Document:

Exhibit 10.3 

 

EMPLOYMENT AGREEMENT

 

EMPLOYMENT AGREEMENT
(the “Agreement”), dated as of June 5, 2013, between Black Diamond, Inc., a Delaware corporation (the “Company”),
and Robert R. Schiller (the “Employee”).

 

WITNESSETH:

 

WHEREAS,
the Employee and the Company are parties to an employment agreement between the Employee and the Company, dated as of May 28, 2010
(the “Existing Employment Agreement”), which expires as of the date hereof in accordance with its terms; and

 

WHEREAS, the
Company desires to continue to employ the Employee as its Executive Vice Chairman of the Board of Directors of the Company and
to be assured of his services on the terms and conditions hereinafter set forth; and

 

WHEREAS, the
Employee is willing to continue to be employed as Executive Vice Chairman of the Board of Directors of the Company on such terms
and conditions; and

 

WHEREAS,
the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) has recommended
to the Company’s Board of Directors (the “Board”) that this Agreement be entered into by the Company, and the
Board has authorized and approved the execution and delivery of this Agreement by the Company.

 

NOW THEREFORE,
in consideration of the mutual covenants and agreements set forth in this Agreement, the Company and the Employee hereby agree
as follows:

 

1.            Term.

 

The term of this Agreement
shall commence on the date hereof (the “Commencement Date”) and shall terminate on the third anniversary of the Commencement
Date (the “Term”), subject to earlier termination as provided herein.

 

2.            Duties.

 

(a) During the Term of
this Agreement, the Employee shall serve as the Executive Vice Chairman of the Board of the Company and shall perform all duties
commensurate with his position and as may be assigned to him by the Board of the Company, including providing strategic and operational
guidance of the Company. The Employee shall devote such business time and energies to the business and affairs of the Company as
shall be necessary to perform his duties hereunder and shall use his best efforts, skills and abilities to promote the interests
of the Company, and to diligently and competently perform the duties of his position.

 

    	 

    	 

    

 

(b) The Employee shall
report to the Board and shall at all times keep the Board promptly and fully informed (in writing if so requested) of his conduct
and of the business or affairs of the Company.

 

3.            Compensation,
Bonus, Stock Options, Benefits, etc.

 

(a) Salary.
During the Term of this Agreement, the Company shall pay to the Employee, and the Employee shall accept from the Company, as compensation
for the performance of services under this Agreement and the Employee’s observance and performance of all of the provisions
hereof, an annual salary at the rate of $175,000 (the “Base Compensation”). The Base Compensation shall be payable
in accordance with the normal payroll practices of the Company. The Employee’s performance and the Base Compensation shall
be subject to annual review by the Company.

 

(b) Bonus.
In addition to the Base Compensation described above, the Employee shall, in the sole and absolute discretion of the Compensation
Committee of the Board, be entitled to performance bonuses which may be based upon a variety of factors, including the Employee’s
performance and the achievement of Company goals, all as determined in the sole and absolute discretion of the Board or the Compensation
Committee of the Board. In addition, the Employee may be entitled to participate in such other bonus plans, during the Term of
this Agreement, as the Compensation Committee of the Board may, in its sole and absolute discretion, determine. Without limiting
the foregoing, the Employee shall, in the sole and absolute discretion of the Compensation Committee of the Board, be entitled
to bonuses in the form of cash, stock options and/or restricted stock awards based upon the Employee’s provision of strategic
advice to the Company in connection with capital markets transactions, financings, capital structure optimization and mergers and
acquisitions transactions. Any such bonus, as determined by the Compensation Committee of the Board, shall be payable to the Employee
no later than March 15 of the year following the year in which it was earned.

 

(c) Stock Options.
During the Term, the Employee shall be entitled to receive stock options, at such exercise prices and other terms as the Compensation
Committee of the Board may, in its sole and absolute discretion, determine.

 

(d) Benefits.
During the Term of this Agreement, the Employee shall be entitled to participate in or benefit from, in accordance with the eligibility
and other provisions thereof, the Company’s medical insurance and other fringe benefit plans or policies as the Company may
make available to, or have in effect for, its senior executive officers from time to time. The Company and its affiliates retain
the right to terminate or alter any such plans or policies from time to time. The Employee shall also be entitled to four weeks
paid vacation each year, sick leave and other similar benefits in accordance with policies of the Company from time to time in
effect for its senior executive officers. In addition, during the Term, the Company shall pay for Bloomberg service, executive
assistant service, and cellular telephone/smartphone service for the Employee.

 

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(e) Reimbursement
of Business Expenses. During the Term of this Agreement, upon submission of proper invoices, receipts or other supporting
documentation reasonably satisfactory to the Company and in accordance with and subject to the Company’s expense reimbursement
policies, the Employee shall be reimbursed by the Company for all reasonable business expenses actually and necessarily incurred
by the Employee on behalf of the Company in connection with the performance of services under this Agreement.

 

(f)          Taxes.
The Base Compensation and any other compensation paid to Employee, including, without limitation, any bonus, shall be subject
to withholding for applicable taxes and other amounts.

 

4.            Representation
and Covenant of Employee.

 

The Employee represents and warrants that
he is not party to, or bound by, any agreement or commitment, or subject to any restriction, including but not limited to agreements
related to previous employment containing confidentiality or noncompetition covenants, which limit the ability of the Employee
to perform his duties under this Agreement.

 

5.            Confidentiality,
Noncompetition, Nonsolicitation and Non-Disparagement.

 

For purposes of this
Section 5, all references to the Company shall be deemed to include the Company’s affiliates and subsidiaries and their respective
subsidiaries, whether now existing or hereafter established or acquired. In consideration for the compensation and benefits provided
to the Employee pursuant to this Agreement, the Employee agrees with the provisions of this Section 5.

 

(a) Confidential
Information. (i) The Employee acknowledges that as a result of his retention by the Company, the Employee has and will
continue to have knowledge of, and access to, proprietary and confidential information of the Company including, without limitation,
research and development plans and results, software, databases, technology, inventions, trade secrets, technical information,
know-how, plans, specifications, methods of operations, product and service information, product and service availability, pricing
information (including pricing strategies), financial, business and marketing information and plans, and the identity of customers,
clients and suppliers (collectively, the “Confidential Information”), and that the Confidential Information, even though
it may be contributed, developed or acquired by the Employee, constitutes valuable, special and unique assets of the Company developed
at great expense which are the exclusive property of the Company. Accordingly, the Employee shall not, at any time, either during
or subsequent to the Term of this Agreement, use, reveal, report, publish, transfer or otherwise disclose to any person, corporation,
or other entity, any of the Confidential Information without the prior written consent of the Company, except to responsible officers
and employees of the Company and other responsible persons who are in a contractual or fiduciary relationship with the Company
and who have a need for such Confidential Information for purposes in the best interests of the Company, and except for such Confidential
Information which is or becomes of general public knowledge from authorized sources other than by or through the Employee.

 

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(ii) The Employee acknowledges
that the Company would not enter into this Agreement without the assurance that all the Confidential Information will be used for
the exclusive benefit of the Company.

 

(b) Return of Confidential
Information. Upon the termination of this Agreement or upon the request of the Company, the Employee shall promptly return
to the Company all Confidential Information in his possession or control, including but not limited to all drawings, manuals, computer
printouts, computer databases, disks, data, files, lists, memoranda, letters, notes, notebooks, reports and other writings and
copies thereof and all other materials relating to the Company’s business, including, without limitation, any materials incorporating
Confidential Information.

 

(c) Inventions,
etc. During the Term and for a period of one year thereafter, the Employee will promptly disclose to the Company all designs,
processes, inventions, improvements, developments, discoveries, processes, techniques, and other information related to the business
of the Company conceived, developed, acquired, or reduced to practice by him alone or with others during the Term of this Agreement,
whether or not conceived during regular working hours, through the use of Company time, material or facilities or otherwise (“Inventions”).

 

The Employee agrees that
all copyrights created in conjunction with his service to the Company and other Inventions, are “works made for hire”
(as that term is defined under the Copyright Act of 1976, as amended). All such copyrights, trademarks, and other Inventions shall
be the sole and exclusive property of the Company, and the Company shall be the sole owner of all patents, copyrights, trademarks,
trade secrets, and other rights and protection in connection therewith. To the extent any such copyright and other Inventions may
not be works for hire, the Employee hereby assigns to the Company any and all rights he now has or may hereafter acquire in such
copyrights and any other Inventions. Upon request the Employee shall deliver to the Company all drawings, models and other data
and records relating to such copyrights, trademarks and Inventions. The Employee further agrees as to all such Inventions, to assist
the Company in every proper way (but at the Company’s expense) to obtain, register, and from time to time enforce patents,
copyrights, trademarks, trade secrets, and other rights and protection relating to said Inventions in any and all countries, and
to that end the Employee shall execute all documents for use in applying for and obtaining such patents, copyrights, trademarks,
trade secrets and other rights and protection on and enforcing such Inventions, as the Company may reasonably request, together
with any assignments thereof to the Company or persons designated by it. Such obligation to assist the Company shall continue beyond
the termination of the Employee’s service to the Company, but the Company shall compensate the Employee at a reasonable rate
after termination of service for time actually spent by the Employee at the Company’s request for such assistance. In the
event the Company is unable, after reasonable effort, to secure the Employee’s signature on any document or documents needed
to apply for or prosecute any patent, copyright, trademark, trade secret, or other right or protection relating to an Invention,
whether because of the Employee’s physical or mental incapacity or for any other reason whatsoever, the Employee hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents as his agent coupled with an interest and attorney-in-fact,
to act for and in his behalf and stead to execute and file any such application or applications and to do all other lawfully permitted
acts to further the prosecution and issuance of patents, copyrights, trademarks, trade secrets, or similar rights or protection
thereon with the same legal force and effect as if executed by the Employee.

 

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(d) Non-Competition.
The Employee agrees not to utilize his special knowledge of the Business and his relationships with customers, prospective customers,
suppliers and others or otherwise to compete with the Company in the Business during the Restricted Period. During the Restricted
Period, the Employee shall not, and shall not permit any of his respective employees, agents or others under his control, directly
or indirectly, on behalf of the Employee or any other Person, to engage or have an interest, anywhere in the world in which the
Company conducts business or markets or sells its products, alone or in association with others, as principal, officer, agent,
employee, director, partner or stockholder (except as an owner of two percent or less of the stock of any company listed on a national
securities exchange or traded in the over-the-counter market), whether through the investment of capital, lending of money or property,
rendering of services or capital, or otherwise, in any Competitive Business. During the Restricted Period, the Employee shall not,
and shall not permit any of his respective employees, agents or others under his control, directly or indirectly, on behalf of
the Employee or any other Person, to accept Competitive Business from, or solicit the Competitive Business of any Person who is
a customer of the Business conducted by the Company, or, to the Employee’s knowledge, is a customer of the Business conducted
by the Company at any time during the Restricted Period.

 

(e) Non-Disparagement
and Non-Interference. The Employee shall not, either directly or indirectly, (i) during the Restricted Period, make or
cause to be made, any statements that are disparaging or derogatory concerning the Company or its business, reputation or prospects;
(ii) during the Restricted Period, request, suggest, influence or cause any party, directly or indirectly, to cease doing business
with or to reduce its business with the Company or do or say anything which could reasonably be expected to damage the business
relationships of the Company; or (iii) at any time during or after the Restricted Period, use or purport to authorize any Person
to use any Intellectual Property owned by the Company or exclusively licensed to the Company or to otherwise infringe on the intellectual
property rights of the Company.

 

(f) Non-Solicitation.
During the Restricted Period, the Employee shall not recruit or otherwise solicit or induce any Person who is an employee or consultant
of, or otherwise engaged by Company, to terminate his or her employment or other relationship with the Company, or such successor,
or hire any person who has left the employ of the Company during the preceding one year.

 

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(g) Certain Definitions.
For purposes of this Agreement: (i) the term “Business” shall mean the business of designing, manufacturing, assembling,
licensing, distributing, marketing and selling active outdoor performance products for climbing, mountaineering, backpacking, skiing,
cycling and other outdoor recreation activities, avalanche transceiver technology, alpine safety products, and any other business
that the Company or its subsidiaries may be engaged in during the Term of this Agreement; (ii) the term “Competitive Business”
shall mean any business competitive with the Business; and (iii) the term “Restricted Period” shall mean the Term of
this Agreement and a period of three years after termination of this Agreement; provided, that, if Employee breaches the covenants
set forth in this Section 5, the Restricted Period shall be extended for a period equal to the period that a court having jurisdiction
has determined that such covenant has been breached.

 

6.            Remedies.
The restrictions set forth in Section 5 are considered by the parties to be fair and reasonable. The Employee acknowledges that
the restrictions contained in Section 5 will not prevent him from earning a livelihood. The Employee further acknowledges that
the Company would be irreparably harmed and that monetary damages would not provide an adequate remedy in the event of a breach
of the provisions of Section 5. Accordingly, the Employee agrees that, in addition to any other remedies available to the Company,
the Company shall be entitled to injunctive and other equitable relief to secure the enforcement of these provisions. In connection
with seeking any such equitable remedy, including, but not limited to, an injunction or specific performance, the Company shall
not be required to post a bond as a condition to obtaining such remedy. In any such litigation, the prevailing party shall be entitled
to receive an award of reasonable attorneys’ fees and costs. If any provisions of Sections 5 or 6 relating to the time period,
scope of activities or geographic area of restrictions is declared by a court of competent jurisdiction to exceed the maximum permissible
time period, scope of activities or geographic area, the maximum time period, scope of activities or geographic area, as the case
may be, shall be reduced to the maximum which such court deems enforceable. If any provisions of Sections 5 or 6 other than those
described in the preceding sentence are adjudicated to be invalid or unenforceable, the invalid or unenforceable provisions shall
be deemed amended (with respect only to the jurisdiction in which such adjudication is made) in such manner as to render them enforceable
and to effectuate as nearly as possible the original intentions and agreement of the parties. For purposes of this Section 6, all
references to the Company shall be deemed to include the Company's affiliates and subsidiaries, whether now existing or hereafter
established or acquired.

 

7.            Termination.
This Agreement shall terminate at the end of the Term set forth in Section 1. In addition, this Agreement may be terminated prior
to the end of the Term set forth in Section 1 upon the occurrence of any of the events set forth in, and subject to the terms of,
this Section 7.

 

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(a) Death or Permanent
Disability. If the Employee dies or becomes permanently disabled, this Agreement shall terminate effective upon the Employee’s
death or when his disability is deemed to have become permanent. If the Employee is unable to perform his normal duties for the
Company because of illness or incapacity (whether physical or mental) for 45 consecutive days during the Term of this Agreement,
or for 60 days (whether or not consecutive) out of any calendar year during the Term of this Agreement, his disability shall be
deemed to have become permanent. If this Agreement is terminated on account of the death or permanent disability of the Employee,
then the Employee or his estate shall be entitled to receive accrued Base Compensation through the date of such termination, all
unvested stock options held by the Employee shall immediately vest and become exercisable and the Employee or the Employee’s
estate, as applicable, shall have no further entitlement to Base Compensation, bonus, or benefits from the Company following the
effective date of such termination; except as provided in Section 3(b) of this Agreement; provided, however, that any bonus pursuant
to Section 3(b) of this Agreement shall be paid only for the year in which such termination occurred pro rated for the portion
of such year prior to such termination and shall be paid at such time as the Board determines the bonuses for all senior executive
officers of the Company for such year, but no later than March 15 of the year following the year in which it was earned.

 

(b) Cause.
This Agreement may be terminated at the Company’s option, immediately upon notice to the Employee, upon the occurrence of
any of the following (“Cause”): (i) breach by the Employee of any material provision of this Agreement and the expiration
of a 10-business day cure period for such breach after written notice thereof has been given to the Employee (which cure period
shall not be applicable to clauses (ii) through (v) of this Section 7(b)); (ii) gross negligence or willful misconduct of the Employee
in connection with the performance of his duties under this Agreement; (iii) Employee’s failure to perform any reasonable
directive of the Board; (iv) fraud, criminal conduct, dishonesty or embezzlement by the Employee; or (v) Employee’s misappropriation
for personal use of any assets (having in excess of nominal value) or business opportunities of the Company. If this Agreement
is terminated by the Company for Cause, then the Employee shall be entitled to receive accrued Base Compensation through the date
of such termination, all stock options, whether vested or unvested, will be forfeited by the Employee and will terminate and be
null and void and the Employee shall have no further entitlement to Base Compensation, bonus, or benefits from the Company following
the effective date of such termination.

 

(c) Without Cause.
This Agreement may be terminated, at any time by the Company without Cause immediately upon giving written notice to the Employee
of such termination. Upon the termination of this Agreement by the Company without Cause, the Employee shall be entitled to receive
one year of Base Compensation in one lump sum within five days of the effective date of such termination, subject to withholding
for applicable taxes and other amounts, all unvested stock options held by the Employee shall immediately vest and become exercisable
and the Employee shall have no further entitlement to Base Compensation, bonus, or benefits from the Company following the effective
date of such termination.

 

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(d) By Employee.

 

(i) Subject to the provisions
of clause (ii) of this Section 7(d), the Employee may terminate this Agreement at anytime upon providing the Company with six weeks
prior written notice. If this Agreement is terminated by the Employee pursuant to this Section 7(d)(i), then the Employee shall
be entitled to receive his accrued Base Compensation and benefits through the effective date of such termination, any unvested
stock options will terminate and be null and void and the Employee shall have no further entitlement to Base Compensation, bonus,
or benefits from the Company following the effective date of such termination.

 

(ii) The Employee may
terminate this Agreement upon the occurrence of any of the following: (A) a breach by the Company of any material provision of
this Agreement and the expiration of a 10-business day cure period for such breach after written notice thereof has been given
to the Company by the Employee; (B) any material diminution in the authority or responsibilities delegated to the Employee as the
chief executive officer of the Company; or (C) any reduction in the Employee’s Base Compensation. Upon the termination of
this Agreement by the Employee pursuant to this Section 7(d)(ii), the Employee shall be entitled to receive one year of Base Compensation
in one lump sum within five days of the effective date of such termination, subject to withholding for applicable taxes and other
amounts, all unvested stock options held by the Employee shall immediately vest and become exercisable and the Employee shall have
no further entitlement to Base Compensation, bonus, or benefits from the Company following the effective date of such termination.

 

(e) Change in Control.
Upon the occurrence of a Change in Control (as hereinafter defined), the Employee shall have the right to terminate this Agreement
within 30 days of the occurrence of such Change in Control. Upon the termination of this Agreement by the Employee due to the occurrence
of a Change in Control, the Employee shall be entitled to receive one year of Base Compensation in one lump sum within five days
of the effective date of such termination, subject to withholding for applicable taxes and other amounts, all unvested stock options
held by the Employee shall immediately vest and become exercisable. For purposes of this Agreement, a “Change in Control”
of the Company shall be deemed to have occurred in the event that: (i) individuals who, as of the date hereof, constitute the Board
cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming
a director subsequent to the date hereof whose election, or nomination for election by the Company’s stockholders, was approved
by a vote of at least a majority of the directors then comprising the Board shall be considered as though such individual was a
member of the Board as of the date hereof; (ii) the Company shall have been sold by either (A) a sale of all or substantially all
its assets, or (B) a merger or consolidation, other than any merger or consolidation pursuant to which the Company acquires another
entity, or (C) a tender offer, whether solicited or unsolicited; or (iii) any party, other than the Company, is or becomes the
“beneficial owner” (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended), directly or indirectly,
of voting securities of the Company representing 50% or more of the total voting power of all the then-outstanding voting securities
of the Company.

 

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(f) Return of Payments
and Cancellation of Benefits. In the event that the Employee fails to comply with any of his obligations under this Agreement,
including, without limitation, the covenants contained in Section 5 hereof, the Employee shall repay to the Company the one year
Base Compensation lump sum payment received by the Employee from the Company pursuant to Section 7(c), 7(d)(ii) or Section 7(e)
hereof as of the date of such failure to comply, and the Employee will have no further rights in or to such amounts.

 

8.           
Miscellaneous.

 

(a) Survival.
The provisions of Sections 4, 5, 6, 7 and 8 shall survive the termination of this Agreement.

 

(b) Entire Agreement.
This Agreement sets forth the entire understanding of the parties and, except as specifically set forth herein, merges and supersedes
any prior or contemporaneous agreements between the parties pertaining to the subject matter hereof.

 

(c) Modification.
This Agreement may not be modified or terminated orally, and no modification, termination or attempted waiver of any of the provisions
hereof shall be binding unless in writing and signed by the party against whom the same is sought to be enforced.

 

(d) Waiver.
Failure of a party to enforce one or more of the provisions of this Agreement or to require at any time performance of any of the
obligations hereof shall not be construed to be a waiver of such provisions by such party nor to in any way affect the validity
of this Agreement or such party’s right thereafter to enforce any provision of this Agreement, nor to preclude such party
from taking any other action at any time which it would legally be entitled to take.

 

(e) Successors
and Assigns. Neither party shall have the right to assign this Agreement, or any rights or obligations hereunder, without
the consent of the other party; provided, however, that upon the sale of all or substantially all of the assets,
business and goodwill of the Company to another company, or upon the merger or consolidation of the Company with another company,
this Agreement shall inure to the benefit of, and be binding upon, both Employee and the company purchasing such assets, business
and goodwill, or surviving such merger or consolidation, as the case may be, in the same manner and to the same extent as though
such other company were the Company; and provided, further, that the Company shall have the right to assign this
Agreement to any affiliate or subsidiary of the Company. Subject to the foregoing, this Agreement shall inure to the benefit of,
and be binding upon, the parties hereto and their legal representatives, heirs, successors and assigns.

 

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(f) Communications.
All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been
given at the time personally delivered or when mailed in any United States post office enclosed in a registered or certified postage
prepaid envelope and addressed to the addresses set forth below, or to such other address as any party may specify by notice to
the other party; provided, however, that any notice of change of address shall be effective only upon receipt.

 

	If to the Company:

Black Diamond, Inc.

2084 East 3900 South

Salt Lake City, Utah 84124

Facsimile: (801) 278-5544

Attention:  Warren B. Kanders	With a copy to:

Kane Kessler, P.C.

1350 Avenue of the Americas

New York, New York  10019

Facsimile: (212) 245-3009

Attention: Robert L. Lawrence, Esq.
	 	 
	If to the Employee:

Robert R. Schiller

3940 Alhambra Drive W.

Jacksonville, Florida 32207	 

 

(g) Severability.
If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, such invalidity
or unenforceability shall not affect the validity and enforceability of the other provisions of this Agreement and the provisions
held to be invalid or unenforceable shall be enforced as nearly as possible according to its original terms and intent to eliminate
such invalidity or unenforceability.

 

(h) Jurisdiction;
Venue. This Agreement shall be subject to the non-exclusive jurisdiction of the federal courts or state courts of the State
of Delaware, County of New Castle, for the purpose of resolving any disputes among them relating to this Agreement or the transactions
contemplated by this Agreement and waive any objections on the grounds of forum non conveniens or otherwise. The parties hereto
agree to service of process by certified or registered United States mail, postage prepaid, addressed to the party in question.
The prevailing party in any proceeding instituted in connection with this Agreement shall be entitled to an award of its/his reasonable
attorneys’ fees and costs.

 

(i) Governing Law.
This Agreement is made and executed and shall be governed by the laws of the State of Delaware, without regard to the conflicts
of law principles thereof.

 

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(j) Counterparts.
This Agreement may be executed in any number of counterparts (and by facsimile or other electronic signature), but all counterparts
will together constitute but one agreement.

 

(k) Third Party
Beneficiaries. This Agreement is for the sole and exclusive benefit of the parties hereto and, except as provided herein,
shall not be deemed for the benefit of any other person or entity.

 

(l) Headings and
References. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. References in this Agreement to any section refer to such section of this Agreement
unless the context otherwise requires.

 

(m) IRC Section
409A. The parties to this Agreement intend that the Agreement complies with Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”), where applicable, and this Agreement shall be interpreted in a manner consistent with
that intention. To the extent not otherwise provided by this Agreement, and solely to the extent required by Section 409A of the
Code, no payment or other distribution required to be made to the Employee hereunder (including any payment of cash, any transfer
of property and any provision of taxable benefits) as a result of his termination of employment with the Company shall be made
earlier than the date that is six (6) months and one day following the date on which the Employee separates from service with the
Company and its affiliates (within the meaning of Section 409A of the Code).

 

(n) Recovery of
Compensation. All payments and benefits provided under this Agreement shall be subject to any compensation recovery or
clawback policy as required under applicable law, rule or regulation or otherwise adopted by the Company from time to time.

 

(o) Participation
of the Parties. The parties hereto acknowledge and agree that (i) this Agreement and all matters contemplated herein have
been negotiated among all parties hereto and their respective legal counsel, if any, (ii) each party has had, or has been afforded
the opportunity to have, this Agreement and the transactions contemplated hereby reviewed by independent counsel of its own choosing,
(iii) all such parties have participated in the drafting and preparation of this Agreement from the commencement of negotiations
at all times through the execution hereof, and (iv) any ambiguities contained in this Agreement shall not be construed against
any party hereto.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, each of the parties
hereto has duly executed this Employment Agreement as of the date set forth above.

 

	Black Diamond, Inc.	Employee
	 	 
	By:	/s/ Peter Metcalf	 	/s/ Robert R. Schiller
	 	Name: Peter Metcalf	 	Robert R. Schiller
	 	Title:  Chief Executive Officer and President	 	 

 

(Signature Page to Employment Agreement
of Robert R. Schiller)a50647394ex4_1.htm

EXHIBIT 4.1

 

 

AMENDMENT NO. 2

 

dated as of June 4, 2013

 

to

 

CREDIT AGREEMENT

 

Dated as of March 25, 2011

 

THIS AMENDMENT NO. 2 (“Amendment”) is made as of June  4, 2013 (the “Effective Date”) by and among Layne Christensen Company, as Borrower (the “Borrower”),  the lenders listed on the signature pages hereof (the “Lenders”) and JPMorgan Chase Bank, N.A., as Administrative Agent (the “Administrative Agent”), under that certain Credit Agreement dated as of March 25, 2011 by and among the Borrower, the Lenders and the Administrative Agent (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement”).  Capitalized terms used herein and not otherwise defined herein shall have the respective meanings given to them in the Credit Agreement.

 

WHEREAS, the Borrower has requested that the Lenders and the Administrative Agent agree to make certain modifications to the Credit Agreement; and

 

WHEREAS, the Borrower, the Lenders and the Administrative Agent have so agreed on the terms and conditions set forth herein;

 

NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Lenders and the Administrative Agent hereby agree as follows.

 

1.  Amendments to the Credit Agreement.  Effective as of the Effective Date, but subject to the satisfaction of the conditions precedent set forth in Section 2 below, the Credit Agreement is hereby amended as follows:

 

(a)  Section 1.01 of the Credit Agreement is hereby amended to insert the following defined terms alphabetically therein:

 

“Amendment No. 2” means Amendment No. 2 to Credit Agreement, dated as of June 4, 2013, by and among the Borrower, the Lenders party thereto, and the Administrative Agent.

 

“Amendment No. 2 Effective Date” means June 4, 2013.

 

“Capital Expenditures” means, without duplication, any expenditures for any purchase or other acquisition of any asset, other than any expenditures in connection with Permitted Acquisitions, which would be classified as a fixed or capital asset on a consolidated balance sheet of the Borrower and its Subsidiaries prepared in accordance GAAP; provided, however, that the purchase of certain equipment by the Borrower or a Subsidiary (pursuant to a transaction disclosed to the Administrative Agent and the Lenders prior to the Amendment No. 2 Effective Date) shall not be included as a Capital Expenditure hereunder so long as the aggregate consideration therefor does not exceed $5,000,000 and such purchase is made contemporaneously with a sale of certain defective equipment by the Borrower or such Subsidiary to the vendor thereof.

 

  

  

  

 

“Collateral” means any and all property owned, leased or operated by a Person covered by the Collateral Documents or required to be pledged or secured pursuant to the requirements hereof or thereof and any and all other property of any Loan Party, now existing or hereafter acquired, that may at any time be or become subject to a security interest or Lien in favor of Administrative Agent, on behalf of itself and the Secured Parties, to secure the Obligations; provided, however, that Collateral shall not include any Excluded Property.

 

“Collateral Documents” means, collectively, all agreements, instruments and documents executed in connection with this Agreement and the other Loan Documents that are intended to create or evidence Liens to secure the Obligations, including, without limitation, all security agreements, pledge agreements, mortgages, deeds of trust, guarantees, pledges, powers of attorney and financing statements whether heretofore, now, or hereafter executed by the Borrower or any of its Subsidiaries and delivered to the Administrative Agent or its designee.

 

“Commodity Exchange Act” means the Commodity Exchange Act (7 U.S.C. § 1 et seq.), as amended from time to time, and any successor statute.

 

“Designated Persons” means a person or entity: (i) listed in the annex to, or otherwise the subject of the provisions of, any Executive Order; (ii) named as a “Specially Designated National and Blocked Person” (“SDN”) on the most current list published by OFAC at its official website or any replacement website or other replacement official publication of such list, or is otherwise the subject of any Sanctions Laws and Regulations; or (iii) in which an entity or person on the SDN List has 50% or greater ownership interest or that is otherwise controlled by an SDN.

 

“ECP” means an “Eligible Contract Participant” as defined in Section 1(a)(18) of the Commodity Exchange Act or any regulations promulgated thereunder and the applicable rules issued by the Commodity Futures Trading Commission and/or the SEC (collectively, and as now or hereafter in effect, the “ECP Rules”).

 

  

2

  

 

“ECP Rules” has the meaning assigned to such term in the definition of “ECP”.

 

“Excluded Property” has the meaning set forth in the Pledge and Security Agreement.

 

“Excluded Swap Obligation” means, with respect to any Subsidiary Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guarantee of such Subsidiary Guarantor of, or the grant by such Subsidiary Guarantor of a security interest to secure, such Swap Obligation (or any Guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) (a) by virtue of such Subsidiary Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guarantee of such Subsidiary Guarantor or the grant of such security interest becomes or would become effective with respect to such Swap Obligation or (b) in the case of a Swap Obligation subject to a clearing requirement pursuant to Section 2(h) of the Commodity Exchange Act (or any successor provision thereto), because such Subsidiary Guarantor is a “financial entity,” as defined in Section 2(h)(7)(C)(i) of the Commodity Exchange Act (or any successor provision thereto), at the time the Guarantee of such Subsidiary Guarantor becomes or would become effective with respect to such related Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guarantee or security interest is or becomes illegal.

 

“Executive Order” has the meaning set forth in the definition  of “Sanctions Laws and Regulations”.

 

“Net Proceeds” means, with respect to any sale, transfer or disposition of any asset or property of the Borrower or any Subsidiary Guarantor, (a) the cash proceeds received in respect of such event including any cash received in respect of any non-cash proceeds (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or purchase price adjustment receivable or otherwise, but excluding any interest payments), but only as and when received, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid to third parties (other than Affiliates) in connection with such event, (ii) the amount of all payments required to be made as a result of such event to repay Indebtedness (other than Loans, if any such payment requirement exists) secured by such asset or otherwise subject to mandatory prepayment as a result of such event and (iii) the amount of all taxes paid (or reasonably estimated to be payable) and the amount of any reserves established to fund contingent liabilities reasonably estimated to be payable, in each case during the year that such event occurred or the next succeeding year and that are directly attributable to such event (as determined reasonably and in good faith by a Financial Officer of the Borrower).

 

  

3

  

 

“OFAC” has the meaning set forth in the definition of “Sanctions Laws and Regulations”.

 

“Permitted Priority Liens” means Liens permitted under the following clauses of Section 6.02, which Liens may have priority over the Liens granted to the Administrative Agent: Section 6.02(c), Section 6.02(f); Section 6.02(h) (to the extent constituting a purchase money security interest in respect of purchase money debt), and Sections 6.02(d), (g) or (j) (with respect to cash collateral permitted to be granted thereunder).

 

“Pledge and Security Agreement” means the Pledge and Security Agreement, dated as of June 4, 2013, by and among the Borrower, certain of its Domestic Subsidiaries, and the Administrative Agent, the form of which is attached to Amendment No. 2 as Exhibit B, and as the same may be amended, restated, supplemented or otherwise modified from time to time.

 

“Qualified ECP Guarantor” means, in respect of any Swap Obligation, each Loan Party that has total assets exceeding $10,000,000 at the time the relevant Guarantee becomes effective with respect to such Swap Obligation or such other Person as constitutes an ECP and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

“Sanctions Laws and Regulations” means any sanctions, prohibitions or requirements imposed by any executive order (an “Executive Order”) or by any sanctions program administered by the U.S. Department of the Treasury Office of Foreign Assets Control (“OFAC”).

 

  

4

  

 

“Secured Parties” means the holders of the Obligations from time to time.

 

“SolmeteX Sale” means the sale of the SolmeteX division of the Borrower, which is engaged in the business of providing dental amalgam separator devices and amalgam recycling services to the dental industry.

 

“Swap Obligation” means, solely for purposes of determining an obligation being guaranteed by a Subsidiary Guarantor in respect of a “swap”, any obligation to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

 

“Voting Stock” means with respect to any Person, any class or classes of Equity Interests pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the board of directors (or similar governing body) of such Person.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or any other state the laws of which are required to be applied in connection with the issue of perfection of security interests.

 

(b)  The definition of “Applicable Rate” set forth in Section 1.01 of the Credit Agreement is hereby amended in its entirety as follows:

 

“Applicable Rate” means, for any day, with respect to any Eurodollar Revolving Loan or any ABR Revolving Loan or with respect to the commitment fees payable hereunder, as the case may be, the applicable rate per annum set forth below under the caption “Eurodollar Spread”, “ABR Spread” or “Commitment Fee Rate”, as the case may be, based upon the Leverage Ratio applicable on such date:

 

	  	
Leverage Ratio:

 

	
Eurodollar

Spread

 

	
ABR

Spread

 

	
Commitment

Fee Rate

	
Category 1:

 

	
< 0.75 to 1.00

	
1.25%

	
0.25%

	
0.20%

	
Category 2:

	
>0.75 to 1.00 but

< 1.25 to 1.00

	
1.50%

	
0.50%

	
0.25%

	
Category 3:

	
> 1.25 to 1.00 but

< 1.75 to 1.00

	
1.75%

	
0.75%

	
0.30%

	
Category 4:

 

	
> 1.75 to 1.00 but

< 2.25 to 1.00

	
2.00%

	
1.00%

	
0.35%

	
Category 5:

	
> 2.25 to 1.00 but

< 2.75 to 1.00

	
2.25%

	
1.25%

	
0.40%

	
Category 6:

	
> 2.75 to 1.00

	
2.50%

	
1.50%

	
0.45%

  

5

  

 

For purposes of the foregoing,

 

(i) if at any time the Borrower fails to deliver the Financials on or before the date the Financials are due pursuant to Section 5.01, Category 6 shall be deemed applicable for the period commencing five (5) Business Days after the required date of delivery and ending on the date which is five (5) Business Days after the Financials are actually delivered, after which the Category shall be determined in accordance with the table above as applicable;

 

(ii) adjustments, if any, to the Category then in effect shall be effective five (5) Business Days after the Administrative Agent has received the applicable Financials (it being understood and agreed that each change in Category shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change); and

 

(iii) notwithstanding the foregoing, Category 6 shall be deemed to be applicable from the Amendment No. 2 Effective Date until the Administrative Agent’s receipt of the applicable Financials for the fiscal year ended January 31, 2014, and adjustments to the Category then in effect shall thereafter be effected in accordance with the preceding paragraphs.

 

(c)  The definition of “Consolidated EBITDA” set forth in Section 1.01 of the Credit Agreement is hereby amended to delete therefrom the following clause “and (xii) non-cash asset impairment charges” and to substitute therefor the following:

 

, (xii) non-cash asset impairment charges, and (xiii) non-recurring relocation expenses (including, without limitation, retention bonuses, severance costs, recruiting costs, moving expenses, transaction expenses, and consulting expenses) resulting from the Borrower moving its corporate headquarters from Mission Woods, Kansas to The Woodlands, Texas; provided, however, that (a) for purposes of determining the Borrower’s compliance with the financial covenants set forth in Section 6.12, the aggregate amount of this clause (xiii) shall not exceed the lesser of the actual amount of such expenses for the applicable period and the following: (1) $6,000,000 for the twelve-month period ended April 30, 2013; (2) $12,000,000 for the twelve-month period ending January 31, 2014; (3) $9,000,000 for the twelve-month period ending April 30, 2014; (4) $6,000,000 for the twelve-month period ending July 31, 2014; and (5) $3,000,000 for the twelve-month period ending October 31, 2014; and (b) for purposes of determining the Borrower’s compliance with the minimum Consolidated EBITDA covenant set forth in Section 6.12(c), the aggregate amount of this clause (xiii) shall not exceed the lesser of the actual amount of such expenses and (x) $3,000,000 for any three-month reporting period; (y) $6,000,000 for any six-month reporting period; and (z) $9,000,000 for any nine-month reporting period;

 

  

6

  

 

(d)  The definition of “Intercreditor Agreement” set forth in Section 1.01 of the Credit Agreement is hereby amended to insert the following immediately at the end thereof:

 

Notwithstanding the foregoing or anything to the contrary set forth herein, the Sharing Agreement shall be terminated and of no force and effect from and after the Amendment No. 2 Effective Date.

 

(e)  The definition of “Interest Period” set forth in Section 1.01 of the Credit Agreement is hereby amended in its entirety as follows:

 

“Interest Period” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Borrower may elect; provided, that (i) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless, in the case of a Eurodollar Borrowing only with respect to one, two, three or six month periods, such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (ii) any Interest Period pertaining to a one, two, three or six month Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period.  For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

 

(f)  The definition of “Loan Documents” set forth in Section 1.01 of the Credit Agreement  is hereby amended in its entirety as follows:

 

“Loan Documents” means this Agreement, any promissory notes issued pursuant to Section 2.10(e) of this Agreement, any Letter of Credit applications, the Subsidiary Guaranty, the Intercreditor Agreement, the Collateral Documents, and all other agreements, instruments, documents and certificates identified in Section 4.01 executed and delivered to, or in favor of, the Administrative Agent or any Lenders and including all other pledges, powers of attorney, consents, assignments, contracts, notices, letter of credit agreements and all other written matter whether heretofore, now or hereafter executed by or on behalf of any Loan Party, or any employee of any Loan Party, and delivered to the Administrative Agent or any Lender in connection with this Agreement or the transactions contemplated hereby.  Any reference in this Agreement or any other Loan Document to a Loan Document shall include all appendices, exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications thereto, and shall refer to this Agreement or such Loan Document as the same may be in effect at any and all times such reference becomes operative.

 

  

7

  

 

(g)  The definition of “Obligations” set forth in Section 1.01 of the Credit Agreement is hereby amended in its entirety as follows:

 

“Obligations” means all unpaid principal of and accrued and unpaid interest on the Loans, all LC Exposure, all accrued and unpaid fees and all reasonable out-of-pocket expenses, reimbursements, indemnities and other obligations and indebtedness (including interest and fees accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), obligations and liabilities of any of the Borrower and its Subsidiaries to any of the Lenders, the Administrative Agent, the Issuing Bank or any indemnified party, individually or collectively, existing on the Effective Date or arising thereafter, direct or indirect, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, secured or unsecured, arising out of or in connection with the transactions evidenced by the Loan Documents (including, without limitation, if arising by operation of law or otherwise), obligations under any Swap Agreement or any Banking Services Agreement entered into with a Person that was a Lender or an Affiliate of a Lender as of the time such agreement was executed or to the Lenders or any of their Affiliates in respect of any of the Loans made or reimbursement, or other obligations incurred under any of the Letters of Credit or other instruments at any time evidencing any thereof; provided, however, that the definition of “Obligations” shall not create any guarantee by any Subsidiary Guarantor of (or grant of security interest by any Subsidiary Guarantor to support, as applicable) any Excluded Swap Obligations of such Subsidiary Guarantor for purposes of determining any obligations of any Subsidiary Guarantor.

 

(h)  The definition  of “Senior Note Agreement” set forth in Section 1.01 of the Credit Agreement is hereby amended in its entirety as follows:

 

“Senior Note Agreement” means the Private Shelf Agreement, dated as of July 8, 2011, by and among the Borrower and the Senior Noteholders, as the same may be amended, restated, supplemented, replaced, refinanced or otherwise modified from time to time; provided, however, that from and after the Amendment No. 2 Effective Date, the Private Shelf Agreement shall be terminated and of no force and effect, and there shall be no Indebtedness permitted to be outstanding or available thereunder.

 

  

8

  

 

(i)  The definition of “Senior Notes” set forth in Section 1.01 of the Credit Agreement is hereby amended to insert immediately at the end thereof the following:

 

Notwithstanding the foregoing or anything to the contrary set forth herein, from and after the Amendment No. 2 Effective Date, no Senior Notes shall be permitted to be outstanding or issued under the Senior Note Agreement.

 

(j)  The definition of “Senior Noteholders” set forth in Section 1.01 of the Credit Agreement is hereby amended to insert immediately at the end thereof the following:

 

Notwithstanding the foregoing or anything to the contrary set forth herein, from and after the Amendment No. 2 Effective Date, no Persons shall be permitted to constitute Senior Noteholders.

 

(k)  Section 2.18 is hereby amended to insert immediately at the end thereof the following paragraph (g):

 

(g)  Any proceeds received by the Administrative Agent under or in connection with the Collateral Documents, (i) not constituting a specific payment of principal, interest, fees or other sum payable under the Loan Documents (which shall be applied as specified by the Borrower), or (ii) after an Event of Default has occurred and is continuing and the Administrative Agent so elects or the Required Lenders so direct, such funds shall be applied first, ratably, to pay any fees, indemnities, or expense reimbursements including amounts then due to the Administrative Agent from the Borrower or any Subsidiary Guarantor (other than in connection with obligations under Banking Services Agreements or Swap Agreements), second, ratably to pay any fees or expense reimbursements then due to the Lenders from the Borrower or any Subsidiary Guarantor (other than in connection with obligations under Banking Services Agreements and Swap Agreements), third, to pay interest then due and payable on the Loans ratably, fourth, ratably, to prepay principal on the Loans and to pay any amounts owing with respect to obligations under Banking Services Agreements and Swap Agreements, and fifth, ratably to the payment of any other Obligation due to the Administrative Agent or any Lender by the Borrower or any Subsidiary Guarantor.  The Administrative Agent and the Lenders shall have the continuing and exclusive right to apply and reverse and reapply any and all such proceeds and payments to any portion of the Obligations.  Notwithstanding the foregoing or anything to the contrary set forth herein, amounts received from any Loan Party that is not a Qualified ECP Guarantor shall not be applied to any Excluded Swap Obligation of such Subsidiary Guarantor.

 

  

9

  

 

(l)  Section 3.01 of the Credit Agreement is hereby amended to delete the last sentence therefrom and to substitute the following therefor:

 

All of the outstanding shares of capital stock and other equity interests of each Subsidiary are validly issued and outstanding and fully paid and nonassessable (except as such non-assessability may be affected by Sections 18-607 and 18-804 of the Delaware Limited Liability Company Act or analogous provisions of the laws of other states, as applicable) and all such shares and other equity interests indicated on Schedule 3.01 as owned by the Borrower or another Subsidiary are owned, beneficially and of record, by the Borrower or any Subsidiary free and clear of all Liens (other than those arising under the Collateral Documents).

 

(m)  Section 3.03 of the Credit Agreement is hereby amended to delete therefrom clause (d) thereof and to substitute therefor the following:

 

(d) will not result in the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries (other than those under the Collateral Documents).

 

(n)  Article III of the Credit Agreement is hereby amended to insert the following new Sections 3.17 and 3.18:

 

SECTION 3.17         Sanctions Laws and Regulations.  None of the Borrower, any Subsidiary thereof or any of their respective directors or officers is a Designated Person.

 

SECTION 3.18        Security Interest in Collateral.  The provisions of the Collateral Documents create legal and valid Liens on all the Collateral in favor of the Administrative Agent, for the benefit of the Secured Parties, and upon taking all of the actions contemplated by the Collateral Documents, such Liens will  constitute perfected and continuing Liens on the Collateral, securing the Obligations, enforceable against the applicable Loan Party and all third parties, and, subject to provisions of the UCC, having priority over all other Liens on the Collateral except in the case of (a) Permitted Priority Liens, and (b) Liens perfected only by possession or control (including possession of any certificate of title) to the extent the Administrative Agent has not obtained or does not maintain possession or control of such Collateral.

 

  

10

  

 

(o)  Section 5.05 of the Credit Agreement is hereby amended in its entirety as follows:

 

SECTION 5.05        Maintenance of Properties; Insurance.  The Borrower will, and will cause each of its Subsidiaries to, (a) keep and maintain all property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and (b) maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations.  The Borrower will furnish to the Administrative Agent, upon request of the Administrative Agent, information in reasonable detail as to the insurance so maintained.  The Borrower shall deliver to the Administrative Agent endorsements (x) to all “All Risk” physical damage insurance policies on all of the Loan Parties’ tangible personal property and assets and business interruption insurance policies naming the Administrative Agent as lender loss payee (or assignee, with respect to business interruption insurance), and (y) to all general liability and other liability policies naming the Administrative Agent an additional insured.  Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing, the Borrower and its Subsidiaries shall be entitled to receive and retain any proceeds from any such insurance policies.  In the event the Borrower or any of its Subsidiaries at any time or times hereafter shall fail to obtain or maintain any of the policies or insurance required herein or to pay any premium in whole or in part relating thereto, then the Administrative Agent, without waiving or releasing any obligations or resulting Default hereunder, may, following 2 Business Days notice to the Borrower, at any time or times thereafter (but shall be under no obligation to do so) obtain and maintain such policies of insurance and pay such premiums and take any other action with respect thereto which the Administrative Agent deems advisable.  All sums so disbursed by the Administrative Agent shall constitute part of the Obligations, payable as provided in this Agreement.  The Borrower will furnish to the Administrative Agent, the Administrative Agent and the Lenders prompt written notice of any casualty or other insured damage to any material portion of the Collateral or the commencement of any action or proceeding for the taking of any material portion of the Collateral or interest therein under power of eminent domain or by condemnation or similar proceeding.

 

  

11

  

 

(p)  Article V of the Credit Agreement is hereby amended to insert immediately at the end thereof the following Section 5.10:

 

SECTION 5.10.       Collateral.  The Borrower will cause, and will cause each other Loan Party that is a Subsidiary Guarantor to cause, all of its owned property (whether personal, tangible, intangible, or mixed), other than Excluded Property, to be subject at all times to first priority, perfected Liens in favor of the Administrative Agent for the benefit of the Secured Parties to secure the Obligations, in accordance with the terms and conditions of the Collateral Documents, subject in any case to Liens permitted by Section 6.02; provided, that Liens upon any parcel of real property shall only be required to be granted when either the book value, or if the Borrower has a fair market appraisal of such parcel, the appraised value thereof equals or exceeds $10,000,000.  The Borrower shall and shall cause its Domestic Subsidiaries to execute or cause to be executed (subject to the grace periods provided in Section 5.09 for the joinder of Subsidiary Guarantors), Collateral Documents (including, upon the request of the Administrative Agent, applicable local law pledge documents) in favor of the Administrative Agent for the benefit of the Secured Parties, with respect to all of the property of the Borrower or such Subsidiary Guarantor constituting or required to constitute Collateral; provided that no pledge of the Equity Interests of a Foreign Subsidiary shall be required hereunder if such Equity Interests constitute Excluded Property; provided, further, that no local-law pledge documentation shall be required to be delivered unless requested by the Administrative Agent. The Borrower further agrees to deliver or cause the delivery to the Administrative Agent of all such Collateral Documents, together with appropriate corporate resolutions and other documentation (including legal opinions, the stock certificates representing the Equity Interests subject to the above-described pledge, stock powers with respect thereto executed in blank, and such other documents as shall be reasonably requested by the Administrative Agent) to grant and perfect such Lien, in each case in form and substance reasonably satisfactory to the Administrative Agent, and in a manner that the Administrative Agent shall be reasonably satisfied that the Administrative Agent has a first priority perfected security interest in and pledge of the Collateral of the Borrower or such Subsidiary Guarantor and all rights, title, power and privileges related thereto, subject to any Liens permitted by Section 6.02 of the Credit Agreement; provided, that no such Lien (other than Permitted Priority Liens) shall be permitted to have priority over the Administrative Agent’s Liens on the Collateral.

 

  

12

  

 

(q)  Section 6.01(g) of the Credit Agreement is hereby amended to insert immediately at the end thereof the following:

 

notwithstanding the foregoing or anything to the contrary set forth herein, no Indebtedness or other amounts shall be outstanding, available or due and payable under the Senior Note Agreement or the Senior Notes from and after the Amendment No. 2 Effective Date;

 

(r)  Section 6.02(h) of the Credit Agreement is hereby amended in its entirety as follows:

 

(h) Liens (1) in favor of the Administrative Agent for the benefit of the Secured Parties under the Collateral Documents to the extent securing the Obligations, and (2) securing other Priority Indebtedness permitted under Section 6.01(k) and not covered by the foregoing clause (h)(1);

 

(s)  Section 6.03(a)(ix) of the Credit Agreement is hereby amended in its entirety as follows (including the addition of a new clause (x)):

 

(ix) transactions permitted by Sections 6.04(g) and (h); and

 

(x)  the SolmeteX Sale; provided, that the Net Proceeds resulting therefrom are applied to repay the principal amount of all Loans then outstanding.

 

(t)  Section 6.12 of the Credit Agreement is hereby amended in its entirety as follows:

 

Section 6.12             Financial Covenants.

 

(a)           Maximum Leverage Ratio.   The Borrower will not permit the ratio (the “Leverage Ratio”), determined as of the end of each of its fiscal quarters ending on and after January 31, 2011, of (i) Consolidated Total Funded Indebtedness to (ii) Consolidated EBITDA for the period of four (4) consecutive fiscal quarters ending with the end of such fiscal quarter, all calculated for the Borrower and its Subsidiaries on a consolidated basis based on the quarterly compliance certificate most recently delivered pursuant to Section 5.01(c), to be greater than 3.00 to 1.00; provided, however, that this maximum Leverage Ratio covenant shall not be in effect and the Borrower shall not be required to report compliance herewith for the quarters ending July 31, 2013 and October 31, 2013.

 

  

13

  

 

(b)           Minimum Fixed Charge Coverage Ratio.  The Borrower will not permit the ratio (the “Fixed Charge Coverage Ratio”), determined as of the end of each of its fiscal quarters ending on and after January 31, 2011, of (i) Consolidated EBITDA plus Consolidated Rental Expense to (ii) Fixed Charges, in each case for the period of four (4) consecutive fiscal quarters ending with the end of such fiscal quarter, all calculated for the Borrower and its Subsidiaries on a consolidated basis based on the quarterly compliance certificate most recently delivered pursuant to Section 5.01(c), to be less than 1.50 to 1.00; provided, however, that this minimum Fixed Charge Coverage Ratio covenant shall not be in effect and the Borrower shall not be required to report compliance herewith for the quarters ending July 31, 2013 and October 31, 2013.

 

(c)           Minimum EBITDA.  The Borrower will not permit Consolidated EBITDA to be less than the following amounts for the following periods (to be determined as of the last day of the applicable period): (i) $6,000,000 for the three-month period ending July 31, 2013; (ii) $15,000,000 for the three-month period ending October 31, 2013; (iii) $7,500,000 for the six-month period ending July 31, 2013; and (iv) $25,000,000 for the nine-month period ending October 31, 2013.

 

(d)           Maximum Capital Expenditures.  The Borrower will not permit Capital Expenditures (determined on a consolidated basis for the Borrower and its Subsidiaries) to exceed the following amounts for the following periods (to be determined as of the last day of the applicable period): (i) $22,000,000 for the six-month period ending July 31, 2013; (ii) $34,000,000 for the nine-month period ending October 31, 2013; and (iii) $46,000,000 for the twelve-month period ending January 31, 2014.

 

(u)  Article VI of the Credit Agreement is hereby amended to insert immediately at the end thereof the following new Section 6.13:

 

SECTION 6.13.       Sanction Laws and Regulations. The Borrower shall not, directly or indirectly, use the proceeds of the credit facilities evidenced by the Loan Documents, or lend, contribute or otherwise make available such proceeds to any Subsidiary, joint venture partner or other person or entity in any manner  that would result in a violation of any Sanctions Laws and Regulations by any party to this Agreement.  None of the funds or assets of the Borrower or any Subsidiary that are used to pay any amount due pursuant to the credit facilities evidenced by the Loan Documents shall constitute funds obtained from transactions that violate any Sanctions Laws and Regulations.

 

  

14

  

 

(v)  The word “or” is deleted from the end of clause (n) and added to the end of clause (o) of Article VII of the Credit Agreement and the following clause (p) is added immediately after clause (o) of Article VII of the Credit Agreement:

 

(p)  the Pledge and Security Agreement or any other Collateral Document shall for any reason (except in accordance with its terms) fail to create a valid and perfected first priority security interest in the Collateral subject thereto or purported to be covered thereby, except for Liens permitted by Section 6.02 of the Credit Agreement (with the understanding that no such Lien shall be permitted to have priority over the Administrative Agent’s Lien other than Permitted Priority Liens), or any action shall be taken by or on behalf of the Borrower or any Subsidiary to discontinue or to assert the invalidity or unenforceability of the Pledge and Security Agreement or any other applicable Collateral Document or (B) any provision of any Collateral Document shall for any reason cease to be valid and binding on any Person that is a party thereto (except in accordance with its terms), or any such Person shall so assert in writing;

 

(w)  Section 9.14 of the Credit Agreement is hereby amended in its entirety as follows:

 

SECTION 9.14.      Releases of Guarantors; Release of Liens.  A Subsidiary Guarantor shall automatically be released from its obligations under the Subsidiary Guaranty upon the consummation of any transaction permitted by this Agreement as a result of which such Subsidiary Guarantor ceases to be a Subsidiary; provided that, if so required by this Agreement, the Required Lenders shall have consented to such transaction and the terms of such consent shall not have provided otherwise.  In connection with any termination or release pursuant to this Section, the Administrative Agent shall (and is hereby irrevocably authorized by each Lender to) execute and deliver to any Loan Party, at such Loan Party’s expense, all documents that such Loan Party shall reasonably request to evidence such termination or release.  Any execution and delivery of documents pursuant to this Section shall be without recourse to or warranty by the Administrative Agent.

 

  

15

  

 

Further, the Administrative Agent shall (and is hereby irrevocably authorized by each Lender to), upon the request of the Borrower, release any Subsidiary Guarantor from its obligations under the Subsidiary Guaranty if such Subsidiary Guarantor is no longer a Material Domestic Subsidiary.

 

At such time as the principal and interest on the Loans, the fees, expenses and other amounts payable under the Loan Documents and the other Obligations (other than obligations under any Swap Agreement or any Banking Services Agreement, and other Obligations expressly stated to survive such payment and termination) shall have been paid in full, the Commitments shall have been terminated, the Subsidiary Guaranty and all obligations (other than those expressly stated to survive such termination) of each Subsidiary Guarantor thereunder shall automatically terminate, all without delivery of any instrument or performance of any act by any Person.

 

The Lenders hereby irrevocably authorize the Administrative Agent and the Administrative Agent shall release any Liens granted to the Administrative Agent by the Loan Parties on any Collateral (i) upon the termination of all the Commitments and payment and satisfaction in full in cash of all Obligations (other than obligations under any Swap Agreement or any Banking Services Agreement, and other Obligations expressly stated to survive such payment and termination), (ii) constituting property being sold or disposed of if the Borrower certifies to the Administrative Agent that the sale or disposition is made in compliance with the terms of this Agreement (and the Administrative Agent may rely conclusively on any such certificate, without further inquiry), (iii) as required to effect any sale or other disposition of such collateral in connection with any exercise of remedies of the Administrative Agent and the Lenders pursuant to the terms of the Loan Documents or (iv) owned by a Subsidiary Guarantor if such Subsidiary Guarantor is no longer a Subsidiary Guarantor.  Any such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of the Loan Parties in respect of) all interests retained by the Loan Parties, including the proceeds of any sale, all of which shall continue to constitute part of the collateral.

 

(x)  Article IX of the Credit Agreement is hereby amended to insert immediately at the end thereof the following Section 9.15:

 

SECTION 9.15.        Appointment for Perfection; Appointment under Collateral Documents.

 

Each Lender hereby appoints each other Lender as its agent for the purpose of perfecting Liens, for the benefit of the Administrative Agent and the Secured Parties, in assets which, in accordance with Article 9 of the UCC or any other applicable law, can be perfected only by possession.  Should any Lender (other than the Administrative Agent) obtain possession of any such collateral, such Lender shall notify the Administrative Agent thereof, and, promptly upon the Administrative Agent’s request therefor shall deliver such collateral to the Administrative Agent, or otherwise deal with such collateral in accordance with the Administrative Agent’s instructions.  Each Lender hereby acknowledges and agrees that the Administrative Agent will hold all security interests and Liens granted by Loan Parties in respect of the Obligations.

 

  

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The Administrative Agent is a “representative” of the Secured Parties within the meaning of the term “secured party” as defined in the New York Uniform Commercial Code.  Each Lender authorizes the Administrative Agent to enter into each of the Pledge and Security Agreement and other Collateral Documents to which it is a party and all amendments, restatements, supplements or other modifications thereto, and to take all action contemplated by such documents.  Each Lender agrees that no Secured Party (other than the Administrative Agent) shall have the right individually to seek to realize upon the security granted by any Collateral Document, it being understood and agreed that such rights and remedies may be exercised solely by the Administrative Agent for the benefit of the Secured Parties upon the terms of the Pledge and Security Agreement and the other Collateral Documents.  In the event that any Collateral is hereafter pledged by any Person as collateral security for the Obligations, the Administrative Agent is hereby authorized, and hereby granted a power of attorney, to execute and deliver on behalf of the Secured Parties any Loan Documents necessary or appropriate to grant and perfect a Lien on such Collateral in favor of the Administrative Agent on behalf of Secured Parties.  The Lenders hereby authorize the Administrative Agent and, at its option and in its discretion, to release any Lien granted to or held by the Administrative Agent upon any Collateral (i) as described in Section 9.14; (ii) as permitted by, but only in accordance with, the terms of the applicable Loan Document; or (iii) if approved, authorized or ratified in writing by the Required Lenders, unless such release is required to be approved by all of the Lenders hereunder.  Upon request by the Administrative Agent at any time, the Lenders will confirm in writing the Administrative Agent’s authority to release particular types or items of Collateral pursuant hereto.  Upon any sale or transfer of assets constituting Collateral which is permitted pursuant to the terms of any Loan Document, the release of Collateral in connection with the release of any Subsidiary Guarantor as a Guarantor or consented to in writing by the Required Lenders or all of the Lenders, as applicable, and upon at least five Business Days’ prior written request by the Borrower to the Administrative Agent, the Administrative Agent shall execute such documents as may be necessary to evidence the release of the Liens granted to the Administrative Agent for the benefit of the Secured Parties or pursuant hereto upon the Collateral that was sold or transferred or owned by a Subsidiary Guarantor that was released from its Guaranty; provided, however, that (i) the Administrative Agent shall not be required to execute any such document on terms which, in the Administrative Agent’s opinion, would expose the Administrative Agent to liability or create any obligation or entail any consequence other than the release of such Liens without recourse or warranty, and (ii) such release shall not in any manner discharge, affect or impair the Obligations or any Liens upon (or obligations of any Loan Party or any Subsidiary thereof in respect of) all interests retained by any Loan Party or any Subsidiary thereof, including (without limitation) the proceeds of the sale, all of which shall continue to constitute part of the Collateral.

 

  

17

  

 

2.  Conditions of Effectiveness.  The effectiveness of this Amendment is subject to the following conditions precedent:

 

(a)     the Administrative Agent shall have received counterparts of this Amendment duly executed by the Borrower, the Lenders required to execute and deliver this Amendment in order to give effect hereto, and the Administrative Agent;

 

(b)     the Administrative Agent shall have received, in form and substance acceptable to it, the agreements, documents and instruments referenced in Exhibit A hereto; and

 

(c)     the Administrative Agent shall have received all other fees and amounts due and payable on or prior to the Effective Date, including, (x) to the Administrative Agent, for the benefit of each Lender that executes and delivers its signature page hereto by 9:00 a.m. Chicago time on June 4, 2013 (with delivery being determined by the Administrative Agent in its sole discretion), an amendment fee for each such approving Lender as agreed to by the Borrower and the Administrative Agent, and (y) to the extent invoiced, reimbursement or payment of all reasonable out-of-pocket expenses required to be reimbursed or paid by the Borrower.

 

3.  Representations and Warranties of the Borrower.  The Borrower hereby represents and warrants as follows:

 

(a)    This Amendment and the Credit Agreement, as amended hereby, constitute legal, valid and binding obligations of the Borrower and are enforceable against the Borrower in accordance with their terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

(b)    As of the date hereof and after giving effect to the terms of this Amendment, (i) no Default or Event of Default shall have occurred and be continuing and (ii) the representations and warranties of the Borrower set forth in the Credit Agreement, as amended hereby, are true and correct as of the date hereof.

 

  

18

  

 

4.  Reference to and Effect on the Credit Agreement.

 

(a)    Upon the effectiveness of this Amendment, on and after the date hereof, each reference in the Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein” or words of like import shall mean and be a reference to the Credit Agreement, as amended hereby.

 

(b)    Except as specifically amended above, the Credit Agreement and all other documents, instruments and agreements executed and/or delivered in connection therewith shall remain in full force and effect and are hereby ratified and confirmed.

 

(c)    The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the Administrative Agent or the Lenders, nor constitute a waiver of any provision of the Credit Agreement or any other documents, instruments and agreements executed and/or delivered in connection therewith.

 

5.  Costs and Expenses.  The Borrower shall pay on demand all reasonable costs and expenses of the Administrative Agent (including the reasonable fees, costs and expenses of counsel to the Administrative Agent) incurred in connection with the preparation, execution and delivery of this Amendment.

 

6.  Governing Law.  THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK.

 

7.  Execution.  This Amendment may be executed in any number of counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Amendment by facsimile or other electronic imaging shall be effective as delivery of a manually executed counterpart of this Amendment.

 

8.  Headings.  Section headings used herein are for convenience of reference only, are not part of this Amendment and shall not affect the construction of, or be taken into consideration in interpreting, this Amendment.

 

[Signature Pages Follow]

 

  

19

  

IN WITNESS WHEREOF, this Amendment has been duly executed as of the day and year first above written.

 

	 	
LAYNE CHRISTENSEN COMPANY,

as the Borrower

	 	 	  
	 	 	  
	 	By	
/s/ James R. Easter

	 	Name: James R. Easter
	 	Title: Senior Vice President – Finance and
	 	Treasurer

 

 

Signature Page to

Amendment No. 2 to Credit Agreement

  

  

  

 

	 	
JPMORGAN CHASE BANK, N.A.,

individually as a Lender, as the Swingline

Lender, as the Issuing Bank and as

Administrative Agent

	 	 	  
	 	 	  
	 	By	
/s/ R. Todd Hovermale

	 	Name: R. Todd Hovermale
	 	Title: Vice President

 

 

Signature Page to

Amendment No. 2 to Credit Agreement

  

  

  

 

	 	BANK OF AMERICA, N.A., as a Lender
	 	 	  
	 	 	  
	 	By	
/s/ Dianne M. Smith

	 	Name: Dianne M. Smith
	 	Title: Senior Vice President

 

 

Signature Page to

Amendment No. 2 to Credit Agreement

  

  

  

 

	 	
PNC BANK, NATIONAL ASSOCIATION,

as a Lender

	 	 	  
	 	 	  
	 	By	
/s/ David Bentzinger

	 	Name: David Bentzinger
	 	Title: Senior Vice President

 

 

Signature Page to

Amendment No. 2 to Credit Agreement

  

  

  

	 	
U.S. BANK NATIONAL ASSOCIATION,

as a Lender

	 	 	  
	 	 	  
	 	By	
/s/ Patrick Engel

	 	Name: Patrick Engel
	 	Title: Vice President

 

 

Signature Page to

Amendment No. 2 to Credit Agreement

  

  

  

 

	 	WELLS FARGO BANK, N.A., as a Lender
	 	 	  
	 	 	  
	 	By	
/s/ Kathleen Gound

	 	Name: Kathleen Gound
	 	Title: Vice President

 

 

Signature Page to

Amendment No. 2 to Credit Agreement

  

  

  

 

	 	BANK OF THE WEST, as a Lender
	 	 	  
	 	 	  
	 	By	
/s/ Roger Lumley

	 	Name: Roger Lumley
	 	Title: Senior Vice President

 

 

Signature Page to

Amendment No. 2 to Credit Agreement

  

  

  

 

	 	UMB BANK, N.A., as a Lender
	 	 	  
	 	 	  
	 	By	
/s/ Martin Nay

	 	Name: Martin Nay
	 	Title: Senior Vice President

 

 

Signature Page to

Amendment No. 2 to Credit Agreement

  

  

  

	 	BOKF, N.A., as a Lender
	 	 	  
	 	 	  
	 	By	
/s/ Dennis Nicely

	 	Name: Dennis Nicely
	 	Title: Senior Vice President

 

 

Signature Page to

Amendment No. 2 to Credit Agreement

  

  

  

 

EXHIBIT A

To

Amendment No. 2

List of Closing Deliverables

1. Amendment No. 1 to Subsidiary Guaranty.

2. Pledge and Security Agreement entered into by the Loan Parties and the Administrative Agent, together with all applicable equity certificates and equity powers.

4. Termination letter in respect of Senior Note Agreement.

5. Certificates of insurance listing the Administrative Agent as (x) lender loss payee or assignee, as applicable, for the property, casualty and business interruption insurance policies of the Borrower and its Subsidiaries (with long-form lender loss payable endorsements or assignments, as appropriate, and (y) additional insured with respect to the liability insurance of the Borrower and its Subsidiaries (together with additional insured endorsements).

6. UCC, tax lien and name variation search reports with respect to the Loan Parties from the appropriate offices in their respective jurisdictions of organization.

7. UCC-1 financing statements naming each Loan Party as debtor and the Administrative Agent as secured party to be filed in the applicable offices of the Loan Parties’ jurisdictions of organization.

8. Certificate of the Secretary or an Assistant Secretary of each Loan Party certifying (i) that there have been no changes in the Articles or Certificate of Incorporation or Certificate of Formation, as applicable, as attached thereto and as certified as of a recent date by the applicable Secretary of State, since the date of the certification thereof by such Secretary of State, (ii) the By-Laws, Operating Agreement or Limited Liability Company Agreement, as applicable, as attached thereto, of such Loan Party as in effect on the date of such certification, (iii) resolutions of the Board of Directors, Board of Managers or other governing body of such Loan Party authorizing the execution, delivery and performance of each Loan Document to which it is a party, and (iv) the names and true signatures of the incumbent officers of the each Loan Party authorized to sign the Loan Documents to which it is a party, and, with respect to the Borrower, authorized to request Loans or Letters of Credit  under the Credit Agreement.

9.  Good Standing Certificate for each Loan Party from the Secretary of State (or other applicable office) of its jurisdiction of organization.

 

10.  Opinion of Stinson Morrison Hecker LLP, counsel for the Borrower, and opinion of internal counsel for the Borrower.

  

  

  

 

EXHIBIT B

To

Amendment No. 2

Pledge and Security Agreement

Attached.

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