Document:

Exhibit 10.21

 

 

Amendment No. 2 to

 

Loan and Security Agreement

 

	
Borrower:
    	
Quench USA, Inc.
    
	
Address:
    	
780 5th Avenue, Suite 135
    
	
 
    	
King of Prussia, PA 19406
    
	
 
    	
 
    
	
Date:
    	
December 23, 2013
    

 

This AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into on the above date, by and between the borrower named above (“Borrower”) and ORIX Ventures, LLC, a Delaware limited liability company (“ORIX”).

 

RECITALS:

 

WHEREAS, Borrower and ORIX are parties to that certain Loan and Security Agreement dated as of October 7, 2011 (as from time to time amended, restated, supplemented or otherwise modified, the “Loan Agreement”), pursuant to which ORIX has agreed to make loans and other extensions of credit to Borrower in accordance with the terms thereof;

 

WHEREAS, Borrower and ORIX have agreed to amend the Loan Agreement subject to the terms and conditions set forth herein;

 

WHEREAS, in connection with the foregoing, Borrower and ORIX wish to amend the Loan Agreement, subject to the terms and conditions of this Amendment; and

 

WHEREAS, this Amendment shall constitute a Loan Document and capitalized terms used but not otherwise defined in this Amendment shall have the meanings ascribed to them in the Loan Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the agreements, promises and covenants set forth below, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

 

Section 1                                              Amendments to Loan Agreement.

 

(a)                                 Section 1.1 (Loans) of the Loan Agreement is hereby amended and restated in its entirety as follows:

 

“1.1 Loans.  Subject to the terms and conditions in this Agreement, ORIX shall make loans to Borrower (collectively and individually, the “Loan”), in the amounts shown on the Schedule. The Loan may not be repaid and reborrowed.”

 

(b)                                 Section 2.1 (Security Interest) of the Loan Agreement is hereby amended and restated in its entirety as follows:

 

“2.1 Security Interest.  To secure the payment and performance of all of the Obligations when due, Borrower hereby grants to ORIX a security interest in all of the following (collectively, the “Collateral”):  all right, title and interest of Borrower in and to its present and future assets of every kind, whether now owned or hereafter arising or acquired and wherever located, and all proceeds and products thereof, including without limitation the following: all Accounts; all Inventory; all Equipment; all General Intangibles (including without limitation all Intellectual Property and Deposit Accounts); all Investment Property; all Other Property; and any and all claims, rights and interests in any of the above, and all guaranties and security for any of the above, and all substitutions and replacements for, additions, accessions, attachments, accessories, and improvements to, and proceeds (including proceeds of any insurance policies, proceeds of proceeds and claims against third parties) of, any and all of the above, and all Borrower’s books relating to any of the above, including without limitation the assets identified in the Representations; provided, however, that the Collateral shall not include any assets that are the subject of any Permitted Acquisition to the extent that such assets are subject to a continuing security interest in favor of or otherwise pledged to the seller of such assets in connection with any deferred purchase consideration arrangement pursuant to such Permitted Acquisition and in connection with such Permitted Acquisition Borrower has provided ORIX with a schedule of such assets.”

 

(c)                                  Section 5.2 (Prepayment) of the Loan Agreement is hereby amended and restated in its entirety as follows:

 

“5.2 Prepayment.  Borrower shall have the option of prepaying the principal amount of the Loan, prior to the Maturity Date, in whole or in part, provided that Borrower concurrently pays ORIX (i) all accrued and unpaid interest on the principal so prepaid and (ii) a prepayment fee equal to 2.0% of the amount prepaid if prepayment occurs on or prior to the second anniversary of the Second Amendment Effective Date, and 1.0% of the amount prepaid if prepayment occurs after the second anniversary of the Second Amendment Effective Date and 

 

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on or before the third anniversary of the Second Amendment Effective Date.  Said prepayment fee shall be due from Borrower to ORIX upon any prepayment of the principal of the Loan, including without limitation any prepayment as a result of an Event of Default or the exercise of any rights or remedies by ORIX following the same. Prepayments of the Loan shall be applied pro rata to the principal installments due or outstanding on the Loan.”

 

(d)                                 Section 7 (Definitions) of the Loan Agreement is hereby amended by amending and restating the definitions of “Permitted Acquisition” and “Subordinated Debt” in their entirety as follows:

 

““Permitted Acquisition” means an acquisition transaction pursuant to which the following conditions are satisfied: (i) no Event of Default has occurred, is continuing or would exist after giving effect to such transactions; (ii) Borrower is in pro forma compliance with all financial covenants after giving effect to such transactions; (iii) such transaction does not result in a Change in Control (as applicable); (iv) Borrower is the surviving entity and the target is a U.S. entity or an entity organized under another jurisdiction within North America (including Mexico and countries located in the Caribbean) in which ORIX is able to perfect its liens in the acquired assets (as applicable); (v) the target becomes a borrower under this Agreement (as applicable); (vi) the merger or consolidation is not likely to cause a Material Adverse Change (as applicable); (vii) value of the acquired assets (inclusive of goodwill, but exclusive of any assets that are subject to a continuing security interest in favor of or otherwise pledged to the seller of such assets in connection with any deferred purchase consideration arrangement) is equal to or greater than the purchase price payment amount made at closing (exclusive of any deferred purchase price payment amounts or earn-out payments); (viii) acquired assets (other than any assets that are subject to a continuing security interest in favor of or otherwise pledged to the seller of such assets in connection with any deferred purchase consideration arrangement) become part of the Collateral, and are acquired free and clear of any other liens other than Permitted Liens; (ix) any Indebtedness used to finance deferred payment obligations shall not contain a cross-default to this Agreement and shall be Subordinated Debt; (x) Borrower provides ORIX copies of all final transaction documents related to such acquisition prior to closing; (xi) not later than ten (10) Business Days prior to the proposed acquisition consummation date, Borrower provides ORIX evidence that (a) the target is in a similar line of or complementary services business as Borrower; and (b) adequate financial information with respect to the seller and the seller’s assets to be acquired by Borrower; and (xii) for any acquisition with up-front consideration (exclusive of any deferred purchase price payment amounts or seller notes) greater than $15 

 

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million, Borrower shall have a quality of earnings report performed on the acquisition target by a third party reasonably acceptable to ORIX, with a scope of work reasonably acceptable to ORIX.”

 

““Subordinated Debt” means Indebtedness which is (i) on terms reasonably acceptable to ORIX in its Good Faith Business Judgment, and (ii) which is subordinated to the Obligations pursuant to (A) a Subordination Agreement in such form as ORIX shall reasonably specify in its Good Faith Business Judgment (which, among other terms, shall (unless otherwise agreed by ORIX) provide for a “silent-second” lien on the acquired assets in connection with any Permitted Acquisition if ORIX permits such Indebtedness to be secured by a lien), or (B) with respect to any deferred purchase consideration in an amount less than $4,000,000 in any Permitted Acquisition, the inclusion of the following provision in all agreements, notes, or documents evidencing such Indebtedness:

 

“[Seller] hereby acknowledges and agrees that [Seller]’s rights to receive any payment of the deferred portion of the Purchase Price (the “[Seller] Debt”), are unsecured with respect to the Collateral (as defined in the Loan Agreement (as defined below)) and subordinated to the payment in full in cash by [Buyer] of its obligations to ORIX Ventures, LLC (“ORIX”) under the Loan and Security Agreement dated as of October 7, 2011 (as the same may be further amended, restated, supplemented or replaced, the “ORIX Agreement”) by and between Quench USA, Inc. and ORIX (including the Obligations as defined in the ORIX Agreement,  collectively, the “ORIX Debt”).  Notwithstanding the foregoing, [Seller] may accept the regularly scheduled (non-default) payments of the deferred portion of the Purchase Price; provided that no default or event of default and no event which, with notice or passage of time or both, would constitute a default or event of default, has occurred under the ORIX Agreement, both before and after giving effect to such payments.

 

The [Seller] Debt shall not be cross-defaulted to the ORIX Debt.  Until the ORIX Debt has been paid and performed in full in cash, [Seller] shall not (i) accelerate the maturity of the [Seller] Debt, (ii) commence or join in any action or proceeding to recover any amounts due on the [Seller] Debt other than actions or proceedings in which recourse is limited to assets in which such [Seller] was granted a security interest in or which were otherwise pledged to [Seller] by [Buyer], (iii) commence or join in any involuntary bankruptcy petition, insolvency proceeding or similar judicial proceeding against [Buyer], or (iv) initiate or prosecute any claim, action or other proceeding (a) challenging the validity, enforceability or 

 

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unavoidability of any claim of ORIX with respect to any of its collateral, or (b) challenging  the perfection, enforceability or unavoidability of any liens or security interests of ORIX in any collateral.

 

Notwithstanding any provision to the contrary contained in this Agreement, the parties hereto hereby acknowledge that ORIX is an intended third-party beneficiary of the foregoing subordination provisions and, until the ORIX Debt has been paid and performed in full in cash, the parties shall not amend or modify such provisions, without ORIX’s consent, and any purchaser, assignee or transferee of any rights, claim or interest of any kind in or to any of the [Seller] Debt, shall remain bound by the foregoing as a condition to any sale, assignment or transfer.”“

 

(e)                                  Section 7 (Definitions) of the Loan Agreement is hereby amended by adding the following definitions in alphabetical order therein:

 

““Second Amendment” means that certain Second Amendment to Loan and Security Agreement, dated as of December 23, 2013, by and between ORIX and Borrower.”

 

““Second Amendment Effective Date” means the date of the Second Amendment.”

 

(f)                                   Sections 1, 2, 3, 4, 6 and 7 of the Schedules to the Loan Agreement are hereby amended and restated in their entirety as set forth on Exhibit A attached hereto.

 

(g)                                  Exhibit A1 to the Loan Agreement is hereby amended and restated in its entirety as set forth on Exhibit B attached hereto.

 

Section 2                                              Representations and Warranties.  To induce ORIX to enter into this Amendment, Borrower represents and warrants that:

 

(a)                                 No Default.  After giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing as of the date hereof;

 

(b)                                 Representations and Warranties.  No event has occurred and is continuing or would result from the execution, delivery or performance of this Amendment which constitutes an Event of Default and, after giving effect to this Amendment and the transactions contemplated hereby, the representations and warranties of Borrower contained in the Loan Documents are true, accurate and complete in all material respects on and as of the date hereof to the same extent as though made on and as of such date except to the extent such representations 

 

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and warranties specifically relate to an earlier date, in which case such representation or warranty shall be true, accurate and complete in all material respects as of such earlier date; and

 

(c)                                  Corporate Authority.  (i) The execution, delivery and performance by Borrower of this Amendment is within its corporate powers and has been duly authorized by all necessary corporate action on the part of Borrower, (ii) this Amendment is the legal, valid and binding obligation of Borrower enforceable against Borrower in accordance with its terms, and (iii) neither the execution, delivery or performance by Borrower of this Amendment (1) violates any law or regulation, or any other or decree of any governmental authority, (2) conflicts with or result in the breach or termination of, constitute a default under or accelerate any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which Borrower is a party or by which Borrower or any of its property is bound, (3) results in the creation or imposition of any lien upon any of the Collateral, (4) violates or conflicts with the certificate of incorporation or bylaws of Borrower, or (5) requires the consent, approval or authorization of, or declaration or filing by Borrower with, any other Person, except for those already duly obtained.

 

Section 3                                              Conditions Precedent.  The effectiveness of this Amendment is subject to the following conditions precedent:

 

(a)                                 Executed Amendment.  ORIX shall have received from Borrower a copy of this Amendment (with an original to follow promptly thereafter), duly authorized, executed and delivered, and the Amendment shall constitute a Loan Document;

 

(b)                                 Amendment/Modification Fee.  Borrower shall have paid to ORIX a fully-earned, non-refundable amendment/modification fee of $31,250.00 with respect to this Amendment;

 

(c)                                  New Term Loan Commitment Fee.  Borrower shall have paid to ORIX a fully-earned, non-refundable new term loan commitment fee (as set forth in Section 3 of the Schedules to the Loan Agreement) of $175,000.00 with respect to this Amendment;

 

(d)                                 Receipt of Equity Investment.  Borrower shall have received proceeds from a capital contribution of not less than $20,000,000.00 from Borrower’s parent; and

 

(e)                                  Counsel Fees.  Borrower shall have satisfied all fees and expenses incurred by ORIX in connection with this Amendment and the subject matter hereof, including without limitation, reasonable fees, costs, and expenses of ORIX’s legal counsel incurred in connection with the preparation and negotiation of this Amendment.

 

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Section 4                                              Miscellaneous.

 

(a)                                 Binding Obligation.  This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

 

(b)                                 Ratification.  Notwithstanding anything contained herein, the terms of this Amendment are not intended to and do not effect a novation of the Loan Agreement or any other Loan Document.  Borrower hereby ratifies and reaffirms each of the terms and conditions of the Loan Documents to which it is a party and all of its obligations thereunder.

 

(c)                                  Limitation; Reservation of Rights.  The amendments set forth in this Amendment shall be limited precisely as written and shall not be deemed (a) to be a waiver or modification of any Event of Default or any other term or condition of any Loan Document or of any other instrument or agreement referred to therein or to prejudice any right or remedy which ORIX may now have or may have in the future under or in connection with the Loan Documents or any instrument or agreement referred to therein; or (b) to be a consent to any future amendment or modification or waiver to any instrument or agreement the execution and delivery of which is consented to hereby, or to any waiver of any of the provisions thereof.  Except for the amendments set forth herein, ORIX hereby expressly reserves all of its rights and remedies under the Loan Documents and at law and equity.  Except as expressly amended hereby, the Loan Documents shall continue in full force and effect.

 

(d)                                 Releases.  In further consideration of ORIX’s execution of this Agreement, Borrower for itself and on behalf of its respective successors (including, without limitation, any trustees acting on behalf of Borrower and any debtor-in-possession with respect to Borrower), assigns, subsidiaries and affiliates, hereby forever releases ORIX and its respective successors, assigns, parents, subsidiaries, affiliates, officers, employees directors, agents and attorneys (collectively, the “Releasees”) from any and all debts, claims, demands, liabilities, responsibilities, disputes, causes, damages, actions and causes of action (whether at law or in equity) and obligations of every nature whatsoever, whether liquidated or unliquidated, known or unknown, matured or unmatured, fixed or contingent, that Borrower may have against the Releasees which arise from or relate to any actions which the Releasees may have taken or omitted to take prior to the date this Amendment was executed with respect to the Obligations, any Collateral, the Loan Agreement, any other Loan Document and any third parties liable in whole or in part for the Obligations, other than arising out of the gross negligence or willful misconduct of such Releasee or its respective officers, employees directors, agents or attorneys as determined by a non-appealable decision of a court of competent jurisdiction.  This provision shall survive and continue in full force and effect whether or not Borrower shall satisfy all other provisions of this Amendment, the Loan Documents or the Loan Agreement including payment in full of all Obligations.

 

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(e)                                  Successors and Assigns.  This Amendment shall be binding on and shall inure to the benefit of Borrower and ORIX and their respective successors and assigns.

 

(f)                                   ENTIRE AGREEMENT.  THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE AND CONTAIN THE ENTIRE, FINAL AGREEMENT AND UNDERSTANDING CONCERNING THE SUBJECT MATTER HEREOF BETWEEN THE PARTIES HERETO, AND SUPERSEDES ALL OTHER PRIOR AGREEMENTS, UNDERSTANDINGS, NEGOTIATIONS AND DISCUSSIONS, REPRESENTATIONS, WARRANTIES, COMMITMENTS, PROPOSALS, OFFERS AND CONTRACTS CONCERNING THE SUBJECT MATTER HEREOF, WHETHER ORAL OR WRITTEN.  THIS AMENDMENT, ANY SUPPLEMENTS HERETO, AND ANY INSTRUMENTS OR DOCUMENTS DELIVERED OR TO BE DELIVERED IN CONNECTION HEREWITH MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.

 

(g)                                  Headings.  Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

 

(h)                                 Severability.  Wherever possible, each provision of this Amendment shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Amendment shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment.

 

(i)                                     Counterparts.  This Amendment may be executed in any number of separate original counterparts (or telecopied counterparts with original execution copy to follow) and by the different parties on separate counterparts, each of which shall be deemed to be an original, but all of such counterparts shall together constitute one agreement.  Delivery of an executed counterpart of a signature page to this Amendment by telecopy shall be effective as delivery of a manually executed counterpart of this Amendment.

 

(j)                                    Incorporation of Loan Agreement Provisions.  This Amendment is executed pursuant to the Loan Agreement and shall be construed, administered and applied in accordance with the terms and provisions of the Loan Agreement. The provisions contained in Section 8.11 (Governing Law) and Section 8.13 (Jury Trial) of the Loan Agreement are incorporated herein by reference to the same extent as if reproduced herein in their entirety.

 

[Signature Page to Follow]

 

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IN WITNESS WHEREOF, this Amendment has been duly executed on the date first written above.

 

 

	
Quench   USA, Inc., a   Delaware corporation
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:   
    	
/s/   Anthony Ibarguen
    	
 
    
	
 
    	
Name:   Anthony Ibarguen
    	
 
    
	
 
    	
Title:     President and Chief Executive Officer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
ORIX Ventures, LLC, a Delaware limited liability company
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:   
    	
/s/   Christopher L. Smith
    	
 
    
	
 
    	
Name:   Christopher L. Smith
    	
 
    
	
 
    	
Title:   Manager
    	
 
    

 

ORIX/QUENCH —AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT

 

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Exhibit A

 

Amendments to Schedules to Loan Agreement

 

1.  LOAN AMOUNTS (Section 1.1):

 

	
 
    	
 
    	
Tranche A Term Loan Amount:   $12,500,000
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The initial Loan (the “Tranche A Term Loan”) was   made in one disbursement on the Closing Date upon satisfaction of the   conditions set forth in this Agreement.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The entire unpaid principal balance of the Tranche A   Term Loan outstanding on December 23, 2015 shall be repaid in   (i) 12 equal monthly principal payments of $156,250.00, commencing on   January 23, 2016, and continuing on the same day of each month   thereafter until December 23, 2016; (ii) 12 equal monthly principal   payments of $208,333.33, commencing on January 23, 2017, and continuing   on the same day of each month thereafter until December 23, 2017;   (iii) 12 equal monthly principal payments of $260,416.67, commencing on   January 23, 2018, and continuing on the same day of each month   thereafter until the Maturity Date on which date the entire unpaid principal   balance of the Tranche A Term Loan plus any and all accrued and unpaid   interest shall be paid.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Tranche B Term Loan Amount:   $7,500,000
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Tranche B Term Loan (the “Tranche B Term Loan”)   shall be made in one disbursement on the Second Amendment Effective Date upon   satisfaction of the conditions set forth in this Agreement and the Second   Amendment.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The entire unpaid principal balance of the Tranche B   Term Loan outstanding on December 23, 2015 shall be repaid in   (i) 12 equal monthly principal payments of $93,750.00, commencing on   January 23, 2016, and continuing on the same day of each month   thereafter until December 23, 2016; (ii) 12 equal monthly principal   payments of $125,000.00, commencing on January 23, 2017, and continuing   on the same
    

 

ORIX/QUENCH —AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT

 

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day of each month thereafter until December 23,   2017; (iii) 12 equal monthly principal payments of $156,250.00,   commencing on January 23, 2018, and continuing on the same day of each   month thereafter until the Maturity Date on which date the entire unpaid   principal balance of the Tranche B Term Loan plus any and all accrued and   unpaid interest shall be paid.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Delayed Tranche C Term Loan Amount:   $10,000,000
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Until December 23, 2015, the Delayed Tranche C   Term Loan (the “Delayed Tranche C Term Loan”) shall be made in not more than   forty (40) disbursements (each of not less than $250,000) upon satisfaction   of the conditions set forth in this Agreement, and the following:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(a)         No Event of Default has occurred and is   continuing or would result following such draw on the Delayed Tranche C Term   Loan or any Permitted Acquisition entered into in connection therewith;

 

(b)         The proceeds of the Delayed Tranche C Term   Loan advance shall be used for a Permitted Acquisition;

 

(c)          The total pro forma indebtedness is less   than $500.00 per cooler; and

 

(d)         If such draw is made in   connection with a Permitted Acquisition, then the amount of such Delayed   Tranche C Term Loan draw and any amounts from the Tranche B Term Loan draw   may, collectively, not exceed 65% of the aggregate cash consideration   (excluding equity, seller notes, or deferred consideration) for such   Permitted Acquisition amount needed by Borrower.  The remaining 35% of the aggregate cash   consideration (excluding equity, seller notes, or deferred consideration) for   such Permitted Acquisition needed by Borrower shall be funded by equity   financings.  For the avoidance of   doubt, Borrower’s $20,000,000.00 capital contribution from Borrower’s parent   on December 23, 2013, shall qualify as an equity investment for the   purposes of this section and be used 
    

 

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to satisfy the   remaining 35% of the aggregate cash consideration for Permitted Acquisitions.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The entire unpaid   principal balance of the Delayed Tranche C Term Loan outstanding on   December 23, 2015 shall be repaid in (i) 12 equal monthly principal   payments equal to (a) 1/12th times (b) fifteen percent (15%) of   the outstanding principal balance of the Delayed Tranche C Term Loan   outstanding as of December 23, 2015, commencing on January 23,   2016, and continuing on the same day of each month thereafter until   December 23, 2016; (ii) 12 equal monthly principal payments equal   to (a) 1/12th times (b) twenty percent (20%) of   the outstanding principal balance of the Delayed Tranche C Term Loan   outstanding as of December 23, 2015, commencing on January 23,   2017, and continuing on the same day of each month thereafter until   December 23, 2017; (iii) 12 equal monthly principal payments equal   to (a) 1/12th times (b) twenty-five percent (25%)   of the outstanding principal balance of the Delayed Tranche C Term Loan   outstanding as of December 23, 2015, commencing on January 23,   2018, and continuing on the same day of each month thereafter until the   Maturity Date on which date the entire unpaid principal balance of the   Delayed Tranche C Term Loan plus any and all accrued and unpaid interest   shall be paid.
    
	
 
    	
 
    	
 
    
	
2.    INTEREST.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Interest   Rates
    	
 
    	
 
    
	
(Section 1.3):
    	
 
    	
The outstanding principal amount of the Tranche A   Term Loan shall bear interest each month at an interest rate per annum equal   to the Base Rate in effect for such month, plus 6.0% per annum; provided that   in no event shall the interest rate per annum be less than 9.50%.

 

The outstanding principal amount of the Tranche B   Term Loan and the Delayed Tranche C Term Loan shall bear interest each month   at an interest rate per annum equal to the Base Rate in effect for such   month, plus 5.50% per annum; provided that in no event shall the interest   rate per annum be less than 9.0%.
    

 

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Interest shall be calculated on the basis of a   360-day year for the actual number of days elapsed. Base Rate has the meaning   set forth in Section 7 of this Agreement.
    
	
 
    	
 
    	
 
    
	
3. FEES (Section 1.4):
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Initial Loan Fee:
    	
 
    	
$125,000.00, payable on the Closing Date.
    
	
 
    	
 
    	
 
    
	
Second Amendment Loan   Fee:
    	
 
    	
$175,000.00, payable on the Second Amendment   Effective Date.
    
	
 
    	
 
    	
 
    
	
4. MATURITY DATE
    	
 
    	
 
    
	
(Section 5.1):
    	
 
    	
December 23, 2018.
    
	
 
    	
 
    	
 
    
	
6. FINANCIAL COVENANTS.
    	
 
    	
 
    
	
(Section 4.8):
    	
 
    	
Borrower shall comply with the following financial   covenants. Compliance shall be measured monthly, except as may be otherwise   provided below.
    
	
 
    	
 
    	
 
    
	
Minimum Net   Rental Revenue:
    	
 
    	
Recurring Revenue: Borrower’s “Net   Rental Revenue” (as defined below) shall be not less than the amounts set   forth on the Minimum Net Rental Revenue “Covenant for Test Period” line set   forth on Exhibit A1 attached hereto during the periods set forth   on such Exhibit A1, tested as of the last day of each such   period; provided, that the Minimum Net Rental Revenue “Covenant for   Test Period” amount shall increase by an amount equal to 75% of Net Rental   Revenue attributable to each acquisition for each applicable test period,   beginning in the calendar quarter after the closing of each acquisition.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Minimum Net Rental Revenue “Covenant for Test   Period” amount will be capped at an amount equal to two (2) times the 
    

 

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sum of (i) the aggregate outstanding amount of   the funded ORIX Loans, plus (ii) the aggregate outstanding amount of any   deferred purchase price consideration from a Permitted Acquisition that   (A) is secured by a first lien in assets purchased in connection with such   Permitted Acquisition and (B) are not subject to a factoring   arrangement.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Borrower will provide ORIX   with a detailed schedule of expected Net Rental Revenue based on the amount   of in-house contract Net Rental Revenue at the time of each acquisition minus   expected churn within 45 days of the closing of each acquisition.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
For the purposes of this Schedule 6 and the attached   Exhibit A1, “Net Rental Revenue” shall mean as reported on   Borrower’s Detailed Income Statement line titled “Rental Revenue, Gross” plus   Borrower’s Detailed Income Statement line titled “Credit Memos.”  For the avoidance of doubt, the expected Net Rental   Revenue attributable to each acquisition shall be calculated based   only on the portion of acquired Net Rental Revenue that will be added to   the Borrower’s   Detailed Income Statement lines noted above, and not the total acquired   revenue.
    
	
 
    	
 
    	
 
    
	
Minimum Cash:
    	
 
    	
At-all-times, Borrower   shall have a minimum total available cash balance, in Deposit Accounts   (excluding any restricted accounts) for which ORIX maintains control   agreements sufficient to perfect ORIX’s security interest in said Deposit   Accounts, of at least $1,500,000.00, until such time as Borrower generates   positive trailing three-month free cash flow from operations less capital   expenditures for two consecutive quarters; provided, that this financial   covenant would be reinstated should the trailing three-month free cash flow   from operations less capital expenditures become negative in any fiscal   quarter.
    
	
 
    	
 
    	
 
    
	
7.  ADDITIONAL PROVISIONS.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(a)         Warrants.  On the Closing Date, Borrower   issued to ORIX 7-year warrant to purchase 187.5 shares of Series D   Preferred Stock of
    

 

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Borrower at a purchase   price of $2,000.00 per share (the “Initial Warrant”).  On the Second Amendment Effective Date, the   Initial Warrant shall be amended and restated to reflect its conversion into   a warrant for ordinary common shares of Quench USA Holdings LLC, to adjust   the number of shares and warrant price accordingly, and to extend the   expiration date of the Initial Warrant.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)         Additional   Warrants.  On the Second   Amendment Effective Date, Borrower shall concurrently issue to ORIX Finance   Equity Investors, LP, a Delaware limited partnership, a 7-year warrant to   purchase 225,000 ordinary common shares of Quench USA Holdings LLC at a   purchase price of $1.00 per share, on the terms set forth in ORIX Finance   Equity Investors, LP’s standard form of Warrant to Purchase Stock (the   “Second Warrant”).  If any portion of the Delayed Tranche C   Term Loan is disbursed by ORIX Ventures, LLC, then on the date of any such   advance the number of Shares subject to the Second Warrant shall be increased   by an amount equal to (i) the amount of such advance times   (ii) three percent (3%); provided, however, that the number of   shares subject to the Second Warrant shall be automatically increased to   525,000 upon (i) the occurrence of   an Event of Default; (ii) repayment, or prepayment, of the Loans in   connection with any refinancing; or (iii) the required exercise of the   Second Warrant in full pursuant to Section 1.9 thereof.

 

(c)          Deposit Accounts.  Prior to the first disbursement   of the Loan, and as a condition precedent thereto, Borrower shall cause the   banks and other institutions where its Deposit Accounts are maintained to   enter into control agreements with ORIX, in form and substance reasonably   satisfactory to ORIX in its Good Faith Business Judgment and sufficient to 
    

 

15

 

	
 
    	
 
    	
perfect ORIX’s   first-priority security interest in said Deposit Accounts. Prior to the   opening of any new Deposit Accounts, Borrower shall use cause the banks and   other institutions where such Deposit Accounts are to be maintained to enter   into control agreements with ORIX, in form and substance reasonably   satisfactory to ORIX in its Good Faith Business Judgment and sufficient to   perfect ORIX’s first-priority security interest in said Deposit Accounts.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(d)         Foreign   Subsidiaries.  Borrower   represents and warrants that it has no partially-owned or wholly-owned   Subsidiaries.
    

 

16

 

Exhibit B

 

Exhibit A1 to the Loan Agreement

 

17

 

MONTHLY   COMPLIANCE CERTIFICATE For Period Exhibit A1 TO: E-MAIL: FROM: The   undersigned authorized officer of Quench USA, Inc. (“Borrower”) certifies   that, under the Loan and Security Agreement between Borrower and ORIX dated   October 7, 2011 (the “Loan Agreement”) and all related documents (with the   Loan Agreement, the “Loan Documents”): (i) For the period above, Borrower is   in complete compliance with all covenants in the Loan Documents, including   all financial covenants (except as may be noted below); (ii) all   representations and warranties in the Loan Documents are true and correct in   all material respects on this date, and (iii) no Default or Event of Default   (as those terms are defined in the Loan Agreement) has occurred and is   continuing. Without limiting the foregoing, the undersigned further certifies   to the compliance with the specific covenants set out below. Attached are the   required documents supporting this Certificate. The undersigned certifies   that these were prepared in accordance with Generally Accepted Accounting   Principles (GAAP) consistently applied from one period to the next except as   explained in any accompanying letter or footnotes. Nothing herein limits,   modifies, amends or waives any provisions of the Loan Documents. Borrower   must comply, without limitation, with all covenants including the following   tests: Minimum Net Rental Revenue Minimum Net Rental Revenue, measured as of   the end of each period, shall not be less than the amount stated in the   Schedule to the Loan and Security Agreement, including all Amendments.   Covenant Compliance Calculation 2014 2015 2016 2017 (000) Q1 (Mar) Q2 (Jun)   Q3 (Sep) Q4 (Dec) Q1 (Mar) Q2 (Jun) Q3 (Sep) Q4 (Dec) Q1 (Mar) Q2 (Jun) Q3   (Sep) Q4 (Dec) Q1 (Mar) Q2 (Jun) Q3 (Sep) Q4 (Dec) Actual Results Rental Revenue,   Gross Credit Memos Net Rental Revenue $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —   $ — $ — $ — $ — $ — $ — Cumulative Actual Net Rental Revenue (trailing 4   quarters) $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —   Cumulative measurement period in quarters 1 2 3 4 4 4 4 4 4 4 4 4 4 4 4 4   Covenant Test Period Calculation Minimum Net Rental Revenue “Covenant for   Test Period” $ 4,600 $ 9,400 $ 14,400 $ 19,500 $ 20,100 $ 20,600 $ 21,200 $ 21,800 $ 22,400 $ 23,100 $ 23,800 $ 24,600 $ 25,400 $ 26,200 $ 27,100 $ 28,100 Acquistion #1 Covenant Adjustment $ — $ — $ — $ — $ — $ — $ — $ — $ —   $ — $ — $ — $ — $ — $ — $ — Acquistion #2 Covenant Adjustment $ — $ — $ — $ —   $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — Acquistion #3 Covenant   Adjustment $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —   Total Minimum Net Rental Revenue “Covenant for Test Period” $ 4,600 $ 9,400 $ 14,400 $ 19,500 $ 20,100 $ 20,600 $ 21,200 $ 21,800 $ 22,400 $ 23,100 $ 23,800 $ 24,600 $ 25,400 $ 26,200 $ 27,100 $ 28,100 Cumulative Actual Net   Rental Revenue (trailing 4 quarters) $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —   $ — $ — $ — $ — $ — $ — Total Minimum Net Rental Revenue “Covenant for Test   Period” $ 4,600 $ 9,400 $ 14,400 $ 19,500 $ 20,100 $ 20,600 $ 21,200 $ 21,800   $ 22,400 $ 23,100 $ 23,800 $ 24,600 $ 25,400 $ 26,200 $ 27,100 $ 28,100   Compliance? YES/NO Acquisition Covenant Adjustment Acquisition #1 Covenant   Adjustment Acquisition Net Rental Revenue $ — $ — $ — $ — $ — $ — $ — $ — $ —   $ — $ — $ — $ — $ — $ — $ — Cumulative Acquisition Net Rental Revenue   (trailing 4 quarters) $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —   $ — $ — Adjustment Factor 75 % 75 % 75 % 75 % 75 % 75 % 75 % 75 % 75 % 75 %   75 % 75 % 75 % 75 % 75 % 75 % Acquisition #1 Covenant Adjustment $ — $ — $ —   $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — Acquisition #2 Covenant   Adjustment Acquisition Net Rental Revenue $ — $ — $ — $ — $ — $ — $ — $ — $ —   $ — $ — $ — $ — $ — $ — $ — Cumulative Acquisition Net Rental Revenue   (trailing 4 quarters) $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —   $ — $ — Adjustment Factor 75 % 75 % 75 % 75 % 75 % 75 % 75 % 75 % 75 % 75 %   75 % 75 % 75 % 75 % 75 % 75 % Acquisition #2 Covenant Adjustment $ — $ — $ —   $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — Acquisition #3 Covenant   Adjustment Acquisition Net Rental Revenue $ — $ — $ — $ — $ — $ — $ — $ — $ —   $ — $ — $ — $ — $ — $ — $ — Cumulative Acquisition Net Rental Revenue   (trailing 4 quarters) $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ —   $ — $ — Adjustment Factor 75 % 75 % 75 % 75 % 75 % 75 % 75 % 75 % 75 % 75 %   75 % 75 % 75 % 75 % 75 % 75 % Acquisition #3 Covenant Adjustment $ — $ — $ —   $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — Cash Balance Obligor   shall at all times maintain unrestricted cash not less than $1,500,000 in   Deposit Accounts not subject to any liens, security interests or charges   other than in favor of ORIX. 2014 2015 (000) Jan Feb Mar April May June July   Aug Sep Oct Nov Dec Jan Feb Mar April Lowest Unrestricted Cash Required   Minimum cash 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500   1,500 1,500 1,500 1,500 1,500 1,500 Compliance? 2015 2016 (000) May June July   Aug Sep Oct Nov Dec Jan Feb Mar April May June July Aug Lowest Unrestricted   Cash Required Minimum cash 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500   1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 Compliance? 2016 2017 (000)   Sep Oct Nov Dec Jan Feb Mar April May June July Aug Sep Oct Nov Dec Lowest   Unrestricted Cash Required Minimum cash 1,500 1,500 1,500 1,500 1,500 1,500   1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 1,500 Compliance?   Borrower only has Deposit Accounts and/or Investment Accounts located at the   following institutions: Deposit Accounts and Investment Accounts opened in   the current period: Type: a/c #: Type: a/c #: Has Borrower filed any new   Trademark, Patent or Copyright applications? (If “yes”, please list below) No   No No SIGNATURE DATE PLEASE RETURN YOUR SIGNED FORM BY EMAIL TO   JEFFREY.SOKOLOWSKI@ORIX.COM FOR ORIX USE ONLY: Date Received: Reviewed by:   Review Date: In Compliance: Y / N ORIX/QUENCH —AMENDMENT NO. 2 TO LOAN AND   SECURITY AGREEMENT 18Exhibit 10.22

 

 

Consent and Amendment No. 3 to

 

Loan and Security Agreement

 

	
Borrower:
    	
Quench USA, Inc.
    
	
Address:
    	
780 5th Avenue, Suite 135
    
	
 
    	
King of Prussia, PA 19406
    
	
 
    	
 
    
	
Date:
    	
June 16, 2014
    

 

This CONSENT AND AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is entered into on the above date, by and between the borrower named above (“Borrower”) and ORIX Ventures, LLC, a Delaware limited liability company (“ORIX”).

 

RECITALS:

 

WHEREAS, Borrower and ORIX are parties to that certain Loan and Security Agreement dated as of October 7, 2011 (as from time to time amended, restated, supplemented or otherwise modified, the “Loan Agreement”), pursuant to which ORIX has agreed to make loans and other extensions of credit to Borrower in accordance with the terms thereof;

 

WHEREAS, Borrower has requested that ORIX consent to Borrower’s acquisition of substantially all of the assets of Atlas Water Systems, Inc., a Massachusetts corporation (“Target”), pursuant to that certain Asset Purchase Agreement by and between Target and Borrower, dated on or about the date hereof (such agreement, as modified by any and all modifications, extensions and renewals thereof and any replacements or substitutions therefor, is hereinafter collectively referred to as the “Purchase Agreement”), and ORIX has agreed to consent to such acquisition transaction subject to the terms and conditions set forth herein; and

 

WHEREAS, in connection with the foregoing, Borrower and ORIX wish to amend the Loan Agreement, subject to the terms and conditions of this Amendment; and

 

WHEREAS, this Amendment shall constitute a Loan Document and capitalized terms used but not otherwise defined in this Amendment shall have the meanings ascribed to them in the Loan Agreement.

 

NOW, THEREFORE, in consideration of the foregoing and the agreements, promises and covenants set forth below, and for other good and valuable consideration the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

 

Section 1                                              Consent.  Notwithstanding Section 4.5(ii) of the Loan Agreement or any provision to the contrary contained in the Loan Documents, ORIX hereby consents to Borrower entering into the Purchase Agreement and acquiring the assets of Target; provided that the representations and warranties contained in Section 3 of this Amendment are true and correct as of the date hereof, and immediately upon the consummation of the transaction contemplated by the Purchase Agreement and Borrower delivers to ORIX the other documents and deliverables required pursuant to Section 4 of this Amendment.

 

Section 2                                              Amendments to Loan Agreement.

 

(a)                                 Section 7 (Definitions) of the Loan Agreement is hereby amended by adding the following definitions in alphabetical order therein:

 

““Third Amendment” means that certain Consent and Third Amendment to Loan and Security Agreement, dated as of June 16, 2014, by and between ORIX and Borrower.”

 

““Third Amendment Effective Date” means the date of the Third Amendment.”

 

(b)                                 Sections 1, 2, 3 and 7 of the Schedules to the Loan Agreement are hereby amended and restated in their entirety as set forth on Exhibit A attached hereto.

 

Section 3                                              Representations and Warranties.  To induce ORIX to enter into this Amendment, Borrower represents and warrants that:

 

(a)                                 No Default.  After giving effect to this Amendment, no Default or Event of Default shall have occurred and be continuing as of the date hereof;

 

(b)                                 Representations and Warranties.  No event has occurred and is continuing or would result from the execution, delivery or performance of this Amendment which constitutes an Event of Default and, after giving effect to this Amendment and the transactions contemplated hereby, the representations and warranties of Borrower contained in the Loan Documents are true, accurate and complete in all material respects on and as of the date hereof to the same extent as though made on and as of such date except to the extent such representations and warranties specifically relate to an earlier date, in which case such representation or warranty shall be true, accurate and complete in all material respects as of such earlier date; and

 

(c)                                  Corporate Authority.  (i) The execution, delivery and performance by Borrower of this Amendment is within its corporate powers and has been duly authorized by all necessary corporate action on the part of Borrower, (ii) this Amendment is the legal, valid and binding obligation of Borrower enforceable against Borrower in accordance with its terms, and (iii) neither the execution, delivery or performance by Borrower of this Amendment (1) violates any law or regulation, or any other or decree of any governmental authority, (2) conflicts with or result in the breach or termination of, constitute a default under or accelerate any performance required by, any indenture, mortgage, deed of trust, lease, agreement or other instrument to which Borrower is a party or by which Borrower or any of its property is bound, (3) results in the creation or imposition of any lien upon any of the Collateral, (4) violates or conflicts with the

 

2

 

certificate of incorporation or bylaws of Borrower, or (5) requires the consent, approval or authorization of, or declaration or filing by Borrower with, any other Person, except for those already duly obtained.

 

Section 4                                              Conditions Precedent to Effectiveness of this Amendment.  The effectiveness of this Amendment is subject to the following conditions precedent:

 

(a)                                 Executed Amendment.  ORIX shall have received from Borrower a copy of this Amendment (with an original to follow promptly thereafter), duly authorized, executed and delivered, and the Amendment shall constitute a Loan Document;

 

(b)                                 Executed Third Warrant.  ORIX shall have received from AquaVenture Holdings LLC a copy of the warrant (with an original to follow promptly thereafter) required to be delivered on the Third Amendment Effective Date pursuant to Section 7(b) of the Schedules to the Loan Agreement, duly authorized, executed and delivered, and such warrant shall constitute a Loan Document;

 

(c)                                  Executed Collateral Assignment of Asset Purchase Agreement.  ORIX shall have received from Borrower a copy of the Collateral Assignment of Asset Purchase Agreement (with an original to follow promptly thereafter), duly authorized, executed and delivered, and such Collateral Assignment of Asset Purchase Agreement shall constitute a Loan Document;

 

(d)                                 Executed Copies of the Purchase Agreement.  ORIX shall have received from Borrower executed copies of the Purchase Agreement together with complete exhibits and schedules as well as any documents delivered in connection therewith;

 

(e)                                  Opinion.  ORIX shall have received from Borrower an opinion of Borrower’s counsel in form and substance reasonably satisfactory to ORIX;

 

(f)                                   Receipt of Equity Investment.  Borrower shall have received proceeds from a capital contribution of not less than $11,000,000.00 from Borrower’s parent, the proceeds of which shall be used to fund the acquisition of Target’s assets as contemplated by the Purchase Agreement;

 

(g)                                  New Term Loan Commitment Fee.  Borrower shall have paid to ORIX a fully-earned, non-refundable new term loan commitment fee (as set forth in Section 3 of the Schedules to the Loan Agreement) of $100,000.00 with respect to this Amendment; and

 

(h)                                 Counsel Fees.  Borrower shall have satisfied all fees and expenses incurred by ORIX in connection with this Amendment and the subject matter hereof, including without limitation, reasonable fees, costs, and expenses of ORIX’s legal counsel incurred in connection with the preparation and negotiation of this Amendment.

 

3

 

Section 5                                              Miscellaneous.

 

(a)                                 Binding Obligation.  This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.

 

(b)                                 Ratification.  Notwithstanding anything contained herein, the terms of this Amendment are not intended to and do not effect a novation of the Loan Agreement or any other Loan Document.  Borrower hereby ratifies and reaffirms each of the terms and conditions of the Loan Documents to which it is a party and all of its obligations thereunder.

 

(c)                                  Limitation; Reservation of Rights.  The amendments set forth in this Amendment shall be limited precisely as written and shall not be deemed (a) to be a waiver or modification of any Event of Default or any other term or condition of any Loan Document or of any other instrument or agreement referred to therein or to prejudice any right or remedy which ORIX may now have or may have in the future under or in connection with the Loan Documents or any instrument or agreement referred to therein; or (b) to be a consent to any future amendment or modification or waiver to any instrument or agreement the execution and delivery of which is consented to hereby, or to any waiver of any of the provisions thereof.  Except for the amendments set forth herein, ORIX hereby expressly reserves all of its rights and remedies under the Loan Documents and at law and equity.  Except as expressly amended hereby, the Loan Documents shall continue in full force and effect.

 

(d)                                 Releases.  In further consideration of ORIX’s execution of this Agreement, Borrower for itself and on behalf of its respective successors (including, without limitation, any trustees acting on behalf of Borrower and any debtor-in-possession with respect to Borrower), assigns, subsidiaries and affiliates, hereby forever releases ORIX and its respective successors, assigns, parents, subsidiaries, affiliates, officers, employees directors, agents and attorneys (collectively, the “Releasees”) from any and all debts, claims, demands, liabilities, responsibilities, disputes, causes, damages, actions and causes of action (whether at law or in equity) and obligations of every nature whatsoever, whether liquidated or unliquidated, known or unknown, matured or unmatured, fixed or contingent, that Borrower may have against the Releasees which arise from or relate to any actions which the Releasees may have taken or omitted to take prior to the date this Amendment was executed with respect to the Obligations, any Collateral, the Loan Agreement, any other Loan Document and any third parties liable in whole or in part for the Obligations, other than arising out of the gross negligence or willful misconduct of such Releasee or its respective officers, employees directors, agents or attorneys as determined by a non-appealable decision of a court of competent jurisdiction.  This provision shall survive and continue in full force and effect whether or not Borrower shall satisfy all other provisions of this Amendment, the Loan Documents or the Loan Agreement including payment in full of all Obligations.

 

(e)                                  Successors and Assigns.  This Amendment shall be binding on and shall inure to the benefit of Borrower and ORIX and their respective successors and assigns.

 

(f)                                   ENTIRE AGREEMENT.  THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS CONSTITUTE AND CONTAIN THE ENTIRE, FINAL AGREEMENT

 

4

 

AND UNDERSTANDING CONCERNING THE SUBJECT MATTER HEREOF BETWEEN THE PARTIES HERETO, AND SUPERSEDES ALL OTHER PRIOR AGREEMENTS, UNDERSTANDINGS, NEGOTIATIONS AND DISCUSSIONS, REPRESENTATIONS, WARRANTIES, COMMITMENTS, PROPOSALS, OFFERS AND CONTRACTS CONCERNING THE SUBJECT MATTER HEREOF, WHETHER ORAL OR WRITTEN.  THIS AMENDMENT, ANY SUPPLEMENTS HERETO, AND ANY INSTRUMENTS OR DOCUMENTS DELIVERED OR TO BE DELIVERED IN CONNECTION HEREWITH MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES HERETO.

 

(g)                                  Headings.  Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

 

(h)                                 Severability.  Wherever possible, each provision of this Amendment shall be interpreted in such a manner as to be effective and valid under applicable law, but if any provision of this Amendment shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Amendment.

 

(i)                                     Counterparts.  This Amendment may be executed in any number of separate original counterparts (or telecopied counterparts with original execution copy to follow) and by the different parties on separate counterparts, each of which shall be deemed to be an original, but all of such counterparts shall together constitute one agreement.  Delivery of an executed counterpart of a signature page to this Amendment by telecopy shall be effective as delivery of a manually executed counterpart of this Amendment.

 

(j)                                    Incorporation of Loan Agreement Provisions.  This Amendment is executed pursuant to the Loan Agreement and shall be construed, administered and applied in accordance with the terms and provisions of the Loan Agreement. The provisions contained in Section 8.11 (Governing Law) and Section 8.13 (Jury Trial) of the Loan Agreement are incorporated herein by reference to the same extent as if reproduced herein in their entirety.

 

[Signature Page to Follow]

 

5

 

IN WITNESS WHEREOF, this Amendment has been duly executed on the date first written above.

 

	
Quench   USA, Inc., a   Delaware corporation
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Anthony Ibarguen
    	
 
    
	
 
    	
Name:
    	
Anthony Ibarguen
    	
 
    
	
 
    	
Title:
    	
President   and Chief Executive Officer
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
ORIX Ventures, LLC, a Delaware limited liability company
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Christopher L. Smith
    	
 
    
	
 
    	
Name:
    	
Christopher   L. Smith
    	
 
    
	
 
    	
Title:
    	
Manager
    	
 
    

 

ORIX/QUENCH —CONSENT AND AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT

 

6

 

Exhibit A

 

Amendments to Schedules to Loan Agreement

 

	
1. LOAN AMOUNTS   (Section 1.1):
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Tranche A Term Loan Amount:   $12,500,000
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The initial Loan (the “Tranche A Term Loan”) was   made in one disbursement on the Closing Date upon satisfaction of the   conditions set forth in this Agreement.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The entire unpaid principal balance of the Tranche A   Term Loan outstanding on December 23, 2015 shall be repaid in   (i) 12 equal monthly principal payments of $156,250.00, commencing on   January 23, 2016, and continuing on the same day of each month   thereafter until December 23, 2016; (ii) 12 equal monthly principal   payments of $208,333.33, commencing on January 23, 2017, and continuing   on the same day of each month thereafter until December 23, 2017;   (iii) 12 equal monthly principal payments of $260,416.67, commencing on   January 23, 2018, and continuing on the same day of each month   thereafter until the Maturity Date on which date the entire unpaid principal   balance of the Tranche A Term Loan plus any and all accrued and unpaid   interest shall be paid.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Tranche B Term Loan Amount:   $7,500,000
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Tranche B Term Loan (the “Tranche B Term Loan”)   was made in one disbursement on the Second Amendment Effective Date upon   satisfaction of the conditions set forth in this Agreement and the Second   Amendment.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The entire unpaid principal balance of the Tranche B   Term Loan outstanding on December 23, 2015 shall be repaid in (i) 12   equal monthly principal payments of $93,750.00, commencing on   January 23, 2016, and continuing on the same day of each month   thereafter until December 23, 2016; (ii) 12 equal monthly principal   payments of $125,000.00, commencing on January 23, 2017, and continuing   on the same
    

 

ORIX/QUENCH —CONSENT AND AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT

 

7

 

	
 
    	
 
    	
day of each month thereafter until December 23,   2017; (iii) 12 equal monthly principal payments of $156,250.00,   commencing on January 23, 2018, and continuing on the same day of each   month thereafter until the Maturity Date on which date the entire unpaid   principal balance of the Tranche B Term Loan plus any and all accrued and unpaid   interest shall be paid.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Delayed Tranche C Term Loan Amount:   $10,000,000
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Delayed Tranche C Term Loan (the “Delayed   Tranche C Term Loan”) was made prior to the Third Amendment Effective Date   upon satisfaction of the conditions set forth in this Agreement and the   Second Amendment.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The entire unpaid principal balance of the Delayed   Tranche C Term Loan outstanding on December 23, 2015 shall be repaid in   (i) 12 equal monthly principal payments equal to $125,000, commencing on   January 23, 2016, and continuing on the same day of each month   thereafter until December 23, 2016; (ii) 12 equal monthly principal   payments equal to $166,666.67, commencing on January 23, 2017, and   continuing on the same day of each month thereafter until December 23,   2017; (iii) 12 equal monthly principal payments equal to $208,333.34,   commencing on January 23, 2018, and continuing on the same day of each   month thereafter until the Maturity Date on which date the entire unpaid   principal balance of the Delayed Tranche C Term Loan plus any and all accrued   and unpaid interest shall be paid.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Tranche D Term Loan Amount:   $10,000,000
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The Tranche D Term Loan (the “Tranche D Term Loan”)   shall be made in one disbursement on the Third Amendment Effective Date upon   satisfaction of the conditions set forth in this Agreement and the Third   Amendment.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The entire unpaid principal balance of the Tranche D   Term Loan outstanding on December 23, 2015 shall be repaid in   (i) 12 equal monthly principal payments equal to $125,000, commencing on   January 23, 2016, and continuing on the same day of each month   thereafter until December 23, 2016; (ii) 12
    

 

8

 

	
 
    	
 
    	
equal monthly principal payments equal to $166,666.67,   commencing on January 23, 2017, and continuing on the same day of each   month thereafter until December 23, 2017; (iii) 12 equal monthly   principal payments equal to $208,333.34, commencing on January 23, 2018,   and continuing on the same day of each month thereafter until the Maturity   Date on which date the entire unpaid principal balance of the Tranche D Term   Loan plus any and all accrued and unpaid interest shall be paid.
    
	
 
    	
 
    	
 
    
	
2. INTEREST.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Interest   Rates (Section 1.3):
    	
 
    	
The outstanding principal amount of the Tranche A   Term Loan shall bear interest each month at an interest rate per annum equal   to the Base Rate in effect for such month, plus 6.0% per annum; provided that   in no event shall the interest rate per annum be less than 9.50%.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
The outstanding principal amount of the Tranche B   Term Loan, the Delayed Tranche C Term Loan and the Tranche D Term Loan shall   bear interest each month at an interest rate per annum equal to the Base Rate   in effect for such month, plus 5.50% per annum; provided that in no event   shall the interest rate per annum be less than 9.0%.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Interest shall be calculated on the basis of a   360-day year for the actual number of days elapsed. Base Rate has the meaning   set forth in Section 7 of this Agreement.
    
	
 
    	
 
    	
 
    
	
3. FEES (Section 1.4):
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Initial Loan   Fee:
    	
 
    	
$125,000.00, payable on the Closing Date.
    
	
 
    	
 
    	
 
    
	
Second Amendment   Loan Fee:
    	
 
    	
$175,000.00, payable on the Second Amendment   Effective Date.
    
	
 
    	
 
    	
 
    
	
Third Amendment Loan   Fee:
    	
 
    	
$100,000.00, payable on the Third Amendment   Effective Date.
    

 

9

 

	
7. ADDITIONAL PROVISIONS.
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(a)
    	
Warrants. On the Closing Date,   Borrower issued to ORIX 7-year warrant to purchase 187.5 shares of   Series D Preferred Stock of Borrower at a purchase price of $2,000.00   per share (the “Initial Warrant”). On the Second Amendment Effective Date,   the Initial Warrant shall be amended and restated to reflect its conversion   into a warrant for ordinary common shares of Quench USA Holdings LLC, to   adjust the number of shares and warrant price accordingly, and to extend the   expiration date of the Initial Warrant.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)
    	
Additional Warrants. On the   Second Amendment Effective Date, Borrower shall concurrently issue to ORIX   Finance Equity Investors, LP, a Delaware limited partnership, a 7-year   warrant to purchase 225,000 ordinary common shares of Quench USA Holdings LLC   at a purchase price of $1.00 per share, on the terms set forth in ORIX   Finance Equity Investors, LP’s standard form of Warrant to Purchase Stock   (the “Second Warrant”). The number of shares subject to the Second Warrant   was later automatically increased to 525,000. On the Third Amendment   Effective Date, Borrower shall concurrently issue to ORIX Finance Equity Investors,   LP, a Delaware limited partnership, a 7-year warrant to purchase 60,635   Class B Shares of AquaVenture Holdings LLC at a purchase price of   $4.9477 per share, on the terms set forth in ORIX Finance Equity Investors,   LP’s standard form of Warrant to Purchase Stock.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(c)
    	
Deposit Accounts. Prior to the   first disbursement of the Loan, and as a condition
    

 

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precedent thereto, Borrower shall cause the banks   and other institutions where its Deposit Accounts are maintained to enter   into control agreements with ORIX, in form and substance reasonably   satisfactory to ORIX in its Good Faith Business Judgment and sufficient to   perfect ORIX’s first-priority security interest in said Deposit Accounts.   Prior to the opening of any new Deposit Accounts, Borrower shall use cause   the banks and other institutions where such Deposit Accounts are to be   maintained to enter into control agreements with ORIX, in form and substance   reasonably satisfactory to ORIX in its Good Faith Business Judgment and   sufficient to perfect ORIX’s first-priority security interest in said Deposit   Accounts.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(d)
    	
Foreign Subsidiaries. Borrower   represents and warrants that it has no partially-owned or wholly-owned Subsidiaries.
    

 

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