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XXXXX XXXXXXXXXXX COMPANY
(FORMERLY XXXXX, INC.)
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FIRST AMENDMENT
Dated as of July 25, 1997
to
NOTE AGREEMENT
Dated as of March 15, 1996
___________________________________
Re: $25,000,000 6.75% Senior Notes
Due March 15, 2006
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FIRST AMENDMENT TO NOTE AGREEMENT
THIS FIRST AMENDMENT dated as of July 25, 1997 (the or this "FIRST
AMENDMENT") to the Note Agreement dated as of March 15, 1996 is between XXXXX
XXXXXXXXXXX COMPANY (FORMERLY XXXXX, INC.), a Delaware corporation (the
"COMPANY"), and the institution which is a signatory to this First Amendment
(the "NOTEHOLDER").
RECITALS:
A. The Company and Noteholder have heretofore entered into the Note
Agreement dated as of March 15, 1996 (the "NOTE AGREEMENT") pursuant to which
the Company issued its $25,000,000 6.75% Senior Notes Due March 15, 2006 (the
"NOTES"). The Noteholder is the holder of 100% of the outstanding principal
amount of the Notes.
B. The Company and the Noteholder now desire to amend the Note Agreement
in the respects, but only in the respects, hereinafter set forth.
C. Capitalized terms used herein shall have the respective meanings
ascribed thereto in the Note Agreement unless herein defined or the context
shall otherwise require.
D. All requirements of law have been fully complied with and all other
acts and things necessary to make this First Amendment a valid, legal and
binding instrument according to its terms for the purposes herein expressed have
been done or performed.
NOW, THEREFORE, the Company and the Noteholder, in consideration of good
and valuable consideration the receipt and sufficiency of which is hereby
acknowledged, do hereby agree as follows:
SECTION 1. AMENDMENTS.
1.1. Section 5.6 of the Note Agreement shall be and is hereby
amended in its entirety to read as follows:
SECTION 5.6. CONSOLIDATED ADJUSTED NET WORTH. The Company will at
all times keep and maintain Consolidated Adjusted Net Worth at an amount
not less than the sum of (i) $41,000,000, plus (ii) 50% of Consolidated
Adjusted Net Income for each semiannual period consisting of the first and
second fiscal quarters of the Company and the third and fourth fiscal
quarters of the Company from and after January 31, 1996 to and including
the date of any determination thereof, computed on a cumulative basis for
such entire period, plus (iii) an amount equal to the Restricted Equity
Amount.
If Consolidated Adjusted Net Income is a deficit for any such
semiannual fiscal period, such deficit shall not reduce the amount of
Consolidated Adjusted Net Worth required to be maintained pursuant to this
Section 5.6.
Compliance with the provisions of this Section 5.6 will be determined
as of the last day of each fiscal quarter of the Company.
1.2. Section 5.9 of the Note Agreement shall be and is hereby amended by
deleting the "and" at the end of paragraph (g), by amending paragraph (h) in its
entirety and by adding a new paragraph (i) as follows:
(H) Liens on capital stock of any Subsidiary securing Debt
evidenced by the Notes, the Subsidiary Guaranties, the Credit Agreement and
the Subsidiary Bank Guaranties, PROVIDED that the Notes are equally and
ratably secured with any and all other obligations secured thereby pursuant
to an agreement satisfactory in scope and form to the Holders holding at
least 51% in aggregate principal amount of the Notes; and
(i) in addition to the Liens permitted by the preceding paragraphs
(a) through (h) of this Section 5.9, Liens securing Debt of the Company and
its Restricted Subsidiaries; PROVIDED that such Debt shall be permitted by
Section 5.8.
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1.3. Clause (4) of Section 5.8(a) of the Note Agreement shall be and is
hereby amended to read as follows:
(4) additional Debt of the Company and its Restricted Subsidiaries;
PROVIDED that at the time of issuance thereof and after giving effect
thereto and the application of the proceeds thereof:
(i) Total Debt shall not exceed (w) 62.5% of Total
Capitalization for the period from the Closing Date through
October 31, 1997, (x) 60% of Total Capitalization for the period from
November 1, 1997 through April 30, 1998, (y) 55% of Total
Capitalization for the period from May 1, 1998 through January 31,
1999, and (z) 50% of Total Capitalization thereafter; PROVIDED that
if at any time prior to January 31, 1998, the Company shall complete
a Qualified Public Offering, Total Debt shall not exceed (x) 55% of
Total Capitalization for the period from the completion of such
Qualified Public Offering through January 31, 1998, and (y) 50% of
Total Capitalization thereafter, and
(ii) in the case of any Priority Debt the aggregate
principal amount of such Debt shall not exceed 10% of Consolidated
Adjusted Net Worth.
1.3. Section 5.10 of the Note Agreement shall be and is hereby
amended to read as follows:
SECTION 5.10. restricted payments. The Company will not
except as hereinafter provided:
(a) Declare or pay any dividends, either in cash or property, on
any shares of its capital stock of any class (except dividends or other
distributions payable solely in shares of capital stock of the Company);
(b) Directly or indirectly, or through any Subsidiary, purchase,
redeem or retire any shares of its capital stock
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of any class or any warrants, rights or options to purchase or acquire any
shares of its capital stock; or
(c) Make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital stock;
(such declarations or payments of dividends, purchases, redemptions
or retirements of capital stock and warrants, rights or options and all
such other payments or distributions being herein collectively called
"RESTRICTED PAYMENTS"), if at such time or after giving effect thereto any
Default or Event of Default shall have occurred and be continuing or the
aggregate amount of Restricted Payments made during the period from and
after January 31, 1996 to and including the date of the making of the
Restricted Payment in question would exceed the sum of (i) $10,000,000 plus
(ii) 50% of Consolidated Adjusted Net Income for such period, computed on a
cumulative basis for said entire period (or if such Consolidated Adjusted
Net Income is a deficit figure, then minus 100% of such deficit) plus
(iii) the Unrestricted Equity Amount, plus (iv) any cash received by the
Company which constitutes a return of capital or principal of any
Restricted Investment made after January 31, 1996.
The Company will not declare any dividend which constitutes a
Restricted Payment payable more than 60 days after the date of declaration
thereof.
For the purposes of this Section 5.10, the amount of any Restricted
Payment declared, paid or distributed in property shall be deemed to be the
greater of the book value or fair market value (as determined in good faith
by the Board of Directors of the Company) of such property at the time of
the making of the Restricted Payment in question.
1.5. Subparagraph (a) of Section 5.19 of the Note Agreement shall be
and is hereby amended by adding the following sentence at the end of said
Subparagraph (a):
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Notwithstanding the foregoing, the Company shall cause Xxxxx
Australia and Xxxxxxx to execute and deliver a Guaranty Agreement to the
Holders no later than September 30, 1997, which shall be satisfactory in
scope and form to the Holders holding at least 51% in aggregate principal
amount of the outstanding Notes, together with an opinion of Australian
counsel to the effect as described in paragraph (b) of this Section 5.19.
1.6. The following shall be added as a new Section 5.20 of the Note
Agreement:
SECTION 5.20. PAYMENT OF FEES. On October 31, 1997 and on the last
day of each quarter thereafter in which the ratio of Total Debt to Total
Capitalization shall exceed the Original Leverage Ratio, the Company shall
pay to each Noteholder its pro rata share (based on the unpaid principal
amount of the Notes outstanding) of the Quarterly Bonus; PROVIDED that if
the Company completes a Qualified Public Offering on or prior to January
31, 1998, no Quarterly Bonus shall be paid for the quarter in which such
Qualified Public Offering is consummated or for any quarter thereafter so
long as after giving effect to the application of the proceeds from such
Qualified Public Offering, the ratio of Total Debt to Total Capitalization
shall not exceed the Original Leverage Ratio.
1.7. The definition of "CREDIT AGREEMENT" and "PRIORITY DEBT" shall
be amended in its entirety so that it shall read as follows:
"CREDIT AGREEMENT" shall mean the Amended and Restated Credit
Agreement dated as of July 25, 1997 between the Company, Xxxxx Australia
and Bank of America National Trust and Savings Association, as agent, and
the other financial institutions party thereto, as such agreement may be
amended or modified from time to time.
"PRIORITY DEBT" as of any date of determination shall mean the sum of
(without duplication) (a) Debt of Restricted
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Subsidiaries (excluding the Subsidiary Guaranty, the Guaranties of the
obligations of the Company under the Credit Agreement, any such Debt
described in Section 5.8(A)(3) and the Xxxxx Australia Debt following the
occurrence of the Designated Event) PLUS (b) Debt of the Company and its
Restricted Subsidiaries secured by a Lien permitted by Section 5.9(I).
1.8. The following shall be added as new definitions in alphabetical
order to Section 8.1 of the Note Agreement:
"DESIGNATED EVENT" shall be deemed to have occurred at such time as
(i) Xxxxx Australia and Xxxxxxx shall have executed and delivered to the
Holders the Guaranty Agreements (together with the opinions of Australian
counsel) as described in Section 5.19(A) and (ii) the Amended and Restated
Intercreditor Agreement dated as of July 25, 1997 shall have been amended,
in scope and form satisfactory to the Holders holding at least 51% in
aggregate principal amount of the outstanding Notes, to include any
payments by Layne Australia on the Layne Australia Debt.
"LAYNE AUSTRALIA" shall mean Xxxxx Xxxxxxxxxxx Australia Pty Limited
ACN 078 167 610, a company incorporated in New South Wales, Australia, and
any Person who succeeds to all, or substantially all, of the assets and
business of Xxxxx Xxxxxxxxxxx Australia Pty Ltd.
"LAYNE AUSTRALIA DEBT" shall mean the Debt of Layne Australia in an
aggregate principal amount not to exceed $30,000,000, which shall have been
incurred by Xxxxx Australia pursuant to the Credit Agreement.
"MINIMUM EQUITY AMOUNT" shall mean an amount equal to the greater of
(i) $15,000,000, or (ii) the minimum amount of net cash proceeds received
by the Company from the issue or sale of its capital stock which is
required to make the ratio of Total Debt to Total Capitalization,
immediately after giving effect to such issue or sale of capital stock
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and the application of the proceeds thereof, equal to or less than the
Original Leverage Ratio.
"ORIGINAL LEVERAGE RATIO" shall mean 55% for any date of
determination on or prior to January 31, 1998 and 50% for any date of
determination thereafter.
"QUALIFIED PUBLIC OFFERING" shall mean a public offering of the
capital stock of the Company in which the Company shall receive net cash
proceeds equaling not less than $15,000,000.
"QUARTERLY BONUS" shall mean an amount equal to (in the aggregate)
0.025% multiplied by the aggregate principal amount of the Notes
outstanding as of the last day of any fiscal quarter of the Company.
"RESTRICTED EQUITY AMOUNT" shall mean an amount equal to the lesser
of (i) the net cash proceeds received by the Company from the issue or sale
of its capital stock from and after January 31, 1996, or (ii) the Minimum
Equity Amount.
"XXXXXXX" shall mean Xxxxxxx Mining Services Limited ACN 009 117 533,
a company incorporated in Western Australia, Australia, and any Person who
succeeds to all, or substantially all, of the assets and business of
Xxxxxxx Mining Services Limited.
"UNRESTRICTED EQUITY AMOUNT" shall mean the difference (if any)
between (i) the amount of net cash proceeds received by the Company from
the issue or sale of its common stock from and after January 31, 1996, and
(ii) the Restricted Equity Amount.
SECTION 2. CONDITIONS TO EFFECTIVENESS OF THIS FIRST AMENDMENT.
2.1. This First Amendment shall not become effective until, and
shall become effective when, each and every one of the following conditions
shall have been satisfied:
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(a) the Intercreditor Agreement dated as of March 15, 1996 among
Bank of America Illinois, Mercantile Bank, Bank of America National
Association, as agent, and the Noteholder, shall have been amended, in
scope and form satisfactory to the Noteholder, to include the banks which
are party to the Company's $100 million multi-currency syndicated facility;
and
(b) the Noteholder shall have received a fee from the Company, as
an inducement to, and in consideration of, entering into this First
Amendment in an aggregate amount equal to $25,000.
Upon receipt of all of the foregoing, this First Amendment shall become
effective.
SECTION 3. MISCELLANEOUS.
3.1. The Company represents and warrants that no Default or Event of
Default has occurred and is continuing.
3.2. This First Amendment shall be construed in connection with and
as part of each of the Note Agreement, and except as modified and expressly
amended by this First Amendment, all terms, conditions and covenants contained
in the Note Agreement and the Notes are hereby ratified and shall be and remain
in full force and effect.
3.3. Any and all notices, requests, certificates and other
instruments executed and delivered after the execution and delivery of this
First Amendment may refer to the Note Agreement without making specific
reference to this First Amendment but nevertheless all such references shall
include this First Amendment unless the context otherwise requires.
3.4. The descriptive headings of the various Sections or parts of
this First Amendment are for convenience only and shall not affect the meaning
or construction of any of the provisions hereof.
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3.5. This First Amendment shall be governed by and construed in
accordance with Illinois law.
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The execution hereof by you shall constitute a contract between us for the
uses and purposes hereinabove set forth, and this First Amendment may be
executed in any number of counterparts, each executed counterpart constituting
an original, but all together only one agreement.
XXXXX XXXXXXXXXXX COMPANY
(FORMERLY LAYNE, INC.)
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Vice President--Finance
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Accepted and Agreed to:
MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
Its Managing Director
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