Exhibit 10.2
Execution Version
FIRST AMENDMENT
TO CREDIT
AGREEMENT
THIS FIRST AMENDMENT TO CREDIT
AGREEMENT (this “
Amendment ”) is dated as of December 19, 2008 and
is entered into by and among HAWKER BEECHCRAFT, INC.
(“ Holdings ”), HAWKER BEECHCRAFT ACQUISITION
COMPANY, LLC (the “ U.S. Borrower ”), and
HAWKER BEECHCRAFT LIMITED (the “ U.K. Borrower
” and, together with the U.S. Borrower, the “
Borrowers ”), GOLDMAN SACHS CREDIT PARTNERS
L.P. , as auction manager (the “ Auction Manager
”), CREDIT SUISSE (“ CS ”), as
administrative agent and collateral agent (the “ Agent
”), for purposes of Section IV hereof, the GUARANTORS
listed on the signature papers hereto, and the LENDERS
listed on the signature papers hereto, and is made with reference
to that certain CREDIT AGREEMENT dated as of March 26,
2007 (as amended through the date hereof, the “ Credit
Agreement ”) by and among the Borrowers, the Lenders, the
Guarantors, the Agent and the other Agents named therein.
Capitalized terms used herein without definition shall have the
same meanings herein as set forth in the Credit Agreement after
giving effect to this Amendment.
RECITALS
WHEREAS, the Loan Parties have requested that Required
Lenders agree to amend certain provisions of the Credit Agreement
as provided for herein; and
WHEREAS, subject to certain conditions, Required Lenders
are willing to agree to such amendment relating to the Credit
Agreement.
NOW, THEREFORE,
in consideration of the premises and
the agreements, provisions and covenants herein contained, the
parties hereto agree as follows:
SECTION I. AMENDMENTS TO CREDIT
AGREEMENT
1.1 Amendments to Exhibits
. The Credit Agreement is
hereby amended by adding the following new Exhibit thereto as set
forth in Annex I attached hereto:
Exhibit I Form of Modified Dutch
Auction Procedures
1.2 Amendments to
Section 1: Definitions .
A. Section 1.01 of the Credit Agreement is
hereby amended by adding the following definitions in proper
alphabetical sequence:
“ Auction
Manager ” mean Goldman Sachs Credit Partners
L.P.
“ Auction
Procedures ” means the auction procedures, auction
notice and return bid in substantially the form set forth as
Exhibit I to this Agreement; provided , however ,
that the Auction Manager, in consultation with the U.S. Borrower,
may amend or modify the procedures, notices and bids in connection
with any Permitted Voluntary Prepayment (including economic terms
to the extent no Lenders have validly tendered Term Loans requested
in an offer but excluding economic terms of an auction after any
Lender has
validly tendered Term Loans
requested in an offer other than to increase the Auction Amount or
raise the Discount Range); provided , further , that
no such amendments or modifications may be implemented after 24
hours prior to the date and time return bids are due.
Notwithstanding anything to the contrary set forth herein, the
Auction Procedures may not be amended or modified in any manner
that requires Agent to take or not take any action or otherwise
imposes any obligation of any type on Agent without Agent’s
prior written consent.
“ First
Amendment ” means that certain First Amendment to
Credit Agreement dated as of December [ ],
2008 among Holdings, the Borrowers, the Agent, the Auction Manager
and the Lenders and Guarantors listed on the signature pages
thereto.
“ First Amendment
Effective Date ” means the date of satisfaction of
the conditions referred to in Section II of the First
Amendment.
“ Permitted Voluntary
Prepayment ” means any voluntary prepayment made in
accordance with the provisions set forth in
Section 2.08(b)(ii).
“ Permitted Voluntary
Prepayment Date ” means any date on which a Permitted
Voluntary Prepayment is consummated.
“ Unrestricted Cash and
Cash Equivalents ” means the aggregate amount of cash
and Cash Equivalents held in accounts on the consolidated balance
sheet of a Person to the extent that the use of such cash or Cash
Equivalents for application to payment of the Obligations or other
Indebtedness is not prohibited by law or any contract or other
agreement and such cash and Cash Equivalents is free and clear of
all Liens (other than Liens in favor of the Collateral
Agent).
B. Section 1.01 of the Credit Agreement is
hereby amended by inserting the text “Liens in favor of the
Collateral Agent,” immediately following the text
“other than” in the fifth line of the definition of
“ Consolidated Leverage Ratio
”.
C. Section 1.01 of the Credit Agreement is
hereby amended by inserting the text “Liens in favor of the
Collateral Agent,” immediately following the text
“other than” in the fifth line of the definition of
“ Consolidated Secured Debt Ratio
”.
D. Section 1.01 of the Credit Agreement is
hereby amended by replacing paragraph (b) of the definition of
“ EBITDA ” with the following new
paragraph (b):
“(b) decreased by (without
duplication) noncash gains included in Consolidated Net Income of
such Person for such period in excess of $2.0 million individually
( provided , that such dollar limitation shall not apply to
noncash gains realized from the forgiveness of Indebtedness as a
result of a Permitted Voluntary Prepayment), excluding any noncash
gains that represent the reversal of any accrual of, or cash
reserve for, anticipated cash charges in any prior period (other
than such cash charges that have been added back to Consolidated
Net Income in calculating EBITDA in accordance with this
definition); and”
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1.3 Amendments to
Section 2.08(b) .
A. Section 2.08(b) is hereby amended by
inserting the text “(i)” immediately prior to the text
“The U.S. Borrower may” in the first sentence
thereof.
B. Section 2.08(b) is hereby amended by adding
the following new clause (ii):
“(ii) Permitted Voluntary
Prepayments . Notwithstanding anything to the contrary
contained in Section 2.13(a) or any other provision of this
Agreement, so long as no Default or Event of Default has occurred
and is continuing or would result therefrom, the U.S. Borrower
shall have the right to prepay outstanding Term Loans on the
following basis:
(A) At any time on or prior to
June 30, 2010, the U.S. Borrower shall have the right to
prepay, in cash, Term Loans up to an amount to be specified by the
U.S. Borrower at a prepayment price to be determined, in each case
in accordance with the Auction Procedures established for each such
prepayment; provided that (1) the Auction Amount (as
defined in the Auction Procedures) in respect of each Permitted
Voluntary Prepayment shall be in an amount not less than
$20,000,000 of principal amount of outstanding Term Loans and
(2) in no event shall the aggregate cash used by the U.S.
Borrower in respect of all Permitted Voluntary Prepayments made
pursuant to this Section 2.08(b)(ii) exceed $300,000,000. Each
Permitted Voluntary Prepayment shall be financed exclusively with
either (x) cash of the U.S. Borrower and its Subsidiaries
(other than that constituting the direct proceeds from the issuance
of Equity Interests of, or equity contributions to, Holdings and/or
the U.S. Borrower, used to fund a Permitted Voluntary Prepayment);
provided that (1) to the extent that after giving
effect to such Permitted Voluntary Prepayment made pursuant to this
clause (x) (and the application of such cash actually used to
finance the same under this clause (x)) the sum of (A) the
Unrestricted Cash and Cash Equivalents of the U.S. Borrower and its
domestic Restricted Subsidiaries plus (B) the U.S. Revolving
Available Credit at such time shall equal or exceed
U.S.$400,000,000 and (2) the U.S. Borrower shall have
delivered an officer’s certificate to the Auction Manager
(with a copy to the Agent) on the date of such Permitted Voluntary
Prepayment demonstrating compliance with preceding subclause
(1) and/or (y) cash proceeds of equity contributions
which are Excluded Contributions.
(B) In connection with any Permitted
Voluntary Prepayment, as of each date an Auction (as defined in
Exhibit I) commences and each Permitted Voluntary Prepayment Date,
the U.S. Borrower represents it is not in possession of any
material non-public information regarding the U.S. Borrower,
Holdings, and of Holdings’ Subsidiaries or any of
Holdings’ Affiliates that has not been disclosed to the
Agent, Auction Manager and the Lenders prior to each such
date.
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(C) With respect to each Permitted
Voluntary Prepayment made by the U.S. Borrower, (1) the U.S.
Borrower shall pay all accrued and unpaid interest, if any, on the
applicable Term Loans to the date of such Permitted Voluntary
Prepayment; and (2) such Permitted Voluntary Prepayment shall
not change the scheduled amortization required by
Section 2.06, except to reduce the amount outstanding and due
and payable on the Term Loan Maturity Date (and such reduction, for
the avoidance of doubt, shall only apply, on a non-pro rata basis,
to the Term Loans that are the subject of such Permitted Voluntary
Prepayment).
(D) Immediately following any
Permitted Voluntary Prepayment, no interest shall accrue from and
after the Permitted Voluntary Prepayment Date on any Term Loans
prepaid thereon, the aggregate par amount of the Term Loans the
subject of such Permitted Voluntary Prepayment shall be deemed
prepaid by the U.S. Borrower for all purposes and no longer
outstanding for all purposes of this Agreement and all other Loan
Documents (notwithstanding any provisions herein or therein to the
contrary), including, but not limited to (1) the making of, or
the application of, any payments to the Lenders under this
Agreement or any other Loan Document, (2) the making of any
request, demand, authorization, direction, notice, consent or
waiver under this Agreement or any other Loan Document or
(3) the determination of Required Lenders, or for any similar
or related purpose, under this Agreement or any other Loan
Document.
(E) The U.S. Borrower shall make
Permitted Voluntary Prepayments of the applicable amounts accepted
for prepayment pursuant to the Auction Procedures by transmitting
funds to the Agent to be applied as set forth in the Auction
Procedures.
(F) Permitted Voluntary Prepayments
may not, under any circumstance, be made from the proceeds of
Revolving Loans.
(G) The provisions of this
Section 2.08(b)(ii) shall not require the U.S. Borrower to
undertake any Permitted Voluntary Prepayment.”
1.4 Amendment to
Section 2.09(a) . Section 2.09(a) is hereby amended by
adding the words “(other than pursuant to
Section 2.08(b)(ii))” immediately after the reference to
“Section 2.08” in the ninth line thereof.
1.5 Amendment to
Section 2.13(a) . Section 2.13(a) is hereby amended by
(i) adding the following proviso to the end of the first
sentence thereof: “ provided that payments under
Section 2.08(b)(ii) shall be paid to the Agent and applied as
required by the Auction Procedures.” and (ii) deleting
the first word of the second sentence thereof, and replacing it
with the following: “Subject to the provisions set forth in
Section 2.08(b)(ii)(E), the”.
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1.6 Amendment to Article
VIII . The third
sentence of the third paragraph of Article VIII is hereby deleted
in its entirety and replaced by the following:
“The Agent shall not be liable
for (i) its execution of the First Amendment at the direction
of the Required Lenders or any other action taken or not taken by
it in connection with a Permitted Voluntary Prepayment with the
consent or at the request of the Required Lenders or (ii) any
action taken or not taken by it with the consent or at the request
of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided
in Section 9.02) or (iii) any action taken or not taken
by it in the absence of its own gross negligence or willful
misconduct.”
1.7 Amendment to
Section 9.03 .
A. Section 9.03(a) and Section 9.03(b)
are each hereby amended by adding the text “the Auction
Manager,” immediately after the text “the Syndication
Agent,” in each such clause.
B. Section 9.03(a)(iv) is hereby amended by
(i) deleting the word “and” immediately preceding
clause (iv) of such Section and (ii) inserting the
following immediately preceding the period at the end of clause
(iv) thereof:
“, and (v) subject to any
other provisions of this Agreement, of the Loan Documents or of any
separate agreement entered into by the Borrowers and the Auction
Manager with respect thereto, all reasonable documented
out-of-pocket expenses incurred by the Auction Manager in the
administration of the Loan Documents or any agreement entered into
in connection therewith.”
C. Section 9.03(b) is hereby amended by adding
“(including any such performance by Agent in connection with
any Permitted Voluntary Prepayment)” immediately prior to the
words “or the consummation” in clause
(i) thereof.
D. Section 9.03 is hereby amended by adding
the following new clause (g):
“(g) To the extent that the
Borrowers fail to pay any amount required to be paid by it to the
Auction Manager under paragraph (a) or (b) of this
Section (but without affecting the Borrowers’ obligations
with respect thereto), each Lender severally agrees to pay to the
Auction Manager such Lender’s Ratable Portion (determined as
of the time that the applicable unreimbursed expense or indemnity
payment is sought) of such unpaid amount; provided that the
unreimbursed expense or indemnified loss, claim, damage, penalty,
liability or related expense, as the case may be, was incurred by
or asserted against the Auction Manager in its capacity as
such.”
SECTION II. CONDITIONS TO
EFFECTIVENESS
This Amendment shall become
effective as of the date hereof only upon the satisfaction of all
of the following conditions precedent (the date of satisfaction of
such conditions being referred to herein as the “ First
Amendment Effective Date ”):
A. Execution.
The Auction Manager shall have
received a counterpart signature page of this Amendment duly
executed by each of the Loan Parties, each of the Required Lenders
and the Agent.
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B. Fees. The Auction Manager shall have received all fees
and other amounts due and payable on or prior to the First
Amendment Effective Date, including, without limitation, to the
extent invoiced, reimbursement or other payment of all
out-of-pocket expenses (including the fees and expenses of
Latham & Watkins LLP, special counsel to the Auction
Manager) required to be reimbursed or paid by the Borrowers
hereunder or any other Loan Document or agreement entered into in
connection therewith.
C. Necessary Consents.
Each Loan Party shall have obtained
all material consents necessary or advisable in connection with the
transactions contemplated by this Amendment.
D. Other Documents.
The Auction Manager and Lenders
shall have received such other documents, information or agreements
regarding Loan Parties as the Auction Manager may reasonably
request.
E. Notice of
Effectiveness. The
Auction Manager shall have provided written notice of the
effectiveness of this Amendment to the Agent.
SECTION III. REPRESENTATIONS AND
WARRANTIES
In order to induce Lenders to enter
into this Amendment and to amend the Credit Agreement in the manner
provided herein, each Loan Party which is a party hereto represents
and warrants to each Lender that the following statements are true
and correct in all material respects:
A. Corporate Power and
Authority. Each Loan
Party, which is party hereto, has all requisite power and authority
to enter into this Amendment and to carry out the transactions
contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the “ Amended
Agreement ”) and the other Loan Documents.
B. Authorization of
Agreements. The execution
and delivery of this Amendment and the performance of the Amended
Agreement and the other Loan Documents have been duly authorized by
all necessary action on the part of each Loan Party.
C. No Conflict.
The execution and delivery by each
Loan Party of this Amendment and the performance by each Loan Party
of the Amended Agreement and the other Loan Documents do not and
will not (i) violate (A) any provision of law, statute,
rule or regulation in any material respect, or any provision of the
certificate or articles of incorporation, memorandum of association
or other constitutive documents or by-laws (or by-laws) of
Holdings, the Borrowers or any other Subsidiary of Holdings,
(B) any order of any Governmental Authority in any material
respect or (C) any provision of any material indenture,
agreement or other instrument to which Holdings, Borrower or any
Subsidiary is a party or by which any of them or any material
portion of their property is or may be bound (other than any such
indenture, agreement, or other instrument to be terminated on the
First Amendment
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Effective Date or pursuant to which all relevant
consents, or waivers have been obtained), (ii) be in conflict
with, result in a breach of or constitute (alone or with notice or
lapse of time or both) a default under, or give rise to any right
to accelerate or to require the prepayment, repurchase or
redemption of any obligation under any such indenture, agreement or
other instrument, (iii) except as permitted under the Amended
Agreement, result in the creation or imposition of any Lien upon
or
