Document:

ex101to8k07962_12312013.htm

Exhibit 10.1

 

SECOND AMENDMENT TO LOAN AGREEMENT

THIS SECOND AMENDMENT TO LOAN AGREEMENT (this “Amendment”) is made as of December 31, 2013 (the “Effective Date”), by and among ENVIRONMENTAL QUALITY MANAGEMENT, INC., an Ohio corporation (“EQMI”), EQ ENGINEERS, LLC, an Indiana limited liability company (“EQE”), VERTTERRE CORPORATION, a New Mexico corporation (“Vertterre”; and together with EQMI and EQE, each a “Borrower” and collectively, the “Borrowers”), and FIRST FINANCIAL BANK, NATIONAL ASSOCIATION, a national banking association (“Bank”).  Each Borrower and Bank hereby agrees as follows:

Preliminary Statements

A.            Borrowers and Bank are parties to that certain Loan Agreement dated as of September 28, 2012 (as amended, the “Loan Agreement”).  Capitalized terms which are used, but not defined, in this Amendment will have the meanings given to them in the Loan Agreement.

B.            Bank and each of the Borrowers hereby agree to amend the Loan Agreement and the other Loan Documents, as applicable, all on the terms, and subject to the conditions, of this Amendment.

Statement of Agreement

In consideration of the mutual covenants and agreements set forth in this Amendment, and for other good and valuable consideration, Bank and each Borrower hereby agree as follows:

1.            Amendments to Loan Agreement.  Subject to the satisfaction of the conditions of this Amendment, the Loan Agreement is hereby amended as follows:

1.1           The following new definitions are hereby added to Section 1.1 of the Loan Agreement, in their proper alphabetical order, to provide in their entirety as follows:

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

“Excluded Swap Obligations” means, with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the Guaranty of such Guarantor of, or the grant by such Guarantor of a security interest to secure, such  Swap Obligation (or any guaranty thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of such Guarantor’s failure for any reason to constitute an “eligible contract participant” as defined in the Commodity Exchange Act and the regulations thereunder at the time the Guaranty of such Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligation; provided that if a Swap Obligation arises under a master agreement governing more than one swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to swaps for which such Guaranty or security interest is or becomes illegal.

“Guarantor(s)” will mean each of, and collectively, (i) Parent, (ii) Grand Prairie, (iii) LGP and (iv) any and all Persons that in the future deliver one or more Guaranties to Lender.

“Guaranty(ies)” will mean each of, and collectively, (i) the Parent Guaranty, (ii) the Vertterre Subsidiary Guaranty, and (iii) any other guaranty made from time to time by a Person for the benefit of Lender to secure the Obligations, in each case, together with any amendments, modifications, restatements or superseding documents thereof or thereto.

 

  

  

  

 

“Swap Obligation” means any obligation of any Person to pay or perform under any agreement, contract or transaction that constitutes a “swap” within the meaning of section 1a(47) of the Commodity Exchange Act.

“Second Amendment Closing Date” means December 31, 2013.

1.2           The following definitions in Section 1.1 of the Loan Agreement are hereby amended in their entirety by substituting the following in their respective places:

“Obligation(s)” means all loans, advances, Indebtedness and each and every other obligation or liability of Borrowers (or any one or more of them) owed to each of Bank and/or any Bank’s Affiliate, however created, of every kind and description whether now existing or hereafter arising and whether direct or indirect, primary or as guarantor or surety, joint and several, absolute or contingent, liquidated or unliquidated, matured or unmatured, participated in whole or in part, created by trust agreement, lease, overdraft, agreement or otherwise, whether or not secured by additional Collateral, whether originated with Bank or owed to others and acquired by Bank by purchase, assignment or otherwise, and including all loans, advances, Indebtedness, Cross-Guaranteed Obligations, and each and every obligation or liability arising under the Loan Documents, any and all Rate Management Obligations, letters of credit now or hereafter issued, honored or paid by Bank or any Bank’s Affiliate, or any negotiating, confirming, advising, accepting, or paying bank or other financial institution for the benefit of or at the request of any Borrower, foreign exchange or other international transactions or services, treasury management services, all obligations to perform or forbear from performing acts, and agreements, instruments and documents evidencing, guarantying, securing or otherwise executed in connection with any of the foregoing, together with any amendments, modifications and restatements thereof, and all expenses and Attorneys' Fees incurred by Bank hereunder or any other document, instrument or agreement related to any of the foregoing; provided, however, with respect to any Guarantor, the Obligations shall not include Excluded Swap Obligations in respect of such Guarantor.

“Parent Guaranty” means the Amended and Restated Guaranty dated as of the Second Amendment Closing Date made by Parent in favor of Bank.

“Vertterre Subsidiary Guaranty” means the Amended and Restated Guaranty dated as of the Second Amendment Closing Date by Grand Prairie and LGP in favor of Bank.

1.3           Section 11.1 of the Loan Agreement is hereby amended in its entirety by substituting the following in its place:

11.1           Effective Date and Termination Date.  This Agreement, after it is executed by Borrowers, shall be effective upon the date upon which it is signed by Bank.  Unless this Agreement is terminated earlier under Sections 11.2 or 11.3, this Agreement shall terminate on April 15, 2015 (the “Stated Maturity Date”).

1.4           Section 15 of the Loan Agreement is hereby amended by the addition of a new Section 15.20, in its proper place, to provide in its entirety as follows:

15.20           Excluded Swap Obligations.  Notwithstanding anything to the contrary contained in this Agreement or any other Loan Document, in no event shall the proceeds of Collateral of a Guarantor be applied by Lender to any Excluded Swap Obligations in respect of such Guarantor.

1.5           Each Schedule to the Loan Agreement is hereby amended in its entirety by substituting the documents attached hereto, and identified as each such Schedule, in its respective place:

2.            Conditions Precedent.

 

2.1           With the signing of this Amendment, and as a condition of this Amendment, Borrowers will deliver to Bank, all in form and substance satisfactory to Bank in its sole discretion: (a) evidence that the Amendment Documents (as defined below) and the transactions contemplated hereby and thereby were duly authorized by the managers and directors of each Borrower, as applicable, and (b) all other documents, instruments and agreements deemed necessary or desirable by Bank to effect the amendments to Borrowers’ credit facilities with Lender contemplated by this Amendment.

 

  

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2.2           With the signing of this Amendment, and as a condition of this Amendment, Borrowers will deliver to Bank, and will cause all third parties to deliver to Bank, all in form and substance satisfactory to Bank in its sole discretion: (a) an Amended and Restated Guaranty, dated as of the Second Amendment Closing Date, made by Parent for the benefit of Bank (“Amended and Restated Parent Guaranty”); (b) an Amended and Restated Guaranty, dated as of the Second Amendment Closing Date, made by Grand Prairie and LGP in favor of Bank (“Amended and Restated Subsidiary Guaranty”); (c) a Reaffirmation of Management Fee Subordination Agreement, dated as of the Second Amendment Closing Date, made by the Management Company for the benefit of Bank; (d) a Reaffirmation to Subordination Agreement (as it pertains to the Additional Beacon Noteholder Subordinated Debt), dated as of the Second Amendment Closing Date, between Bank and Subordinated Lender Agent (as defined in the Additional Beacon Noteholder Subordination Agreement); (e) a Reaffirmation to Subordination Agreement (as it pertains to the December 2011 Beacon Noteholder Subordinated Debt), dated as of the Second Amendment Closing Date, between Bank and Subordinated Lender Agent (as defined in the December 2011 Beacon Noteholder Subordination Agreement); (f) evidence that the directors and managers of Parent, LGP and Grand Prairie, as applicable, have authorized the execution of the documents, and the transactions contemplated thereby, to be entered into pursuant to this Section 2.2, as applicable; and (g) all other documents, instruments and agreements deemed necessary or desirable by Bank to effect the amendments to Borrowers’ credit facilities with Lender contemplated by this Amendment, including evidence satisfactory to Bank that the contractual maturity of all of the Additional Beacon Noteholder Subordinated Debt and all of the December 2011 Beacon Noteholder Subordinated Debt has been extended to no earlier than April 30, 2015.

2.3           With the signing of this Amendment, and as a condition of this Amendment, Borrowers will deliver to Lender, and will cause all third parties to deliver to Lender, all in form and substance satisfactory to Lender in its sole discretion, all documents, instruments, agreements, UCC amendments, UCC termination statements, certificates, opinions, payoff letters and other materials deemed necessary or desirable by Lender in connection with this Amendment and the transactions contemplated hereby, including those on the closing checklist, if any, prepared by counsel to Lender.

3.            Reaffirmation of Security; Joint Obligations; Consent.

 

3.1           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 Collateral granted pursuant to any Loan Document evidencing, governing or creating a Lien on the Collateral.  Borrowers hereby ratify and reaffirm any and all grants of Liens to Bank on the Collateral as security for the Obligations, and acknowledge and confirm that the grants of the Liens to Bank on the Collateral: (i) represent continuing Liens on all of the Collateral, (ii) secure all of the Obligations, and (iii) represent valid and first priority Liens on all of the Collateral except to the extent of any Permitted Liens.

3.2            All of the obligations of Borrowers under the Loan Documents are joint, several, and primary.  No Borrower will be or be deemed to be an accommodation party with respect to any of the Loan Documents.

3.3           Bank hereby consents, without recourse, representation or warranty, to the amendment and restatement of all of the Additional Beacon Noteholder Subordinated Notes and all of the December 2011 Beacon Noteholder Subordinated Notes on the terms previously provided to Bank in order to, among other things, extend the maturity date with respect to all of the Additional Beacon Noteholder Subordinated Debt and all of the December 2011 Beacon Noteholder Subordinated Debt to April 30, 2015.

4.            Representations.  To induce Bank to accept this Amendment, each Borrower hereby represents and warrants to Bank as follows:

4.1           Each Loan Party has full power and authority to enter into, and to perform its obligations under, as applicable, this Amendment, and the other documents, instruments and certificates being executed and/or delivered in connection herewith, including those contemplated in Section 2.2 (collectively, the “Amendment Documents”) and the execution and delivery of, and the performance of its obligations under and arising out of, the applicable Amendment Documents have been duly authorized by all necessary corporate and limited liability company action, as applicable.

 

  

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4.2           Each Amendment Document, as applicable, constitutes the legal, valid and binding obligation of such Loan Party, 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           Such Loan Party’s representations and warranties contained in the Loan Documents are complete and correct in all material respects as of the Effective Date with the same effect as though such representations and warranties had been made again on and as of the Effective Date, subject to those changes as are not prohibited by, or do not constitute Events of Default under, the Loan Agreement.

4.4           No Event of Default has occurred and is continuing.

5.            Costs and Expenses.  As a condition of this Amendment, Borrowers will pay and reimburse Bank, promptly upon Bank’s request, for the costs and expenses incurred by Bank in connection with this Amendment and the transactions contemplated hereby, including, without limitation, reasonable Attorneys’ Fees.

6.            Entire Agreement.  This Amendment, together with the other Amendment 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.

7.            Release.  Each Borrower, on such Borrower’s behalf and, as applicable, on behalf of such Borrower’s officers, directors, members, managers, shareholders, administrators, heirs, legal representatives, beneficiaries, affiliates, subsidiaries, successors and assigns, hereby voluntarily releases and forever discharges Bank and its direct or indirect parent corporation, all direct or indirect affiliates of such parent corporation, and all of the foregoing’s respective directors, officers, employees, attorneys and legal representatives, or the heirs, administrators, successors or assigns of any of them (collectively, “Bank Parties”) from any and all claims, counterclaims, setoffs, actions or causes of action, damages or liabilities of any kind or nature whatsoever, whether in law or in equity, in contract or in tort, whether now accrued or hereafter maturing that may be asserted against the Bank Parties (or any one or more of them), whether known or unknown, that directly or indirectly arise out of, are based upon or are in any manner connected with any Prior Related Event.  “Prior Related Event” means any transaction, event, circumstance, action, failure to act, occurrence of any type or sort, whether known or unknown, which occurred, existed, was taken, was permitted or begun in accordance with, pursuant to or by virtue of (a) any of the terms of any Loan Document, (b) any actions, transactions, matters or circumstances related thereto, (c) the conduct of the relationship between any Bank Party and any Loan Party, or (d) any other actions or inactions by any Bank Party, all prior to the date 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.

8.            Default.  Any default by any Borrower in the performance of such Borrower’s obligations under any Amendment Document shall constitute an Event of Default under the Loan Agreement.

9.            Continuing Effect of Loan Agreement; Reaffirmation of Loan Documents.  Except as expressly amended hereby, all of the provisions of the Loan Agreement are ratified and confirmed and remain in full force and effect.  The Loan Documents, except as amended by this Amendment or, as applicable, as amended (or amended and restated) by one of the other Amendment Documents, shall remain in full force and effect, and each of them is hereby ratified and confirmed by Borrowers and Bank.

10.          One Agreement; References; Fax Signature.  The Loan Agreement, as amended by this Amendment, will be construed as one agreement.  All references in any of the Loan Documents to: (a) the Loan Agreement will be deemed to be references to the Loan Agreement as amended by this Amendment, (b) the Parent Guaranty will be deemed to be references to the Amended and Restated Parent Guaranty and (c) the Vertterre Subsidiary Guaranty will be deemed to be references to the Amended and Restated Subsidiary Guaranty.  Any Amendment Document may be signed by facsimile signatures or other electronic delivery of an image file reflecting the execution hereof or thereof, and, if so signed: (i) may be relied on by each party as if the document were a manually signed original and (ii) will be binding on each party for all purposes.

11.          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.

 

  

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12.          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.

13.          Governing Law; Severability.  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). If any term of this Amendment is found invalid under Ohio law or laws of mandatory application by a court of competent jurisdiction, the invalid term will be considered excluded from this Amendment and will not invalidate the remaining terms of this Amendment.

14.          WAIVER OF JURY TRIAL. BORROWERS AND BANK EACH WAIVE TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS AMENDMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY.

[Signature Page Follows]

 

  

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           IN WITNESS WHEREOF, Borrowers and Bank have executed this Amendment by their duly authorized officers as of the Effective Date.

 

	
ENVIRONMENTAL QUALITY MANAGEMENT, INC.

	  
	  
	  
	
By:

	
/s/ Robert R. Galvin

	  	
Robert R. Galvin, Chief Financial Officer

	  
	
EQ ENGINEERS, LLC

	  
	  
	  
	
By:

	
/s/ Jack S. Greber

	  	
Jack S. Greber, Manager

	  
	  
	
VERTTERRE CORPORATION

	  
	  
	  	  
	
By:

	
/s/ James E. Wendle

	  	
James E. Wendle, President

	
BANK:

	  
	
FIRST FINANCIAL BANK, NATIONAL ASSOCIATION

	  
	  
	  
	
By:

	
/s/ Thomas J. Fischer

	  	
Thomas J. Fischer, Vice President

SIGNATURE PAGE TO

SECOND AMENDMENT TO LOAN AGREEMENT

(EQM)

 

  

 

  

 

SCHEDULES

The following Schedules (the “Schedules”) are to be read in their entirety.  Nothing in the Schedules is intended to broaden the scope of any representation or warranty of the Borrowers contained in the Loan Agreement, dated as of September 28, 2012, as amended by the First Amendment to Loan Agreement, dated as of February 27, 2013, as amended by the Second Amendment to Loan Agreement, dated as of December 31, 2013, (the “Agreement”), among FIRST FINANCIAL BANK, NATIONAL ASSOCIATION, a national banking association (“Bank”), ENVIRONMENTAL QUALITY MANAGEMENT, INC., an Ohio corporation (“EQMI”), EQ ENGINEERS, LLC, an Indiana limited liability company (“EQE”), and VERTTERRE CORPORATION, a New Mexico corporation (“Vertterre”).  Capitalized terms used but not defined herein or in the Schedules shall have the meanings ascribed to such terms in the Agreement.

To the extent more than one representation and warranty contained in the Agreement requires the same disclosure, the appearance of such disclosure on any single item herein shall serve as disclosure for all other representations and warranties to which such disclosure applies.  The failure by the Borrowers to cross-reference any disclosure on any particular schedule shall not constitute a breach by the Company of the applicable representation or warranty as long as the matter is disclosed elsewhere in these schedules.

Inclusion of any item in the Schedules (i) does not represent a determination by the Borrowers that such item is material and shall not be deemed to establish a standard of materiality and (ii) does not represent a determination by the Borrowers that such item did not arise in the ordinary course of business.  Any disclosure contained in the Schedules that refers to a document is qualified in its entirety by reference to the text of such document.

 

  

 

  

SCHEDULE 1

Borrower’s Facilities

Real Property that EQMI Leases

1)           18939 120th Ave NE, Suite 103 Bothell, Washington

2)           64090 NWY 1090, Pearl River, Louisiana

3)           2135 Schapelle Lane, Cincinnati, Ohio

4)           12721 Wolf Road, Geneseo, Illinois                                                                

5)           3460 Business Drive, Sacramento, California

6)           1280 Arrowhead Court, Crown Point, Indiana

7)           1800 Carillon Boulevard, Cincinnati, Ohio

8)           3400 179th Street, Suite 2, Hammond, Indiana

Real Property that EQE Leases

1)           3400 179th Street, Suite 1, Hammond, Indiana

Real Property that Vertterre Leases

1)           320 Gold Avenue, SW, Suite 500, Albuquerque, New Mexico

2)           816 West Broadway, Bloomfield, New Mexico

3)           14115 Davis Estate Road, Needville, Texas

 

  

 

  

SCHEDULE 2

Financial Statements

See financial statements of EQM Technologies & Energy, Inc. and Subsidiaries included in the Quarterly Report on Form 10-Q of EQM Technologies & Energy, Inc. for the quarter ended September 30, 2013, filed with the Securities and Exchange Commission on November 14, 2013.

 

  

 

  

SCHEDULE 3

Permitted Liens1

 

 

The interest, if any, of the persons named a “secured party” in the UCC financial statements listed below:

 

DEBTOR:  Environmental Quality Management, Inc.

 

A.           Jurisdiction:  Ohio Secretary of State

 

	
Name of Debtor

	
Name of

Secured Party

	
Search 

Location

	
Filing

Date

	
Filing Number

	
Description

of Collateral

	
Environmental Quality Management, Inc.

	
U.S. Bancorp Oliver-Allen Technology Leasing

	
Ohio

	
1/10/08

	
OH00122753991

	
Leased Equipment

	
Environmental Quality Management, Inc.

	
U.S. Bancorp Oliver-Allen Technology Leasing

	
Ohio

	
1/10/08

	
OH00122754014

	
Leased Equipment

	
Environmental Quality Management, Inc.

	
U.S. Bancorp Oliver-Allen Technology Leasing

	
Ohio

	
1/10/08

	
OH00122754125

	
Leased Equipment

	
Environmental Quality Management, Inc.

	
U.S. Bancorp Equipment 

Finance, Inc.

	
Ohio

	
4/4/08

	
OH00125427670

	
Leased Equipment

	
Environmental Quality Management, Inc.

	
U.S. Bancorp Equipment 

Finance, Inc.

	
Ohio

	
4/4/08

	
OH00125414633

	
Leased Equipment

	
Environmental Quality Management, Inc.

	
U.S. Bancorp Equipment 

Finance, Inc.

	
Ohio

	
4/4/08

	
OH00125425878

	
Leased Equipment

	
Environmental Quality Management, Inc.

	
U.S. Bancorp Equipment 

Finance, Inc.

	
Ohio

	
7/29/08

	
OH00128531775

	
Leased Equipment

	
Environmental Quality Management, Inc.

	
U.S. Bancorp Equipment 

Finance, Inc.

	
Ohio

	
7/29/08

	
OH00128531886

	
Leased Equipment

	
Environmental Quality Management, Inc.

	
U.S. Bancorp Equipment 

Finance, Inc.

	
Ohio

	
7/29/08

	
OH00128522887

	
Leased Equipment

	
Environmental Quality Management, Inc.

	
Les Schwab Warehouse 

Center, Inc.

	
Ohio

	
10/13/09

	
OH00137754293

	
Leased Equipment

 

  

	
  

	
1     The appearance of any filing on this Schedule of Permitted Liens is not an acknowledgement of the validity, perfection and/or priority of any interest held by the listed secured party.

  

 

  

 

DEBTOR:  EQ Engineers, LLC

 

B.           Jurisdiction:  Indiana Secretary of State

 

	
Name of Debtor

	
Name of

Secured Party

	
Search 

Location

	
Filing

Date

	
Filing Number

	
Description

of Collateral

	
EQ Engineers, LLC

	
Steelcase Financial Services Inc.

	
Indiana

	
11/4/08

	
200800009750950

	
Leased Equipment

Liens related to the US Bank Letter of Credit (SLCLSTL02779) - Lexon Insurance at Beneficiary.

Liens related to leased equipment.

 

  

 

  

 

SCHEDULE 9.1

List of Jurisdictions of Incorporation and Qualification

EQMI is qualified to do business and is in good standing in the following states:

	
Alabama

	  
	
Arizona

	  
	
California

	  
	
Colorado

	  
	
Hawaii

	  
	
Idaho

	  
	
Indiana

	  
	
Louisiana

	  
	
Michigan

	  
	
Nevada

	  
	
New Mexico

	  
	
North Carolina

	  
	
Ohio

	  
	
Oregon

	  
	
Pennsylvania

	  
	
South Carolina

	  
	
South Dakota

	  
	
Texas

	  
	
Washington

	  

EQMI currently leases property in Illinois. EQMI is qualified to do business and is undertaking to return to good standing in Illinois.

EQ Engineers, LLC is qualified to do business and is in good standing in Indiana.

Vertterre is qualified to do business and is in good standing in New Mexico and Texas.

 

  

 

  

 

SCHEDULE 9.5

Licenses; Trademarks; Patents; Copyrights; Government Contracts

Licenses:

Borrowers have licensed certain off the shelf software for use in their daily operations, including AutoCAD and the Deltek Accounting software.

Trademarks:

EQ (Environmental Quality Management)

EQE (Environmental Quality Engineers)

EQES (EQ – Slovakia)

Patents:

Title: EQ's Releasable Asbestos Field Sampler (RAFS):

US Patent No: 7,758,813

Patent Holder: Environmental Quality Management, Inc.

Inventors: John R. Kominsky, Fred Hall

Description: The RAFS consists of a variable-speed high-efficiency particulate air (REP A) filtered fan attached to a tunnel (6 x 6 x 24 in.) with an open bottom for exposure to the test matrix soil. The fan discharges the air at the tunnel inlet through diffusers to evenly distribute the airflow. A variable-speed motorized rake mechanism inside of the tunnel provides consistent and reproducible agitation of the top 11.2 in. of soil. A gentle airflow laterally transports the generated aerosol inside of a tunnel to one end where filter sampling cassettes or real-time instruments are used to measure asbestos and particulate release.

Copyrights:

None

 

  

 

  

 

Government Contracts:

ACTIVE CONTRACTS

 

	
Project Number

	
 

Contract Number

	
 

Contract Type

	
 

Client

	
 

Title

	
 

Contracting Officer

	
30174

	
GSA GS-10F-0293K

	
ID/IQ (FFP and T&M Orders)

	
General Services Administration,

Auburn, WA

	
Federal Supply Schedule (FSS) Contract for Group 899 - Environmental Services, SINS 899-1 & 899-8

	
Ms. Jaylene J. Berry

Contracting Officer

GSA, MSC

400 15th Street, SW

Auburn, WA 98001-6599

 

	
30174.0016.001

	
GSA GS-10F-0293K,

USACE Order No.

W912QR-11-F-0266

	
FFP Task Order under GSA Contract

	
U.S. Army Corps of Engineers (USACE), Louisville District

Louisville, KY

	
2011 PBA for Environmental Investigation Services RVAAP-66 Facility-Wide Groundwater, Ravenna, OH  (SIN No. 899-1)

	
Ms. Denise Bush

Contracting Officer

U.S. Army Engineer District, Louisville

Civil/OPS/Environmental Team

600 Dr. Martin Luther King, Jr. Place, Room 821

Louisville, KY  40202-2230

 

	
30174.0017.001

	
GSA GS-10F-0293K,

USACE Order No.

W912QR-12-F-0033

	
FFP Task Order under GSA Contract

	
U.S. Army Corps of Engineers (USACE), Louisville District

Louisville, KY

	
Provide Services for the Lockbourne AFB, AOC's 3, 8/9, and 11, Columbus, Franklin County, OH

(SIN No. 899-1)

	
Ms. Lisa Bisig

Contracting Officer

U.S. Army Engineer District, Louisville

Civil/OPS/Environmental Team

600 Dr. Martin Luther King, Jr. Place, Room 821

Louisville, KY  40202-2230

 

	
30240

	
USACE Contract No. W912QR-04-D-0036

	
ID/IQ with FFP, GFPR, CPFF, CPAF or CPIF task orders

	
U.S. Army Engineering District, Louisville

	
Multiple Award Remediation Contract (MARC) for the Louisville District and all USACE Mission Boundaries

	
Ms. Denise Bush

Contracting Officer

U.S. Army Engineer District, Louisville

Civil/OPS/Environmental Team

600 Dr. Martin Luther King, Jr. Place, Room 821

Louisville, KY  40202-2230

 

 

  

 

  

 

	
Project Number

	
 

Contract Number

	
 

Contract Type

	
 

Client

	
 

Title

	
 

Contracting Officer

	
30262

	
EP-W-07-022

	
ID/IQ with

T&M, Fixed Rate T.O.'s

	
U.S. Environmental Protection Agency (EPA), Region 9,

San Francisco, CA

	
Emergency and Rapid Response Services (ERRS - 3) for Region 9

	
Mr. Alexander Kramer

Contracting Officer (MTS-4-3)

U.S. Environmental Protection Agency, Region 9

75 Hawthorne St.

San Francisco, CA  94105-3901

 

	
30268

	
EP-S6-07-01

	
ID/IQ with Time and Materials T.O’s

	
U.S. Environmental Protection Agency (EPA),

Region 6, Dallas, TX

	
Emergency and Rapid Response Services (ERRS - 3) for Region 6

	
Mr. Michael Pheeny

Contracting Officer (6MD-CP)

U.S. Environmental Protection Agency

Region 6

1445 Ross Avenue, Suite 1200

Dallas, TX  75202-2733

 

	
30277

	
CMC Subcontract Dated 2/24/08/

EPA Contract No. EP-S4-07-02

	
ID/IQ with Time and Materials T.O’s

	
Sub. to CMC, Inc./

U.S. EPA, Region IV, Atlanta, GA

	
Emergency and Rapid Response Services III (ERRS III) for EPA Region IV

	
Mr. Clay Corman

CMC, Inc.

1151 Jessamine Station Pike

Nicholasville, KY  40356

 

	
30281

	
EP-S5-08-02

	
ID/IQ with Time and Materials T.O’s

	
U.S. Environmental Protection Agency (EPA),

Chicago, IL

	
Emergency and Rapid Response Services (ERRS-3) for Region 5

	
Mr. Thomas Harrison

Contracting Officer, MCC-10J

U.S. Environmental Protection Agency

Region V

77 West Jackson Boulevard

Chicago, IL  60604-3507

 

	
30283

	
FA3002-09-D-0002

	
ID/IQ with FFP and CPFF Task Orders

	
Dept. of the Air Force, AFCESA,

Tyndall AFB, FL

	
Sustainment/Restoration & Modernization Acquisition Task Order Contract (SATOC)

	
Mr. George Mason

Contracting Officer

AFMC 772/ESS/PKH

C/O HQ AFCESA/CEKC

139 Barnes Drive, Suite 1

Tyndall AFB, FL 32403-5319

 

 

  

 

  

 

	
Project Number

	
 

Contract Number

	
 

Contract Type

	
 

Client

	
 

Title

	
 

Contracting Officer

	
30287

	
FA8903-09-D-8564

	
ID/IQ with CPFF, CPIF, & FFP & FPI Task Orders

	
Dept. of the Air Force,

AFCEE/OD,

Brooks City-Base, TX

	
Worldwide Environmental Restoration and Construction 2009 (WERC09) Contract

	
Ms. Ana Jimenez

Contracting Officer

HQ/AFCEE/ACV

3300 Sidney Brooks

Brooks City Base, TX  78235-5112

 

	
30296.00##

	
EA Engineering PO #______/ Navy Contract No. N62742-10-D-1806

	
FFP

(EA Eng. is issuing separate FFP PO’s for each FFP T.O.)

	
Sub to EA Engineering, Science, and Technology, Inc. / U.S. Navy

	
Provide QA services for Fixed Price Remedial Action Contract (FRAC) for Various Sites in the Naval Facilities Engineering Command Pacific (NAVFAC Pacific) Area of Responsibility

	
Mr. Brian McLaughlin, CFCM

Manager, Contracts and Procurement

EA Engineering, Science, and Technology, Inc.

11019 McCormick Road

Hunt Valley, MD  21031

 

	
30298

	
Gonzales-Stoller Remediation Services, LLC  Sub. No. GSR-EQM-1016/

DOE Contract No. DE-EM0000841

	
ID/IQ with FFP, CPFF, CPAR, & CPIF Task Orders

	
Sub. to Gonzales-Stoller Remediation Services, LLC/

U.S. Dept. of Energy (DOE)

	
Environmental Remediation Services and DD&R

	
Ms. Lorraine Alvarez

Contract Administrator

Gonzales-Stoller Remediation Services, LLC

1294 Suncrest Towne Centre Drive

Morgantown, WV  26505

 

	
30301

	
EP-R5-11-04

	
ID/IQ with FFP T.O.'s

	
U.S. Environmental Protection Agency (EPA),

Chicago, IL

	
Great Lakes National Program Office Cleanup Services (GLNPOCS)

	
Ms. Sheila Dolan

Contracting Officer, MCC-10J

U.S. Environmental Protection Agency

Region V

77 West Jackson Boulevard

Chicago, IL  60604-3507

	
30302

	
Prime Engineering Subcontract No. C10006/

USACE Contract No. W9126G-11-D-0038

	
ID/IQ with FFP T.O.'s

	
Sub. to Prime Engineering & Architecture, Inc./

USACE, Fort Worth District

	
A-E Services SATOC in Support of Dept. of Homeland Security

	
Mr. Kumar Buvanendarann

PRIME Engineering & Architecture, Inc.

3000 Corporate Exchange Dr., Suite 600

Columbus, OH 43231

 

 

  

 

  

 

	
Project Number

	
 

Contract Number

	
 

Contract Type

	
 

Client

	
 

Title

	
 

Contracting Officer

	
30303

	
EP-S9-12-01

	
ID/IQ with

Fixed Rate for Services T.O.’s

	
U.S. Environmental Protection Agency (EPA), Region 9,

San Francisco, CA

	
Emergency and Rapid Response Services (ERRS – 4) for Region 9

	
Mr. Philip Ingram

Contracting Officer (MTS-4-3)

U.S. Environmental Protection Agency, Region 9

75 Hawthorne St.

San Francisco, CA  94105-3901

 

	
30304

	
RTI Sub. No. 8-312-0213151/

EPA Contract No. EP-C-11-036

	
ID/IQ with FFP or CPFF Task Orders

	
Sub to RTI International/U.S. Environmental Protection Agency (EPA), Cincinnati, OH

	
Scientific, Technical, Research, Engineering, and Monitoring Support  II (STREAMS II)

	
Ms. Katherine Mangum

Senior Manager, Subcontracts

RTI International

Global Supply Chain

SSES Subcontracts

P.O. Box 12194, 3040 Cornwallis Road

Research Triangle Park, NC  27709-2194

	
30307

	
USACE Contract No. W912DQ-13-D-3004

	
ID/IQ with FFP & CPFF task orders

	
U.S. Army Engineering District, Kansas City, MO

	
MEGA Long Term Response Action/Environmental Remediation Services (LTRA/ERS) MATOC (multiple award task order contract) in Support of the U.S. Army Corps of Engineers, Northwestern Div. and EPA Region 2

	
Ms. Kris Ann Huber

Contract Specialist, CECT-NWK-H

U.S. Army Corps of Engineers, Kansas City

601 E. 12th St., Room 647

Kansas City, MO  64106-2896

	
30309

	
EP-S7-13-02

	
ID/IQ with

Fixed Rate for Services T.O.'s

	
U.S. Environmental Protection Agency (EPA), Region 10,

Seattle, WA

	
Emergency and Rapid Response Services (ERRS - 4) for Region 10

	
Mr. Tyrone Lewis

Contracting Officer

U.S. EPA, Region 7

PLMG/RFMB/ACMS

11201 Renner Blvd.

Lenexa, KS  66219

	
30310

	
ERT Sub. No. G3350-SUB03/

USACE Contract No. W912QR-12D-0011

	
ID/IQ with FFP & T&M Task Orders

	
Sub. to Earth Resources Technology, Inc. (ERT)/USACE, Louisville District

	
Environmental and Restoration Services Contract for Louisville District and all U.S. Army Corps of Engineers Mission Boundaries (ERSC)

	
Ms. Hope Tucker

Subcontracts and Procurement Specialist

Earth Resources Technology, Inc.

6100 Frost Place, Suite A

Laurel, MD  20707

 

 

  

 

  

 

	
Project Number

	
 

Contract Number

	
 

Contract Type

	
 

Client

	
 

Title

	
 

Contracting Officer

	
30312.0001

	
SulTRAC Sub. No. S184-0002-0/

EPA Contract No. EP-S5-06-02

	
ID/IQ with Fixed Unit Rate TO's

	
SulTRAC JV (joint venture between Sullivan International Group, Inc. and Tetra Tech, Inc.) /U.S. Environmental Protection Agency (EPA), Region 5, Chicago, IL

	
Jacobsville Neighborhood Soil Contamination Site, OU 2 Project 2, Remedial Action

	
Ms. Teena Rhoden

Subcontract Administrator

Sullivan International Group, Inc.

  on behalf of SulTRAC JV

2750 Womble Road, Suite 100

San Diego, CA  92106

	
39001

	
N40083-11-D-0030

	
ID/IQ with FFP Task Orders

	
Dept. of the Navy,

NAVFAC Midwest, IPT

Great Lakes, IL

	
Awarded to SEQ Vets Remediation JV (Joint Venture between Sullivan and EQ)

Environmental Multiple Award Contract (EMAC)

	
Mr. Chris Payton

Contracting Officer

NAVFAC Midwest IPT

201 Decatur Ave., Bldg. 1A

Great Lakes, IL  60088-2801

 

	
39002.0001

	
EP-S7-12-08

	
Indef. Qty. with Fixed Unit Prices

	
U.S. Environmental Protection Agency (EPA), Region 7,

Kansas City, KS

	
Awarded to SEQ Vets Remediation JV B (Joint Venture between Sullivan and EQ) -- Remedial Action Oronogo-Duenweg Mining Belt Site, Operable Unit 01, Jasper County, MO

	
Mr. Jack Peterson

Contracting Officer

U.S. Environmental Protection Agency, Region 7

PLMG/RFMB

11201 Renner Blvd.

Lenexa, KS  66219

 

 

See Schedule 9.15, “Investigation Regarding FOB Hope Project”.

 

Code of Ethics - See attached.

 

  

 

  

SCHEDULE 9.8

Labor matters

None.

 

  

 

  

SCHEDULE 9.9

Compliance with laws

None.

 

 

  

 

  

SCHEDULE 9.10

Hazardous Substances

A substantial portion of EQMI’s business involves planning, design, program management and construction management of pollution control facilities, as well as assessment and management of remediation activities at hazardous waste or Superfund sites and military bases.  In addition, EQMI contracts with U.S. federal government entities to destroy hazardous materials. These activities require EQMI to manage, handle, remove, treat, transport and dispose of toxic and hazardous substances. Some environmental laws, such as the Superfund law and similar state and local statutes, can impose liability for the entire cost of clean-up for contaminated facilities or sites upon present and former owners and operators, as well as generators, transporters and persons arranging for the treatment or disposal of such substances. In addition, while Borrowers strive to handle hazardous and toxic substances with care and in accordance with safe methods, the possibility of accidents, leaks, spills and the events of force majeure always exist. Certain of EQMI’s business operations are covered by U.S. Public Law 85-804, which provides for government indemnification against claims and damages arising out of unusually hazardous activities performed at the request of the government. Due to changes in public policies and law, however, government indemnification may not be available in the case of any future claims or liabilities relating to other hazardous activities that EQMI performs.

 

  

 

  

 

SCHEDULE 9.13

Pension Matters

None.

 

  

 

  

 

SCHEDULE 9.15

Litigation

Investigation Regarding FOB Hope Project

In August 2007, Parent initiated an internal investigation regarding potential billing for unallowable costs in connection with the construction of a forward operating base in Iraq beginning in 2006 (the “FOB Hope Project”).  Parent completed the FOB Hope Project in March 2008.  Parent submitted its findings to the Office of the Department of Defense Inspector General and was admitted into the Department of Defense Voluntary Disclosure Program, which provides participants with certain protections and rights related to possible contract violations.  Parent was accepted into the Voluntary Disclosure Program and answered all questions of, and submitted all information requested by, the Federal government concerning this matter.  On March 26, 2013, Parent received a letter from the Department of the Air Force informing it that the Air Force Civil Engineer Center is seeking reimbursement of approximately $3.69 million, based on approximately $440,000 in overbillings that Parent disclosed as part of the Voluntary Disclosure Program and an additional approximately $3.25 million in unallowable costs as determined by a verification investigation conducted by the Defense Contract Audit Agency (“DCAA”).  Pursuant to the March 26, 2013 letter, the Air Force had requested that payment be made promptly and informed Parent that the Defense Finance and Accounting Services payment office may initiate procedures to offset the amount of the requested reimbursement against any payments otherwise due to Parent.  The letter advises Parent that if it believes the requested reimbursement is invalid or the amount is incorrect, Parent should contact the sender to discuss.

 

Shortly after Parent’s receipt of the March 26, 2013 letter, Parent established a dialogue with the Air Force and has requested additional information regarding the findings of the DCAA.  In a show of good faith, Parent also agreed to remit approximately $440,000 (its estimate of its overbillings pursuant to its filing with the Voluntary Disclosure Program) (the “Voluntary Amount”) to the Air Force over a tentatively agreed to installment period.  As of September 30, 2013, Parent is awaiting further information from the Air Force concerning the specific terms and conditions for paying the Voluntary Amount as proposed.  Parent also requested that the Air Force defer further collection efforts in regard to its request for reimbursement in order to allow the Air Force time to analyze and properly respond to the information that Parent has submitted to the Air Force in connection with the DCAA’s claim.  On August 2, 2013 and September 20, 2013, Parent filed responses to the DCAA’s claim with the Air Force including reasoning to refute the claims asserted by the DCAA.  As of September 30, 2013 and December 31, 2012, Parent has included within accrued expenses and other current liabilities, within the condensed consolidated balance sheet, approximately $400,000 for amounts that may be due in regard to its FOB Hope Project.  Parent’s management believes that it will be successful in defending its position with the Air Force.   However, if Parent is not successful, the outcome would likely have a material adverse effect upon its financial position. Parent has not accrued any additional amounts in response to the letter received on March 26, 2013. 

 

  

 

  

 

FOB Hope Project Claim for Equitable Adjustment

 

In 2008, Parent filed a request with the U.S. Air Force for an equitable adjustment in connection with the FOB Hope Project (the “Air Force Claim”). Parent completed the FOB Hope Project in March 2008. The Air Force Claim is being reviewed, but Parent has not been provided with a specific time line for final resolution of the Air Force Claim and Parent is not able to determine the amount that might be received in connection with the Air Force Claim.

 

EPA Claim for Equitable Adjustment

 

On January 23, 2012, Parent filed with the EPA to request an equitable adjustment in connection with a 2-year, $11 million contract to excavate and remove lead contaminated soils from residential properties located throughout Madison County, Missouri, which was completed in October 2011 (the “Madison County Contract”).  On January 23, 2012, Parent filed a request with the EPA for an equitable adjustment on the basis that it suffered a major financial loss as a result of certain volume under runs in connection with the Madison County Contract (“EPA Claim”).  The amount of the EPA Claim was approximately $6,000,000.  In early April 2013, the EPA filed a motion with the United States Civilian Board of Contract Appeals (“USCBCA”) for the dismissal of Parent’s equitable adjustment claim.  On April 30, 2013, the USCBCA denied the EPA’s motion for dismissal.  On May 10, 2013, Parent agreed with the EPA to pursue an alternative dispute resolution process as a means to resolve the principal elements of its claim.  Parent participated with the EPA in a non-binding mediation program in front of a judge in regard to the principal elements of the EPA Claim.  On August 6, 2013, the judge issued a report in which he denied the principal elements of Parent’s claims and found in favor of the EPA.  Based on this report and upon the advice of legal counsel, Parent has decided not to further pursue the EPA Claim.

 

  

 

  

 

SCHEDULE 9.17

Affiliates; Affiliate Transactions

	
Borrower

	
Directors/Managers

	
Officers

	
Stockholders

	
Subsidiaries

	
EQMI

	
James E. Wendle

Robert R. Galvin

Jack S. Greber

	
James E. Wendle - President and Chief

          Operating Officer

Robert R. Galvin - Chief Financial

          Officer, Executive Vice President,

          Secretary and Treasurer

Jack S. Greber - Senior Vice President

	
Parent

	
EQE

EQ Engineers Slovakia, s.r.o.

Vertterre

	
EQE

	
Jack S. Greber

	
N/A

	
EQMI

	
None

	
Vertterre

	
James E. Wendle

Robert R. Galvin

Joseph P. Hoffman

	
James E. Wendle - President

Robert R. Galvin - Treasurer

Joseph P. Hoffman - Secretary

	
EQMI

	
LGP

Grand Prairie

See also Note 14 - Related Parties, to the Quarterly Report on Form 10-Q of EQM Technologies & Energy, Inc. for the quarter ended September 30, 2013, filed with the Securities and Exchange Commission on November 14, 2013.

Parent and Borrowers have certain other arrangements that may be classified under Permitted Administrative Advances and Permitted Other Distributions pursuant to which goods and services are exchanged between Parent and Borrowers, and certain other intercompany arrangements.

 

  

 

  

SCHEDULE 9.18

Stockholders

	
Borrower

	
Shares/Units Authorized

	
Shares/Units Outstanding

	
Stockholders

	
EQMI

	
1,000

	
100

	
Parent

	
EQE

	
100% Interests

	
EQMI has 100% interest in EQE

	
EQMI

	
Vertterre

	
1,000

	
1,000

	
EQMI

  

 

  

SCHEDULE 9.19

Noncompetition Agreements

Employment Agreement between EQMI and James E. Wendle, effective as of January 1, 2012.

Employment Agreement between EQMI and Jack S. Greber effective as of January 1, 2012.

Employment Agreement between EQMI and Robert R. Galvin effective as of January 1, 2012.

Employment Agreement between EQMI and Joseph P. Hoffman effective as of January 1, 2012.

Employment Agreement between EQMI and Daniel Sandoval effective as of December 27, 2012

Stock Purchase Agreement between EQMI and Daniel Sandoval dated as of December 27, 2012

 

  

 

  

SCHEDULE 9.20

Bank Accounts

Environmental Quality Management, Inc.

First Financial Bank Lockbox A/C# XXXXXXXXX

First Financial Bank Disbursements A/C# XXXXXXXXX

US Bank Lockbox A/C# XXXXXXXXX

US Bank Operating A/C# XXXXXXXXX

EQ Engineers, LLC

First Financial Bank Lockbox A/C# XXXXXXXXX

First Financial Bank Disbursements A/C# XXXXXXXXX

Beacon

First Financial Bank Money Market A/C# XXXXXXXXX

Vertterre

First Financial Bank Lockbox A/C# XXXXXXXXX

First Financial Bank Disbursements A/C# XXXXXXXXX

 

  

 

  

SCHEDULE 9.24

Leases

Real Property that EQMI Leases

1)           18939 120th Ave NE, Suite 103 Bothell, Washington

2)           64090 NWY 1090, Pearl River, Louisiana

3)           2135 Schapelle Lane, Cincinnati, Ohio

4)           12721 Wolf Road, Geneseo, Illinois                                                                

5)           3460 Business Drive, Sacramento, California

6)           1280 Arrowhead Court, Crown Point, Indiana

7)           1800 Carillon Boulevard, Cincinnati, Ohio

8)           3400 179th Street, Suite 2, Hammond, Indiana

Real Property that EQE Leases

1)           3400 179th Street, Suite 1, Hammond, Indiana

Real Property that Vertterre Leases

1)           320 Gold Avenue, SW, Suite 500, Albuquerque, New Mexico

2)           816 West Broadway, Bloomfield, New Mexico

3)           14115 Davis Estate Road, Needville, Texas

Equipment that EQMI Leases

1)           Postage Meter, Bethell, Washington

2)           Postage Meter, Crown Point, Indiana

3)           Savin 8350 Copier, Hammond, Indiana

4)           Postage Meter, Cincinnati, Ohio

5)           RICOH Pro 906 EX Copier, Cincinnati, Ohio

 

  

 

  

6)           Panasonic DP C264 Copier, Hammond, Indiana

7)           Kyocera 400CI Copier, Bethell, Washington

8)           Kyocera KM-3035 Copier, Sacramento, California

9)           RICOH MP6001 Copier, Cincinnati, Ohio

10)           2 RICOH MPC4000 Copiers, Cincinnati, Ohio

11)           2 Bobcat T650 Compact Track Loaders, Lynwood, Washington

12)           2 Bobcat E26 Mini Excavator, Lynwood, Washington

13)           2 Bobcat E45 Mini Excavator, Lynwood, Washington

Vehicles that EQMI Leases

	
#

	
Year

	
Make

	
Model

	
Lic. State

	
1

	
2009

	
CHEV

	
COLC

	
OH

	
2

	
2009

	
CHEV

	
COLC

	
OH

	
3

	
2008

	
CHEV

	
S2HE

	
IN

	
4

	
2010

	
FORD

	
F35C

	
OH

	
5

	
2009

	
CHEV

	
S2HC

	
WA

	
6

	
2009

	
CHEV

	
S15C

	
WA

	
7

	
2009

	
DODG

	
SP35

	
OH

	
8

	
2010

	
FORD

	
F15E

	
CA

	
9

	
2010

	
FORD

	
F150

	
WA

	
10

	
2010

	
CHEV

	
S2HE

	
TX

	
11

	
2010

	
CHEV

	
S2HE

	
OH

	
12

	
2010

	
FORD

	
F15E

	
OH

	
13

	
2010

	
DODG

	
B15Q

	
LA

	
14

	
2009

	
LINC

	
MKX

	
OH

	
15

	
2009

	
CHEV

	
S15C

	
OH

	
16

	
2010

	
FORD

	
TRNC

	
OH

	
17

	
2010

	
CHEV

	
S15E

	
IL

	
18

	
2011

	
FORD

	
F25E

	
OH

	
19

	
2011

	
FORD

	
F15E

	
OH

	
20

	
2011

	
CHEV

	
S2HE

	
OH

	
21

	
2011

	
CHEV

	
S2HE

	
OH

	
22

	
2011

	
CHEV

	
S2HE

	
IN

	
23

	
2011

	
CHEV

	
S15E

	
ID

	
24

	
2011

	
CHEV

	
S15E

	
OH

	
25

	
2011

	
CHEV

	
S2HE

	
OH

	
26

	
2012

	
CHEV

	
S2HE

	
OH

	
27

	
2012

	
CHEV

	
S15E

	
CA

	
28

	
2012

	
CHEV

	
S2HC

	
OH

	
29

	
2013

	
FORD

	
FOCU

	
OH

	
30

	
2013

	
CHEV

	
S3HE

	
OH

 

  

 

  

 

	
31

	
2013

	
CHEV

	
S15E

	
OH

	
32

	
2013

	
CHEV

	
S3DC

	
OH

	
33

	
2013

	
CHEV

	
S15C

	
IL

	
34

	
2013

	
CHEV

	
S15C

	
OH

	
35

	
2013

	
CHEV

	
S15C

	
CA

	
36

	
2013

	
CHEV

	
S2HE

	
OH

	
37

	
2013

	
CHEV

	
EQUI

	
OH

	
38

	
2013

	
CHEV

	
EQUI

	
OH

	
39

	
2013

	
CHEV

	
EQUI

	
LA

	
40

	
2014

	
CHEV

	
E35P

	
OH

  

 

  

 

SCHEDULE 9.25

Insurance Policies for Borrowers

	  	  	
Aggregate

	
Carrier

	
Coverage Type

	
Coverage Limit ($)

	
Chartis

	
General Liability and Professional Liability

	
         2,000,000

	  
	
Chartis

	
Commercial Excess

	
         9,000,000

	  
	
Chubb

	
Property

	
         6,093,000

	  
	
Chubb

	
Equip- Inland Marine

	
            857,364

	  
	
Chubb

	
Worker's Comp

	
         1,000,000

	  
	
Chubb

	
Auto

	
         1,000,000

	  
	
CNA

	
D&O

	
         5,000,000

	  
	
CNA

	
Crime

	
         1,000,000

	  
	
Chubb

	
Employment Practices

	
         3,000,000

	  
	
CNA

	
Fiduciary

	
         3,000,000

	  

Insurance Policies for Beacon Energy (Texas) Corp.

	  	  	
Aggregate

	
Carrier

	
Coverage Type

	
Coverage Limit ($)

	
 

Catlin

	
General Liability

	
 

         2,000,000

	  
	
Steadfast

	
Pollution

	
         2,000,000ex102to8k07962_12312013.htm

Exhibit 10.2

 

AMENDED AND RESTATED GUARANTY

THIS AMENDED AND RESTATED GUARANTY (this “Guaranty”), dated as of December 31, 2013 (the “Effective Date”), is made by EQM TECHNOLOGIES & ENERGY, INC., a Delaware corporation (“Guarantor”), to, and for the benefit of, FIRST FINANCIAL BANK, NATIONAL ASSOCIATION, a national banking association, for itself and as agent for each of its affiliates (collectively, “Bank”). This Guaranty amends and restates in its entirety that certain Guaranty made by Guarantor in favor of Bank dated as of September 28, 2012 (the “Existing Guaranty”).

1.             GUARANTY.

1.1           Guaranty.  For value received and in consideration of any loan, advance or financial accommodation of any kind whatsoever heretofore, now or hereafter made, given or granted to one or more of ENVIRONMENTAL QUALITY MANAGEMENT, INC., an Ohio corporation (“EQMI”), EQ ENGINEERS, LLC, an Indiana limited liability company (“EQE”), VERTTERRE CORPORATION, a New Mexico corporation (“Vertterre”),or any other Borrower from time to time party to the Loan Agreement (EQMI, EQE, and Vertterre, together with each other Borrower from time to time party to the Loan Agreement, each a “Borrower” and collectively, the “Borrowers”), Guarantor hereby absolutely, irrevocably and unconditionally guarantees to Bank: (i) the full and prompt payment when due of the principal of, all interest on, and all fees in respect of, all of the Loans and Letter of Credit Obligations and (ii) the full and prompt payment and performance of any and all other Obligations, whether all or any portion of such Loans, Letter of Credit Obligations and other Obligations are now or hereafter existing, direct or indirect, related or unrelated, joint or several, or absolute or contingent, whether or not for the payment of money, and whether arising by reason of an extension of credit, opening of a letter of credit, loan, guarantee, rate management obligation or in any other manner (all of the indebtedness, liabilities and obligations described in the foregoing clauses (i) and (ii) of this Section 1.1 which are outstanding from time to time are collectively referred to as the “Guaranteed Obligations”); provided that, for the avoidance of doubt, in no event shall the Guaranteed Obligations guaranteed herein include any Excluded Swap Obligations, to the extent applicable in respect of Guarantor.  Guarantor hereby absolutely, irrevocably and unconditionally guarantees to Bank the full and prompt payment and performance of the Guaranteed Obligations when any of the Guaranteed Obligations are due, including, without limitation, on the occurrence of an Event of Default, by reason of the maturity or acceleration of any of the Guaranteed Obligations, on the occurrence of a default under the terms of this Guaranty, or otherwise, and at any times after the date when due.

 

 

1.2           Capitalized Terms.  Capitalized terms used, but not defined, in this Guaranty, have the meanings attributed to them in the Existing Loan Agreement, as amended by the First Amendment (as amended, as the same may be further amended, renewed, consolidated, restated or replaced from time to time, the “Loan Agreement”). Guarantor has had an opportunity to review the Loan Agreement and the other Loan Documents and to discuss the same with counsel.  As used herein:

“Event of Default” has the meaning given in Section 5.1.

“Material Adverse Effect” means a material adverse effect, as determined by Bank in good faith, on (i) Guarantor’s and/or the Borrowers’, as applicable: (a) business, property, assets, operations or condition, financial or otherwise or (b) ability to perform any of its payment or other Obligations under this Guaranty or any of the other Loan Documents to which Guarantor is a party, (ii) the recoverable value of the Loan Collateral or Bank’s rights or interests therein, (iii) the enforceability of any of the Loan Documents to which Guarantor is a party, or (iv) the ability of Bank to exercise any of its rights or remedies under the Loan Documents or by law provided.

“Parent Pledge Agreement” means the Pledge Agreement dated as of September 28, 2012, executed by Parent in favor of Bank, among other things, granting a Lien in favor of Bank on all of the now and hereafter acquired equity interests of EQMI, and its successors and assigns.

“Permitted Liens” means the Liens and interests in favor of Bank granted or provided under the Loan Documents and, to the extent reflected on Guarantor’s books and records and not impairing the operations of Guarantor or any performance under, or contemplated by, the Loan Documents:

(i)           Liens arising by operation of law for taxes not yet due and payable;

(ii)          Liens of mechanics, materialmen, shippers and warehousemen for services or materials for which payment is not yet due;

 

  

  

  

(iii)         Liens incurred or deposits made in the ordinary course of Guarantor’s business in connection with workers’ compensation, unemployment insurance and other types of social security;

(iv)         Liens, if any, specifically permitted by Bank from time to time in writing;

(v)          Liens on Equipment securing Indebtedness under capitalized leases or purchase money Indebtedness so long as (a) the total amount of obligations secured by the purchase money security interests or the subject of capitalized leases during any period does not, together with any other capital expenditures made by Guarantor for the applicable period, exceed $300,000 in the aggregate in any fiscal year for Guarantor; (b) such purchase money Indebtedness or capitalized lease Indebtedness  will not be secured by any of the Loan Collateral other than the property so acquired and any identifiable proceeds, (c) any Liens relating to such purchase money Indebtedness or capitalized lease Indebtedness will not extend to or cover any property of Guarantor other than the property so acquired and any identifiable proceeds, and (d) the principal amount of such capitalized lease or purchase money Indebtedness will not, at the time of the incurrence thereof, exceed the value of the property so acquired;

(vi)         Liens for taxes, assessments and other similar charges to the extent payment thereof shall not at the time be required to be made;

(vi)         those Liens described on Schedule II; provided that those Liens secure only the Indebtedness which the Liens secure on the Effective Date; and

(vii)        Liens arising from the claims or demands of materialmen, mechanics, carriers, warehousemen, landlords, bailees and other like Persons (“Third Party Claims”) if each of the following conditions is met: (a) the validity or amount of the Third Party Claim is being contested in good faith and by appropriate and lawful proceedings promptly initiated and diligently conducted, (b) Guarantor has given prior notice to Bank of the Third Party Claim, (c) Guarantor has established appropriate reserves (in Bank’s reasonable discretion exercised in good faith) for the Third Party Claim, (d) levy and execution on the Third Party Claim have been and continue to be stayed, (e) the Third Party Claim does not prevent Bank from having a perfected first priority security interest in, or a first priority Lien on, the Loan Collateral, (f) Guarantor’s title to, and its right to use, any of the Loan Collateral are not, in Bank’s judgment exercised in good faith, materially affected thereby, and (g) the amount of all Third Party Claims do not exceed, as of any date, $100,000 in the aggregate for Guarantor; and, provided, further, that Guarantor must promptly pay each such Third Party Claim to the extent the dispute is finally settled in favor of the claimant thereof.

1.3           Security.  This Guaranty and the Guaranteed Obligations are secured by the Parent Pledge Agreement.  Bank shall have all of its rights and remedies set forth in the Parent Pledge Agreement.

2.            NATURE OF THE GUARANTY.

2.1           Absolute Obligations.  The obligations of Guarantor under this Guaranty are absolute and unconditional and will be continuing and remain in full force and effect subject to Sections 2.2 and 2.6.  This is a continuing guaranty of payment and not of collection.  Guarantor’s obligations under this Guaranty will not be released, discharged, affected, modified or impaired by any event, including, without limitation, any of the following events:

(i)           the compromise, settlement, release, discharge or termination of any or all of the Guaranteed Obligations by operation of law or otherwise, except as may result from the full and prompt performance and payment of the Guaranteed Obligations;

 

 

(ii)           the extension of the time for payment of any of the Guaranteed Obligations, or the waiver, modification or amendment (whether material or otherwise) of any of the Guaranteed Obligations or the acceptance of partial payments of the Guaranteed Obligations;

(iii)         the taking or failure to take any action under the Loan Agreement, any of the other Loan Documents or this Guaranty;

(iv)         the invalidity or unenforceability of any provision of the Loan Agreement, any of the other Loan Documents, or this Guaranty or any other defense any Borrower or other obligor or guarantor of the Guaranteed Obligations may assert to the payment or performance of the Guaranteed Obligations other than payment and satisfaction in full of all of the Guaranteed Obligations;

 

  

  

  

(v)          any (a) failure by Bank to take any steps to perfect, maintain, or enforce its Liens on any of the Loan Collateral, (b) subordination of any of the Guaranteed Obligations and any security therefor to any other Indebtedness of any Borrower to any Person, or (c) loss, release, substitution of, or other dealings with, any collateral or other security given to Bank with respect to the Guaranteed Obligations;

(vi)         the voluntary or involuntary liquidation, dissolution, sale or other disposition of all or substantially all of the assets, marshaling of assets and liabilities, receivership, insolvency, bankruptcy, assignment, composition with creditors or readjustment of, or other similar proceedings affecting any Borrower, Guarantor, LGP, Grand Prairie or any other obligor or guarantor of any or all of the Guaranteed Obligations;

(vii)        any allegation of invalidity or contest of the validity of this Guaranty in any of the proceedings described in clause (vi) of this Section 2.1;

(viii)       any act, election or remedy, or other election, occurrence or circumstance of any nature, whether or not under Bank’s control, that may affect or impair any subrogation right of Guarantor or the effectiveness or value thereof;

 

(ix)          the default or failure of  Guarantor to perform fully any of its obligations set forth in this Guaranty;

(x)           Bank’s election, in any proceeding instituted under Chapter 11 of Title 11 of the United States Code (the “Bankruptcy Code”), of the application of Section 1111(b)(2) of the Bankruptcy Code;

(xi)          any borrowing or grant of a security interest by any Borrower, as debtor-in-possession, under Section 364 of the Bankruptcy Code;

(xii)         the disallowance of all or any portion of Bank’s claim(s) for repayment of the Guaranteed Obligations under Section 502 of the Bankruptcy Code; or

(xiii)        any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor other than payment and satisfaction in full of all of the Guaranteed Obligations.

2.2           Revival of Guaranty.  If (i) any demand is made at any time on Bank for the repayment of any amount received by it or as proceeds of any collateral or security which have been applied in payment of any of the Guaranteed Obligations, and (ii) Bank makes any repayment by reason of any judgment, decree or order of any court or administrative body or by reason of any settlement or compromise of such demand, Guarantor will be liable under this Guaranty for all amounts so repaid to the same extent as if such amounts had never been received originally by Bank.

2.3           Waivers By Guarantor.  Guarantor hereby covenants that this Guaranty will not be discharged except by complete performance of the obligations contained in this Guaranty.  Guarantor waives all setoffs and counterclaims and all presentments, demands for performance, notices of nonperformance, protests, notices of protest, notices of dishonor, and notices of acceptance of, and reliance on, this Guaranty.  Guarantor further waives all (i) notices of the existence, creation or incurring of new or additional Indebtedness arising either from additional loans extended to any Borrower or otherwise, (ii) notices that the principal amount, or any portion thereof (and any interest thereon), of the Loans or any of the other Guaranteed Obligations is due, (iii) notices of any and all proceedings to collect from any Borrower, any indorser or any other guarantor of all or any part of the Guaranteed Obligations, or from anyone else, (iv) to the extent permitted by law, notices of exchange, sale, surrender or other handling of any security or collateral given to Bank to secure payment of all or any part of the Guaranteed Obligations, and (v) defenses based on suretyship or impairment of collateral.

2.4           Application of Proceeds by Bank.  Bank will have the exclusive right to determine, in its sole discretion, the order and method of the application of payments from and credits to, if any, Guarantor, Borrowers, Landfill Gas Production, L.L.C., a Delaware limited liability company (“LGP”), Grand Prairie Landfill Gas Production, Limited Liability Company, a Texas limited liability company (“Grand Prairie”), or any other Person on account of the Guaranteed Obligations or of any other liability of Guarantor to Bank; provided that, no payment from Guarantor hereunder shall be applied to any Excluded Swap Obligation to the extent applicable in respect of Guarantor.

2.5           Responsibility of Guarantor.  Guarantor hereby assumes responsibility for keeping itself informed of the financial condition of Borrowers and any and all indorsers, obligors or other guarantors of any instrument or document evidencing all or any part of the Guaranteed Obligations and of all other circumstances bearing on the risk of nonpayment of the Guaranteed Obligations or any part thereof that diligent inquiry would reveal.  Bank will have no duty to advise Guarantor of information known to Bank regarding such condition or any such circumstances.

 

  

  

  

2.6           Termination of Guaranty. Except as provided in Section 2.2, Guarantor’s obligations under this Guaranty for the Guaranteed Obligations will terminate upon the later to occur of: (a) the payment and performance in full of the Guaranteed Obligations and (b) the Payment in Full of the Obligations.

2.7           Taxes.  All payments to be made hereunder by Guarantor shall be made without setoff, counterclaim or other defense.  All such payments shall be made free and clear of and without deduction for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any governmental authority (collectively, “Taxes”) excluding Taxes imposed on or measured by Bank’s gross or net income, franchise taxes, branch profits taxes, taxes on doing business or taxes measured by or imposed upon the overall capital or net worth of Bank or its applicable lending office, or any branch or affiliate thereof, in each case imposed by the jurisdiction under the laws of which Bank, applicable lending office, branch or affiliate is organized or is located, or any nation within which such jurisdiction is located or any political subdivision thereof.  If any Taxes are imposed and required to be withheld from any amount payable by Guarantor hereunder, Guarantor shall be obligated to (a) pay such additional amount so that Bank will receive a net amount (after giving effect to the payment of such additional amount and to the deduction of all Taxes) equal to the amount due hereunder, (b) pay such Taxes to the appropriate taxing authority for the account of Bank, and (c) as promptly as possible thereafter, send Bank a certified copy of any original official receipt showing payment thereof, together with such additional documentary evidence as Bank may from time to time require in its discretion exercised in good faith.  If Guarantor fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to Bank the required receipts or other required documentary evidence, Guarantor shall be obligated to indemnify Bank for any incremental Taxes, interest or penalties that may become payable by Bank as a result of such failure.  The obligations of Guarantor under this Section 2.7 shall survive the repayment of the Guaranteed Obligations and the termination of the Loan Agreement and the other Loan Documents.

3.            REPRESENTATIONS AND WARRANTIES; COVENANTS.

3.1           Representations and Warranties.  To induce Bank to have extended and to continue to extend the Guaranteed Obligations, and for other good and valuable consideration, Guarantor hereby represents and warrants to Bank that:

(a)           This Guaranty is the legal, valid and binding obligation of Guarantor, enforceable in accordance with its terms;

(b)           The execution, delivery, and such performance of this Guaranty does not and will not, by the lapse of time, by the giving of notice, or the satisfaction of any other condition, violate or contravene any authority having the force of law or any agreement, instrument or other document to which Guarantor is a party or by which Guarantor or any of its properties is or may be bound;

(c)           The execution and delivery of this Guaranty by Guarantor does not:  (i) require any consent or approval of any Person, (ii) violate, or constitute a default under, any rule or provision of Guarantor’s articles, certificates, regulations, bylaws, operating agreement, any resolution of its members, managers, or directors, as applicable, or other agreement, document or instrument to which Guarantor is a party or by which Guarantor or any of Guarantor’s properties is or may be bound or affected, (iii) violate, or constitute a default under, any law, requirement, rule, regulation, ordinance or restriction of any Governmental Authority or agency applicable to Guarantor or by which Guarantor’s properties are bound or affected, or (iv) result in the creation or imposition of any Lien on any of the property of Guarantor except in favor of Bank;

(d)           There is no action or proceeding pending before any court or Governmental Authority which materially, adversely affects the condition (financial or otherwise) of Guarantor or any of its properties;

(e)           Attached hereto as Schedule I, and incorporated by reference herein, is a true and complete listing of all Indebtedness for borrowed money of Guarantor as of the Effective Date.  Except as set forth on Schedule I, Guarantor has not guaranteed the obligations of any Person (except in favor of Bank and by indorsement of negotiable instruments payable at sight for deposit or collection or similar banking transactions in the usual course of such entity’s business);

(f)           Guarantor (i) is duly organized and is and shall remain validly existing and in good standing under the laws of Delaware, and is and shall remain qualified to do business as a foreign corporation under the laws of each jurisdiction in which the failure to be so qualified and in good standing could reasonably be expected to have a Material Adverse Effect, and (ii) has and shall maintain all requisite power and authority, corporate or otherwise, to conduct its business, to own its property, to execute, deliver and perform all of its obligations under this Guaranty and each of the other Loan Documents, as applicable, to which Guarantor is a party.

 

  

  

  

3.2           Covenants.  Until this Guaranty is terminated in accordance with its terms:

(a)           Indebtedness. Without Bank’s prior written consent, Guarantor will not incur any Indebtedness other than: (i) the Additional Beacon Noteholder Subordinated Debt, the December 2011 Beacon Noteholder Subordinated Debt, and the other Indebtedness set forth on Schedule I; (ii) the Guaranteed Obligations; (iii) Indebtedness (A) which is unsecured, (B) which is not for borrowed money, (C) which has been incurred in the ordinary course of Guarantor’s or its Subsidiaries’ business, (D) which is not otherwise prohibited under any provision of this Guaranty, and (E) the nonpayment of or other default under which would not have a Material Adverse Effect; (iv) Indebtedness in respect of taxes, assessments or governmental charges to the extent that payment thereof shall not at the time be required to be made; (v) Indebtedness in respect of judgments or awards which (1) have been vacated, discharged or stayed within 10 days of the entry thereof or have been in force for less than the applicable appeal period so long as execution is not levied thereunder (or in respect of which (A) Guarantor shall at the time in good faith be prosecuting an appeal or proceedings for review and (B) a stay of execution shall have been obtained pending such appeal or review), and (2) (A) are not, in the aggregate, in an amount in excess of $100,000 (and individually in excess of $50,000) of any available insurance coverage, as determined by Bank in its discretion exercised in good faith, in effect to satisfy such judgments or award for which the insurer has admitted in writing its liability for the full amount thereof and (B) do not have a Material Adverse Effect (regardless of monetary amount or insurance coverage); (vi) Indebtedness under capitalized leases or purchase money financing if (1) such Indebtedness is not secured by any of the Loan Collateral other than the property so acquired and any identifiable proceeds, (2) any Liens relating to such Indebtedness do not extend to or cover any property of Guarantor other than the property so acquired and any identifiable proceeds therefrom, (3) the principal amount of such capitalized lease or purchase money Indebtedness will not, at the time of the incurrence thereof, exceed the value of the property so acquired; and (4) the total amount of such Indebtedness during any period does not exceed $300,000 for Guarantor in any fiscal year; and (vii) Indebtedness representing reimbursement obligations and other liabilities of Guarantor with respect to surety bonds (whether payment, performance or otherwise), letters of credit, banker’s acceptances, drafts or similar documents or instruments issued for Guarantor’s account in the ordinary course of Guarantor’s business; provided, that no Indebtedness otherwise permitted under this Section 3.2(a) to be incurred shall be permitted to be incurred if, after giving effect to the incurrence thereof, any Event of Default shall have occurred and be continuing.

(b)           Guaranties.  Without Bank’s prior written consent, Guarantor will not guaranty or enter into any agreements of guaranty or indemnity of the obligations of any Person except (i) those guaranties which are in favor of Bank; (ii) by indorsement of negotiable instruments payable at sight for deposit or collection or similar banking transactions in the usual course of such Guarantor’s business, (iii) guaranties of direct obligations of Guarantor’s direct and indirect Subsidiaries, which obligations are permitted under the Loan Documents, and (iv) the indemnification of officers, directors, employees, agents and other persons indemnified by Guarantor from time to time consistent with Guarantor’s charter documents.

(c)           Payments on Subordinated Debt; Amendments.  Guarantor will not, and will not permit any of its Subsidiaries to: (i) make any payment (including any principal, premium, interest, fee or charge) with respect to any of the Additional Beacon Noteholder Subordinated Debt or the December 2011 Beacon Noteholder Subordinated Debt except as expressly permitted by the Additional Beacon Noteholder Subordination Agreement or the December 2011 Beacon Noteholder Subordination Agreement, as applicable; (ii) repurchase or acquire for value any of the Additional Beacon Noteholder Subordinated Debt or the December 2011 Beacon Noteholder Subordinated Debt except as expressly permitted by the Additional Beacon Noteholder Subordination Agreement or the December 2011 Beacon Noteholder Subordination Agreement, as applicable; or (iii) amend, or consent to any amendment to, the Additional Beacon Noteholder Subordinated Debt Documents, the December 2011 Beacon Noteholder Subordinated Debt Documents, or any one or more thereof.

(d)            Title to Property; No Liens.  Guarantor will have: (i) good and indefeasible title to, and ownership of, all of its personal property and (ii) good and marketable fee simple title to all of its real property, in each case free and clear of all Liens except to the extent of Permitted Liens.

 

(e)           Maintenance of Books and Records; Access and Inspection.  Guarantor shall, and shall cause each of its Subsidiaries to, keep and maintain complete books of account, records and files with respect to its business in accordance with GAAP consistently applied and shall accurately and completely record all transactions therein.  Bank may, at all times during normal business hours, have (i) access to, and the right to examine and inspect, all of Guarantor’s real and personal property and (ii) access to, and the right to inspect, audit and make extracts from, all of Guarantor’s records, files and books of account, and Guarantor shall execute and deliver at the request of Bank such instruments as may be necessary for Bank to obtain such information concerning the business of Guarantor as Bank may require from any Person; however, unless an Event of Default has occurred or exists, Bank will give Guarantor reasonable notice before it makes the inspections and examinations at any office or place of business of Guarantor.

 

  

  

  

(f)           Mergers; Acquisitions.  Guarantor will not merge or consolidate or be merged or consolidated with or into any other Person, or otherwise reorganize, liquidate or wind-up or dissolve itself.

(g)           Liability Insurance.  Guarantor will, at all times, maintain in full force and effect such liability insurance with respect to its activities and business interruption, product liability and other insurance as may be reasonably required by Bank, such insurance to be provided by insurer(s) reasonably acceptable to Bank.  Such insurance shall name Bank as an additional insured containing a severability of interest/cross-liability endorsement acceptable to Bank.

(h)           Property Insurance.  Guarantor will insure all of its real and personal property against loss or damage by fire, theft, burglary, pilferage, loss in transit and such other extended coverage hazards as Bank shall specify in amounts and under policies by insurers reasonably acceptable to Bank.  The policies or a certificate thereof signed by the insurer evidencing that such insurance coverage is in effect for periods of not less than one year (as measured from the date of renewal)  shall be delivered to Bank within five Business Days after the issuance of the policies to Guarantor and after each renewal thereof.  All premiums thereon shall be paid by Guarantor when due so as to keep such insurance in full force and effect at all times.  With respect to any policy insuring any Loan Collateral, such policy shall name Bank (and no other party, except to the extent of Permitted Liens) as loss payee and, as appropriate, mortgagee under a New York standard mortgagee clause or other similar clause acceptable to Bank and shall provide that such policy may not be amended or canceled without 30 days prior written notice to Bank.  If Guarantor fails to do so, Bank may (but shall not be required to) procure such insurance with respect to any of the Loan Collateral, and all such costs and expenses incurred by Bank shall be payable by Guarantor on demand and secured by the Loan Collateral provided by Guarantor.

(i)           Solvency.  Guarantor will continue to be Solvent.

3.3           Parent Pledge Agreement.  Guarantor will perform, observe and comply with all of the terms and conditions of the Parent Pledge Agreement.

4.            EXPENSES.  Guarantor will pay all of the costs, expenses and fees, including, without limitation, all reasonable attorneys’ fees, incurred by Bank in enforcing or attempting to enforce this Guaranty, whether the same is enforced by suit or otherwise, and all amounts recoverable by law, including, without limitation, interest on any unpaid amounts due under this Guaranty.

5.            DEFAULT; SUBORDINATION; MAXIMUM LIABILITY.

5.1           Events of Default. (i) Each of the following events, whether or not caused by or within the control of Guarantor, will constitute an “Event of Default” under this Guaranty:

(a)           Guarantor does not pay, when due, any of the Indebtedness owing from such Guarantor to Bank;

(b)           Guarantor does not observe, perform, or comply with any term or provision of this Guaranty or of any of the other Loan Documents to which such Guarantor is a party or by which it is bound (exclusive of those defaults covered by the other clauses of this Section 5.1(i));

(c)           Guarantor fails to make any payment due to any Affiliate of Bank, materially breaches any agreement between such Guarantor and any Affiliate of Bank, or makes any material misrepresentation to any Affiliate of Bank;

(d)           Any representation, warranty or statement made by, or on behalf of Guarantor, (1) in this Guaranty, in connection with this Guaranty, in connection with any transaction relating to this Guaranty or in any of the other Loan Documents was false in any material respect, in the good faith judgment of Bank, when made or furnished or when treated as being made or furnished or (2) to induce Bank to make any Loan was false in any material respect, in the good faith judgment of Bank, when made or furnished or when treated as being made or furnished;

(e)           Guarantor: (1) is, as of any date, not Solvent, (2) becomes generally unable to pay its debts as they become due, (3) makes a general assignment for the benefit of creditors, or (4) calls a meeting of creditors for the composition of debts; or the Board of Directors of Guarantor (or any committee thereof) adopts a resolution authorizing or has otherwise authorized the actions described in subitems (3) or (4) of this clause (e);

 

  

  

  

(f)           (1) There is filed by Guarantor any case, petition, proceeding or other action (“Bankruptcy Case”) under any existing or future bankruptcy, insolvency, reorganization, liquidation or arrangement or readjustment of debt law or any similar existing or future law of any applicable jurisdiction (“Insolvency Law”), (2) an involuntary Bankruptcy Case (“Involuntary Proceeding”) is commenced against Guarantor under any Insolvency Law and the Involuntary Proceeding is not controverted within 10 days, or is not dismissed within 60 days, after the commencement of the Bankruptcy Case, or (3) a custodian, receiver, trustee, sequestrator, or agent is appointed or authorized to take charge of any of Guarantor’s properties;

(g)           An event or development occurs that Bank, in good faith, determines has had a Material Adverse Effect;

(h)          There occurs an uninsured casualty loss with respect to Guarantor’s assets having an aggregate fair market value of greater than $100,000;

(i)           Any default occurs under the terms applicable to any Indebtedness of Guarantor in an aggregate amount exceeding $250,000 which represents any borrowing or financing from, by or with any Person;

(j)           A contribution failure occurs with respect to any Pension Plan sufficient to give rise to a Lien under Section 302(f) of ERISA;

(k)          There is instituted against Guarantor any criminal proceeding for which forfeiture of any asset having an aggregate fair market value of greater than $500,000 is a potential penalty and is reasonably likely to occur, or Guarantor is enjoined, restrained or in any way prevented by order of any Governmental Authority from conducting any material part of its business affairs and such order is not completely stayed, to the satisfaction of Bank, or dissolved within one Business Day from the effective date of such order;

(l)           Guarantor shall voluntarily dissolve or cease to exist, or any final and nonappealable order or judgment shall be entered against Guarantor decreeing its involuntary dissolution; or

(m)         Guarantor or any of its Subsidiaries discovers, identifies, is given notice by any Person, or otherwise has knowledge of (1) the existence of any Environmental Liability or (2) any one or more Releases of Hazardous Substances on, about or affecting any real property owned or occupied by Guarantor or its Subsidiaries or Guarantor’s business operations, which, (A) is not entirely covered by insurance and (B) by itself or in the aggregate, will or could reasonably be estimated to subject Guarantor to indebtedness, liability, or obligations in excess of $500,000 during the term of this Guaranty.

(ii)           Each Event of Default will be deemed continuing until it is waived in writing by, or cured to the written satisfaction of, Bank.

5.2           Payment of Guaranteed Obligations.  At any time after all or any portion of the Guaranteed Obligations are due and payable, whether on maturity, after the acceleration of any of the Guaranteed Obligations, on the occurrence of an Event of Default, on the occurrence of any default under this Guaranty, or otherwise:  (i) Guarantor will, on the demand of Bank, immediately deposit with Bank in U.S. dollars the total amount of the Guaranteed Obligations due and payable (whether due and payable as a result of maturity, acceleration, or otherwise), and (ii) Bank will have the right: (a) to proceed directly against Guarantor under this Guaranty without first exhausting any other remedy it may have and without resorting to any security or guaranty held by Bank, (b) to compromise, settle, release, discharge or terminate any of the obligations of any other obligor(s) or guarantor(s) of the Guaranteed Obligations as Bank, in its discretion, determines without thereby in any way affecting, limiting or diminishing its rights thereafter to enforce the obligations of Guarantor under this Guaranty, (c) to sell, collect, or otherwise dispose of and to apply the proceeds of any collateral or other security given to Bank with respect to the Guaranteed Obligations in satisfaction of the Guaranteed Obligations in such order and method of application as may be elected by Bank in its discretion exercised in good faith, and (d) to exercise all of Bank’s other powers, rights and remedies under this Guaranty, the Parent Pledge Agreement, the other Loan Documents and under applicable law.  Bank will not have any obligation to marshal any assets in favor of Guarantor or against or in payment of any or all of the Guaranteed Obligations.

5.3           Subordination.  Until the Guaranteed Obligations have been fully paid, performed and satisfied: (i) any and all claims of Guarantor against Borrowers (or any one of them), LGP, Grand Prairie, any indorser or any other obligor or guarantor of all or any part of the Guaranteed Obligations, or against any of their respective properties are, by the signing of this Guaranty by Guarantor, made subordinate and subject in right of payment and performance to the prior payment and performance to Bank in full of all of the Guaranteed Obligations; and (ii) Guarantor will not exercise any right to enforce any remedy which Guarantor now has or may in the future have against any Borrower, any indorser or any other obligor or guarantor of all or any part of the Guaranteed Obligations.

 

  

  

  

5.4           Maximum Liability.  The provisions of this Guaranty are severable, and in any action or proceeding involving any state corporate law, or any state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the obligations of Guarantor under this Guaranty would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of Guarantor’s liability under this Guaranty, then, notwithstanding any other provision of this Guaranty to the contrary, the amount of such liability shall, without any further action by Guarantor or Bank, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding (such highest amount determined hereunder being Guarantor’s “Maximum Liability”).  This Section with respect to the Maximum Liability of Guarantor is intended solely to preserve the rights of Bank to the maximum extent not subject to avoidance under applicable law, and neither Guarantor nor any other Person or entity shall have any right or claim under this Section with respect to such Maximum Liability, except to the extent necessary so that the obligations of Guarantor hereunder shall not be rendered voidable under applicable law. Guarantor agrees that the Guaranteed Obligations may at any time and from time to time exceed the Maximum Liability of Guarantor without impairing this Guaranty or affecting the rights and remedies of Bank hereunder; provided that, nothing in this sentence shall be construed to increase Guarantor’s obligations hereunder beyond its Maximum Liability.

6.            GENERAL.

6.1           Cumulative Remedies.  The remedies provided in this Guaranty, the Loan Agreement, and the other Loan Documents are cumulative and not exclusive of any remedies provided by law.  Exercise of one or more remedy(ies) by Bank does not require that all or any other remedy(ies) be exercised and does not preclude later exercise of the same remedy.  If there is any conflict, ambiguity, or inconsistency, in Bank’s judgment, between the terms of this Guaranty and any of the Loan Agreement or other Loan Documents, then the applicable terms and provisions, in Bank’s judgment, providing Bank with the greater rights, remedies, powers, privileges, or benefits will control.

6.2           Waivers and Amendments in Writing.  Failure by Bank to exercise any right, remedy or option under this Guaranty, the Loan Agreement or in any other Loan Document or delay by Bank in exercising the same shall not operate as a waiver by Bank of its right to exercise any such right, remedy or option.  No waiver by Bank shall be effective unless it is in writing and then only to the extent specifically stated.  This Guaranty cannot be amended, modified, changed or terminated orally.

6.3           Entire Agreement; Counterparts; Fax Signatures.  This Guaranty and the other Loan Documents to which Guarantor is a party constitute the entire agreement between the parties with respect to the subject matter of this Guaranty, and supersede all prior written and oral agreements and understandings.  Any request from time to time by Guarantor for Bank’s consent under any provision in this Guaranty must be in writing, and any consent to be provided by Bank under this Guaranty from time to time must be in writing in order to be binding on Bank; however, Bank will have no obligation to provide any consent requested by Guarantor, and Bank may, for any reason in its discretion exercised in good faith, elect to withhold the requested consent.  Two or more duplicate originals of this Guaranty may be signed by the parties, each of which shall be an original but all of which together shall constitute one and the same instrument.  Any documents delivered by, or on behalf of, Guarantor by facsimile transmission or other electronic delivery of an image file reflecting the execution hereof: (i) may be relied on by each party as if the document were a manually signed original and (ii) will be binding on each party for all purposes of the Loan Agreement and other Loan Documents.

6.4           Headings; Construction.  Section headings in this Guaranty are included for convenience of reference only and shall not relate to the interpretation or construction of this Guaranty.  Any and all references in this Guaranty to any other document or documents will be references to that other document or documents as they may, from time to time, be modified, amended, renewed, consolidated, extended or replaced.

6.5           Separate Instrument.  This Guaranty constitutes a separate instrument, enforceable in accordance with its terms, and neither this Guaranty nor the obligations of Guarantor under this Guaranty will, under any circumstance or in any legal proceeding, be deemed to have merged into any other agreement or obligation of Guarantor.

6.6           Severability.  If any term of this Guaranty is found invalid under Ohio law or laws of mandatory application by a court of competent jurisdiction, that invalid term will be considered excluded from this Guaranty and will not invalidate the remaining terms of this Guaranty.

 

  

  

  

6.7           OHIO LAW.  THIS GUARANTY HAS BEEN DELIVERED AT AND ACCEPTED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN HAMILTON COUNTY, OHIO.  THIS GUARANTY SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF OHIO (WITHOUT REFERENCE TO OHIO CONFLICTS OF LAW PRINCIPLES).

6.8           WAIVER OF JURISDICTION.  AS A SPECIFICALLY BARGAINED INDUCEMENT FOR BANK TO ACCEPT THIS GUARANTY AND TO HAVE EXTENDED AND TO CONTINUE TO EXTEND CREDIT TO BORROWERS, GUARANTOR AND BANK AGREE THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS GUARANTY, ITS VALIDITY OR PERFORMANCE, AND WITHOUT LIMITATION ON THE ABILITY OF BANK, ITS SUCCESSORS AND ASSIGNS, TO EXERCISE ALL RIGHTS AS TO THE LOAN COLLATERAL AND TO INITIATE AND PROSECUTE IN ANY APPLICABLE JURISDICTION ACTIONS RELATED TO REPAYMENT OF THE GUARANTEED OBLIGATIONS, SHALL BE INITIATED AND PROSECUTED AS TO ALL PARTIES AND THEIR SUCCESSORS AND ASSIGNS AT CINCINNATI, OHIO.  BANK AND GUARANTOR EACH CONSENTS TO AND SUBMITS TO THE EXERCISE OF JURISDICTION OVER ITS PERSON BY ANY COURT SITUATED AT CINCINNATI, OHIO HAVING JURISDICTION OVER THE SUBJECT MATTER, AND CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY CERTIFIED MAIL DIRECTED TO GUARANTOR AND BANK AT THEIR RESPECTIVE ADDRESSES SET FORTH IN THIS GUARANTY OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE STATE OF CINCINNATI, OHIO.  GUARANTOR WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION TO VENUE OF ANY ACTION INSTITUTED HEREUNDER, AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.

6.9           Successors and Assigns.  This Guaranty will inure to the benefit of Bank, its successors and assigns and be binding on the successors and assigns of Guarantor.

6.10           Notices.  Any notice required, permitted or contemplated hereunder shall, except as expressly provided in this Guaranty, be in writing and addressed to the party to be notified at the address set forth below or at such other address as each party may designate for itself from time to time by notice hereunder, and shall be deemed validly given:  (i) three days following deposit in the U.S. certified mails (return receipt requested), with proper postage prepaid, or (ii) the next Business Day after such notice was delivered to a regularly scheduled overnight delivery carrier with delivery fees either prepaid or an arrangement satisfactory with such carrier made for the payment thereof, or (iii) upon receipt of notice given by telecopy (fax), mailgram, telegram, telex or personal delivery:

To Guarantor:                                      EQM Technologies & Energy, Inc.

1800 Carillon Boulevard

Cincinnati, Ohio 45240

Attention:  Robert R. Galvin

Fax:  (513) 825-7495

To Bank:                                              First Financial Bank, National Association

255 E. Fifth Street, Suite 800

Cincinnati, Ohio 45202

Attention: Mr. Thomas J. Fischer, Vice President

Fax: (513) 246-1872

6.11         Separate Action.  Each default in payment of any amount due under this Guaranty will, at Bank’s sole option, give rise to a separate cause of action under this Guaranty, and separate suits, at Bank’s sole option, may be brought under this Guaranty as each cause of action arises.

6.12         Survival and Continuation of Representations and Warranties. All of Guarantor’s representations and warranties contained in this Guaranty shall:  (i) survive the execution, delivery and acceptance hereof by the parties hereto and the closing of the transactions described herein or related hereto, (ii) be deemed to be made as of each and every day of the term of this Guaranty, and (iii) remain true until the Guaranteed Obligations are fully performed, paid and satisfied, subject to any changes to such representations and warranties that (a) are not prohibited hereby, (b) do not constitute defaults hereunder, or (c) have been consented to by Bank in writing.

 

6.13         Equitable Relief.  Guarantor recognizes that, in the event that Guarantor fails to perform, observe or discharge any of its obligations or liabilities under this Guaranty, any remedy at law may prove to be inadequate relief to Bank; therefore, Guarantor agrees that Bank, if Bank so requests, shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages.

 

  

  

  

 

6.14         WAIVER OF JURY TRIAL.  AS A SPECIFICALLY BARGAINED INDUCEMENT FOR BANK TO ENTER INTO THIS GUARANTY AND TO HAVE EXTENDED AND TO CONTINUE TO EXTEND CREDIT TO BORROWERS, GUARANTOR AND BANK EACH WAIVE TRIAL BY JURY WITH RESPECT TO ANY ACTION, CLAIM, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS GUARANTY.

6.15         Indemnity.  Guarantor shall indemnify, defend, save and hold Bank, its affiliates, and their respective officers, directors, attorneys, and employees harmless of, from and against all claims, demands, liabilities, judgments, losses, damages, taxes, costs and expenses, joint or several (including all accounting fees and reasonable attorneys’ fees), that Bank or any such indemnified party may incur arising out of this Guaranty or any act taken by Bank hereunder (including any arising out of the comparative, contributory or sole negligence of any of Bank or any such indemnified party) except to the extent of the willful misconduct or gross negligence of such indemnified party, as determined by a court of competent jurisdiction in a final non-appealable judgment or order.  The provisions of this Section 6.15 shall survive the termination of this Guaranty.

6.16         Amendment and Restatement.  This Guaranty amends and restates, in its entirety, the Existing Guaranty.  The obligations and other Indebtedness of Guarantor under the Existing Guaranty will continue in existence as obligations and other Indebtedness of Guarantor under the terms of this Guaranty.  References in any of the Loan Documents to the Existing Guaranty shall, after the date of this Guaranty, be deemed to be references to this Guaranty.

[Signature Page Follows]

 

  

  

  

 

Guarantor has signed this Guaranty as of the Effective Date.

	
EQM TECHNOLOGIES & ENERGY, INC.

	  
	  
	  
	
By:

	
/s/ Robert R. Galvin

	  	
Robert R. Galvin, Chief Financial Officer

Accepted as of the Effective Date.

	
FIRST FINANCIAL BANK, NATIONAL ASSOCIATION

 

	  
	  
	
By:           /s/ Thomas J. Fischer 

	
      Thomas J. Fischer, Vice President

	  
	  
	  
	  
	  

 

  

  

  

 

SCHEDULE I

 

 

Additional Beacon Noteholder Subordinated Debt (including Additional Greber Convertible Subordinated Note)

 

December 2011 Beacon Noteholder Subordinated Debt

 

Vertterre Subordinated Note

 

Capital Lease Liability – ($38,601 at September 30, 2013)

 

  

  

  

 

SCHEDULE II

 

Liens: 

 

Liens related to the First Financial Bank Letter of Credit (SLCLSTL02779) - Lexon Insurance at Beneficiary.

 

Liens related to Capital Leases

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