.    Each Borrower shall have complied in all respects with the
terms of this First Amendment, the Side Letter and of any other agreement, document, instrument or other writing to be delivered by the Borrower in connection herewith and therewith. 

        Section 5.    Waiver.    Subject to the satisfaction of the conditions precedent
set
forth in Section 4 hereof, the Agent and the Lenders hereby waives compliance with the provisions of the Loan Documents that prohibit Borrowers from entering into the Original Notes. 

        Section 6.    General Confirmations and Amendments.    

        6.01    Continuing Effect.    Except as specifically provided herein, the Loan Agreement and
the other Loan Documents shall remain in full force and effect in accordance with their respective terms and are hereby ratified and confirmed in all respects. 

        6.02    No Waiver.    This First Amendment is limited as specified and the execution, delivery
and effectiveness of this First Amendment shall not operate as a modification, acceptance or waiver of any provision of the Loan Agreement or any other Loan Document. 

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        6.03    References.    

        (a)  From
and after the Effective Date, (i) the Loan Agreement, the other Loan Documents and all agreements, instruments and documents executed and delivered in
connection with any of the foregoing shall each be deemed amended hereby to the extent necessary, if any, to give effect to the provisions of this First Amendment and (ii) all of the terms and
provisions of this First Amendment are hereby incorporated by reference into the Loan Agreement, as if such terms and provisions were set forth in full therein. 

        (b)  From
and after the Effective Date, (i) all references in the Loan Agreement to "this Agreement", "hereto", "hereof", "hereunder" or words of like import referring
to the Loan Agreement shall mean the Loan Agreement as amended hereby and (ii) all references in the Loan Agreement, the other Loan Documents or any other agreement, instrument or document
executed and delivered in connection therewith to "Loan Agreement", "thereto", "thereof", "thereunder" or words of like import referring to the Loan Agreement shall mean the Loan Agreement as amended
hereby. 

        Section 7.    Miscellaneous.    

        7.01    Governing Law.    THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. 

        7.02    Severability.    The provisions of this First Amendment are severable, and if any
clause or provision shall be held invalid or unenforceable in whole or in part in any jurisdiction, then such invalidity or unenforceability shall affect only such clause or provision, or part
thereof, in such jurisdiction and shall not in any manner affect such clause or provision in any other jurisdiction, or any other clause or provision in this First Amendment in any jurisdiction. 

        7.03    Counterparts.    This First Amendment may be executed in any number of counterparts,
each of which counterparts when executed and delivered shall be an original, but all of which shall together constitute one and the same instrument. 

        7.04    Headings.    Section headings in this First Amendment are included herein for
convenience of reference only and shall not constitute a part of this First Amendment for any other purpose. 

        7.05    Binding Effect; Assignment.    This First Amendment shall be binding upon and inure to
the benefit of the Borrowers, Agent and the Lenders and their respective successors and assigns; provided, however, that the rights and obligations of
the Borrowers under this First Amendment shall not be assigned or delegated without the prior written consent of Agent and the Lenders. 

        7.06    Expenses.    The Borrowers agree to pay Agent upon demand for all reasonable expenses,
including reasonable fees of attorneys and legal assistants for Agent, Highbridge and HCM/Z Special Opportunites, LLC (who may be employees of Agent, Highbridge or HCM Special Opportunities, LLC, as
applicable), incurred by Agent and Highbridge in connection with the preparation, negotiation and execution of this First Amendment, the Side Letter and any document required to be furnished herewith
or therewith. 

        [Signature
pages follow] 

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QuickLinks

Exhibit 10.1

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