TO FINANCING AGREEMENT
EXECUTION VERSION
EIGHTH AMENDMENT
TO
THIS EIGHTH AMENDMENT TO FINANCING AGREEMENT (this “Amendment”), dated as of November 4, 2011 (the “Effective Date”), by and among ENVIRONMENTAL QUALITY MANAGEMENT, INC., an Ohio corporation (“EQMI”), EQ ENGINEERS, LLC, an Indiana limited liability company (“EQE” and together with EQMI, each a “Borrower” and collectively, “Borrowers”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association (“Bank”), is as follows:
Preliminary Statements
A. Borrowers and Bank are parties to a Financing Agreement dated as of October 31, 2006, as amended by the First Amendment to Financing Agreement dated as of October 1, 2007, the Second Amendment to Financing Agreement dated as of September 12, 2008, the Third Amendment to Financing Agreement dated as of February 10, 2009, the Fourth Amendment to Financing Agreement dated as of December 29, 2010, the Fifth Amendment to Financing Agreement dated as of February 4, 2011, the Sixth Amendment to Financing Agreement dated as of March 15, 2011, and the Seventh Amendment to Financing Agreement dated as of October 28, 2011 (as amended, the “Financing Agreement”). Capitalized terms which are used, but not defined, in this Amendment will have the meanings given to them in the Financing Agreement.
B. Borrowers have requested that Bank: (i) consent to the Eighth Amendment Beacon Transaction (as defined in Section 2 below) and (ii) make certain other changes to the Financing Agreement and certain of the other Loan Documents, all as more specifically set forth herein.
C. Bank is willing to consent to such requests and so amend the Financing Agreement and other Loan Documents, all as contemplated by the terms, and subject to the conditions, of this Amendment.
Statement of Amendment
In consideration of the covenants, agreements, and conditions set forth in this Amendment, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Bank and Borrowers hereby agree as follows:
1. Amendments to Financing Agreement. Subject to the satisfaction of the conditions of this Amendment, the Financing Agreement is hereby amended as follows:
1.1 Section 1.1 of the Financing Agreement is hereby amended by the addition of the following new definitions, in their proper alphabetical order, to provide in their respective entireties as follows:
“Eighth Amendment” means the Eighth Amendment to Credit Agreement, dated to be effective as of the Eighth Amendment Effective Date, by and between Borrowers and Lender with respect to this Agreement.
“Eighth Amendment Beacon Noteholder Subordinated Debt” means the Subordinated Debt (as defined in the Eighth Amendment Beacon Noteholder Subordination Agreement).
“Eighth Amendment Beacon Noteholder Subordinated Debt Default” means any of the following (or any combination of the following): (a) the occurrence and continuance of a Subordinated Debt Default (as defined in the Eighth Amendment Beacon Noteholder Subordination Agreement) or (b) any acceleration of any of the Eighth Amendment Beacon Noteholder Subordinated Debt.
“Eighth Amendment Beacon Noteholder Subordinated Debt Documents” means the Subordinated Debt Documents (as defined in the Eighth Amendment Beacon Noteholder Subordination Agreement).
“Eighth Amendment Beacon Noteholder Subordinated Notes” means each of, and collectively, the Subordinated Debt Notes (as defined in the Eighth Amendment Beacon Noteholder Subordination Agreement).
“Eighth Amendment Beacon Noteholder Subordination Agreement” means the Subordination Agreement dated as of the Eighth Amendment Effective Date among the Eighth Amendment Beacon Subordinated Noteholders and Bank.
“Eighth Amendment Beacon Subordinated Noteholders” means each of, and collectively: (i) Argentum Capital Partners II, L.P., on behalf of itself and as Subordinated Lender Agent (as defined in the Eighth Amendment Beacon Noteholder Subordination Agreement), (ii) Xxxxxx X. Xxxxxxxxxxx, (iii) Xxxx X. Xxxxxx, (iv) Xxxxxx X. Xxxxxx, (v) Xxxxx X. Xxxxxx, (vi) Xxxxxx X. Xxxxxxx, (vii) Xxxxx Xxxxxxxx, and (viii) as applicable, their respective heirs, beneficiaries, successors, and assigns.
“Eighth Amendment Effective Date” means the Effective Date (as defined in the Eighth Amendment).
1.2 The following definition in Section 1.1 of the Financing Agreement is hereby amended in its entirety by substituting the following in its place:
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“Loan Documents” means this Agreement, the Joinder Agreement, the Revolving Loan Note, the Security Agreements, the Letter of Credit Documents, each Insurance Agreement and Life Insurance Assignment (as defined in Section 5.2), the Cross-Guaranties, the Parent Guaranty, the Parent Pledge Agreement, the Beacon Texas Guaranty (if any), the Beacon Texas Deed of Trust (if any), the Beacon Texas Security Agreement (if any), the Xxxxxx Subordination Agreement, the Fox Subordination Agreement, the Beacon Xxxxxx Subordination Agreement, the Beacon Noteholder Subordination Agreement, the Additional Beacon Noteholder Subordination Agreement, the Eighth Amendment Beacon Noteholder Subordination Agreement, the documents, instruments and agreements executed in connection with the Federal Assignment of Claims Act and any state Assignment of Claims Law, and all other agreements, instruments and documents relating to the Loans, including mortgages, deeds of trust, security agreements, subordination agreements, intercreditor agreements, pledges, powers of attorney, consents, collateral assignments, locked box and cash management agreements, letter agreements, contracts, notices, leases, financing statements and letters of credit and applications therefor and all other writings, all of which must be in form and substance satisfactory to Bank, which have been, are as of the date of this Agreement, or will in the future be signed by, or on behalf of, any one or more Borrowers and delivered to Bank.
1.3 Section 12.1(i)(s) of the Financing Agreement is hereby amended in its entirety by substituting the following in its place:
(s) (i) There occurs an EQE Acquisition Debt Default which has not been waived in writing by the applicable EQE Seller; (ii) there occurs a Fox Subordinated Debt Default which has not been waived in writing by the Fox Seller; (iii) there occurs a Xxxxxx Subordinated Debt Default which has not been waived in writing by the Xxxxxx Seller; (iv) the Fox Seller defaults under the Fox Subordination Agreement or the Fox Seller denies his obligations under the Fox Subordination Agreement; (v) any Xxxxxx Seller defaults under the Xxxxxx Subordination Agreement or any Xxxxxx Seller denies its obligations under the Xxxxxx Subordination Agreement; (vi) either of the Fox Subordination Agreement or the Xxxxxx Subordination Agreement is terminated or ceases, for any reason, to be in full force and effect (other than as agreed in writing by Bank or in accordance with its express terms); (vii) there occurs a Beacon Xxxxxx Subordinated Debt Default which has not been waived in writing by Xx. Xxxxxx; (viii) Xx. Xxxxxx defaults under the Beacon Xxxxxx Subordination Agreement or Xx. Xxxxxx denies his obligations under the Beacon Xxxxxx Subordination Agreement; (ix) there occurs a Beacon Noteholder Subordinated Debt Default which has not been waived in writing by the Beacon Subordinated Noteholders; (x) any Beacon Subordinated Noteholder defaults under the Beacon Noteholder Subordination Agreement or any Beacon Subordinated Noteholder denies his, her, or its obligations under the Beacon Noteholder Subordination Agreement; (xi) there occurs an Additional Beacon Noteholder Subordinated Debt Default which has not been waived in writing by the Additional Beacon Subordinated Noteholders; (xii) any Additional Beacon Subordinated Noteholder defaults under the Additional Beacon Noteholder Subordination Agreement or any Additional Beacon Subordinated Noteholder denies his, her or its obligations under the Additional Beacon Noteholder Subordination Agreement; (xiii) there occurs an Eighth Amendment Beacon Noteholder Subordinated Debt Default which has not been waived in writing by the Eighth Amendment Beacon Subordinated Noteholders; (xiv) any Eighth Amendment Beacon Subordinated Noteholder defaults under the Eighth Amendment Beacon Noteholder Subordination Agreement or any Eighth Amendment Beacon Subordinated Noteholder denies his, or its obligations under the Eighth Amendment Beacon Noteholder Subordination Agreement; or (xv) any of the Beacon Xxxxxx Subordination Agreement, the Beacon Noteholder Subordination Agreement, the Additional Beacon Noteholder Subordination Agreement, or the Eighth Amendment Beacon Noteholder Subordination Agreement is terminated or ceases, for any reason, to be in full force and effect (other than as agreed in writing by Bank or in accordance with its express terms); or
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2. Consents by Bank. Borrowers have requested that Bank consent to the Eighth Amendment Beacon Noteholder Subordinated Debt (as defined in Section 1.1 of this Amendment), in an aggregate amount of up to $1,535,000.00 (collectively, the “Eighth Amendment Beacon Transaction”), as required under the Financing Agreement and the other Loan Documents. Subject to the terms, and on the conditions, of this Amendment, Bank hereby consents to the Eighth Amendment Beacon Transaction. The consent provided in this Section 2, either alone or together with other consents which Bank may give from time to time, shall not, by course of dealing, implication or otherwise, obligate Bank to consent to any other incurrence of Indebtedness otherwise prohibited by the Financing Agreement or the other Loan Documents, in any case past, present or future, other than that specifically consented to by this Amendment, or reduce, restrict or in any way affect the discretion of Bank in considering any future consent requested by Borrowers.
3. Conditions; Other Documents. As a condition precedent to the effectiveness of this Amendment and the consent delineated in Section 2 of this Amendment, with the signing of this Amendment, Borrowers will deliver, or cause to be delivered, to Bank, all in form and substance satisfactory to Bank: (i) the Eighth Amendment Beacon Noteholder Subordination Agreement, duly executed by the Eighth Amendment Beacon Subordinated Noteholders; (ii) copies, certified by the Secretary of each Borrower, of resolutions of the Board of Directors or managers, as applicable, of such Borrower, authorizing the execution of this Amendment and the other Eighth Amendment Documents (as defined below) to which such Borrower is a party; (iii) the Reaffirmation of Guaranty and Security set forth after the signatures below, duly executed by Parent; (iv) a copy, certified by the Secretary of Parent, of resolutions of the Board of Directors of Parent, authorizing the execution of the Reaffirmation of Guaranty and Security referenced in the immediately preceding clause; (v) the Reaffirmation of Subordination set forth after the signatures below, duly executed by Argentum; (vi) the Reaffirmation of Subordination set forth after the signatures below, duly executed by Argentum, as agent on behalf of the Beacon Subordinated Noteholders; (vii) the Reaffirmation of Subordination set forth after the signatures below, duly executed by Argentum, as agent on behalf of the Additional Beacon Subordinated Noteholders; and (viii) such other documents, instruments, and agreements deemed necessary by Bank to effect the amendments to Borrowers’ credit facilities with Bank contemplated by this Amendment.
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4. Representations. To induce Bank to accept this Amendment, Borrowers hereby represent and warrant to Bank as follows:
4.1 Each Borrower has full power and authority to enter into, and to perform its obligations under, as applicable, this Amendment and the other Loan Documents executed, amended, or amended and restated in connection herewith (collectively, the “Eighth Amendment Documents”) and the execution and delivery of, and the performance of its obligations under and arising out of, each applicable Eighth Amendment Document has been duly authorized by all necessary corporate or limited liability company action, as applicable.
4.2 Each Eighth Amendment Document, as applicable, constitutes the legal, valid and binding obligations of such Borrower enforceable in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally.
4.3 Each of Borrowers’ representations and warranties contained in the Loan Documents are complete and correct in all material respects as of the date of this Amendment with the same effect as though these representations and warranties had been made again on and as of the date of this Amendment (except where such representations and warranties speak solely as of an earlier date), subject to those changes as are not prohibited by, or do not constitute Events of Default under, the Financing Agreement.
4.4 No Event of Default has occurred and is continuing under the Financing Agreement other than pursuant to Section 10.28 of the Financing Agreement as a result of Borrowers’ violation of the Fixed Charge Coverage Ratio (as defined in Exhibit F to the Financing Agreement) for the Fiscal Quarters ended June 30, 2011 and September 30, 2011. Borrowers acknowledge Lender’s continued reservation of rights as provided in the letters from Lender to Borrowers and Parent dated August 8, 2011 and November 2, 2011 (collectively, the “Reservation of Rights Letters”) with respect to the Existing Defaults (as defined in the respective Reservation of Rights Letters).
5. Costs and Expenses. As a condition of this Amendment, Borrowers will promptly on demand pay or reimburse Bank for the costs and expenses incurred by Bank in connection with this Amendment, including, without limitation, Attorneys’ Fees.
6. Release. Each Borrower hereby releases Bank from any and all liabilities, damages and claims arising from or in any way related to the Obligations or the Loan Documents, other than such liabilities, damages and claims which arise after the execution of this Amendment. The foregoing release does not release or discharge, or operate to waive performance by, Bank of its express agreements and obligations stated in the Loan Documents on and after the date of this Amendment.
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7. Default. Any default by Borrowers in the performance of Borrowers’ obligations under this Amendment shall constitute an Event of Default under the Financing Agreement.
8. Continuing Effect of the Financing Agreement; Security. Except as expressly amended hereby, all of the provisions of the Financing Agreement are ratified and confirmed and remain in full force and effect. Borrowers and Bank hereby expressly intend that this Amendment shall not in any manner: (a) constitute the refinancing, refunding, payment or extinguishment of the Obligations evidenced by the existing Loan Documents; (b) be deemed to evidence a novation of the outstanding balance of the Obligations; or (c) replace, impair, or extinguish the creation, attachment, perfection or priority of the Liens on the Loan Collateral granted pursuant to the Loan Documents. Each Borrower ratifies and reaffirms any and all grants of Liens to Bank on the Loan Collateral as security for the Obligations, and each Borrower acknowledges and confirms that the grants of the Liens to Bank on the Loan Collateral: (i) represent continuing Liens on all of the Loan Collateral, (ii) secure all of the Obligations, and (iii) represent valid, first and best Liens on all of the Loan Collateral except to the extent, if any, of the Permitted Liens.
9. One Agreement; References; Fax Signature. The Financing Agreement, as amended by this Amendment, will be construed as one agreement. All references in any of the Loan Documents to the Financing Agreement will be deemed to be references to the Financing Agreement as amended by this Amendment. This Amendment may be signed by facsimile signatures or other electronic delivery of an image file reflecting the execution thereof, and if so signed, (i) may be relied on by each party as if the documents were a manually signed original and (ii) will be binding on each party for all purposes.
10. Captions. The headings to the Sections of this Amendment have been inserted for convenience of reference only and shall in no way modify or restrict any provisions hereof or be used to construe any such provisions.
11. Counterparts. This Amendment may be executed in multiple counterparts, each of which shall be an original but all of which together shall constitute one and the same instrument.
12. Entire Agreement. This Amendment, together with the other Loan Documents, sets forth the entire agreement of the parties with respect to the subject matter of this Amendment and supersedes all previous understandings, written or oral, in respect of this Amendment.
13. Governing Law. This Amendment shall be governed by and construed in accordance with the internal laws of the State of Ohio (without regard to Ohio conflicts of law principles).
14. Reaffirmation of Cross-Guaranty. Each Borrower hereby: (i) ratifies and reaffirms the Cross-Guaranty and (ii) acknowledges and agrees that no Borrower is released from its obligations under the Cross-Guaranty by reason of this Amendment or the other Loan Documents and that the obligations of each Borrower under the Cross-Guaranty extend, among other Obligations of Borrowers to Lender, to the Obligations of Borrowers under this Amendment and other Loan Documents.
[Signature Page Follows]
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IN WITNESS WHEREOF, this Amendment has been duly executed by Borrowers as of the Effective Date.
| ENVIRONMENTAL QUALITY MANAGEMENT, INC. | ||
| By: | /s/ Xxxxxx X. Xxxxxx | |
| Xxxxxx X. Xxxxxx, Chief Financial Officer | ||
| EQ ENGINEERS, LLC | ||
| By: | /s/ Xxxx X. Xxxxxx | |
| Xxxx X. Xxxxxx, Manager | ||
| Accepted at Cincinnati, Ohio | ||
| as of the Effective Date. | ||
| U.S. BANK NATIONAL ASSOCIATION | ||
| By: | /s/ Xxxxx X. Xxxxx | |
| Xxxxx X. Xxxxx, Banking Officer | ||
