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Exhibit 10.37
EXECUTION COPY
DEALER MANAGER AGREEMENT
September 15, 1997
Xxxxxx Brothers Inc.
Three World Financial Center
Xxx Xxxx, XX 00000
Dear Ladies and Gentlemen:
1. Offer to Purchase. K&F Industries, Inc. (the "Company") proposes
to make a tender offer (hereinafter called, together with any extensions
thereof, the "Tender Offer") to purchase for cash all of its outstanding 10 3/8%
Senior Subordinated Notes due 2004 (the "Notes"), on the terms and subject to
the conditions set forth in the Offer to Purchase and Consent Solicitation
Statement (the "Offer to Purchase") and Consent and Letter of Transmittal in the
forms attached hereto as Exhibit A. Concurrently with the Tender Offer, the
Company is soliciting (the "Solicitation") consents (the "Consents") from
holders (the "Holders") of the Notes to the proposed amendments (the "Proposed
Amendments") to the Indenture between the Company and Fleet National Bank, as
Trustee, dated as of August 15, 1996, pursuant to which the Notes were issued
(the "Indenture").
2. Appointment as Dealer Manager. The Company hereby appoints Xxxxxx
Brothers Inc. ("Xxxxxx Brothers") as exclusive financial advisor and Dealer
Manager with respect to the Tender Offer and Solicitation Agent with respect to
the Solicitation (the "Dealer Manager") and authorizes Xxxxxx Brothers to act as
such in accordance with the Tender Offer and the Solicitation. As Dealer
Manager, you agree, in accordance with your customary practice, to use your
reasonable best efforts to perform those services in connection with the Tender
Offer and the Solicitation as are customarily performed by an investment banking
concern acting as dealer/manager in connection with tender offers and consent
solicitations of like nature and to communicate with brokers, dealers, banks,
trust companies and other persons with respect to the Tender Offer and the
Solicitation. The Company acknowledges and agrees that, in your role as Dealer
Manager, you will not recommend to any Holder how such Holder should act or vote
with respect to the Tender Offer. In soliciting or obtaining tenders, you, as
Dealer Manager, are acting as an independent contractor and shall not be deemed
to be acting
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as the agent of the Company, and no broker, dealer, bank or trust company shall
be deemed to be acting as your agent.
3. No Liability for Acts of Dealers, Etc. You shall have no
liability (in tort, contract or otherwise) to the Company or any of its
affiliates for any losses, claims, damages, liabilities or expenses arising from
any act or omission on the part of any broker, dealer (other than yourself),
commercial bank or trust company, nominee, or any other person, and you shall
have no liability (in tort, contract or otherwise) to the Company or any other
person for any losses, claims, damages, liabilities or expenses arising from
your own acts or omissions in performing your obligations hereunder or otherwise
in connection with the Company's proposed acquisition of the Notes, except for
any such losses, claims, damages, liabilities or expenses which are determined,
in a final judgment by a court of competent jurisdiction to have resulted
directly from acts or omissions taken or omitted to be taken by you through your
gross negligence or willful misconduct. In soliciting or obtaining tenders, you,
as Dealer Manager, are acting as independent contractor and shall not be deemed
to be acting as the agent of the Company or as the agent of any broker, dealer,
bank or trust company, and no broker, dealer, bank or trust company shall be
deemed to be acting as your agent or as the agent of the Company.
4. Tender Offer Material; Early Termination. (a) The Company agrees
to furnish you with as many copies as you may reasonably request of the Offer to
Purchase, any amendments and supplements thereto, the Consent and Letter of
Transmittal, Notice of Guaranteed Delivery and any other materials relating to,
or contemplated by, the Tender Offer and the Solicitation including, but not
limited to, any advertisements, press releases or summaries relating to the
Tender Offer and the Solicitation (including any publication of the Tender Offer
and the Solicitation in the MCM Corporate Watch) and any forms of letters to
brokers, dealers, commercial banks, trust companies and other nominees relating
to the Tender Offer and the Solicitation (collectively, as amended or
supplemented from time to time, the "Tender Offer Material") to be used by the
Company in connection with the Tender Offer and the Solicitation. You are
authorized to use copies of the Tender Offer Material in accordance with the
terms and conditions of this Agreement. The Company shall on or as soon as
practicable after the date hereof (the "Mailing Date"), cause a copy of the
relevant Tender Offer Material, together with a return envelope, to be mailed to
each Holder whose name appears on the most recent list of Holders, which
includes all beneficial owners of Notes known by the Company. Thereafter, to the
extent practicable until the expiration or termination of the Tender Offer and
the Solicitation and subject to the terms and conditions of the Tender Offer as
provided by the Tender Offer Material, the Company shall use its reasonable best
efforts to cause copies of such material and a return envelope to be mailed to
each person who becomes a Holder.
(b) The Company agrees that, in a reasonable time prior to using, or
filing with any federal or other governmental agency or instrumentality, any
Tender Offer Material, it will submit copies of such material to you and will
not use any such Tender Offer Material without your prior approval, which shall
not be unreasonably withheld. If (i) any restraining order or other injunctive
order shall have been issued or any action, suit or proceeding shall have been
commenced with respect to the Tender Offer or the Solicitation or with respect
to any of the transactions in connection with, or contemplated by, the Tender
Offer or the Solicitation or this Agreement, before
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any court or governmental agency or other regulatory body or administrative
authority that, in the opinion of your counsel, makes it legally inadvisable for
you to continue to act hereunder; (ii) the Company uses or permits the use of,
or files with the Securities and Exchange Commission (the "Commission") or with
any other federal or governmental agency, authority or instrumentality, any
Tender Offer Material without your prior approval, which approval shall not be
unreasonably withheld; or (iii) the Company shall have breached, in any material
respect, any of its representations, warranties, agreements or covenants herein,
then you shall be entitled to withdraw as the Dealer Manager in connection with
the Tender Offer and the Solicitation without any liability or penalty to you or
any other Indemnified Person (as defined in Section 10 hereof) as a result of
such withdrawal and without loss of any right to indemnification or contribution
provided in Section 10 hereof or to the payment of all fees and expenses payable
hereunder which have accrued to the date of such withdrawal (it being agreed
that in the event of any such withdrawal, for the purpose of determining the
fees payable to you pursuant to Section 5 hereof, (A) the number of Notes
tendered pursuant to the Tender Offer as of the close of business on the date of
such withdrawal which are thereafter acquired by the Company or any of its
subsidiaries or affiliates pursuant to the Tender Offer or otherwise shall be
deemed to have been acquired as of the date of such withdrawal and (B) any other
Notes which the Company or any of its subsidiaries or affiliates, as of such
close of business, has acquired since the date hereof or has a right to acquire
and which are subsequently acquired by the Company or any of its subsidiaries or
affiliates for a period of one year following the withdraw of the Tender Offer
shall be deemed to have been acquired as of the date of such withdrawal). If you
withdraw as the Dealer Manager, the fees accrued and reimbursement for your
reasonable expenses through the date of such withdrawal shall be paid to you
promptly after such date.
(c) The Company shall arrange for MacKenzie Partners, Inc., as the
information agent (the "Information Agent"), or State Street Bank and Trust
Company, as the depositary named in the Tender Offer Material (the "Depositary"
and, together with the Information Agent, the "Agents"), to inform you and your
counsel during each business day during the Tender Offer and the Solicitation of
the principal amounts of Notes (and the names of the Holders thereof) (i) that
have been tendered pursuant to the Tender Offer and have not been withdrawn and
(ii) with respect to which a Consent to the Proposed Amendments has been
delivered and not revoked, in each case during the interval since its previous
daily report to you under this provision and as to such other matters as you may
reasonably request.
(d) The Company shall use its reasonable best efforts to cause the
Agents to cooperate with you in all respects reasonably required.
5. Compensation. The Company agrees to pay to Xxxxxx Brothers as
compensation for its services as financial advisor and Dealer Manager hereunder
a fee of $2.50 per each $1,000 face amount of the Notes actually tendered and
accepted pursuant to the terms of the Tender Offer on the Expiration Date.
6. Expenses. In connection with the Tender Offer and the
Solicitation and the transactions contemplated thereby, the Company agrees to
pay (or, to the extent that the Dealer
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Manager shall have paid for any of the following items, to reimburse the Dealer
Manager for such payments of) (a) all fees and expenses relating to the
preparation, printing, filing, mailing and publishing of the Tender Offer
Material, (b) all advertising charges pertaining to the Tender Offer and the
Solicitation, (c) all costs of the execution and delivery of the supplemental
indenture giving effect to the Proposed Amendments in the form attached hereto
on Schedule 1 (the "Supplemental Indenture"), (d) all fees payable to you and
any broker including, without limitation, prompt reimbursement of the reasonable
expenses incurred in forwarding the Tender Offer Material to Holders, (e) all
fees and expenses of the Agents or other persons rendering services in
connection with the Tender Offer or the Solicitation, and (f) all other fees and
expenses in connection with the Tender Offer or the Solicitation. The Company
will also reimburse you for all fees and expenses reasonably incurred by you in
connection with your services as financial advisor and Dealer Manager,
including, without limitation, reasonable fees and expenses of counsel. All
payments to be made by the Company pursuant to this Section 6 and Section 5
shall be made promptly after the expiration or termination of the Tender Offer.
The Company shall perform its obligations set forth in this Section 6 and
Section 10 whether or not the Tender Offer is commenced or the Company, or any
of its subsidiaries or affiliates purchases any Notes pursuant to the Tender
Offer or otherwise acquires any Notes.
7. Securityholder Lists. The Company shall provide you or cause the
trustee under the Indenture governing the Notes and The Depository Trust Company
Inc. ("DTC") to provide you with cards or lists in reasonable quantities or
copies thereof showing the names and addresses of, and principal amounts of
Notes held by, the holders of Notes as of a recent date, and will use their
reasonable efforts to advise you or cause such trustee or DTC to advise you from
day to day during the period of the Tender Offer as to any transfers of record
of Notes. You agree to use such information only in connection with the Tender
Offer and the Solicitation and not to furnish such information to any other
person except in connection with the Tender Offer or the Solicitation.
The Company has appointed State Street Bank and Trust Company to
serve as depositary in connection with the Tender Offer and the Solicitation and
has instructed such depository to advise you daily as to such matters in
connection with the Tender Offer and the Solicitation as you may reasonably
request.
8. Representations and Warranties of the Company. The Company
represents and warrants to you, and agrees with you, that:
(a) The Company and each of its Subsidiaries (as defined below) has
been duly organized and is validly existing and in good standing under the
laws of its respective jurisdiction of incorporation, is duly qualified to
do business as a foreign corporation, and are corporations in good
standing in each jurisdiction in which its ownership or leasing of
property or the conduct of its business requires such qualification
(except where the failure to be so qualified and in good standing would
not have a Material Adverse Effect), and has all necessary corporate power
and authority necessary to own or hold its properties and to conduct the
business in which it is engaged. As used herein, "Material Adverse Effect"
means a material adverse effect on the condition (financial or otherwise),
results of
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operations, business or prospects of the Company and its Subsidiaries
taken as a whole. The term "Subsidiaries" as used herein shall refer only
to Aircraft Braking Systems Corporation and Engineered Fabrics
Corporation. The Subsidiaries are the only "significant" subsidiaries" of
the Company within the meaning of Rule 1-02(v) of Regulation S-K. The
Company has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement and to conduct
the Tender Offer and Solicitation (including, any related borrowings by
the Company or any of its subsidiaries), and the purchase of Notes
pursuant to the Tender Offer and the payment for Consents pursuant to the
Solicitation in accordance with its terms;
(b) All necessary corporate action has been duly taken by the
Company to authorize the Tender Offer and the Solicitation, the purchase
of the Notes pursuant to the Tender Offer, the amendment of the Indenture
pursuant to the Solicitation, and the execution, delivery and performance
of this Agreement and the Supplemental Indenture by the Company;
(c) This Agreement has been duly executed and delivered by the
Company and is a legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that
(i) enforcement thereof may be subject to (A) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
now or hereafter in effect relating to or affecting creditors' rights
generally and (B) general principles of equity (regardless of whether
enforceability is considered in a proceeding in equity or at law) and (ii)
the enforceability of any indemnification or contribution provisions
thereof may be limited under applicable securities laws or the public
policies underlying such laws;
(d) The Tender Offer and the Solicitation, the purchase of the Notes
pursuant to the Tender Offer, the amendment of the Indenture pursuant to
the Solicitation, the other transactions contemplated thereby and the
execution, delivery and performance of this Agreement and the Supplemental
Indenture (the "Proposed Transactions"), assuming the satisfaction or
waiver of the conditions set forth in the Tender Offer Material, do not
and will not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan or credit agreement or other agreement or
instrument to which either the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound or to
which any of the properties or assets of the Company or any of its
Subsidiaries are subject, nor will such actions result in any violation of
the provisions of the charter or by-laws of the Company or any of its
Subsidiaries or any statute to which it may be subject or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its Subsidiaries or any of their
properties or assets (except to the extent any such conflict, breach,
violation or default does not or will not, as the case may be, have a
Material Adverse Effect);
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(e) The Proposed Transactions will comply in all material respects
with all applicable requirements of United States law, including, without
limitation, applicable regulations of the Commission and other
governmental authorities, and no consent or approval of or filing with any
governmental authority is required in connection with the commencement or
consummation by the Company of the Proposed Transactions;
(f) No action, suit or proceeding is pending or, to the best of the
knowledge of the Company after due inquiry, threatened, before any court
or governmental agency or other regulatory or administrative authority
seeking to enjoin the making or consummation of the Proposed Transactions;
(g) (i) The Offer to Purchase as furnished to the Dealer Manager
upon commencement of the Tender Offer and as amended from time to time and
all other Tender Offer Material comply and will comply during the term of
the Tender Offer in all material respects with all applicable requirements
of the federal securities laws; and (ii) such Tender Offer Material (as
amended or supplemented from time to time) does not and during the term of
the Tender Offer will not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements made therein, in the light of the
circumstances under which they are made, not misleading;
(h) The Company will pay promptly, in accordance with and subject to
the terms of the Tender Offer and the Solicitation, the full Tender Offer
Consideration and Consent Payment as set forth in the Offer to Purchase
and all related fees and reasonable expenses (including, but not limited
to, fees and reasonable expenses payable hereunder);
(i) In connection with the Tender Offer and the Solicitation, the
Company has complied in all material respects and will continue to comply
in all material respects with the requirements of the Securities Act of
1933, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Securities Act"), the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Exchange Act") and the Trust Indenture Act
of 1939, as amended, and the rules and regulations of the Commission
thereunder (collectively, the "Trust Indenture Act");
(j) If at any time during the Tender Offer any event shall occur or
condition shall exist as a result of which it is necessary, in the
reasonable opinion of counsel for the Dealer Manager, to amend or
supplement the Tender Offer Material in order that such Material will not
include any statement which, at the time and in the light of the
circumstances under which it was made, was false or misleading with
respect to any material fact, or which omitted to state any material fact
necessary in order to make the statements therein not false or misleading
or necessary to correct any statement in the Tender Offer Material which
has become false or misleading or if, in the reasonable opinion of such
counsel, it shall be necessary to amend or supplement the Tender Offer
Material to comply with the requirements of the Securities Act or the
Exchange Act, the Company will promptly prepare such amendment or
supplement as may be necessary to correct such false or misleading
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statement or omission or to make the Tender Offer Material comply with
such requirements and distribute such amendments or supplement to holders
of Notes, if in the opinion of such counsel it shall be necessary to so
distribute such amendment or supplement to comply with the requirements of
the Securities Act or Exchange Act;
(k) Upon execution and delivery of the Supplemental Indenture
following consummation of the Solicitation, the Supplemental Indenture, as
well as the Indenture (as so amended by the Supplemental Indenture) and
the Notes issued thereunder, will be the legal, valid and binding
obligations of the Company enforceable in accordance with their respective
terms, except that (i) enforcement thereof may be subject to (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law) and (ii) the enforceability of any indemnification or
contribution provisions thereof may be limited under applicable securities
laws or the public policies underlying such laws;
(l) The Supplemental Indenture may be entered into upon the consent
of the Holders of a majority of the aggregate outstanding principal amount
of the Notes pursuant to the provisions of the Indenture and, together
with the Consents and the Solicitation, complies in all material respects
with the requirements of such Indenture;
(m) The financial information and statistical data set forth in the
Tender Offer Material, including the accompanying notes thereto, are
prepared on a basis consistent with the consolidated financial statements
of the Company;
(n) The pro forma financial statements set forth in the Tender Offer
Material have been prepared to give effect to assumptions made on
reasonable bases, historical transactions and proposed transactions such
as are fully and accurately described in the Tender Offer Material, and
the pro forma adjustments have been properly applied on the bases
described therein; and
(o) Neither the Company nor any of its subsidiaries is party to any
agreement, arrangement or understanding relating to the acquisition by any
such person of any business which is both (i) "probable" within the
meaning of Regulation S-X and (ii) of such a size that the Company would
be required by Regulation S-X and other applicable notes of the Commission
to include either historical or pro forma financial information with
respect to such business in the Tender Offer Material.
9. Additional Covenants. Prior to and during the period of the
Tender Offer and the Solicitation, the Company shall advise you promptly of (i)
the occurrence of any event or the discovery of any fact which might reasonably
be expected to cause the Company to fail to commence, withdraw, rescind or
terminate the Tender Offer and the Solicitation or would reasonably be expected
to permit the Company to exercise any right not to purchase Notes tendered
thereunder,
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(ii) any proposal or requirements to modify, amend or supplement any of the
Tender Offer Material, (iii) the issuance of any order or the taking of any
other action by the Commission or any another federal or other governmental
agency or instrumentality concerning the Tender Offer and the Solicitation (and,
if in writing, will furnish you a copy thereof), (iv) the commencement or threat
of any lawsuit or government proceeding in connection with the Tender Offer and
the Solicitation, (v) any event that causes a representation, warranty or other
statement to cease to be true and correct and (vi) any other information
relating to the Tender Offer and the Solicitation which you may from time to
time reasonably request.
10. Indemnification. (a) The Company agrees to hold harmless and
indemnify the Dealer Manager and its affiliates and any officer, director,
employee or agent of either thereof and any person controlling (within the
meaning of Section 20(a) of the Exchange Act) the Dealer Manager or any of such
affiliates (collectively, the "Indemnified Persons") from and against any and
all losses, claims, damages, liabilities and expenses whatsoever (as incurred or
suffered, and including, but not limited to, any and all reasonable legal or
other expenses incurred in connection with investigating, preparing to defend or
defending any lawsuit, claim or other proceeding, commenced or threatened,
whether or not resulting in any liability, which legal or other expenses shall
be reimbursed by the Company promptly after receipt of any invoices therefor),
(i) arising out of or based upon (A) any untrue statement or alleged untrue
statement of a material fact contained in any of the Tender Offer Material or
any amendment or supplement to such Tender Offer Material or in any other
solicitation material used by the Company or authorized by it for use in
connection with the Tender Offer and the Solicitation, or arising out of or
based upon the omission or alleged omission to state in any such document a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading (other than statements or omissions made solely in reliance upon
and in conformity with information relating to the Dealer Manager furnished by
the Dealer Manager in writing to the Company expressly for use therein), (B) any
third party claims resulting from any withdrawal or termination by the Company
of, or failure by the Company to make or consummate, the Tender Offer or the
Solicitation, (C) any actions taken or omitted to be taken by an Indemnified
Person with the consent of the Company or in conformity with actions taken or
omitted to be taken by the Company or (D) any breach by the Company of any
representation or warranty, or any failure by the Company to comply with any
agreement or covenant, contained in this Agreement or (ii) arising out of,
relating to or in connection with or alleged to arise out of, relate to or be in
connection with the Tender Offer or the Solicitation or the performance of your
services as financial advisor or Dealer Manager with respect to the Tender Offer
and the Solicitation. However, the Company will not be obligated to indemnify an
Indemnified Person under clause (ii) of this Section 10(a) for any loss, claim,
damage, liability or expense which has been determined in a final judgment by a
court of competent jurisdiction to have resulted directly from gross negligence
or willful misconduct on the part of such Indemnified Person.
(b) If any lawsuit, claim or proceeding is brought against any
Indemnified Person in respect of which indemnification may be sought against the
Company pursuant to Section 10(a), such Indemnified Person shall promptly notify
in writing the Company of the commencement of such lawsuit, claim or proceeding;
provided, however, that the failure so to notify the Company shall
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not relieve the Company from any obligation or liability which it may have under
Section 10(a) except to the extent that it has been prejudiced in any material
respect by such failure and in any event shall not relieve the Company from any
obligation or liability which it may have to such Indemnified Person otherwise
than under Section 10(a). In case any such lawsuit, claim or proceeding shall be
brought against any Indemnified Person and such Indemnified Person shall notify
in writing the Company of the commencement of such lawsuit, claim or proceeding,
the Company shall be entitled to participate in such lawsuit, claim or
proceeding, and, to the extent the Company may elect upon written notice to such
Indemnified Person, to assume the defense of such lawsuit, claim or proceeding
with counsel of its choice at its expense; provided, however, that such counsel
shall be satisfactory to the Indemnified Person in the exercise of its
reasonable judgment. Notwithstanding the election of the Company to assume the
defense of such lawsuit, claim or proceeding, the Indemnified Person shall have
the right to employ separate counsel to assert such legal defenses and to
otherwise participate in the defense of such action on behalf of such
Indemnified Person but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless (i) the employment thereof has been
specifically authorized by the Company in writing, (ii) such Indemnified Person
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Company and in the reasonable judgment of such counsel it is
advisable for such Indemnified Person to employ separate counsel or (iii) the
Company has failed to assume the defense of such action and employ counsel
reasonably satisfactory to the Indemnified Person, in which case, if such
Indemnified Person notifies the Company in writing that it elects to employ
separate counsel at the expense of the Company, the Company shall not have the
right to assume the defense of such action on behalf of such Indemnified Person,
it being understood, however, that the Company shall not, in connection with any
one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for all such Indemnified Persons, which firm shall be
designated in writing by Xxxxxx Brothers. The foregoing indemnification
commitments shall apply whether or not the Indemnified Person is a formal party
to any such lawsuit, claim or proceeding. The Company shall not be liable for
any settlement of any lawsuit, claim or proceeding effected without its consent
(which consent will not be unreasonably withheld), but if settled with such
consent, the Company agrees, subject to the provisions of this Section 10(b), to
indemnify the Indemnified Person from and against any loss, damage or liability
by reason of such settlement. The Company agrees to notify you promptly, or
cause you to be notified promptly, of the assertion of any lawsuit, claim or
proceeding against the Company, any of its respective officers or directors or
any person who controls any of the foregoing within the meaning of Section 20(a)
of the Exchange Act, arising out of or relating to the Tender Offer or the
Solicitation. The Company shall not agree to any settlement of any lawsuit,
claim or proceeding without the prior written consent of the Indemnified Person,
which consent shall not be unreasonably withheld. Notwithstanding the foregoing,
the Company shall not be required to obtain the consent of the Indemnified
Person if such settlement includes an explicit and unconditional release from
the parties bringing such lawsuit, claim or proceeding of all Indemnified
Persons, which release shall be reasonably satisfactory to you.
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(c) The Company and you agree that if any indemnification sought by
any Indemnified Person pursuant to Section 10(a) is held by a court to be
unavailable for any reason, other than that specified in the second sentence of
Section 10(a), then (whether or not you are the Indemnified Person) the Company,
on the one hand, and you, on the other hand, shall contribute to the losses,
claims, damages, liabilities and expenses for which such indemnification is held
unavailable (i) in such proportion as is appropriate to reflect the relative
benefits to the Company, on one hand, and you, on the other hand, in connection
with the matter giving rise to such losses, claims, damages, liabilities and
expenses, and other equitable considerations, or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, in such
proportions as is appropriate to reflect not only the relative benefits referred
to in the foregoing clause (i) but also the relative faults of the Company, on
the one hand, and you, on the other, in connection with the matter giving rise
to such losses, claims, damages, liabilities and expenses, and other equitable
considerations, subject to the limitation that in any event your aggregate
contribution to all losses, claims, damages, liabilities and expenses with
respect to which contribution is available hereunder shall not exceed the amount
of fees actually received by you pursuant to this Agreement. It is hereby agreed
that the relative benefits to the Company, on the one hand, and you, on the
other hand, with respect to the Tender Offer and the Solicitation shall be
deemed to be in the same proportion as (i) the aggregate value of the
consideration paid or proposed to be paid to the Holders of the Notes pursuant
to the Tender Offer and the Solicitation (whether or not the Tender Offer and
the Solicitation are consummated) bears to (ii) the fees payable to you with
respect to the Tender Offer and the Solicitation pursuant to Section 5. It is
further agreed that the relative faults of the Company on the one hand and you
on the other hand, (i) in the case of an untrue or alleged untrue statement of a
material fact or an omission or alleged omission to state a material fact, shall
be determined by reference to, among other things, whether such statement or
omission relates to information supplied by the Company or by you and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission and (ii) in the case of any other
action or omission, shall be determined by reference to, among other things,
whether such action or omission was taken or omitted to be taken by the Company
or you and the parties' relative intent, knowledge, access to information and
opportunity to prevent such action or omission.
(d) The amount paid or payable by an Indemnified Person as a result
of the losses, claims, damages, liabilities or expenses referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably incurred by
such Indemnified Person in connection with investigating, preparing to defend or
defending any such action or claim. The Company also agrees that no Indemnified
Person shall have any liability to the Company or any person asserting claims on
behalf of or in right of the Company in connection with this Agreement or your
acting as financial advisor and Dealer Manager hereunder, except for liabilities
determined in a final judgment by a court of competent jurisdiction to have
resulted from any acts or omissions undertaken or omitted to be taken by you
through your gross negligence or willful misconduct. The foregoing rights to
indemnification and contribution shall be in addition to any other rights which
you and the other Indemnified Persons may have against the Company under common
law or otherwise.
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11. Indemnification, Representations and Warranties to Remain
Operative. The indemnity and contribution agreements contained in Section 10 and
the representations and warranties of the Company set forth in this Agreement
shall remain operative and in full force and effect regardless of (a) any
failure to commence, or the withdrawal, rescission, termination or consummation
of, the Tender Offer or the termination or assignment of this Agreement, (b) any
investigation made by or on behalf of any party entitled to indemnification
pursuant to the terms of Section 10 and (c) any withdrawal by you pursuant to
Section 4(b).
12. Conditions to Obligations of Dealer Manager. Your obligations
hereunder shall at all times be subject, in your reasonable discretion, to the
satisfaction of the following conditions:
(a) all representations, warranties and other statements of the
Company contained herein are, on the date hereof, and at all times during
the period beginning on the date hereof and ending upon the consummation
or termination of the Tender Offer will be true and correct and you shall
have received a certificate to that effect, dated the date of consummation
of the Tender Offer, signed by the Chief Executive Officer or Chief
Financial Officer of the Company;
(b) the Company, at all times during the pendency of the Tender
Offer, shall have performed all of its obligations hereunder to be
performed and you shall have received a certificate to that effect, dated
the date of consummation of the Tender Offer, signed by the Executive Vice
President or Chief Financial Officer of the Company;
(c) no stop order, restraining order or denial of an application for
approval shall have been issued and no litigation shall have been
commenced or threatened before any regulatory authority or other public
body or court of any jurisdiction with respect to the Tender Offer or the
Solicitation, which you, in good faith, believe makes it inadvisable for
you to continue to act hereunder;
(d) the Company shall have delivered to you opinions, each dated as
of the commencement date of the Tender Offer and at the expiration of the
Tender Offer, of X'Xxxxxxxx Graev & Karabell, LLP, special counsel to the
Company, and Xxxxxx Xxxxxx, general counsel to the Company, each addressed
to you and substantially in the forms attached hereto as Exhibits B and C,
respectively;
(e) on the expiration date of the Solicitation, you shall have
received copies of the opinions of counsel together with applicable
reliance letters and other documents that are delivered to the Trustee in
connection with the Supplemental Indenture; and
(f) at all times during the pendency of the Tender Offer and the
Solicitation, the Company shall have furnished to you or your counsel, as
the case may be, such information, certificates and documents as you or
your counsel shall have reasonably requested.
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All opinions, certificates, letters and other documents required by
this Section 12 to be delivered to you by the Company will be in compliance with
the provisions hereof only if they are reasonably satisfactory in form and
substance to you and to Xxxxxx & Xxxxxxx, your counsel. The Company will furnish
you with such conformed copies of such opinions, certificates, letters and other
documents as you shall reasonably request.
You shall have a reasonable period of time after discovering or
being informed of a breach in any of the foregoing conditions to elect whether
to continue to act as Dealer Manager. Your resignation as Dealer Manager as a
result of a breach of the foregoing conditions shall be without prejudice to
your entitlement to any fees under Section 5 of this Agreement and shall be
governed in all other respects by Section 4(b) of this Agreement.
13. Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally to the parties hereto as
follows:
(a) If to you:
Xxxxxx Brothers Inc.
Three World Financial Center
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Liability Management Group
with a copy to:
Xxxxxx & Xxxxxxx
000 Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxx, Esq.
(b) If to the Company:
K&F Industries, Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Chief Financial Officer
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with a copy to:
X'Xxxxxxxx Graev & Karabell, LLP
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxx, Esq.
14. Successors and Assigns; Assignment. This Agreement, including
any right to indemnity or contribution hereunder, shall inure to the benefit of
and be binding upon the Company and you and such other parties entitled to
indemnification pursuant to the terms of Section 10, and the respective
successors and permitted assigns of such parties. Nothing in this Agreement is
intended, or shall be construed, to give to any other person or entity any right
hereunder or by virtue hereof. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned without the prior written consent of the
other party.
15. No Rights in Shareholders or Others. The Company recognizes that
you have been retained only by the Company, and that your engagement is not
deemed to be on behalf of and is not intended to confer rights upon any
shareholder, owner or partner of the Company or any other person not a party
hereto as against you or any of your affiliates or the respective directors,
officers, agents, employees or representatives of you or your affiliates. Unless
otherwise expressly agreed, no one other than the Company is authorized to rely
upon your engagement hereunder or any statements, advice, opinions or conduct by
you.
16. Acceptance/Rejection of the Notes. The Company will have sole
responsibility for the acceptance or rejection of the Notes tendered pursuant to
the Tender Offer and Consents delivered pursuant to the Solicitation.
17. Third Party Beneficiaries. This Agreement is made solely for the
benefit of you, the Company and the persons indemnified by the Company and you
pursuant to Section 10 hereof, and their respective successors, permitted
assigns and legal representatives, and no other person shall acquire or have any
right under or by virtue of this Agreement. You shall not have any liability or
obligation to the Company for any act or omission of any broker, and you shall
not undertake any obligation to the Company other than for the performance of
your express representations, warranties and agreements hereunder. The Company
agrees and acknowledges that the only information furnished or to be furnished
by you or on your behalf for inclusion in any Tender Offer Material is the
description of yourself and your relationships with the Company to be included
in such Tender Offer Material.
18. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to the
principles thereof relating to conflict of laws.
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19. Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto and supersedes all prior agreements,
understandings and arrangements, oral or written, among the parties hereto with
respect to the subject matter hereof and thereof.
20. Severability; Counterparts. In the event that any provision
hereof shall be determined to be invalid or unenforceable in any respect, such
determination shall not affect such provision in any other respect or any other
provision hereof, which shall remain in full force and effect. This Agreement
may be executed in one or more separate counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
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Please indicate your willingness to act as financial advisor and
Dealer Manager on the terms set forth herein and your acceptance of the
foregoing provisions by signing in the space provided below for that purpose and
returning to us a copy of this letter so signed, whereupon this letter and your
acceptance shall constitute a binding agreement among us.
Very truly yours,
K&F INDUSTRIES, INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------------
Title: Executive Vice President
Accepted as of the date first set forth above:
XXXXXX BROTHERS INC.
By: /s/ Xxxxxx X. XxXxxxxx
-----------------------------------
Title: Managing Director
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