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Exhibit 10.35
SETTLEMENT AGREEMENT
This Agreement ("Agreement"), by and between K & F Industries, Inc.
("K & F" or the "Company") and the Pension Benefit Guaranty Corporation ("PBGC")
is effective as of the Closing Date (as hereinafter defined).
RECITALS
K & F is a Contributing Sponsor (as hereinafter defined) of the
Pension Plans (as hereinafter defined).
K & F intends to refinance certain of its debt obligations and issue
new subordinated debt to the public in the context of a recapitalization (the
"Recapitalization").
The PBGC, a wholly-owned United States government corporation
established under Title IV of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), has indicated that, without certain agreements by K
& F, the Recapitalization might cause PBGC to seek to terminate one or more of
the Pension Plans under section 4042 of ERISA.
K & F believes that the Recapitalization should not pose an
unreasonably increased risk to PBGC and wishes to proceed with the
Recapitalization without the threat that PBGC would
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attempt to terminate any of the Pension Plans.
In consideration of K & F's agreement to undertake the
obligations set forth below, PBGC has agreed to forbear from taking any action
to terminate the Pension Plans as a result of the Recapitalization Transactions.
Now, therefore, for good and valuable consideration, each of the
parties to this Agreement hereby agrees as follows.
AGREEMENT
Definitions
1.1 "Administrative Agent" shall mean the First National Bank of
Chicago (or any replacement thereof) in its capacity as administrative agent for
the Lenders under the Credit Agreement.
1.2 "K & F Controlled Group" shall mean K & F Industries, Inc. and all
members of its Controlled Group.
1.3 "Bank Obligations" shall have the meaning set forth in the
Intercreditor Agreement.
1.4 "Buyer" shall mean a person (as defined in section 4001(a)(20) of
ERISA) who (a) acquires assets or stock of a member of the K & F Controlled
Group and (b) prior to such acquisition, is not a member of the K & F Controlled
Group.
1.5 "Change of Controlled Group Event" shall mean an
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event, subsequent to the Recapitalization Transaction, in which (i) a Buyer or a
member of its Controlled Group assumes the Pension Plans or (ii) one or more of
the Pension Plans' Contributing Sponsors becomes a member of the Buyer's
Controlled Group and does not cease to be the Contributing Sponsor of such
Pension Plan.
1.6 "Closing Date" shall mean the closing date of the
Recapitalization.
1.7 "Collateral" shall have the meaning set forth in the Guarantee and
Collateral Agreement.
1.8 "Contributing Sponsor" shall mean contributing sponsor as defined
in section 4001(a)(13) of ERISA.
1.9 "Controlled Group" shall mean controlled group as defined in
section 4001(a)(14) of ERISA.
1.10 "Credit Agreement" shall mean the Credit Agreement, dated as of
the Closing Date, among the Administrative Agent, the Lenders, the Syndication
Agent and the Arranger thereto, Aircraft Braking Systems Corp. and Engineered
Fabrics Corporation, as amended, supplemented or otherwise modified from time to
time, and shall also be deemed to refer to any credit agreement or similar
document entered into by the Company and any lender(s) that replaces in whole or
in part such Credit Agreement as the Company's senior credit facility.
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1.11 "Distress Termination" shall mean a pension plan termination
pursuant to section 4041(c) of ERISA.
1.12 "Documents" shall mean, collectively, this Agreement, the
Intercreditor Agreement, the Guarantee And Collateral Agreement and the Letters
of Credit.
1.13 "Guarantee and Collateral Agreement" shall mean the agreement
attached hereto as Exhibit C.
1.14 "Hypothetical Unsecured Debt" shall mean hypothetical unsecured
debt, for which a rating is requested from Standard & Poor's and Moody's, in an
amount not less than $50 million (as of the date of the rating request).
1.15 "Insolvency Event" shall mean (a) with respect to any of the
Pension Plans, the issuance of a notice of determination for an involuntary
termination under section 4042 of ERISA or initiation of a Distress Termination
under section 4041(c); (b) the occurrence with respect to the Company or any
member of the K & F Controlled Group that is a Material Subsidiary (as defined
in the Credit Agreement) of (i) application for or consent to the appointment
of, or the taking of possession by, a receiver, trustee or liquidator of itself
or of all or a substantial part of its assets, (ii) a general assignment for the
benefit of its creditors, (iii) filing a petition seeking to take advantage of
any other law relating to
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bankruptcy, insolvency, reorganization, winding-up, or composition or
readjustment of debts, (iv) failure to contest in a timely and appropriate
manner, or acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code or (v) any corporate action for the
purpose of effecting any of the foregoing; (c) commencement of a proceeding or
case, without the application or consent of the Company or any member of the
K & F Controlled Group that is a Material Subsidiary, in any court of competent
jurisdiction, seeking (i) its liquidation, reorganization, dissolution or
winding-up, or the composition or readjustment of the debts, (ii) the
appointment of a trustee, receiver, custodian, liquidator or the like of it or
of all or any substantial part of its assets or (iii) similar relief in respect
of it under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or readjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 60 or more Days: or (d) entry of an order for relief
against the Company or any member of the K & F Controlled Group that is a
Material Subsidiary in an involuntary case under the Bankruptcy Code.
1.16 "Intercreditor Agreement" shall mean the
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agreement attached hereto as Exhibit B.
1.17 "IRC" shall mean the Internal Revenue Code of 1986, as amended.
1.18 "Lenders" shall mean the parties from time to time to the Credit
Agreement in their capacity as lenders thereunder, and their respective
successors and assigns.
1.19 "Letters of Credit" shall mean irrevocable standby letters of
credit (and any renewals thereof) in favor of the PBGC issued by a bank rated
"A" or better, which letter of credit shall provide that it may be drawn upon
the presentation by the PBGC in the amount of the draw, not to exceed $4.5
million, accompanied by a certificate signed by the PBGC that a breach of this
Agreement, within the meaning of section 7, has occurred and is continuing,
specifying the amount of obligations owed by the Company which have not been
paid when due. Except at expiration of this Agreement, or expiration of the
requirement under this Agreement that Letters of Credit be held in favor of the
PBGC, such Letters of Credit may also be drawn upon 30 days before their
expiration date, if they have not been renewed as of that date or automatically
extended in accordance with their terms or replaced by the Company.
1.20 "Material Adverse Effect" shall have the meaning set forth in the
Credit Agreement.
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1.21 "Pension Plans" or "Plans" shall mean the K & F Industries
Retirement Plan for Salaried Employees and the Aircraft Braking
Systems/Engineered Fabrics Retirement Plan for Bargaining Unit Employees (or any
defined benefit pension plan which is a successor to any of the foregoing plans
(whether by merger, consolidation, transfer of assets or liabilities or
otherwise)), in each case, so long as the Contributing Sponsor of each such
pension plan is a member of the K & F Controlled Group.
1.22 "Plan Year" shall mean, as to any Pension Plan, the "plan year"
as defined in section 3(39) of ERISA; provided, however, that for purposes
hereof, any Plan Year must equal twelve (12) months.
1.23 "Recapitalization Transaction" shall mean the series of events
and transactions expressly contemplated by the offering Memorandum, dated
October 9, 1997 of K & F, including the incurrence of debt by K & F, the
incurrence of debt by certain subsidiaries of K & F and certain purchases and
sales of equity interests in K & F, as therein described.
1.24 "Senior Subordinated Notes" shall mean the 9 1/4% senior
subordinated notes due 2007 issued by K & F in connection with the
Recapitalization Transaction.
1.25 "Unfunded Benefit Liabilities" shall mean, as to any Pension
Plan, the amount of unfunded benefit liabilities as
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defined in section 4001(a)(18) of ERISA.
SECTION 2. PBGC'S UNDERTAKINGS
2.1 PBGC will take no action under Title IV of ERISA in connection
with the Recapitalization Transaction, including, but not limited to, initiating
or threatening to initiate proceedings under section 4042 of ERISA to terminate
any of the Pension Plans sponsored by K & F or any member of K & F's Controlled
Group.
2.2 PBGC agrees to execute and deliver the Intercreditor Agreement in
the form attached hereto.
SECTION 3. K & F'S UNDERTAKINGS
3.1 K & F agrees to execute and deliver to PBGC, in the form attached
hereto, the Guarantee And Collateral Agreement (under which the Company and its
subsidiaries are granting to PBGC a second security interest in substantially
all their assets), and the Intercreditor Agreement (under which the relative
interests of PBGC and the Lenders in the assets of K & F and its subsidiaries
are established). As soon as practicable after execution of this Agreement, the
Collateral Agent shall prepare and file, at the Company's expense, and the
Company shall execute and deliver, such documents, including Uniform Commercial
Code financing statements, as are required to establish and perfect a
subordinate security interest in the assets of the
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Company and its subsidiaries pursuant to the Guarantee And Collateral Agreement.
It is agreed and understood that the security interest provided in such assets
is and shall at all times be subordinate to the security interest granted under
the Credit Agreement and subject to the terms of the Intercreditor Agreement.
3.2 For each Plan Year beginning on and after the Closing Date, K & F
will deliver to PBGC for each Pension Plan (a) a copy of Form 5500 (with all
related schedules and attachments) within ten (10) days after it is filed and
(b) a copy of the annual actuarial valuation report, within thirty (30) days
after a final copy of such actuarial valuation report signed by the Pension
Plan's enrolled actuary is received by the Pension Plan's Contributing Sponsor,
no later than December 31 of each plan year.
3.3 Beginning on and after the Closing Date, K & F will deliver to the
PBGC (a) written notice within 30 days after the occurrence of any event of
default as specified in the Creditor Agreement which has not been cured within
the period permitted for cure under the Credit Agreement; (b) written notice
within two (2) days after the due date of any failure to make any required
minimum funding installment; (c) promptly after such documents are filed, copies
of quarterly 10-Q, annual 10-K and
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8-K reports, if any, filed with the Securities Exchange Commission; (d) written
notice at least thirty (30) days prior to any refinancing of debt; (e) written
notice at least thirty (30) days prior to any transaction that would have the
effect of transferring the assets and liabilities of any Pension Plan or
transferring such Pension Plan's sponsorship, in either event, to a Contributing
Sponsor who is not a member of the K & F Controlled Group after such
transaction; (f) written notice at least thirty (30) days prior to any sale,
transfer or other disposition of assets of any member of the K & F Controlled
Group where such assets represent 10 percent or more of the book value of the
assets of the K & F Controlled Group on a consolidated basis, or generated 10
percent or more of the consolidated revenues or operating income of the K & F
Controlled Group on a consolidated basis in the preceding fiscal year; (g) to
the extent not otherwise provided in the filings pursuant to paragraph (e)
above, annual audited financial statements and quarterly financial statements at
the time such documents are provided to the Lenders; (h) simultaneous with the
filing of any reportable event notice pursuant to section 4043 of ERISA, a
separate copy of such filing to the Director of PBGC's Corporate Finance and
Negotiations Department; (i) written notice within thirty (30) days after the
payment of any unscheduled
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amortization of any secured credit facility (other than the Company's revolving
credit facility), the amount of such payments; (j) written notice at least
thirty (30) days prior to any borrowing under any facility other than the
Company's revolving credit facility; (k) written notice within ten (10) days
after a contribution is made to either Pension Plan; (l) for each Plan, by
January 1 of each Plan Year, beginning in 1998, a certified actuarial statement
showing the estimated Minimum Contribution for that Plan Year and the underlying
calculations, including calculation of the Required Credit Balance; (m) for each
Plan, by September 30 of each Plan Year beginning in 1998, a certified actuarial
statement showing the final calculation of Minimum Contributions for that Plan
Year and the underlying calculations including calculation of the Required
Credit Balance; and (n) by the earlier of September 30 of each Plan Year or a
date ten (10) days prior to the due date of any contribution required under this
Agreement that will not be made on account of tax deductibility, beginning in
1998, written notice if tax deductibility is a limiting factor in the payment of
Minimum Contribution amounts and the calculations underlying that determination;
and (o) within 10 days after the Company renews, or receives notice that the
issuer of the Letter of Credit will not renew, any Letter of Credit.
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3.4 At least thirty (30) days before implementing any change (other
than a change required by law) in any of the Pension Plans' actuarial
assumptions or methods from those used for purposes of the 1996 actuarial
valuation for purposes of the minimum funding standard of section 412 of the
IRC, K & F shall provide PBGC with written notice of such change, and such
change shall be subject to PBGC's prior written consent (which consent shall not
to be unreasonably withheld or delayed). K & F shall provide PBGC a copy of any
plan amendment within ten (10) days of the adoption of such plan amendment.
3.5 With respect to contributions to the Plans:
(a) K & F shall ensure that the following amounts are contributed to
the Plans specified below by the due dates specified below.
PLAN FOR SALARIED EMPLOYEES
Within 10 days after the Closing Date $1.5 million
December 31, 1997 2.0 million
PLAN FOR BARGAINING UNIT EMPLOYEES
Within 10 days after the Closing Date $ 500,000
December 31, 1997 500,000
(b) The Plan for Salaried Employees and the Plan for
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Bargaining Unit Employees will have letters of credit of $2.5 million and $2.0
million respectively to secure liability to the PBGC in the event of an
involuntary plan termination under section 4042 of ERISA or a distress
termination within section 4041(c) of ERISA and to secure contributions required
under this Agreement. The $4.5 million Letter of Credit will be renewed annually
until either (i) $4.5 million is contributed to the Plans in excess of the
Minimum Contributions ($2.5 million to the Salaried Plan and $2.0 million to the
Bargaining Unit Plan) (such Letters of Credit may be reduced dollar for dollar
for contributions made in excess of the Minimum Contribution); or (ii) each Plan
has a funded ratio of 85% or greater as of the last day of the plan year in each
of two consecutive years. Notwithstanding any other section of this Agreement,
in the event of a default under this Agreement, the PBGC shall be entitled to
reallocate the amounts payable under such Letters of Credit to either of the
Plans. For purposes of computing the funded ratio, unfunded benefit liabilities
will be determined under section 4001(a)(18) of ERISA. Assets will be the fair
market value of assets as of the last day of the plan year in the year measured.
(c) For Plan Years beginning January 1, 1998, and thereafter, K & F
will pay Minimum Contributions for each of the plans determined as follows. The
Minimum Contribution for a Plan
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Year is the minimum amount of cash required under the statutory funding
requirements to be contributed for the Plan Year, payable in substantially equal
quarterly installments by April 15, July 15, and October 15 of the Plan Year and
on January 15 of the following year, except that (i) the Required Credit Balance
shall not be offset in calculating the minimum contributions for the Plan; and
(ii) the Required Credit Balance shall be subtracted from the assets used in
calculating the unfunded current liability under section 302(d)(8)(A) of ERISA
and section 412(l)(8)(A) of the IRC and the full funding limit under section
412(l)(7) and the unfunded current liability percentage under section 412(l)(9).
(d) Required Credit Balance for each Plan means as of the end of any
Plan Year, the funding standard account credit balance as of December 31, 1997,
plus the excess each year of the Minimum Contributions for the Plan over the
statutory funding requirements, all adjusted with interest to the end of the
Plan Year, plus $200,000 (or the ratably reduced amount as the Letter of Credit
is reduced) to each plan for each year that the Letter of Credit remains
outstanding, plus the Letter of Credit amount to the extent it is paid the
Plan(s).
(e) Notwithstanding any other provision of this Agreement, K & F shall
not be required to make that portion of
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any contribution that would not be deductible under section 404 of the IRC. For
purposes of this Agreement, deductibility under section 404 of the IRC shall be
determined subject to the requirement that current liability shall be computed
using the lowest interest rate in the permissible range prescribed under section
412(b)(5)(B)(ii) of the IRC. If any portion of a Minimum Contribution is not tax
deductible if made to either Plan, then that portion shall be carried over and
paid in the next year in which it is deductible. Any such carryover payment will
be in addition to any minimum contributions required for such year.
(f) For purposes of IRC sections 404 and 412, (i) all contributions
required by this Agreement and made to the Plans during 1997 will be allocated
to 1997; (ii) contributions made on April 15, July 15 and October 15 are made
for the current Plan Year; and (iii) contributions made on January 15 are made
for the previous Plan Year.
SECTION 4. PBGC LIENS
4.1 Upon termination of the Plans after the Closing Date (other than
in a standard termination pursuant to section 4041(b) of ERISA), K & F will pay
PBGC an amount equal to the total amount of the Plan(s), unfunded benefit
liabilities, as calculated in accordance with section 4001(a)(18) of ERISA, as
of
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the termination date determined in accordance with section 4048 of ERISA. The
obligation to pay the amount described in this subsection shall be secured with
a second security interest in the Collateral equal to the lesser of $24 million
or the unfunded benefit liabilities, as described in the Guarantee and
Collateral Agreement and the Intercreditor Agreement and the obligation to make
the contributions described in this Agreement shall be secured with a second
security interest in the Collateral equal to the lesser of the aggregate Minimum
Contributions due under this Agreement prior to December 31, 2002 or $16
million, as described in the Guarantee and Collateral Agreement and the
Intercreditor Agreement ("PBGC Lien"). The PBGC Lien and the rights and
interests of the PBGC thereunder, shall be subordinate to the Senior Lien and
subject to the terms of the Intercreditor Agreement. K & F shall not reborrow or
refinance amounts under its existing credit agreement or any successor agreement
(other than the Company's revolving credit facility) to the extent that such
reborrowing or refinancing would exceed $272 million reduced by $15 million
annually.
SECTION 5. TERMINATION OF AGREEMENT
5.1 This Agreement shall terminate in its entirety upon the first to
occur of the following conditions: (a)
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termination of this Agreement with respect to all of the Pension Plans under
Section 5.2 below; or (b) on or after October 31, 2002, (i) the date on which K
& F (or any successor) has a rating of BBB by Standard & Poor's and Baa2 by
Moody's, or better, for the Senior Subordinated Notes (or if the Senior
Subordinated Notes are no longer outstanding, any other subsequent issuance of
public debt by K & F or its successors) and such debt is unsecured or (ii) in
the event the ratings for the debt described in (b)(i) above are not available,
K & F (or any successor) or K & F's parent, if any, obtains ratings of BBB by
Standard & Poor's and Baa2 by Moody's, or better, for Hypothetical Unsecured
Debt issued by the entire K & F Controlled Group; or (c) on or after October 31,
2002, K & F demonstrates that for two consecutive Plan Years, as of the last day
of such Plan Years, the amount of Unfunded Benefit Liabilities of each of the
Pension Plans is zero.
5.2 This Agreement shall also terminate with respect to the Pension
Plans to the extent (a) there is a Change of Controlled Group Event, and the
unsecured debt of the Buyer or the parent of the Buyer's Controlled Group has
been rated BBB by Standard & Poor's and Baa2 by Moody's, or better, for the two
consecutive years prior to a rating date (which rating date is subsequent to the
date of the Change of Controlled Group Event),
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and such ratings are reaffirmed taking into account the Change of Controlled
Group Event or (b) following a Change of Controlled Group Event, the Buyer and
the parent of the Buyer's Controlled Group have no unsecured debt that is rated
by Standard & Poor's and Moody's, and have had no unsecured debt rated below
BBB/Baa2 by any rating agency within the two years prior to the rating date
(which rating date is subsequent to the date of the Change of Controlled Group
Event), and the Buyer obtains a private rating of BBB by Standard & Poor's and
Baa2 by Moody's, or better, for Hypothetical Unsecured Debt of the Buyer or the
parent of the Buyer's Controlled Group and such ratings are reaffirmed taking
into account the Change of Controlled Group Event.
5.3 Upon the termination of this Agreement, all rights of PBGC and all
obligations of K & F under the Documents shall terminate in their entirety.
5.4 K & F shall provide PBGC with written notice of any determination
that it has satisfied a test for termination of the obligations under this
Agreement, and shall provide to PBGC the information and documentation that
supports such determination. At the request of K & F, PBGC shall thereafter
respond promptly in writing as to whether it concurs with the determination,
such concurrence not to be unreasonably withheld
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or delayed.
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 K & F hereby represents and warrants to PBGC that:
(a) K & F is a corporation, duly incorporated and validly existing
under the laws of the State of Delaware and has all requisite corporate or other
powers and all material governmental licenses, authorizations, consents and
approvals, necessary to own its assets and carry on its business as now being or
as proposed to be conducted, except where the failure to have any of the
foregoing would not result in a Material Adverse Effect on its business. K & F
is duly qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary except where failure
to so qualify could not reasonably be expected to have a Material Adverse
Effect.
(b) The execution and delivery of the Documents shall not conflict
with nor result in a breach of, or require any consent under, the charter or
by-laws (or other equivalent organizational documents) of the Company or any of
its subsidiaries, or any applicable law or regulation, or any order, writ,
injunction or decree of any governmental authority, or any
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material agreement or instrument to which the Company or a subsidiary is a party
or by which it is bound or to which it is subject, or constitute a default under
any such agreement or instrument, or result in the creation or imposition of any
lien upon any of the revenues or assets of the Company or a subsidiary pursuant
to the terms of any such agreement or instrument, except in each case where such
conflict, breach, failure to obtain such consent, default or imposition of a
lien could not reasonably be expected to result in a material Adverse Effect.
(c) The Company has all necessary corporate power and authority to
execute, deliver and perform its obligations under the Documents; the execution,
delivery and performance by the Company of the Documents has been duly
authorized by all necessary corporate action on its part; and the Documents have
been duly executed and delivered by the Company and each constitutes a legal,
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
similar laws of general applicability affecting the enforcement of creditors'
rights or (ii) the application of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
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6.2 PBGC represents and warrants to K & F that:
(a) PBGC is a wholly-owned United States government corporation
established under Title IV of ERISA, and has all requisite corporate and other
powers and all material governmental licenses, authorizations, consents and
approvals required to carry on its activities as now conducted.
(b) The execution, delivery and performance by PBGC of this Agreement
and the consummation of the transactions contemplated by this Agreement are
within the powers of PBGC and have been duly authorized by all necessary action
on the part of PBGC. This Agreement constitutes a legal, valid and binding
agreement of PBGC enforceable against PBGC in accordance with its terms, except
as such enforceability may be limited by the application of general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or law).
(c) The execution, delivery and performance by PBGC of this Agreement
require no action by or in respect of, or consent or approval of or filing with
any other governmental authority or agency.
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SECTION 7. COMPANY BREACHES AND REMEDIES.
7.1 Each of the following constitutes a breach of this Agreement:
(a) Failure to provide PBGC with any information which the Company is
required to provide under this Agreement within fifteen (15) days after written
notice from PBGC that the information was not provided by its due date.,
(b) Failure to meet any of the material obligations under the
Intercreditor Agreement.
(c) Occurrence of an Insolvency Event described in section 1.15(a).
(d) Failure to make a contribution required by this Agreement.
7.2 PBGC shall be entitled to the following remedies, at its option,
in addition to other remedies that may be available at law or in equity.
(a) All rights, remedies, and powers granted to PBGC herein, by ERISA,
or by other applicable law shall be cumulative and may be exercised singly or
concurrently. Failure to exercise any remedy shall not be considered a waiver of
such remedy or of any breach giving rise to such remedy.
(b) Upon the occurrence of a breach described in Section 7.1(a), PBGC
shall be entitled to receive from the
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Company as liquidated damages, $100 for each day between the specified or other
agreed date and the date on which such information is actually provided.
(c) Upon the occurrence of an Insolvency Event, PBGC shall be entitled
(subject to the limitations referred to in the Intercreditor Agreement) to
exercise any and all rights and remedies of a secured party under the
Uniform Commercial Code or any other applicable law relating to any security it
has received.
(d) In the event of a breach of any other provision of this Agreement,
either PBGC or K & F may apply for an order requiring performance, whether for
the specific performance of any term or provision hereof or for an injunction
against the violation of any of the terms or provisions hereof or for an
appropriate show cause order, it being agreed that a remedy of money damages
will be inadequate because the failure of the Company to comply strictly with
the terms hereof would cause irreparable injury to PBGC. However, either PBGC or
K & F may proceed to enforce its rights by any other action, suit, remedy, or
proceeding authorized or permitted by this Agreement or by law or by equity.
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SECTION 8. GENERAL PROVISIONS
8.1 This Agreement may be amended, modified or supplemented only by
written instrument executed by each of the parties hereto. Except as provided in
the preceding sentence, no action taken pursuant to this Agreement, including,
without limitation, any investigation by or on behalf of either party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants or agreements contained herein. The
waiver by either party hereto of a breach of any provision of this Agreement
shall not operate or be construed as a waiver of any subsequent breach.
8.2 This Agreement and Exhibits A, B, and C hereto contain the
complete and exclusive statement of the agreement and understanding by and
between the parties hereto and supersede all prior agreements (other than the
confidentiality agreement between PBGC and the Company dated as of September 12,
1997), understandings, commitments, representations, communications, and
proposals, oral or written, between the parties relating to the subject matter
of this Agreement and such Exhibits. Notwithstanding the foregoing, nothing
contained herein, or in the Exhibits hereto, shall be construed as an admission
to the actual amount of any liability of the K & F Controlled Group to PBGC
under Title IV of ERISA.
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8.3 This Agreement may be executed in one or more counterparts and by
different parties on separate counterparts, each of which will be deemed an
original, but all of which together will constitute one and the same instrument.
8.4 No provision of this Agreement shall create any third party
beneficiary rights in any person including, without limitation, any participant,
or beneficiary of a participant, in any employee benefit plan sponsored by K & F
or any member of the K & F Controlled Group.
8.5 Any reference in this Agreement to any provision of ERISA or the
IRC will be deemed also to refer to all rules and regulations promulgated under
such provision. References to any provision of ERISA or the IRC and regulations
promulgated thereunder refer to the provision of ERISA, the IRC, or the
regulations as of the Closing Date, and to any modified and successor provision
thereof after the effective date of any amendment, renumbering or other
modification thereto occurring after the Closing Date, provided that such
modified and successor provision has substantially the same effect as the
provision that it is amending, renumbering or otherwise modifying.
8.6 All notices, requests, demands to or upon either party hereto to
be effective shall be in writing (or by telex, facsimile or similar electronic
transfer confirmed in writing) and shall be deemed to have been duly given or
made (i) when
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delivered by hand or (ii) if given by mail, when deposited in the mails by
relied mail, return receipt requested or (iii) If by telex, facsimile or similar
electronic transfer, when sent and receipt has been confirmed, addressed as
follows:
If to K & F: K & F Industries, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
ATTN: Xx. Xxxxxxx Xxxxxxxx
Facsimile No. (000) 000-0000
If to PBGC: Director
Corporate Finance and Negotiations Department
Pension Benefit Guaranty Corporation
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Facsimile No. (000) 000-0000
General Counsel
Pension Benefit Guaranty Corporation
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Facsimile No. (000) 000-0000
The parties hereto may change their addresses and transmission numbers for
notices by notice in the manner provided in this Section 8.6.
8.7 Each party to this Agreement has made its own independent inquiry
as to any and all matters, facts and circumstances material to the Agreement.
Neither party to this Agreement has relied and neither party will rely upon the
other party hereto, or any of its legal counsel or financial or actuarial
advisors, for any information or advice of any kind.
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8.8 No failure of either party to this Agreement to enforce at any
time any provision of this Agreement and no course of dealing between the
parties to this Agreement will be a waiver of any such provision, or will in any
way affect the validity of this Agreement or the right of either party to
enforce any provision, to the extent permitted in this Agreement.
8.9 Except as expressly provided herein, nothing in this Agreement
constitutes or reflects a waiver or modification by the Company or PBGC of any
claim, right or defense that it has under law.
8.10 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York and by ERISA, the IRC and other laws of
the United States to the extent they preempt New York law.
8.11 The language used in this Agreement is deemed to be the language
chosen by the parties to express their mutual intent. No rule of strict
construction will be applied against either party hereto and no deference will
be provided to either party with respect to the interpretation of this
Agreement. The section and subsection headings contained in this Agreement are
inserted for convenience only and will not affect in any way the meaning or
interpretation of this Agreement.
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8.12 This Agreement may not be assigned without the written consent of
the signatories hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their duly authorized officers as of the dates indicated below.
K & F INDUSTRIES, INC.
Date: October 15, 1997 By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------- ----------------------------
PENSION BENEFIT GUARANTY
CORPORATION
Date: October 14, 1997 By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------- ----------------------------
Xxxxxx Xxxxxxxxx
Director
Corporate Finance and
Negotiations Department
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