SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported): June 7, 1995
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INSITUFORM TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-10786 13-3032158
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
1770 Kirby Parkway, Suite 300, Memphis, Tennessee 38138
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (901) 759-7473
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Item 5. Other Events.
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On June 7, 1995 (the "Closing"), Insituform Technologies, Inc.
(the "Registrant") entered into an amendment and restatement of its
existing credit facility with Third National Bank in Nashville (the
"Bank") to provide for additional credit, available for two years
on a revolving basis, in the amount, together with the existing
facility, aggregating up to $50,000,000, the additional amounts to
be utilized for working capital and expansion of the Registrant's
business. At Closing, the Registrant had an outstanding principal
amount of $35.2 million under such facility, as so amended and
restated.
As previously reported by the Registrant, the Registrant's
credit agreement with the Bank, entered into in July 1993,
initially provided for advances of up to $30 million and was
subsequently amended in August 1994 to provide for an additional
$12 million so as to aggregate $42 million. Until Closing,
borrowings under this facility accrued interest, payable quarterly
on the original $30 million (and monthly through August 1995, and
then quarterly, on the additional facility), at the lesser of (i)
the Bank's prime rate or (ii) 2.75% above a 30-day adjusted LIBOR
rate, as defined in the facility (or, if the Registrant maintained
certain financial ratios, 2.25% above such adjusted LIBOR rate).
Quarterly principal payments of $1.1 million were due until the
facility was amended at Closing, with the entire remaining
principal due on December 31, 1997.
The amended facility provides that all new advances, together
with all existing indebtedness, are due June 7, 2000, subject to
earlier installments after June 1997 based on a five-year
amortization schedule for the existing and additional indebtedness.
Under the revised arrangements, interest on all existing and
additional indebtedness is payable quarterly at a rate selected
monthly by the Registrant as either the bank's prime rate, plus a
margin up to .25% in the event certain financial ratios are not
maintained, or a 30-day adjusted LIBOR rate, plus a margin ranging
from 1.75% to 2.25%, depending on maintenance of certain financial
ratios. The facility, as amended, continues to obligate the
Registrant to comply with certain financial ratios and restrictive
covenants that, among other things, limit the ability of the
Registrant and its subsidiaries to incur further indebtedness, pay
dividends, make loans and encumber their properties, and requires
guarantees of certain domestic subsidiaries.
Reference is hereby made to the complete text of the Amended
and Restated Loan Agreement, and the Consolidated, Amended and
Restated Promissory Note, annexed hereto as, respectively, Exhibits
5(a) and 5(b), which are hereby incorporated by reference into this
item.
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Item 7. Financial Statements and Exhibits.
---------------------------------
Exhibits.
The exhibits filed as part of this Current Report on Form
8-K are listed in the attached Index to Exhibits.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunder duly authorized.
INSITUFORM TECHNOLOGIES, INC.
By s/William A. Martin
---------------------------
William A.Martin
Senior Vice President
Dated: June 20, 1995
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<PAGE>
INDEX TO EXHIBITS
Exhibit Description
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5(a) - Amended and Restated Loan Agreement
dated June 7, 1995 between the
Registrant and Third National Bank
in Nashville
5(b) - Consolidated, Amended and Restated
Promissory Note of the Registrant
dated June 7, 1995 executed by the
Registrant to Third National Bank in
Nashville
corp\ina\forms\8k-jun.95
Exhibit 5(a)
AMENDED AND RESTATED LOAN AGREEMENT
By and Between
INSITUFORM TECHNOLOGIES, INC.
and
THIRD NATIONAL BANK IN NASHVILLE
$50,000,000.00 June 7, 1995
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<PAGE>
AMENDED AND RESTATED LOAN AGREEMENT
This Amended and Restated Loan Agreement is executed by
INSITUFORM TECHNOLOGIES, INC., a Delaware corporation ("Borrower")
and THIRD NATIONAL BANK IN NASHVILLE, a national banking
association ("Lender"), as of the 7th day of June, 1995.
W I T N E S S E T H :
WHEREAS, Borrower and Lender previously executed that certain
Loan Agreement dated as of July 12, 1993, as supplemented and
amended from time to time (as supplemented and amended, the "Prior
Loan Agreement"); and
WHEREAS, in connection with the Prior Loan Agreement, Lender
extended to Borrower a credit facility in the original principal
amount of $30,000,000, increased pursuant to amendments and
supplemental promissory notes to the aggregate principal amount of
up to $45,000,000, subsequently reduced to the aggregate principal
amount of up to $42,000,000 (herein such $42,000,000 credit
facility is referred to as the "Prior Loan"); and
WHEREAS, Borrower has requested that Lender increase the
principal amount of the Prior Loan to the aggregate principal
amount of up to $50,000,000, and amend and restate the Prior Loan
Agreement and related documents, and subject to certain terms and
conditions, Lender is willing to increase the amount of the Prior
Loan to up to $50,000,000 and to amend and restate the Prior Loan
Agreement as set forth herein; and
NOW, THEREFORE, in order to induce Lender to extend any
additional credit to Borrower, in consideration of the premises,
and for other good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, the parties hereby agree
that the Prior Loan Agreement is amended and restated to read in
its entirety as follows:
Article I. Definitions.
As used in this Agreement, the following terms shall have the
following meanings, unless the context expressly otherwise
requires:
"Adjusted LIBOR Rate" means the LIBOR Rate adjusted to include
the cost, in basis points, of any applicable reserve requirements
of the Board of Governors of the Federal Reserve System (or any
successor), applicable to "Eurocurrency Liabilities" pursuant to
Regulation D or other then-applicable regulations of the Board of
Governors, if any, and any other applicable reserve or insurance
requirements or costs charged to the Lender.
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"Advance" means any extension of credit made pursuant to this
Agreement and/or the Note. The terms "Advance" and "Loan" (or the
plural forms thereof) are used interchangeably in this Agreement.
"Affiliate" means a Person (i) which directly or indirectly
through one or more intermediaries controls, or is controlled by,
or is under common control with, the Borrower, (ii) which
beneficially owns or holds 5% or more of any class of the Voting
Stock of the Borrower, or (iii) of which 5% or more of the Voting
Stock (or in the case of a Person which is not a corporation, 5% or
more of the equity interest) is beneficially owned or held by the
Borrower or another Affiliate.
"Agreement" means this Loan Agreement (including all exhibits
hereto) as the same may be modified, amended, or supplemented from
time to time.
"Applicable Margin" and "Applicable Margins" means:
(i) From the Closing Date through June 30, 1995, zero
for the Base Rate and 2.25% per annum for the Adjusted LIBOR
Rate;
(ii) From July 1, 1995 to the Maturity Date:
(a) If the Borrower's ratio of Funded
Debt to EBITDA is less than 2.0 to 1 and the
Borrower's ratio of Liabilities to Tangible
Net Worth is less than 2.0 to 1, zero for the
Base Rate and 1.75% per annum for the Adjusted
LIBOR Rate;
(b) If the Borrower's ratio of Funded
Debt to EBITDA is less than 2.0 to 1 and the
Borrower's ratio of Liabilities to Tangible
Net Worth is equal to or greater than 2.0 to
1, zero for the Base Rate and 2.00% per annum
for the Adjusted LIBOR Rate;
(c) If the Borrower's ratio of Funded Debt to
EBITDA is equal to or greater than 2.0 to 1 and the
Borrower's ratio of Liabilities to Tangible Net
Worth is less than 2.0 to 1, zero for the Base Rate
and 2.00% per annum for the Adjusted LIBOR Rate;
(d) If the Borrower's ratio of Funded
Debt to EBITDA is equal to or greater than 2.0
to 1 and the Borrower's ratio of Liabilities
to Tangible Net Worth is equal to or greater
than 2.0 to 1, .25% per annum for the Base
Rate and 2.25% per annum for the Adjusted
<PAGE>
LIBOR Rate; provided, that for purposes of determining
the Applicable Margins: (i) the Borrower's ratios of
Funded Debt to EBITDA and Liabilities to Tangible Net
Worth will be measured quarterly at the end of each
calendar quarter based on Borrower's quarterly and annual
Financial Statements, beginning with the measurements to
occur as of March 31, 1995, and (ii) each Applicable
Margin so determined shall be effective as of the first
day of the second Fiscal Quarter following the date of
such determination.
"Base Rate" means the rate of interest established from time
to time and announced by Lender as its "base rate", such rate being
an interest rate used as an index for establishing interest rates
on loans. The Base Rate is determined daily.
"Bond Obligations" means, collectively, the Panola County Bond
Obligations and the Shelby County Bond Obligations.
"Business Day" means any day other than a Saturday, Sunday or
day on which commercial banks are authorized to close under the
laws of the State of Tennessee.
"Closing" means the time and place of the execution and/or
delivery of the Loan Documents.
"Closing Date" means the 7th day of June, 1995.
"Code" means the Internal Revenue Code of 1986, as amended,
and any successor statute.
"Conditions Precedent" means those matters or events that must
be completed or must occur or exist prior to Lender's being
obligated to fund any Advance, including, but not limited to, those
matters described in Article V hereof.
"Debt" means, with respect to any Person, (a) the Obligations
and all other indebtedness which in accordance with GAAP would be
classified on a balance sheet of such Person as indebtedness of
such Person, whether or not represented by bonds, debentures, notes
or other securities, for the repayment of borrowed money, (b) all
indebtedness, contingent or otherwise, for reimbursement of drafts
drawn or available to be drawn under letters of credit, (c) all
deferred indebtedness which in accordance with GAAP would be
classified on a balance sheet of such Person as indebtedness of
such Person, for the payment of the purchase price of property or
assets purchased, (d) all capitalized lease obligations, (e) all
guaranties (including guaranties of guaranties and guaranties of
dividends and other monetary obligations, endorsements, assumptions
and other contingent obligations with respect to, or to purchase or
to otherwise pay or acquire, Debt of all Persons that are not
<PAGE>
Subsidiaries that are included in Borrower's consolidated financial
statements), (f) all indebtedness secured by any mortgage or pledge
of, or Lien on property of such Person, whether or not any
indebtedness secured thereby shall have been assumed, and (g) all
obligations of such Person to indemnify another Person to the
extent of the amount of indemnity, if any, which would be payable
by such Person at the time of determination of Debt.
"Default" or "Event of Default" means the occurrence of any of
the events specified in Section 8.01 hereof.
"EBITDA" means for any period (a) Net Income for such period
plus (b) the sum of the following items to the extent deducted in
determining such Net Income: (i) Fixed Charges and (ii) provisions
for depreciation, amortization and taxes based on income or profit
and other non-cash charges that reduced such Net Income for such
period, minus: the value or proceeds received from the sale,
transfer or disposition, outside the ordinary course of business,
of any assets during such period, if the proceeds or amounts were
included in the determination of Net Income.
"Exempted Significant Subsidiaries" shall be those Significant
Subsidiaries organized under the laws of a jurisdiction outside of
the United States (whether or not domesticated, so long as such
domesticated company was organized under and continues to be
governed by the laws of a non-United States jurisdiction).
"Financial Statements" means the financial statement or
statements of Borrower described or referenced in Section 6.01
hereof and delivered pursuant to this Agreement to Lender.
"Fiscal Month" means each of the twelve months in the Fiscal
Year.
"Fiscal Quarter" means each of the quarters of the Fiscal Year
ending on March 31, June 30, September 30, and December 31.
"Fiscal Year" or "Annually" means any twelve-month accounting
period ending December 31.
"Fixed Charges" means total interest expense including without
limitation, for borrowed money, and the interest component
(determined in accordance with GAAP) of capital lease payments.
"Funded Debt" means all indebtedness for money borrowed,
indebtedness evidenced or secured by purchase money mortgages,
capitalized leases, conditional sales contracts and similar title
retention debt instruments, including any current maturities of
such indebtedness. The calculation of Funded Debt shall include all
Funded Debt of the Borrower and its Subsidiaries, plus all Funded
Debt of other Persons, which has been guaranteed by the Borrower or
<PAGE>
any Subsidiary or which is supported by a letter of credit issued
for the account of the Borrower or any Subsidiary, or as to which
and to the extent which the Borrower or a Subsidiary or its assets
otherwise have become liable for payment thereof. Funded Debt shall
also include the redemption amount with respect to any stock of the
Borrower or its Subsidiaries required to be redeemed within the
next twelve months.
"GAAP" means generally accepted accounting principles.
"Guarantor" and "Guarantors" mean each and all of the
Significant Subsidiaries of Borrower other than the Exempted
Significant Subsidiaries.
"Guaranty" and "Guaranties" mean each and all of the guaranty
agreements executed by Guarantors in favor of Lender, in form and
substance as set forth in Exhibit C.
"Hanseatic Obligations" means that certain 8.5% Senior
Subordinated Note dated as of July 26, 1993 executed by the
Borrower to Deltec Asset Management Corporation, as custodian for
Hanseatic Corporation, in the original principal amount of
$5,000,000, together with the related purchase agreement of even
date therewith, as amended from time to time.
"Indebtedness" means any and all amounts and liabilities owing
or to be owing by Borrower to Lender from time to time whether now
existing or hereafter incurred, and whether in connection with this
Agreement or otherwise, including any amendments hereof, or in
connection with loans, participation interests, drafts, notes,
banker's acceptances, letters of credit, industrial development
bonds, guarantees, or overdrafts of checking or savings accounts of
Borrower maintained with Lender. The term "Indebtedness" includes,
without limitation, all indebtedness and obligations owing in
connection with any draw under the Letter of Credit (as hereafter
defined), and all indebtedness and obligations owing from time to
time by Borrower in connection with the Panola County Bond
Obligations (as hereinafter defined).
"Interest Rate Option" means either (a) the Base Rate plus the
Applicable Margin as such rate may change from day to day as the
Base Rate changes, or (b) the 30-day Adjusted LIBOR Rate plus the
Applicable Margin as such rate may change from month to month on
the first day of each month, as selected by Borrower pursuant to
the terms of Section 2.01 of this Agreement.
"Liabilities" means, with respect to any Person, all Debt and
all other items (including without limitation taxes accrued as
estimated) that, in accordance with GAAP, would be included in
determining total liabilities as shown on the liabilities side of
a balance sheet.
<PAGE>
"LIBOR Rate" means the LIBOR rate of interest for one-month
periods, reported by the Telerate Computer Service to which Lender
subscribes, established on the last Business Day of each month.
"Lien" means any interest in Property securing an obligation
owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on the common law,
statute, or contract, and including, but not limited to, the lien
or security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale, or trust receipt or a lease,
consignment, or bailment for security purposes. For the purposes
of this Agreement, Borrower shall be deemed to be the owner of any
Property that it has acquired or holds subject to a conditional
sale agreement, financing lease, or other arrangement pursuant to
which title to the Property has been retained by or vested in some
other Person for security purposes.
"Loan" or "Loans" means any borrowing by Borrower under this
Agreement and/or the Note, and/or any extension of credit by Lender
to or for Borrower pursuant to this Agreement or any other Loan
Document, including any renewal, amendment, extension, or
modification thereof.
"Loan Documents" means, collectively, each document, paper or
certificate executed, furnished or delivered in connection with
this Agreement (whether before, at, or after the Closing Date),
including, without limitation, this Agreement, the Note, the
Guaranties, and all other documents, certificates, reports, and
instruments that this Agreement requires or that were executed or
delivered (or both) at Lender's request.
"Maturity Date" means the earlier of (i) June 7, 2000, or (ii)
the date Lender accelerates the Indebtedness following an Event of
Default. All amounts owed by Borrower to Lender pursuant to this
Agreement and the Loan Documents shall be due and payable in full
on the Maturity Date, unless the Maturity Date is extended in
writing by the Lender.
"Maximum Amount" means the principal amount of $50,000,000,
which is the maximum amount that may be outstanding at any time
under the Loan.
"Net Income" means the consolidated net income before
extraordinary items (but after giving effect to the credit
resulting from tax loss carry forwards) of the Borrower for any
period determined in conformity with GAAP applied on a basis
consistent with those applied in preparing the Borrower's audited
annual reports.
"Non-Guaranteeing Subsidiary" shall have the meaning set forth
under Section 7.10.
<PAGE>
"Note" means that certain Consolidated, Amended and Restated
Promissory Note in the form as set forth in Exhibit A hereto, in
the principal amount of up to $50,000,000.00, including all
amendments, extensions, increases and restatements thereto and
thereof, and all replacement and substitute notes therefor.
"Obligations" means all of Borrower's undertakings in the Loan
Documents including, but not limited to, all agreements,
representations, warranties, and covenants. The term "Obligations"
includes the Indebtedness.
"Offering Proceeds" means all net proceeds derived by Borrower
or any Subsidiary through the issuance in exchange for cash of (a)
any equity security (other than in connection with any employee
benefit plan or compensatory arrangement generally available to
employees) or, (b) any indebtedness evidenced by a note, bond,
debenture or certificate, other than Debt permitted under Section
7.01 hereof; and includes without limitation (if not already
included by the foregoing language) the net amount raised by
Borrower in an equity offering (less expenses incurred in such
equity offering). At least five days prior notice of any proposed
equity offering must be given to Lender, and any information
concerning which reasonably requested by Lender shall be given to
Lender.
Panola County Bond Obligations means those certain $4,756,000
Panola County, Mississippi Industrial Development Revenue Bonds
Series 1988, of the Borrower, dated January 1, 1992, as amended
from time to time.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Acquisition" means the purchase by the Borrower of
a direct or indirect licensee or sublicensee of Borrower or any
Subsidiary (which was a licensee or sublicensee of Borrower or any
Subsidiary as of December 31, 1994 and thereafter and any parent of
any such licensee or sublicensee), provided that no Event of
Default has occurred under this Agreement and that no default,
breach or Event of Default (or any event which, with the giving of
notice or passage of time or both would constitute an Event of
Default) under this Agreement would reasonably be expected to occur
as a result of such acquisition (and Borrower must deliver to
Lender Borrower's certificate and representations to that effect,
in form and substance reasonably satisfactory to Lender), which
acquisition either (a) is for a purchase price not exceeding a
total of $5,000,000, or (b) has been approved in advance by Lender,
which approval may be not unreasonably withheld.
"Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
<PAGE>
organization, government, or any agency or political subdivision
thereof, or any other form of entity.
"Principal Office" means the principal office of the Lender
located at 201 Fourth Avenue North, Nashville, Tennessee 37219.
"Prior Loan Agreement" shall mean the Loan Agreement dated
July 12, 1993, as supplemented and amended between Borrower and
Lender.
"Prior Notes" shall have the meaning set forth under Section
2.01.
"Property" or "Properties" means any interest in any kind of
property or asset, whether real, personal, or mixed, or tangible
or intangible.
"Reinstatement Event" shall have the meaning set forth under
Section 2.01.
"Shelby County Bond Obligations" has the meaning ascribed to
such term in Section 7.01 hereof.
"Significant Subsidiary" means any Subsidiary which has gross
assets (based on undepreciated historical cost) aggregating
$125,000 or more at any time (excluding Subsidiaries whose sole
material assets consist of stock in another Subsidiary). The
Significant Subsidiaries include, without limitation, the following
Subsidiaries:
Insituform North America Corp., a Tennessee corporation
Insituform California, Inc., a Delaware corporation
Insituform Southwest, a partnership having Insituform
California, Inc., a Delaware corporation, and NuPipe
California, Inc., a Delaware corporation, as sole general
partners
Insituform of New England, Inc., a Massachusetts corporation
NuPipe, Inc., an Oregon corporation
Pipe Rehab International, Inc., a Delaware corporation
INA Acquisition Corp., a Delaware corporation
Insituform Capital Corp., a Delaware corporation
NuPipe International, Inc., a Delaware corporation
NuPipe California, Inc., a Delaware corporation
Insituform Midwest, Inc., a Delaware corporation
Insituform Gulf South, Inc., a Delaware corporation
(formerly known as Naylor EnviroSystems, Inc.)
Gelco Services, Inc., an Oregon corporation
Geltech Constructors, Inc., an Oregon corporation
<PAGE>
"Subsidiary" means any corporation (or other entity) of which
more than fifty percent (50%) of the issued and outstanding voting
stock (or other ownership interest therein) is owned or controlled
at the time as of which any determination is being made directly or
indirectly, by the Borrower and/or by one or more of any
Subsidiaries of the Borrower. A corporation that otherwise would be
a "Subsidiary" shall not be included within the definition of
Subsidiary if, on the date of this Agreement and at all times
hereafter, such corporation is dormant and has no material assets.
Should any such corporation that is dormant and has no material
assets on the date of this Agreement at any time become active or
own any asset other than immaterial assets, then such corporation
shall immediately be deemed to be included within the definition of
"Subsidiary".
"Tangible Net Worth" means (i) the aggregate amount of all
assets of the Borrower as may properly be classified as such under
GAAP, other than goodwill and such other assets as are properly
classified as "intangible assets" in accordance with GAAP, less
(ii) the aggregate amount of all liabilities of the Borrower as may
properly be classified under GAAP. Offering Proceeds received
subsequent to the date hereof will not be included in the
determination of Borrower's Tangible Net Worth for purposes of the
financial covenants set forth in Section 7.12 (b) of this
Agreement.
"Voting Stock" means securities of any class of a corporation
the holders of which are ordinarily, in the absence of
contingencies, entitled to elect a majority of the corporate
directors (or persons performing similar functions).
Article II. The Loan.
Section 2.01 Interest and Repayment. (a) Subject to the
conditions and pursuant to the terms of the Loan Documents, and in
reliance upon the representations, warranties and covenants set
forth in the Loan Documents, Lender agrees to make Advances to
Borrower until June 7, 1997 in the aggregate principal amount of up
to $50,000,000 (the "Loan"), evidenced by Borrower's Consolidated,
Amended and Restated Promissory Note in the form of Exhibit A
hereto, which is a consolidation, increase, amendment and
restatement of and to that certain Promissory Note executed by
Borrower in favor of Lender, dated July 12, 1993, in the original
principal amount of $30,000,000 and that certain Additional
Promissory Note dated August 2, 1994 in the original principal
amount of up to $15,000,000, as reduced and amended pursuant to
that certain First Amended and Restated Additional Promissory Note
executed by Borrower in favor of Lender, dated October 5, 1994, in
the original principal amount of $12,000,000 (such promissory notes
being collectively referred to herein as the "Prior Notes"). Any
and all such Prior Notes shall contemporaneously herewith be
<PAGE>
conspicuously marked with the following legend: "THIS NOTE HAS BEEN
AMENDED AND RESTATED INTO ONE CONSOLIDATED, AMENDED AND RESTATED
NOTE DATED JUNE 7, 1995 IN THE PRINCIPAL AMOUNT OF UP TO
$50,000,000."
Proceeds of this Loan shall be used by Borrower solely for
Permitted Acquisitions and in order to fund working capital needs
and for general corporate purposes. Subject to the terms and
conditions of this Agreement, Borrower may borrow, repay and
reborrow hereunder, provided that at no time may the principal
balance outstanding under this Note exceed the Maximum Amount. Each
month by the close of Lender's business on the first day of the
month Borrower shall elect which Interest Rate Option shall apply
to all Advances and to all amounts outstanding under the Loan
during such month. Borrower shall notify Lender of its election of
the Interest Rate Option by telephone and, if requested to do so by
Lender, in writing. If Lender does not receive proper notification
as aforesaid of Borrower's election of the Interest Rate Option,
the parties agree that the Interest Rate Option applicable to the
Loan for such month, shall be the Interest Rate Option in effect
for the immediately preceding month, adjusted appropriately for
such new month. Once the applicable Interest Rate Option has been
established for a month, all Advances made during such month, and
all amounts outstanding under the Loan during such month, shall
bear interest at the applicable Interest Rate Option as such rate
may change from day to day (with regard to the Base Rate) or not
change during such month (with regard to the Adjusted LIBOR Rate),
until the first day of the following month, at which time Borrower
shall elect a new Interest Rate Option by telephonic (or, if
requested, written) notice to Lender. The terms and provisions of
repayment of the obligations hereunder, shall be as set forth in
the Note. Interest shall be paid quarterly beginning on June 30,
1995. In addition, on the last day of each Fiscal Quarter beginning
on June 30, 1995 and continuing through June 30, 1997, Borrower
shall pay to Lender principal payments of $500,000 each hereunder.
Provided, however, that if Borrower and the intended principal
parties to a proposed Permitted Acquisition have executed a letter
of intent with regard to the Borrower's intent to effectuate a
proposed Permitted Acquisition within six months of the execution
of such letter, then until June 30, 1997 but only so long as such
proposed Permitted Acquisition shall not have been abandoned by the
Borrower and Borrower is actively pursuing such Permitted
Acquisition and the other principal parties to such Permitted
Acquisition have not abandoned or rejected such proposed Permitted
Acquisition or terminated, revoked or repudiated the letter of
intent, and such letter of intent has not expired, and if no Event
of Default has occurred, the $500,000 quarterly principal payments
shall not be required to be made. If the proposed Permitted
Acquisition is abandoned by Borrower or Borrower is not actively
pursuing the Permitted Acquisition, or the other principal parties
to the Permitted Acquisition have abandoned such proposed Permitted
<PAGE>
Acquisition or terminated, revoked or repudiated the letter of
intent, or if the letter of intent has expired or been terminated,
or if Borrower determines not to proceed with such acquisition (any
of the foregoing being referred to herein as a "Reinstatement
Event"), then the $500,000 principal payment requirement shall,
with respect to subsequent quarters, be reinstated, to be first
(after such reinstatement) paid on the last day of the month in
which the Reinstatement Event occurred, and thereafter to be paid
on the last day of each third month thereafter until June 30, 1997.
(b) On June 7, 1997 Borrower shall have no further ability to
request any Advances under the Loan, and all amounts outstanding
under the Note and Loan shall be repaid on a five-year amortization
schedule but due and payable in three years, as follows: Beginning
on September 30, 1997, and continuing on the last day of each
consecutive December, March, June and September thereafter until
the Maturity Date, Borrower shall pay to Lender (i) principal
payments equal to one-twentieth (1/20th) of the total principal
amount outstanding under the Note and Loan on September 30, 1997,
plus (ii) all then-accrued interest on the Loan and Note, and any
fees, expenses or other charges thereon. The Loan will mature on
the Maturity Date, at which time a balloon payment of all
outstanding principal and then-accrued interest shall be
immediately due and payable. If no principal is outstanding under
the Loan on September 30, 1997, then this loan facility shall be
cancelled, and Lender will have no further obligations to extend
any credit to the Borrower.
(c) The Prior Loan Agreement shall be deemed amended and
restated in its entirety and in all respects superseded by this
Agreement, and neither the execution or delivery hereof or of the
Note, nor any borrowing hereunder, shall constitute a default or
Event of Default or breach under the Prior Loan Agreement.
Section 2.02. Borrowing Procedure under Loan. Until June 7,
1997 the Borrower shall give the Lender written or telephonic
notice of the proposed borrowing prior to 1:00 p.m. Central
Standard (or Daylight) Time on the Business Day of such borrowing,
and shall present any certificates or documentation required to be
given in connection with such borrowing. Borrower may not request
that the Loan be in the principal amount of less than $1,000,000,
or more than $50,000,000. The following persons are authorized to
request an Advance: James D. Krugman, Jean Paul Richard or William
A. Martin. The Lender shall make the Loan by depositing the funds
being advanced into the Borrower's operating account with the
Lender no later than the close of the Lender's business on the next
Business Day. The giving of notice by the Borrower that it is
requesting the Loan shall constitute a warranty by the Borrower
that, as of the date notice is given and as of the date the advance
is made, the officers of the Borrower do not have knowledge of any
Event of Default as defined herein; and that as of such dates, the
<PAGE>
representations and warranties contained in Article IV are and will
be true and correct, except as to changes occurring after the date
of this Agreement caused by transactions permitted under this
Agreement.
Section 2.03. (a) Required Prepayment. Whenever the amount
outstanding under the Note exceeds $50,000,000, Borrower shall
immediately pay to Lender such amounts as may be necessary to cause
the principal amount outstanding under the Note to be equal to or
less than $50,000,000; and
(b) Optional Prepayment. Upon ten days prior written notice
delivered from Borrower to Lender, the Borrower may permanently
prepay the Note in whole or in part with accrued interest to the
date of such prepayment or the amount prepaid, provided that each
partial prepayment shall be in a principal amount of not less than
$500,000. No prepayment premium or fee shall be required upon a
prepayment permitted by this Section 2.03. All prepayments will be
applied first to unpaid expenses (if any), then to accrued
interest, then to principal in the inverse order of maturity.
Section 2.04. Participation Agreements. Notwithstanding any
other provision of this Agreement, Borrower understands that Lender
may, subject to applicable securities laws, at any time enter into
participation agreements with one or more participating banks or
other institutions, whereby Lender may allocate certain percentages
of its commitment to them. Borrower shall furnish a reasonably
sufficient number of copies of reports and certificates to Lender
so that Lender and each participating lender shall receive a copy
of each such document.
Section 2.05. Use of Proceeds. The proceeds of the Loan
hereunder (subsequent to those disbursed under the Prior Loan
Agreement) shall be used by the Borrower only for Permitted
Acquisitions and to fund working capital needs and for general
corporate purposes. Such acquisition(s) shall be made in compliance
with all applicable laws, rules, regulations, orders and
governmental and other requirements.
Section 2.06. Conditions of Lending. Notwithstanding any
other provision of this Agreement, the Lender shall not be
obligated or required to make any Advance under the Note unless
each of the Conditions Precedent set forth in this Agreement has
been satisfied at the time the Advance is made.
Section 2.07. Term of Agreement. This Agreement shall be
binding on the Borrower so long as any portion of the Loan
described herein remains outstanding and/or any amounts are
available to be drawn hereunder.
<PAGE>
Section 2.08. Payments to Principal Office; Debit Authority.
Each payment under the Note (including any prepayment and payment
of interest) shall be made to Lender at its Principal Office for
the account of Lender in immediately available funds before 11:00
a.m. Nashville time on the date such payment is due. The Lender
may, but shall not be obligated to, debit the amount of any such
payment which is not made by such time to any ordinary deposit
account of the Borrower with the Lender. All payments under the
Note shall be in amounts equal to or greater than $500,000.
Section 2.09. Right of Offset, Etc.. The Borrower hereby
agrees that, in addition to (and without limitation of) any right
of set-off, banker's lien or counterclaim the Lender may otherwise
have, the Lender (and any participant of this Loan under Section
2.04) shall be entitled, at its option, to offset balances held by
it at any of its offices against any principal of or interest on
the Obligations hereunder which is not paid when due by reason of
a failure by the Borrower to make any payment when due to the
Lender (regardless whether such balances are then due to the
Borrower), in which case it shall promptly notify the Borrower,
provided that its failure to give such notice shall not affect the
validity thereof.
Section 2.10. Non-Use Fee. As additional consideration for
the Lender's commitment to make the Loan hereunder and reservation
of monies to fund the Loan, the Borrower shall pay to the Lender on
each March 31, June 30, September 30 and December 31 after the
Closing Date through June 7, 1997 (and/or on any earlier date on
which the Loan is permanently prepaid in full), a fee in the amount
of one-quarter of one percent (1/4%) per annum of the average
unused portion of the Maximum Amount during the prior Fiscal
Quarter (or other period following the previous date payment of the
non-use fee was due).
Section 2.11. Fees. Borrower shall pay to the Lender or
SunTrust Corporate Finance, as the case may be, the fees set forth
in the fourth paragraph of the engagement letter from SunTrust
Corporate Finance to Borrower dated March 1, 1995, executed by
Borrower on March 2, 1995.
Section 2.12. Usury. The parties to this Agreement intend to
conform strictly to applicable usury laws as presently in effect.
Accordingly, if the transactions contemplated hereby would be
usurious under applicable law (including the laws of the United
States of America and the state of Tennessee), then, in that event,
notwithstanding anything to the contrary in any Loan Document or
agreement executed in connection with or as security for the
Obligations, Borrower and Lender agree as follows: (i) the
aggregate of all consideration that constitutes interest under
applicable law which is contracted for, charged, or received under
any of the Loan Documents, shall under no circumstance exceed the
<PAGE>
maximum lawful rate of interest permitted by applicable law, and
any excess shall be credited on the Obligations by the holder
thereof (or, if the obligations shall have been paid in full,
refunded to Borrower); and (ii) in the event that the maturity of
the Obligations is accelerated by reason of an election of the
holder resulting from any Event of Default under this Agreement or
otherwise, or in the event of any required or permitted prepayment,
then such consideration that constitutes interest may never include
more than the maximum amount of interest permitted by applicable
law, and excess interest, if any, for which this Agreement
provides, or otherwise, shall be cancelled automatically as of the
date of such acceleration or prepayment and, if previously paid,
shall be credited on the Obligations (or, if the Obligations shall
have been paid in full, refunded to Borrower).
Article III. Guaranties.
Section 3.01. Guarantors. Repayment of all of the
Indebtedness and performance of the Obligations shall be guaranteed
by the Guarantors pursuant to the Guaranties.
Article IV. Representations and Warranties.
To induce Lender to enter this Agreement and extend credit
under this Agreement, Borrower covenants, represents, and warrants
to Lender that as of the date hereof and as of the Closing Date:
Section 4.01. Organization and Qualification. Borrower is a
corporation duly organized and existing under the laws of the State
of Delaware, each of the Subsidiaries is a corporation duly
organized and existing under the laws of its jurisdiction of
incorporation, and Borrower and each of the Subsidiaries is
qualified to do business in all jurisdictions in which it conducts
its business, the failure to qualify in which would have a material
adverse effect on the business, Properties, operations or financial
condition of the Borrower and the Significant Subsidiaries on a
consolidated basis.
Section 4.02. Corporate Power and Authorization. Borrower
and each Guarantor is duly authorized and empowered to execute,
deliver, and perform under all Loan Documents to which it is a
party; the Borrower's and each Guarantor's board of directors has
authorized the Borrower and each Guarantor to execute and perform
under those Loan Documents to which it is a party; and all other
corporate and/or shareholder action on Borrower's part and on each
Guarantor's part required for the due execution, delivery, and
performance of the Loan Documents has been duly and effectively
taken.
Section 4.03. Binding Obligations. This Agreement is, and
the Note, Guaranties and other Loan Documents when executed and
<PAGE>
delivered in accordance with this Agreement will be, legal, valid
and binding upon the Borrower and the Guarantors, respectively,
enforceable in accordance with their respective terms, subject to
no defense, counterclaim, set-off, or objection of any kind.
Section 4.04. No Legal Bar or Resultant Lien. The Borrower's
and each Guarantor's execution, delivery and performance of those
Loan Documents to which it is a party do not constitute a default
under, and will not violate any provisions of the articles of
incorporation or bylaws of Borrower or the respective Guarantor,
any contract, agreement, law, regulation, order, injunction,
judgment or decree to which Borrower or any Guarantor is subject,
or result in the creation or imposition of any lien upon any
Properties of Borrower or any Guarantor, other than those
contemplated by the Loan Documents (provided, however, that the
parties acknowledge that with respect to the Panola County Bond
Obligations, the Hanseatic Obligations and the Shelby County Bond
Obligations, Borrower may be required to obtain waivers of certain
breaches of certain financial covenants contained in the documents
evidencing such obligations, prior to borrowing under this
Agreement), which violation, creation or imposition would have a
material adverse effect on the business, Properties, operations or
financial condition of the Borrower and the Significant
Subsidiaries on a consolidated basis, or on the ability of the
Borrower or any Guarantor to perform its obligations under this
Agreement or any of the other Loan Documents.
Section 4.05. No Consent. Borrower's and each Guarantor's
execution, delivery, and performance of the Loan Documents do not
require the consent or approval of any other Person, which has not
been obtained.
Section 4.06. Liabilities and Litigation. There is no
litigation, legal or administrative proceeding, investigation, or
other action of any nature pending or, to the knowledge of
Borrower, threatened against or affecting Borrower or any
Subsidiary, not fully covered by insurance, that may materially
adversely affect the business or the Properties of the Borrower and
the Significant Subsidiaries on a consolidated basis, the ability
of Borrower or any Guarantor to carry out the terms of the Loan
Documents, or the ability of Borrower and the Significant
Subsidiaries on a consolidated basis, to carry on its/their
business as now conducted. Notwithstanding any provision to the
contrary contained herein, the representation and warranty
contained in this Section 4.06 hereof shall not, insofar as made
when any Advance is requested or made under the Loan, and upon
execution and delivery of this Loan Agreement, include the
litigation matters disclosed in the Annual Report on Form 10-K of
the Borrower for the year ended December 31, 1994, filed with the
Securities and Exchange Commission and delivered to the Lender
(including the exhibits thereto, the "1994 10-K"), or the Quarterly
<PAGE>
Report on Form 10-Q, filed with the Securities and Exchange
Commission and delivered to the Lender (including the exhibits
thereto, the "1995 10-Q"), but only to the extent such litigation
matters are disclosed therein and only to the extent the status,
nature and amount of such litigation, and the likely outcome
thereof, have not changed from such disclosures in any material
respect, all the foregoing of which shall constitute notice under
Sections 5.02(a)(iv) and 6.10(iii) hereof.
Section 4.07. Taxes; Governmental Charges. Borrower and
each Subsidiary of Borrower has filed or caused to be filed all tax
returns and reports required to be filed and has paid all taxes,
assessments, fees, and other governmental charges levied upon it or
upon any of its Properties or income, which are due and payable,
including interest and penalties, in each case the failure to file
or pay which would have a material adverse effect on the business,
Properties, financial condition or operations of the Borrower and
the Significant Subsidiaries on a consolidated basis, or on the
ability of the Borrower or any of the Guarantors to perform their
obligations under this Agreement or any of the other Loan
Documents. Borrower and each Subsidiary has made all required
withholding deposits, the failure to make which would have a
material adverse effect on the business, Properties, financial
condition or operations of the Borrower and the Significant
Subsidiaries on a consolidated basis, or on the ability of the
Borrower or any of the Guarantors to perform its obligations under
this Agreement or any of the other Loan Documents. There are no
material unpaid assessments pending against Borrower or any
Subsidiary for any taxes or withholdings, and neither Borrower nor
any Subsidiary knows of any basis therefor.
Section 4.08. Title, Etc. Borrower and each Guarantor has
good title (except for any immaterial defect in title which would
not impair the ability of Borrower or any Guarantor to conduct its
business as now conducted and to perform its obligations under this
Agreement and the other Loan Documents) to its Properties, free and
clear of all liens except those referenced or reflected in the
Financial Statement described in Section 4.14 hereof. Borrower and
each Guarantor possesses all trademarks, copyrights, trade names,
patents, licenses, and rights therein, adequate in all material
respects for the conduct of its business as now conducted and
presently proposed to be conducted.
Section 4.09. No Default. Borrower is not in default, and no
Subsidiary of Borrower is in default, in any respect that
materially adversely affects the business, Properties, operations,
or condition, financial or otherwise, of the Borrower and the
Significant Subsidiaries on a consolidated basis, under any
indenture, mortgage, deed of trust, credit agreement, note,
agreement, or other instrument to which Borrower or any Subsidiary
is a party or by which it or its Properties are bound. No party to
<PAGE>
any such indenture, mortgage, deed of trust, credit agreement,
note, agreement or other instrument has declared a default
thereunder which such default or breach would have a material
adverse effect on the business, Properties, financial condition or
operations of the Borrower and the Significant Subsidiaries on a
consolidated basis, or has notified Borrower or any Subsidiary of
the occurrence of any breach or default thereunder involving Debt
of $1,100,000 or more.
Section 4.10. Compliance with Laws, Etc.. Borrower is not in
violation, and no Subsidiary is in violation, of any law, judgment,
decree, order, ordinance, or governmental rule or regulation to
which Borrower or any Subsidiary of Borrower, or any of its
respective Properties, is subject, which violation would have a
material adverse effect on the business, Properties, financial
condition or operations of the Borrower and the Significant
Subsidiaries on a consolidated basis, or on the ability of the
Borrower or any of the Guarantors to perform their obligations
under this Agreement or any of the other Loan Documents. Borrower
is in compliance in all material respects with the applicable
provisions of ERISA. The Borrower has not incurred any
"accumulated funding deficiency" within the meaning of ERISA, and
the Borrower has not incurred any material liability to PBGC in
connection with any plan, which deficiency or liability would be
materially adverse to the business, Properties, financial condition
or operations of the Borrower and the Significant Subsidiaries, on
a consolidated basis. Notwithstanding any provision to the contrary
contained herein, the representation and warranty contained in the
first sentence of this Section 4.10, insofar as relating to the
business, Properties, financial condition or operations of the
Borrower and the Significant Subsidiaries on a consolidated basis,
and insofar as made when any Advance is requested or made under the
Loan, and upon execution and delivery of this Loan Agreement, shall
not include the subject of the litigation matters described under
the final sentence of Section 4.06 hereof, but only to the extent
set forth therein.
Section 4.11. Subsidiaries, Etc.. As of the date hereof,
Borrower has no Significant Subsidiaries other than the Significant
Subsidiaries specifically listed in the definition of "Significant
Subsidiary" in Article 1 of this Agreement and other than the
Exempted Significant Subsidiaries.
Section 4.12. No Material Misstatements. No information,
exhibit, or report furnished or to be furnished by Borrower to
Lender in connection with this Agreement, contain as of the date
thereof, or will contain as of the Closing Date, any material
misstatement of fact or failed or will fail to state any material
fact, the omission of which would render the statements therein
materially false or misleading.
<PAGE>
Section 4.13. Use of Proceeds; Purpose of the Credit.
Borrower has used or will use proceeds from the Loan exclusively
for the purposes stated in this Agreement.
Section 4.14. Financial Statement. The consolidated
financial statements dated December 31, 1994 previously delivered
by Borrower to Lender, and Borrower's financial statements dated
March 31, 1995 delivered by Borrower to Lender, fairly and
accurately present the financial condition of Borrower and the
Subsidiaries as of such dates and have been prepared in accordance
with generally accepted accounting principles consistently applied.
Since December 31, 1994, there has been no material, adverse change
in the financial condition of the Borrower and the Subsidiaries,
taken as a group, as disclosed by such financial statements,
subject to the matters set forth therein.
Article V. Conditions Precedent.
Section 5.01. Initial Conditions. Lender's obligation to
extend credit hereunder is subject to the Conditions Precedent that
Lender shall have received (or agreed in writing to waive or defer
receipt of) all of the following, each duly executed, dated and
delivered as of the Closing Date, in form and substance
satisfactory to Lender and its counsel:
(a) Note and Loan Documents. The Note of Borrower payable to
the order of Lender, the Guaranties and all other Loan Documents;
(b) Evidence Of All Corporate Action By The Borrower.
Certified (as of the date of this Agreement) copies of all
corporate action taken by the Borrower, including resolutions of
its Board of Directors, authorizing the execution, delivery, and
performance of the Loan Documents to which it is a party and each
other document to be delivered pursuant to this Agreement;
(c) Incumbency And Signature Certificate Of The Borrower. A
certificate (dated as of the date of this Agreement) of the
Secretary of the Borrower certifying the names and true signatures
of the officers of the Borrower authorized to sign the Loan
Documents to which it is a party and the other documents to be
delivered by the Borrower under this Agreement;
(d) Opinion of Counsel For the Borrower and the Subsidiaries.
A favorable opinion of Krugman, Chapnick and Grimshaw, counsel for
the Borrower and the Subsidiaries, in substantially the form of
Exhibit B and as to such other matters as the Lender may reasonably
request;
(e) Evidence Of All Corporate and Partnership Action By The
Guarantors. Certified (as of the date of delivery of their
respective Guaranties) copies of all corporate and partnership
<PAGE>
action taken by the Guarantors and by the general partners of
Insituform Southwest and any other partnership Guarantor (the
"Partners"), including resolutions of their Boards of Directors,
authorizing the execution, delivery, and performance of the
Guaranties;
(f) Incumbency And Signature Certificates Of The Guarantors.
A certificate (dated as of the date of delivery of their respective
Guaranties) of the secretary or assistant secretary of each of the
Guarantors, and/or of the secretaries or assistant secretaries of
the Partners of the partnership Guarantors, certifying the names
and true signatures of the officers of the Guarantors authorized to
sign the Guaranties, and of the officers of the Partners authorized
to sign on behalf of Insituform Southwest and any other partnership
Guarantor;
(g) Other Opinions, Approvals And Documents. The Lender
shall have received such other approvals, opinions or documents as
the Bank or its counsel may reasonably request;
(h) No Material Adverse Change. No material adverse changes
in the financial or other condition of Borrower or any of the
Guarantors shall have occurred since the date of this Agreement
which, in the opinion of Lender, is likely to materially adversely
affect the ability of Borrower to perform its obligations under
this Agreement, or of the Guarantors to collectively perform their
obligations under the Guaranties;
(i) Certificates of Good Standing. Certificates of good
standing of Borrower and each Guarantor from the states of their
incorporation and each state in which Borrower has qualified to do
business and is doing business;
(j) Consents, Etc.. Certified copies of all documents
evidencing any necessary corporate action, consents, and
governmental approvals (if any) with respect to this Agreement and
the Loan Documents;
(k) Charter and By-Laws. Copies of Borrower's and
Guarantors' and the Partners' by-laws and articles of
incorporation, and a copy of the partnership agreement of
Insituform Southwest (and any other partnership Guarantor)
(including all amendments thereto) certified by the secretary of
Borrower or the respective Guarantor, and by the partners of
Insituform Southwest (and any other partnership Guarantor), as
being true and complete copies of the current by-laws, articles of
incorporation and partnership agreement of Borrower, the Partners,
and the Guarantors, as applicable;
(l) Fees. Payment of the fees required to be paid by
Borrower to Lender as of the Closing Date; and
<PAGE>
(m) Other. Such other documents as Lender may reasonably
request.
Section 5.02. All Borrowings; Acquisitions.
(a) The Lender's obligations to extend credit under the Note
are subject to the following additional Conditions Precedent which
shall be met when an Advance is requested and an Advance is made:
(i) The representations of the Borrower contained in Article IV are
true and correct as of the date of the requested Advance, with the
same effect as though made on the date additional funds are
advanced; (ii) There has been no material adverse change in the
Borrower's financial condition since the date of the last borrowing
hereunder; (iii) No Event of Default has occurred and continues to
exist; (iv) No material litigation or governmental proceedings not
disclosed in writing by the Borrower to the Lender prior to the
date of the execution and delivery of this Agreement is pending or
known to be threatened against the Borrower, which could reasonably
be expected to materially adversely affect the financial position
or business of the Borrower and the Significant Subsidiaries on a
consolidated basis or impair the ability of the Borrower or the
Guarantors to perform their obligations under this Agreement or any
other Loan Documents; and (v) If a requested Advance would cause a
breach of a financial covenant under any of the documents executed
in connection with the Bond Obligations, evidence reasonably
satisfactory to Lender that such breach has been waived.
(b) Information Concerning Acquisitions. If any portion of
a requested Advance is to be used in connection with a Permitted
Acquisition, the Lender shall have received the following
information from the Borrower, in writing: (i) full identification
of any licensee or sublicensee, or its holding company, being
acquired with the proceeds of the Loan; (ii) an explanation of the
terms of the acquisition, including without limitation the purchase
price; (iii) the estimated amount of goodwill that will be added to
the Borrower's balance sheet; and (iv) historical financial
statements for any licensee or sublicensee acquired with proceeds
of the Loan, covering the three years immediately preceding such
acquisition, in a form reasonably satisfactory to the Lender,
together with a current interim financial statement of such
entity, in a form reasonably satisfactory to the Lender, containing
such information as the Lender may reasonably request.
Article VI. Affirmative Covenants.
Borrower covenants that, during the term of this Agreement
(including any extensions hereof) and until all Indebtedness shall
have been finally paid in full and/or any amounts are available to
be requested or disbursed hereunder, unless Lender shall otherwise
first consent in writing, Borrower shall:
<PAGE>
Section 6.01 Financial Statements and Reports. Make no
changes in the dates of the Fiscal Year and Fiscal Quarters, and
promptly furnish to Lender:
(a) Annual Reports. As soon as available, and in any event
within ninety (90) days after the close of each Fiscal Year, from
the present independent certified public accountants of Borrower or
by such other firm of independent public accountants as may be
designated by Borrower and be reasonably satisfactory to Bank, the
audited consolidated Financial Statements of the Borrower and its
Subsidiaries setting forth the audited consolidated and unaudited
consolidating balance sheets of Borrower and its Subsidiaries at
the end of such year, and the audited consolidated and unaudited
consolidating statements of income, statements of cash flows, and
statements of retained earnings of Borrower and its Subsidiaries
for such year, setting forth in each case in comparative form
(beginning when comparative data are available) the corresponding
figures for the preceding Fiscal Year;
(b) Quarterly and Year-to-Date Reports. As soon as
available and in any event within forty-five (45) days after the
end of each Fiscal Quarter, the unaudited consolidated and
consolidating balance sheet of Borrower and its Subsidiaries as of
the end of such Fiscal Quarter and the unaudited consolidated and
consolidating statement of income of Borrower and its Subsidiaries
for such Fiscal Quarter and for the period from the beginning of
the Fiscal Year to the close of such quarter, all certified by the
chief financial or chief accounting officer of the Borrower as
being true and correct to the best of his or her knowledge; and
(c) Other Information. At the same time as they are filed
with the Securities and Exchange Commission, copies of Borrower's
10-Q and 10-K reports, and, with reasonable promptness, such other
information as Lender may from time to time reasonably request. All
such balance sheets and other Financial Statements referred to in
Sections 6.01(a) and (b) hereof shall conform to GAAP on a basis
consistent with those of previous Financial Statements.
Section 6.02. Certificates of Compliance. (a) Annual and
Quarterly Certificates. Concurrently with the furnishing of the
annual Financial Statements pursuant to Section 6.01(a) hereof and
the quarterly Financial Statements pursuant to Section 6.01(b)
hereof, furnish or cause to be furnished to Lender a certificate of
compliance in the form of Exhibit D hereto, certified by the
president or chief accounting or financial officer of the Borrower,
stating that neither such officer nor the Borrower has obtained
knowledge of any Event of Default, or event which, after notice or
lapse of time (or both), would constitute an Event of Default or,
if such officer or the Borrower has obtained such knowledge,
disclosing the nature, details, and period of existence of such
event.
<PAGE>
Section 6.03. Taxes and Other Liens. Pay and discharge
promptly all taxes, assessments, and governmental charges or levies
imposed upon it or upon any of its income or Property as well as
all claims of any kind (including claims for labor, materials,
supplies, and rent) which, if unpaid, might become a Lien (other
than Liens permitted under Section 7.02) upon any or all of its
Property, the failure to pay which might have material adverse
effect on the business, Properties, financial condition or
operations of the Borrower and its Significant Subsidiaries on a
consolidated basis; provided, however, that Borrower shall not be
required to pay any such tax, assessment, charge, levy, or claim if
the amount, applicability, or validity thereof shall currently be
contested in good faith by appropriate proceedings diligently
conducted and if Borrower shall establish reserves therefor
adequate under GAAP.
Section 6.04 Maintenance.
(a) Maintain its corporate existence;
(b) Remain substantially in the business in which it is
currently engaged;
(c) Observe and comply (to the extent necessary so that any
failure will not materially and adversely affect the business or
Property of the Borrower and the Significant Subsidiaries on a
consolidated basis) with all applicable laws, statutes, codes,
acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, certificates, franchises, permits, licenses,
authorizations, and requirements of all federal, state, county,
municipal, and other governments; and
(d) Maintain its Property (and any Property leased by or
consigned to it or held under title retention or conditional sales
contracts) in good and workable condition at all times and make all
repairs, replacements, additions, and improvements to its Property
reasonably necessary and proper to ensure that the business carried
on in connection with its Property may in all respects material to
the business, financial condition or operations of the Borrower and
its Significant Subsidiaries on a consolidated basis, be conducted
properly and efficiently at all times.
Section 6.05. Further Assurances. Promptly cure any defects
in the creation, issuance, and delivery of the Loan Documents.
Borrower at its expense promptly will execute and deliver to Lender
upon request all such other and further documents, agreements, and
instruments in compliance with or accomplishment of the covenants
and agreements of Borrower in the Loan Documents, or to correct any
omissions in the Loan Documents, or to state more fully the
Obligations and agreements set out in any of the Loan Documents, or
<PAGE>
to file any notices, or to obtain any consents, all as may be
reasonably necessary or appropriate in connection therewith.
Section 6.06 Performance of Obligations.
(a) Pay the Indebtedness according to the terms of the Note
and Loan Documents; and
(b) do and perform, and cause to be done and to be performed,
every act and discharge all of the obligations provided to be
performed and discharged by Borrower under the Note and Loan
Documents, at the time or times and in the manner specified.
Section 6.07. Insurance. Maintain and continue to maintain,
with financially sound and reputable insurors, insurance reasonably
satisfactory in type, coverage and amount to Lender against such
liabilities, casualties, risks, and contingencies and in such types
and amounts as is customary in the case of corporations engaged in
the same or similar businesses and similarly situated. Upon
request of Lender, Borrower will furnish or cause to be furnished
to Lender from time to time a summary of the insurance coverage of
Borrower in form and substance satisfactory to Lender and if
requested will furnish Lender copies of the applicable policies.
Section 6.08. Accounts and Records. Keep books of record and
account, in which full, true, and correct entries will be made of
all dealings or transactions in accordance with GAAP.
Section 6.09. Right of Inspection. Permit any officer,
employee, or agent of Lender to visit and inspect any of the
Property of Borrower, to examine Borrower's books of record and
accounts, to take copies and extracts from such books of record and
accounts, all at such reasonable times and upon reasonable (which
may be same-day) notice and as often as Lender may reasonably
desire.
Section 6.10. Notice of Certain Events. Promptly notify
Lender if Borrower learns of the occurrence of (i) any event that
constitutes an Event of Default together with a detailed statement
by a responsible officer of Borrower of the steps being taken as a
result thereof; or (ii) the receipt of any notice from, or the
taking of any other action by, the holder of any promissory note,
debenture, or other evidence of Debt of Borrower or of any security
(as defined under the Securities Act of 1933, as amended) of
Borrower, representing Debt in excess of $500,000, with respect to
a claimed default, together with a detailed statement by an officer
of Borrower specifying the notice given or other action taken by
such holder and the nature of the claimed default and what action
Borrower is taking or proposes to take with respect thereto; or
(iii) any legal, judicial, or regulatory proceedings affecting
Borrower in which the amount involved is material and is not
<PAGE>
covered by insurance or which, if adversely determined, would have
a material and adverse effect on the business or the financial
condition of Borrower; or (iv) any dispute between Borrower and any
governmental or regulatory authority or any other person, entity,
or agency which, if adversely determined, might materially
interfere with the normal business operations of Borrower; or (v)
any material adverse changes, either individually or in the
aggregate, in the assets, liabilities, financial condition,
business, operations, affairs, or circumstances of Borrower from
those reflected in the Financial Statements or from the facts
warranted or represented in any Loan Document. The parties
acknowledge and agree that any notice delivered by Borrower to
Lender under the Prior Loan Agreement prior to the date of this
Agreement shall constitute a notice hereunder; and that any waiver
or consent delivered by Lender to Borrower prior to the date hereof
under the Prior Loan Agreement shall constitute a waiver and
consent hereunder.
Section 6.11. ERISA Information and Compliance. Comply in
all respects in which noncompliance might cause a material adverse
effect on the business, Properties, financial condition or
operations of the Borrower and its Significant Subsidiaries on a
consolidated basis, with the Employee Retirement and Income
Security Act ("ERISA") and all other applicable laws governing any
pension or profit sharing plan or arrangement to which Borrower is
a party. Borrower shall provide Lender with notice of any
"reportable event" or "prohibited transaction" or the imposition of
a "withdrawal liability" within the meaning of ERISA.
Section 6.12. Management. Give immediate notice to Lender of
any change in the senior management of Borrower.
Section 6.13. Acquired Subsidiaries' Guaranties. In the event
of the acquisition thereof by Borrower subsequent to the date
hereof, cause each Significant Subsidiary so acquired (other than
an Exempted Significant Subsidiary), to execute Guaranties and
deliver to Lender the related articles of incorporation, bylaws,
certificates of good standing, certificates of incumbency, attorney
opinion letters and all other applicable items described in Article
5 related thereto, within 90 days after the acquisition by Borrower
thereof.
ARTICLE VII. Negative Covenants.
Borrower covenants and agrees that, during the term of this
Agreement and any extensions hereof and until the Indebtedness has
been paid and satisfied in full, unless Lender shall otherwise
first consent in writing, Borrower will not, and will not allow or
suffer any of its Subsidiaries to,:
<PAGE>
Section 7.01. Debts, Guaranties, and Other Obligations.
Incur, create, assume, suffer to exist or in any manner become or
be liable with respect to any Debt; provided that subject to all
other provisions of this Article, the foregoing prohibitions shall
not apply to: (a) any Debt outstanding on March 31, 1995 that is
reflected on the March 31, 1995 financial statement of Borrower
that has been delivered to Lender, or subsequently incurred
pursuant to credit lines in effect at March 31, 1995, or incurred
in the ordinary course of business for customary operating needs
from March 31, 1995 to the date hereof; (b) indebtedness incurred
under this Agreement or any other agreement between Borrower and
Bank; (c) trade indebtedness incurred in the ordinary course of
business payable (and paid) within 60 days of its incurrence,
whether paid directly or by reimbursement in connection with any
letter of credit facility, but not to exceed amounts historically
and customarily incurred by Borrower (or its Subsidiaries, as
applicable); (d) any subordinate indebtedness in form, amount and
substance reasonably approved in advance in writing by the Bank and
subordinated by subordination agreements reasonably satisfactory to
Bank; (e) Debt of a corporation acquired by the Borrower or a
Subsidiary subsequent to the date of this Agreement, which Debt was
incurred prior to such acquisition and is outstanding on the date
of such acquisition; (f) intercompany Debt arising solely among
Borrower and its Subsidiaries that is not otherwise prohibited
under Section 7.10 of this Agreement; (g) guaranties given in the
ordinary course of business to secure bids or contracts or
performance bonds relating to work to be performed by Borrower or
a Subsidiary; (h) a certain guaranty executed by Borrower in favor
of National Westminster Bank ("NatWest") guaranteeing certain
indebtedness of Insituform Linings, Plc owed to NatWest not to
exceed the principal amount of Pound Sterling 700,000; and (i)
other indebtedness not to exceed $2,500.000.00 in the aggregate for
Borrower and its Subsidiaries at one time outstanding.
Section 7.02. Liens. Grant any Lien in, or otherwise
encumber, any of its Properties or assets or permit any of the
Subsidiaries to grant any Lien in, or otherwise encumber, any of
such Subsidiary's Properties or assets, except for (i) Liens now
existing (including Liens existing on the date of acquisition of
any corporation subsequently acquired by Borrower as a Subsidiary
in accordance with this Agreement); (ii) Liens for taxes not yet
due and payable or which are being actively contested in good faith
by appropriate proceedings; (iii) liens arising in favor of the
Lender; (iv) Liens incurred or pledges and deposits made in
connection with worker's compensation, unemployment insurance, old
age pensions, social security and public liability laws and similar
legislation; (v) liens securing the performance of bids, tenders,
leases, contracts (other than for the repayment of borrowed money),
statutory obligations, surety and appeal bonds and other
obligations of like nature, incurred as an incident to and in the
ordinary course of business; (vi) statutory liens of landlords and
<PAGE>
other liens imposed by law, such as carriers', warehousemen's,
mechanics', materialmen's and vendor's liens, incurred in good
faith in the ordinary course of business; (vii) zoning
restrictions, easements, licenses, reservations, restrictions on
the use or transfer of real property which do not in the aggregate
materially detract from the value of the property or assets of the
Borrower and its Subsidiaries taken as a whole, or materially
impair the use of such property or assets in the operations of the
business of the Borrower or any Subsidiary; (viii) attachment,
judgment or similar liens so long as the finality of any judgments
related thereto in excess of $250,000.00 in the aggregate is being
contested in good faith, and for which adequate reserves have been
provided in the financial statements of the Borrower; and (ix)
liens securing any property for rent or hire or any deferred
purchase price for any property.
Section 7.03. Investments. Subject to any limitations
otherwise provided in this Agreement:
(a) purchase or own any stock or other securities or other
ownership interest in any corporation, firm, or other entity other
than the Subsidiaries or any of Borrower's direct or indirect
licensees and sublicensees, or joint ventures or investments in
similar or related businesses with respect to the Insituform
process, the NuPipe process or other pipeline rehabilitation
business, provided that such purchases and/or investments not
reflected in Borrower's March 31, 1995 financial statements
delivered to Lender, (w) do not exceed $5,000,000 per acquisition,
purchase and/or entity or (y) in each case is a Permitted
Acquisition, or
(b) invest in excess of 20% of its liquid assets in other
marketable securities (such 20% limitation shall not apply to
government backed securities, government bonds and United States
Treasury investments).
Compliance with the foregoing Section 7.03(a), in the event
that Borrower is required by the terms of an existing commitment in
connection with any investment described in the 1994 Form 10-K
under the caption "Investments" or in connection with Insituform
Linings Plc shall not in and of itself be deemed to constitute a
conflict with or a breach or default under such commitment
including so as to cause an Event of Default under this Loan
Agreement.
Section 7.04. Dividends, Distributions, and Redemptions;
Issuance of Stock. In any Fiscal Year commencing with the
Borrower's Fiscal Year beginning January 1, 1995, declare or pay
any dividend (other than dividends payable solely in common stock
of Borrower), or purchase, redeem, or otherwise retire or acquire
for value any of its stock, now or hereafter outstanding, or apply
<PAGE>
or set apart any of its assets, or return any capital to its
stockholders, or make any distribution of its assets to its
stockholders as such, in excess of fifty percent (50%) of the
aggregate net income (as defined in accordance with GAAP) of
Borrower and its Subsidiaries, on a consolidated basis, for such
Fiscal Year. Dividends may be paid no more often than once in any
Fiscal Year. All Offering Proceeds must be applied to the
Indebtedness owed to the Lender arising from this Agreement (or any
amendment hereto or restatement hereof), if required by the Lender,
and all such Offering Proceeds shall be applied first to
outstanding expenses, then to accrued interest, and then to
principal in the inverse order of maturity.
Section 7.05. Nature and Ownership of Business. Suffer or
permit any material change to be made in the character of its
business as carried on at the Closing Date.
Section 7.06. Mergers, Dispositions, Etc.. (a) Except for
the acquisition by NuPipe Limited of Insituform Permaline Limited
in a scheme of arrangement under English law, sell, assign, lease,
transfer, or otherwise dispose of (whether in one transaction or in
a series of transactions) all or substantially all of its Property
(or any Subsidiary), or the Property (whether now owned or
hereafter acquired) of any of its Subsidiaries, to any Person,
except for transfers to a Subsidiary that is also a Guarantor that
has been previously approved by the Lender, and that has executed
and delivered to Lender its Guaranty and all related items as
described in Article 5 of this Agreement; or (b) consolidate with
or merge into, or permit any Subsidiary to consolidate with or
merge into, any other corporation or entity, (i) unless no Event of
Default (without reference to this Section 7.06) has occurred or
would occur after giving effect to such merger, and (ii) (x) unless
the Borrower or a Subsidiary that is also a Guarantor that has been
previously approved by the Lender and that has executed and
delivered to Lender its Guaranty and all related items as described
in Article 5 of this Agreement is the surviving entity, or (y) such
transaction is effectuated in order to consummate a Permitted
Acquisition and is effectuated by a newly-formed Subsidiary (which
is not a Significant Subsidiary) created for that purpose; (c)
suffer or permit in whole or in part dissolution or liquidation of
Borrower or any Subsidiary (except in a transaction permitted by
clause (b) immediately preceding and except, with regard to a
Subsidiary, but not with regard to the Borrower, in a transaction
permitted by clause (a) immediately preceding); or (d) permit a
reorganization or sale of securities that would cause Borrower to
no longer maintain control of the Subsidiaries (other than any
Subsidiary subject to a transaction permitted under clauses (a),
(b) or (c) immediately preceding). For purposes of this Agreement,
Lender has previously approved as Guarantors all Subsidiaries
identified by name under the definition of "Significant Subsidiary"
in this Agreement.
<PAGE>
Section 7.07. Transactions With Affiliates. Except for
transactions between Borrower and the Subsidiaries, or between
Subsidiaries, which are not otherwise prohibited by this Agreement,
enter into or be a party to any transaction or arrangement with any
Affiliate (including, without limitation, the purchase from, sale
to or exchange of Property with, or the rendering of any service by
or for, any Affiliate), except for transactions entered into prior
to the date hereof which are noted in the Borrower's financial
statements dated December 31, 1994 or March 31, 1995, if material,
and except in the ordinary course of and pursuant to the reasonable
and customary standards, practice and requirements of the
Borrower's business and upon fair and reasonable terms no less
favorable to the Borrower than would be obtained by a Person other
than an Affiliate in a comparable arm's length transaction with
Borrower. Borrower and Lender agree that this Section shall not be
construed so as to allow, and shall be read so as to disallow,
pricing below cost on product sales by Borrower or any Guarantor to
any Affiliate, other than sales to Borrower or a Guarantor.
Section 7.08. Use of Loan Proceeds. Permit the proceeds of
the Loan to be used for any purpose other than the purposes
described in Section 2.05 of this Agreement.
Section 7.09. Disposition of Assets. Dispose of any of its
assets or any assets of any of its Subsidiaries, other than as
permitted under Section 7.06 and other than in the ordinary course
of Borrower's (or the respective Subsidiary's, as applicable)
present business upon terms not materially adverse to Borrower (or
the applicable Subsidiary), and in any event only for full and
adequate consideration.
Section 7.10. No Loans. Make any loans, advances or
extensions of credit to any person or entity, except for such
loans, advances or extensions (i) set forth in the 1994 10-K (and
except for loans made pursuant to the commitments described in the
1994 10-K), (ii) made to employees of the Borrower or any
Subsidiary not to exceed an aggregate of $600,000.00, (iii) made to
the Borrower or any Subsidiary that is also a Guarantor that has
been previously approved by the Lender, and that has executed and
delivered to Lender its Guaranty and all related items as described
in Article 5 of this Agreement; (iv) (A) made to the entities
described on the "Schedule of Net Positive Receivable Balances
Outstanding at June 30, 1993 to Borrower and Guaranteeing
Subsidiaries by Non-Guaranteeing Subsidiaries" previously delivered
by Borrower to Lender (the "Schedule"), by Borrower and by INA
Acquisition Corp. in the amounts described in the Schedule, which
amounts may not be increased (and, once repaid, may not be
reborrowed or readvanced), and (B) amounts required to be loaned or
invested by Borrower or a Subsidiary due to a pro-rata call on all
shareholders of Insituform Linings Plc, to the extent permitted
under Section 7A.01(a) of this Agreement, plus (C) $5,000,000 (a
<PAGE>
"Non-Guaranteeing Subsidiary", for purposes of this Agreement,
means any Subsidiary that is not an approved Guarantor and that has
not delivered to Lender the Guaranty and related items described in
Article 5, and the "Non-Guaranteeing Subsidiaries" means,
collectively, each Non-Guaranteeing Subsidiary); and (v) otherwise
made to any licensee, sublicensee, vendor, sales agent or
distributor not to exceed $1,000,000 in the aggregate; provided,
however, that a Non-Guaranteeing Subsidiary may make loans,
advances or extensions of credit to the Borrower or any Subsidiary
so long as such loans, advances or extensions are not otherwise
prohibited by this Agreement (without reference to this Section
7.10).
Section 7.11. Prepayments of Other Debts. Prepay any Debt
(excluding trade payables) to any Person, except that the foregoing
restriction shall not apply to the Indebtedness (unless otherwise
expressly prohibited by another provision herein or in any Loan
Document).
Section 7.12. Financial Covenants. On a consolidated basis
for Borrower and its Subsidiaries:
(a) Current Ratio. Permit the ratio of current assets to
current liabilities to be less than 1.5 to 1.0 at any time until
the Maturity Date.
(b) Liabilities to Tangible Net Worth. Permit the ratio of
Liabilities to Tangible Net Worth to exceed 4.5 to 1.0 at any time
from the Closing Date through December 31, 1995; or 3.0 to 1.0 at
any time from January 1, 1996 through December 31, 1996; or 2.0 to
1.0 at any time thereafter until the Maturity Date.
(c) Tangible Net Worth. Permit Tangible Net Worth (including
Offering Proceeds raised in any equity offering) to be less at any
time than the amounts and for the periods indicated below:
<TABLE>
Time Periods Minimum Tangible Net Worth
<CAPTION>
<S> <C>
From the Closing Date $19,000,000 plus Offering Proceeds received
through December 31, 1995 in any equity offerings closed during 1995
From January 1, 1996 $19,000,000 plus the greater of: (A) $8,500,000
through December 31, 1996 or (B) 75 percent of net earnings, determined in
accordance with GAAP, during 1995 (said sum
being referred to as "1996 Required Net Worth")
plus Offering Proceeds received in any equity
offerings closed during 1995 and/or 1996
From January 1, 1997 1996 Required Net Worth plus 50 percent of net
through December 31, 1997 earnings, determined in accordance with GAAP,
for 1996 (said sum being referred to as "1997
Required Net Worth"), plus Offering Proceeds
received in any equity offerings closed during
1995, 1996 and/or 1997
From January 1, 1998 1997 Required Net Worth plus 50 percent of net
through December 31, 1998 earnings, determined in accordance with GAAP,
for 1997 (said sum being referred to as "1998
Required Net Worth") plus Offering Proceeds
received in any equity offerings closed during
1995, 1996, 1997 and/or 1998
From January 1, 1999 1998 Required Net Worth plus 50 percent of net
through December 31, 1999 earnings, determined in accordance with GAAP,
for 1998 (said sum being referred to as "1999
Required Net Worth") plus Offering Proceeds
received in any equity offerings closed during
1995, 1996, 1997, 1998 and/or 1999
From January 1, 2000 1999 Required Net Worth plus 50 percent of net
through the Maturity Date earnings, determined in accordance with GAAP,
for 1999 plus Offering Proceeds received in any
equity offerings closed during 1995, 1996, 1997,
1998, 1999 and/or 2000.
</TABLE>
(d) Ratio of Funded Debt to EBITDA. Permit the ratio of
Funded Debt to EBITDA to equal or exceed 3.0 to 1.0 at any time
during 1995 for any trailing four-quarter period, or 2.5 to 1.0 at
any time beginning January 1, 1996 and thereafter, for any trailing
four-quarter period.
Section 7.13. Transactions with Guarantors. The Borrower
shall not, and its Subsidiaries who are Guarantors shall not, take
any action, and shall not allow any action to be taken, that would
result in direct or indirect loans, or in transactions that could
<PAGE>
be construed as direct or indirect loans by the Borrower or such
Subsidiary, to any Subsidiary that is not a Guarantor approved by
Lender that has delivered to Lender its Guaranty and the other
related items described in Article 5 of this Agreement (as used in
this section, a "Guarantor") in excess of the loans permitted to be
made to such non-guaranteeing Subsidiaries under Section 7.10,
including without limitation pricing below cost on product sales by
the Borrower or its Subsidiaries who are Guarantors to Subsidiaries
that are not Guarantors.
Article VIIA. Special Agreement Regarding Insituform Linings
Plc.
Section 7A.01. Insituform Linings Plc. With regard to
Insituform Linings Plc, an English corporation ("Insituform
Linings"), Lender acknowledges that it has been informed that the
Borrower does not, as of the Closing Date, have control over
Insituform Linings. Therefore, Borrower and Lender agree that:
Insituform Linings shall not be deemed to be included within
the term "Subsidiary" as that term is used in Article 7 of this
Agreement, except for Section 7.12 of this Agreement. Additionally,
Insituform Linings shall not be deemed to be a "Subsidiary" to
which the Events of Default described in Article 8 of this
Agreement apply, except for Sections 8.01 (g), (h), (i), (j) and
(o).
Provided, however, that notwithstanding any provision herein
to the contrary (and/or the effect, on any other provision of this
Agreement, of the agreements set forth above), the Borrower and
Lender agree that:
(a) The Borrower and the other Subsidiaries (excluding
Insituform Linings) shall not have the ability to lend monies to,
guarantee loans or performance of, obtain bonds for, or otherwise
extend credit to or on behalf of or for the benefit of, or make
itself or any of its property liable for any indebtedness or
obligations of, Insituform Linings or invest additional capital in
Linings (except for a receivable from Insituform Linings to the
Borrower in the outstanding amount not to exceed $373,706 and
except that in the event Insituform Linings makes a call on all
shareholders on a pro-rata basis according to the interest of each
shareholder, Borrower or a Subsidiary shall be permitted to loan or
invest the amount of such call, as the case may be, if such does
not otherwise cause a default under this Agreement); and
(b) The Borrower and its Subsidiaries shall not deal with
Insituform Linings on any basis other than an arm's-length basis,
no more favorable to Insituform Linings than to an entity not owned
(wholly or partially) by the Borrower, and shall not dispose of or
<PAGE>
transfer any property or assets to Insituform Linings except for
full and adequate consideration; and
(c) Should the Borrower at any time gain control of Insituform
Linings, Borrower agrees that immediately upon gaining such control
Insituform Linings shall be deemed to be a "Subsidiary" for all
purposes under this Agreement, and the provisions of this Section
7A.01 shall terminate.
Article VIII. Events of Default.
Section 8.01. Events of Default. Any of the following events
shall be considered an Event of Default as those terms are used in
this Agreement:
(a) Borrower fails to make payment within five (5) days of
the due date of any payment of interest, principal or other
amount(s) on the Note or due hereunder or under any of the Loan
Documents, or otherwise in connection with the Indebtedness; or
(b) Failure by Borrower to pay to Lender within five (5) days
from the due date thereof any principal, interest or other amount
due on any other indebtedness of Borrower to Lender, now existing
or hereafter owing or arising, direct or contingent, secured or
unsecured, including without limitation any indebtedness or
obligations arising in connection with the Panola County Bond
Obligations, the Letter of Credit, and/or any of the other
Obligations; or
(c) Default by Borrower or any of the Subsidiaries under any
other document, note, agreement or understanding with, held by, or
executed in favor of Lender which is not cured within twenty (20)
days from receipt by Borrower of written notice from Lender
specifying such default; or
(d) Should any representation or warranty contained herein or
made by or furnished on behalf of Borrower or any of the
Subsidiaries in connection herewith be false or misleading in any
material respect as of the date made; or
(e) Failure to perform or observe any covenant, or agreement,
duty or obligation (other than those for which an Event of Default
is specifically listed in this Section 8.01, for which no notice or
cure period, or a shorter cure period, is specified) contained in
this Agreement within twenty (20) days after Lender sends written
notice to Borrower specifying such non-performance; or
(f) Failure by Borrower or any of the Subsidiaries to pay its
debts generally as they become due; or
<PAGE>
(g) Concealing, removing, or permitting to be concealed or
removed, any part of the Property of Borrower or any of the
Subsidiaries, with intent to hinder, delay or defraud its creditors
or any of them, or making or suffering a transfer of any Property
of Borrower or any of the Subsidiaries which may be fraudulent
under any bankruptcy, fraudulent conveyance or similar law; or
making any transfer of any of Property of Borrower or any of the
Subsidiaries to or for the benefit of a creditor at a time when
other creditors similarly situated have not been paid, or suffering
or permitting, while insolvent, any creditor to obtain a lien upon
any Property of Borrower or any of the Subsidiaries through legal
proceedings or distraint which is not vacated within thirty days
from the date thereof;
(h) In each case except for Insituform Group Limited, an Isle
of Man corporation which Borrower represents has no material assets
and will not have any material assets ("Insituform Group Limited"),
and except for the acquisition by NuPipe Limited of Insituform
Permaline Limited in a scheme of arrangement under English law, and
except as otherwise permitted under this Agreement, a receiver,
custodian, liquidator, or trustee of Borrower or of any Subsidiary,
or of any of its respective Property, is appointed by the order or
decree of any court or agency or supervisory authority having
jurisdiction; or Borrower or any Subsidiary is adjudicated bankrupt
or insolvent; or any of the Property of Borrower or any Subsidiary
is sequestered by court order or a petition is filed against
Borrower and/or any Subsidiary under any state or federal
bankruptcy, reorganization, debt arrangement, insolvency,
readjustment of debt, dissolution, liquidation, or receivership law
of any jurisdiction, whether now or hereafter in effect (and if
made involuntarily against Borrower or such Subsidiary, without the
consent or cooperation of Borrower or any Subsidiary, is not
dismissed within 60 days of the filing thereof) (it being
acknowledged and agreed that no notice requirement on the part of
Lender, and no cure period except for the 60 days in which Borrower
or the applicable Subsidiary may obtain a dismissal of an
involuntary bankruptcy petition, shall apply to this Subsection
8.01(h)); or
(i) In each case except for Insituform Group Limited, and
except for the acquisition by NuPipe Limited of Insituform
Permaline Limited in a scheme of arrangement under English law, and
except as otherwise permitted by this Agreement, Borrower or any
Subsidiary takes affirmative steps to prepare to file, or Borrower
or any Subsidiary files a petition in voluntary bankruptcy or to
seek relief under any provision of any bankruptcy, reorganization,
debt arrangement, insolvency, readjustment of debt, dissolution, or
liquidation law of any jurisdiction, whether now or hereafter in
effect, or consents to the filing of any petition against it under
any such law (it being acknowledged and agreed that no notice
<PAGE>
requirement on the part of Lender, and no cure period, shall apply
to this Subsection 8.01(i)); or
(j) In each case except for Insituform Group Limited, and
except for the acquisition by NuPipe Limited of Insituform
Permaline Limited in a scheme of arrangement under English law, and
except as otherwise permitted by this Agreement, Borrower or any
Subsidiary makes an assignment for the benefit of its creditors, or
admits in writing its inability to pay its debts generally as they
become due, or consents to the appointment of a receiver, trustee,
or liquidator of Borrower (or any Subsidiary) or of all or any part
of its Properties (it being acknowledged and agreed that no notice
requirement on the part of Lender, and no cure period, shall apply
to this Subsection 8.01 (j)); or
(k) Borrower or any Significant Subsidiary discontinues its
usual business (it being acknowledged and agreed that no notice
requirement on the part of Lender, and no cure period, shall apply
to this Subsection 8.01(k) and it being acknowledged that
Insituform Permaline Limited may discontinue such business pursuant
to a scheme of arrangement under English law with NuPipe Limited);
or
(l) Subject to any applicable grace period or waiver prior to
any due date, Borrower or any Subsidiary fails to make any payment
due on any Debt in excess of $1,100,000, or any other event shall
occur or any condition shall exist with respect to any Debt of
Borrower or any Subsidiary or under any agreement securing or
relating to such Debt the effect of which is to cause any holder of
such Debt or other security or a trustee to cause such Debt or
security, or a portion thereof, to become due prior to its stated
maturity or prior to its regularly scheduled dates of payment; or
(m) If final judgment for the payment of money in excess of
$1,000,000 is rendered by any court or other governmental authority
against Borrower and/or any Subsidiary which is not fully covered
(less a reasonable deductible) by insurance or which is not
discharged, paid, satisfied or appealed, or execution is not
stayed, within 120 days of the date of the said judgment; or
(n) Should any Guarantor give notice that the Guarantor is
terminating or attempting to terminate or revoke its Guaranty, or
should any other event occur that results in the termination of its
Guaranty of any Guarantor; or
(o) Borrower or any Subsidiary violates any law, judgment,
decree, order, ordinance, or governmental rule or regulation to
which Borrower or any Subsidiary of Borrower, or any of its
respective Properties, is subject, which violation would have a
material adverse effect on the business, Properties, financial
condition or operations of the Borrower and the Significant
<PAGE>
Subsidiaries on a consolidated basis, or on the ability of the
Borrower or any of the Guarantors to perform their obligations
under this Agreement or any of the other Loan Documents; or
Borrower or any Subsidiary fails or refuses at any and all times to
remain current in its financial reporting requirements pursuant to
such laws, rules, and regulations or pursuant to the rules and
regulations of any exchange upon which any shares of Borrower or
any Subsidiary are traded, which failure or refusal would have a
material adverse effect on the business, Properties, financial
condition or operations of the Borrower and the Significant
Subsidiaries on a consolidated basis, or on the ability of the
Borrower or any of the Guarantors to perform their obligations
under this Agreement or any of the other Loan Documents.
Section 8.02. Cross-Default. It is the Borrower's intention
that all indebtedness and obligations owed by Borrower to Lender,
now existing and hereafter arising or owing, direct or contingent,
secured or unsecured, and howsoever evidenced, be fully cross-
defaulted.
Section 8.03. Remedies. Upon the happening of any Event of
Default set forth above, with the exception of those events set
forth in Section 8.01(h) and 8.01(i): (i) Lender may declare the
entire principal amount of all Indebtedness then outstanding,
including interest accrued thereon, to be immediately due and
payable without presentment, demand, protest, notice of protest, or
dishonor or other notice of default of any kind, all of which
Borrower hereby expressly waives, (ii) at Lender's sole discretion
and option, all obligations of Lender under this Agreement shall
immediately cease and terminate unless and until Lender shall
reinstate such obligations in writing; or (iii) Lender may bring an
action to protect or enforce its rights under the Loan Documents or
seek to collect the Indebtedness and/or enforce the Obligations by
any lawful means.
Upon the happening of any event specified in Section 8.01(h)
and Section 8.01(i): (i) all Indebtedness, including all principal.
accrued interest, and other charges or monies due in connection
therewith shall be immediately and automatically due and payable in
full, without presentment, demand, protest, or dishonor or other
notice of any kind, all of which Borrower hereby expressly waives,
(ii) all obligations of Lender under this Agreement shall
immediately cease and terminate unless and until Lender shall
reinstate such obligations in writing; or (iii) Lender may bring an
action to protect or enforce its rights under the Loan Documents or
seek to collect the Indebtedness and/or enforce the Obligations by
any lawful means.
Section 8.04. Right of Set-off. Upon the occurrence and
during the continuance of any Event of Default, Lender (and any
participant of this Loan under Section 2.04) is authorized, at any
<PAGE>
time and from time to time, without notice to Borrower (any such
notice being expressly waived by Borrower), to set-off and apply
any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at
any time owing by Lender to or for the credit or the account of
Borrower against any and all of the Obligations, irrespective of
whether or not Lender shall have accelerated the Indebtedness or
made any demand under this Agreement or the Notes and although such
obligations may be unmatured.
Article IX. General Provisions.
Section 9.01. Notices. All communications under or in con-
nection with this Agreement or any of the other Loan Documents
shall be in writing and shall be mailed by first class certified
mail, postage prepaid, or otherwise sent by telex, telegram,
telecopy, or other similar form of rapid transmission confirmed by
mailing (in the manner stated above) a written confirmation at
substantially the same time as such rapid transmission, or
personally delivered to an officer of the receiving party. All
such communications shall be mailed, sent, or delivered as follows:
(a) if to Borrower, to its address shown below, or to such
other address as Borrower may have furnished to Lender in writing:
Insituform Technologies, Inc.
1770 Kirby Parkway
Suite 300
Memphis, Tennessee 38138
Attn: Mr. William A. Martin
(b) if to Lender, to its address shown below, or to such
other address or to such individual's or department's attention as
it may have furnished Borrower in writing:
with a copy to:
Third National Bank in Nashville Third National Bank in Nashville
Suite 145, 6000 Poplar Avenue 201 Fourth Avenue, North
Memphis, Tennessee 38119 Nashville, Tennessee 37219
Attn: Ms. Carol Yochem Attn: Mr. J.H. Miles
Department: U.S. Banking Department: U.S. Banking
Any communication so addressed and mailed by certified mail shall
be deemed to be given when so mailed.
Section 9.02. Deviation from Covenants. The procedure to be
followed by Borrower to obtain the consent of Lender to any
deviation from the covenants contained in this Agreement or any
other Loan Document shall be as follows:
<PAGE>
(a) Borrower shall send a written notice to Lender setting
forth (i) the covenant(s) relevant to the matter, (ii) the
requested deviation from the covenant(s) involved, and (iii) the
reason for the requested deviation from the covenant(s); and
(b) Lender, within a reasonable time, will send a written
notice to Borrower, signed by an authorized officer of Lender,
permitting or refusing the request, but in no event will any
deviation from the covenants of this Agreement or any other Loan
Document be effective without the express prior written consent of
Lender. Lender's failure to provide such written notice shall be
deemed a refusal of such request.
Section 9.03. Invalidity. In the event that any one or more
of the provisions contained in any Loan Document for any reason
shall be held invalid, illegal, or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect
any other provision of any Loan Document.
Section 9.04. Survival of Agreements. All representations
and warranties of Borrower in this Agreement and all covenants and
agreements in this Agreement not fully performed before the Closing
Date of this Agreement shall survive the Closing.
Section 9.05. Successors and Assigns. Borrower may not
assign its rights or delegate its duties under this Agreement or
any other Loan Document. All covenants and agreements contained by
or on behalf of Borrower in any Loan Document shall bind the
Borrower's successors and assigns and shall inure to the benefit of
Lender and its successors and assigns. In the event that Lender
sells participations in Indebtedness to participating lenders, each
of such participating lenders shall have the rights of set-off
against such Indebtedness and similar rights or Liens to the same
extent available to Lender, except as otherwise provided in this
Agreement.
Section 9.06. Renewal, Extension, or Rearrangement. All
provisions of this Agreement relating to Indebtedness shall apply
with equal force and effect to each and all promissory notes
executed hereafter which in whole or in part represent a renewal,
extension for any period, increase, or rearrangement of any part of
the Indebtedness originally represented by any part of such other
Indebtedness.
Section 9.07. Waivers. Pursuant to T.C.A. Section 47-50-112,
no action or course of dealing on the part of Lender, its officers,
employees, consultants, or agents, nor any failure or delay by
Lender with respect to exercising any right, power, or privilege of
Lender under the Note, this Agreement, or any other Loan Document
shall operate as a waiver thereof, except as otherwise provided in
this Agreement. Lender may from time to waive any requirement
<PAGE>
hereof, including any of the Conditions Precedent; however no
waiver shall be effective unless in writing and signed by the
Lender. The execution by Lender of any waiver shall not obligate
Lender to grant any further, similar, or other waivers.
Section 9.08. Cumulative Rights. Rights and remedies of
Lender under each Loan Document shall be cumulative, and the
exercise or partial exercise of any such right or remedy shall not
preclude the exercise of any other right or remedy.
Section 9.09. Construction. This Agreement, the Note, and
the other Loan Documents constitute a contract made under and shall
be construed in accordance with and governed by the laws of the
State of Tennessee.
Section 9.10. Nature of Commitment. With respect to the Loan
and the Advances, Lender's obligation to make the Loan or any
Advances shall be deemed to be pursuant to a contract to make a
loan or to extend debt financing or financial accommodations to or
for the benefit of Borrower within the meaning of Sections
365(c)(2) and 365(e)(2)(B) of the United States Bankruptcy Code, 11
U.S.C. Section 101 et seq.
Section 9.11. Governance; Exhibits. The terms of this Agree-
ment shall govern if determined to be in conflict with the terms or
provisions in any other Loan Document. The exhibits attached to
this Agreement are incorporated in this Agreement and shall be
considered a part of this Agreement except that in the event of any
conflict between an exhibit and this Agreement or another Loan
Document, the provisions of this Agreement or the Loan Document, as
the case may be, shall prevail over the exhibit.
Section 9.12. Titles of Articles, Sections, and Subsections.
All titles or headings to articles, sections, subsections, or other
divisions of this Agreement or the exhibits to this Agreement are
only for the convenience of the parties and shall not be construed
to have any effect or meaning with respect to the other content of
such articles, sections, subsections, or other divisions, such
other content being controlling with respect to the agreement
between the parties.
Section 9.13. Time of Essence. Time is of the essence with
regard to each and every provision of this Agreement.
Section 9.14. Remedies. All remedies for which this Agree-
ment and all other Loan Documents provide for Lender shall be in
addition to all other remedies available to Lender under the
principles of law and equity, and pursuant to any other body of
law, statutory or otherwise.
<PAGE>
Section 9.15. Application of Prepayments. Prepayments shall
be applied at Lender's sole discretion (i) first to accrued
interest under any of the Obligations as determined by Lender and
(ii) second to reduce principal of any of the Obligations, all in
such manner as determined by Lender.
Section 9.16. Costs, Expenses, and Taxes. Borrower agrees to
pay on demand all out-of-pocket costs and expenses of Lender
(including the reasonable fees and out-of-pocket expenses of
counsel for Lender) incurred by Lender in connection with the
preparation of the Loan Documents or the enforcement, or protection
of Lender's rights under the Loan Documents. In addition, Borrower
agrees to pay, and to hold Lender harmless from all liability for,
any taxes which may be payable in connection with the execution or
delivery of this Agreement, the Advances, or the issuance of the
Note or any other Loan Documents. Borrower, upon request, promptly
will reimburse Lender for all amounts expended, advanced, or
incurred by Lender to satisfy any obligation of Borrower under this
Agreement or any other Loan Documents, or to protect the Properties
or business of Borrower or to collect the obligations, or to
enforce the rights of Lender under this Agreement or any other Loan
Document, which amounts will include all court costs, attorney's
fees, fees of auditors and accountants, and investigation expenses
reasonably incurred by Lender in connection with any such matters,
together with interest thereon at the rate applicable to past due
principal and interest as set forth in the Loan Documents but in no
event in excess of the maximum lawful rate of interest permitted by
applicable law on each such amount. All obligations for which this
Section provides shall survive any termination of this Agreement.
Section 9.17. Governing Law; Consent to Forum. This
Agreement has been negotiated, executed and delivered at and shall
be deemed to have been made in Nashville, Tennessee. This
Agreement shall be governed by and construed in accordance with the
internal laws of the State of Tennessee. As part of the
consideration for new value received, and regardless of any present
or future domicile or principal place of business of Borrower or
Lender, Borrower hereby consents and agrees that any Tennessee
state courts sitting in Davidson County, Tennessee, or, at Lender's
option, the United States District Court for the Middle District of
Tennessee, shall have jurisdiction to hear and determine any claims
or disputes between Borrower and Lender pertaining to this
Agreement or to any matter arising out of or related to this
Agreement; provided, however, Lender may, at its option, commence
any action, suit or proceeding in any other appropriate forum or
jurisdiction to obtain possession of or foreclosure upon any
collateral, to obtain equitable relief or to enforce any judgment
or order obtained by Lender against Borrower or with respect to any
collateral, to enforce any other right or remedy under this
Agreement or to obtain any other relief deemed appropriate by
Lender. Borrower expressly submits and consents in advance to such
<PAGE>
jurisdiction in any action or suit commenced in any such court, and
Borrower hereby waives any objection which Borrower may have based
upon lack of personal jurisdiction, improper venue or forum non
conveniens and hereby consents to the granting of such legal or
equitable relief as is deemed appropriate by such court. Borrower
hereby waives personal service of the summons, complaint and other
process issued in any such action or suit and agrees that service
of such summons, complaint and other process may be made by
registered or certified mail addressed to Borrower at the address
set forth in this Agreement and that service so made shall be
deemed completed upon the earlier of Borrower's actual receipt
thereof or three (3) days after deposit in the U.S. Mails, proper
postage prepaid. Nothing in this Agreement shall be deemed or
operate to affect the right of Lender to serve legal process in any
other manner permitted by law.
Section 9.18. Counterparts. This Agreement may be executed
by counterpart signature pages, and it shall not be necessary that
the signatures of all parties be contained on any one counterpart;
each counterpart shall be deemed an original, but all of them
together shall constitute one and the same instrument.
Section 9.19. Entire Agreement; No Oral Representations
Limiting Enforcement. This Agreement represents the entire
agreement between the parties hereto except for such other
agreements set forth in the Loan Documents, and any and all oral
statements heretofore made regarding the matters set forth herein
are merged herein.
Section 9.20. Amendments. The parties hereto agree that this
Agreement may not be modified or amended except in writing signed
by the parties hereto.
IN WITNESS WHEREOF, the undersigned, by and through their duly
authorized officers execute this Loan Agreement as of the day and
date first set forth above.
BORROWER:
INSITUFORM TECHNOLOGIES, INC.
By: s/William A. Martin
--------------------------
Title: Senior Vice President
<PAGE>
LENDER:
THIRD NATIONAL BANK IN
NASHVILLE
By: s/Carol B. Yochem
------------------------
Title: Group Vice President
<PAGE>
<PAGE>
INDEX TO EXHIBITS:
EXHIBIT A: Form of Note
EXHIBIT B: Form of Opinion Letter of Borrower's and Significant
Subsidiaries' Counsel
EXHIBIT C: Form of Guaranty
EXHIBIT D: Form of Compliance Certificate
<PAGE>
<PAGE>
EXHIBIT A
CONSOLIDATED, AMENDED AND RESTATED PROMISSORY NOTE
Nashville, Tennessee
up to $50,000,000
Originally up to $30,000,000, by note dated July 12, 1993
Subsequently increased to up to $45,000,000 by note dated
August 2, 1992, then amended to up to $42,000,000 by note
dated October 5, 1994
THIS CONSOLIDATED, AMENDED AND RESTATED PROMISSORY NOTE
("Note") is executed by INSITUFORM TECHNOLOGIES, INC. ("Borrower")
in favor of THIRD NATIONAL BANK IN NASHVILLE ("Lender"), as of the
7th day of June, 1995.
W I T N E S S E T H:
WHEREAS, the Borrower previously executed in favor of Lender:
(a) that certain Promissory Note dated July 12, 1993 in the
original principal amount of up to $30,000,000, and (b) that
certain Additional Promissory Note dated August 2, 1994 in the
original principal amount of up to $15,000,000, as subsequently
amended and restated by that certain First Amended and Restated
Additional Promissory Note dated October 5, 1994, in the amended
principal amount of up to $12,000,000 (the foregoing promissory
notes, as amended, being collectively referred to herein as the
"Prior Notes"); and
WHEREAS, the Prior Notes evidence the existing credit facility
of Borrower with Lender in the aggregate principal amount of up to
$42,000,000 (the "Prior Loan"), and Borrower has requested that
Lender increase the principal amount of the Prior Loan to up to
$50,000,000, and consolidate, amend and restate the Prior Notes as
set forth herein; and
WHEREAS, subject to certain terms and conditions, Lender has
agreed to increase the maximum principal amount of the Prior Loan
to up to $50,000,000 and to consolidate, amend and restate the
Prior Notes; and
WHEREAS, the parties desire to consolidate the Prior Notes
into this Note, and to increase the maximum aggregate principal
amount of the Prior Notes as set forth herein, and to amend and
restate the Prior Notes as set forth herein.
<PAGE>
NOW, THEREFORE, in order to induce Lender to extend any
additional credit to Borrower, in consideration of the premises,
and for other good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, the parties hereby agree
that the Prior Notes are consolidated, increased, amended and
restated to read as follows:
FOR VALUE RECEIVED, INSITUFORM TECHNOLOGIES, INC.
("Borrower") promises and agrees to pay to the order of THIRD
NATIONAL BANK IN NASHVILLE ("Lender") at Lender's offices in
Nashville, Tennessee, or at such other place as may be
designated in writing by the holder, in lawful money of the
United States of America, the principal sum of Fifty Million
and no/100 Dollars ($50,000,000), or so much thereof as may be
advanced from time to time by Lender, together with interest
from the date hereof on the unpaid principal balance
outstanding from time to time hereon computed from the date of
each advance through the Maturity Date (hereafter defined) at
the applicable Interest Rate Option (hereafter defined).
Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Amended and
Restated Loan Agreement of even date herewith between Borrower
and Lender, as it may be amended, modified, extended or
renewed from time to time, including without limitation all
restatements thereof, replacements therefor and changes in
form thereto (all of the foregoing being collectively referred
to herein as the "Loan Agreement"). Interest for each year
shall be computed based upon a 360-day year for the actual
number of days elapsed.
In the absence of the occurrence of an Event of Default
hereunder or under the Loan Agreement, the Borrower may
borrow, repay and reborrow hereunder (up to the principal
amount hereof) from time to time until June 7, 1997. After
June 7, 1997, Borrower may not request any further Advances
hereunder.
The terms and conditions in connection with requesting an
Advance by Borrower and for making any Advances by Lender
hereunder shall be governed by the applicable provisions of
the Loan Agreement.
This Note shall be repaid as follows:
(a) Beginning on June 30, 1995 and continuing on
the last business day of each consecutive September,
December, March and June thereafter through June 30,
1997, Borrower shall pay to Lender principal payments of
$500,000 each, plus all then-accrued interest, fees and
other charges due hereunder. Provided, however, that if
Borrower and the intended principal parties to a proposed
<PAGE>
Permitted Acquisition (as such term is defined in the
Loan Agreement) have executed a letter of intent with
regard to the Borrower's intent to effectuate a proposed
Permitted Acquisition within six months of the execution
of such letter, then until June 30, 1997 but only so long
as such proposed Permitted Acquisition shall not have
been abandoned by the Borrower and Borrower is actively
pursuing such Permitted Acquisition and the other
principal parties to such Permitted Acquisition have not
abandoned such proposed Permitted Acquisition or
terminated, revoked or repudiated the letter of intent,
and such letter of intent has not expired, and if no
Event of Default has occurred, the $500,000 quarterly
principal payments shall not be required to be made. If
the proposed Permitted Acquisition is abandoned by
Borrower or Borrower is not actively pursuing the
Permitted Acquisition, or the other principal parties to
the Permitted Acquisition have abandoned or rejected such
proposed Permitted Acquisition or terminated, revoked or
repudiated the letter of intent, or if the letter of
intent has expired or been terminated, or if Borrower
determines not to proceed with such acquisition (any of
the foregoing being referred to herein as a
"Reinstatement Event"), then the $500,000 principal
payment requirement shall be reinstated on the occurrence
of a Reinstatement Event, to be first paid on the last
day of the month in which the Reinstatement Event
occurred, and thereafter to be paid on the last day of
each third month thereafter until June 30, 1997.
(b) Beginning on September 30, 1997 and continuing
on the last day of each consecutive December, March, June
and September thereafter through until the Maturity Date,
Borrower shall pay to Lender principal payments equal to
one-twentieth (1/20th) of the unpaid principal balance
outstanding under this Note as of September 30, 1997,
plus all accrued interest, fees and other charges due
hereunder.
This Note shall mature on June 7, 2000 (the "Maturity
Date"), at which time all outstanding principal, accrued
interest, and all fees or charges hereunder (if any) will be
immediately due and payable.
As used herein, the following terms have the following
definitions:
"Adjusted LIBOR Rate" means the LIBOR Rate adjusted to
include the cost, in basis points, of any applicable reserve
requirements of the Board of Governors of the Federal Reserve
System (or any successor), applicable to "Eurocurrency
<PAGE>
Liabilities" pursuant to Regulation D or other then-applicable
regulations of the Board of Governors, if any, and any other
applicable reserve or insurance requirements or costs charged
to the Lender.
"Applicable Margin" means:
(a) During the period beginning on the date of this
Note, and continuing through June 30, 1995, zero for the
Base Rate and two and one-quarter percentage points
(2.25%) above the 30-day Adjusted LIBOR Rate in effect on
the first day of the month during which any calculation
is being made.
(b) During the period beginning July 1, 1995 and
continuing through the Maturity Date:
(a) If the Borrower's ratio of
Funded Debt to EBITDA is less than 2.0 to
1 and the Borrower's ratio of Liabilities
to Tangible Net Worth is less than 2.0 to
1, zero for the Base Rate and 1.75% per
annum for the Adjusted LIBOR Rate;
(b) If the Borrower's ratio of
Funded Debt to EBITDA is less than 2.0 to
1 and the Borrower's ratio of Liabilities
to Tangible Net Worth is equal to or
greater than 2.0 to 1, zero for the Base
Rate and 2.00% per annum for the Adjusted
LIBOR Rate;
(c) If the Borrower's ratio of
Funded Debt to EBITDA is equal to or
greater than 2.0 to 1 and the Borrower's
ratio of Liabilities to Tangible Net
Worth is less than 2.0 to 1, zero for the
Base Rate and 2.00% per annum for the
Adjusted LIBOR Rate;
(d) If the Borrower's ratio of
Funded Debt to EBITDA is equal to or
greater than 2.0 to 1 and the Borrower's
ratio of Liabilities to Tangible Net
Worth is equal to or greater than 2.0 to
1, .25% per annum for the Base Rate and
2.25% per annum for the Adjusted LIBOR
Rate;
<PAGE>
provided, that for purposes of determining the
Applicable Margins: (i) the Borrower's ratios of Funded
Debt to EBITDA and Liabilities to Tangible Net Worth will
be measured quarterly at the end of each calendar quarter
based on Borrower's quarterly and annual Financial
Statements, beginning with the measurements to occur as
of March 31, 1995, and (ii) each Applicable Margin so
determined shall be effective as of the first day of the
second Fiscal Quarter following the date of such
determination.
Each month by the close of Lender's business on the first
day of the month Borrower shall elect which Interest Rate
Option shall apply to all Advances and to all amounts
outstanding under this Note during such month. Borrower shall
notify Lender of its election of the Interest Rate Option by
telephone and, if requested to do so by Lender, in writing. If
Lender does not receive proper notification as aforesaid of
Borrower's election of the Interest Rate Option, the parties
agree that the Interest Rate Option for such month shall be
the Interest Rate Option in effect for the immediately
preceding month, adjusted appropriately for such new month.
Once the Interest Rate Option has been established for a
month, all Advances made during such month, and all amounts
outstanding under this Note during such month, shall bear
interest at such applicable Interest Rate Option as such rate
may change from day to day (with regard to the Base Rate) or
not change during such month (with regard to the Adjusted
LIBOR Rate), until the first day of the following month, at
which time Borrower shall elect a new Interest Rate Option by
telephonic (or, if requested, written) notice to Lender.
"Base Rate" means the rate of interest established from
time to time and announced by Lender as its "base rate", such
rate being an interest rate used as an index for establishing
interest rates on loans. The Base Rate is determined daily.
"Interest Rate Option" means one of the following rates,
as selected by Borrower from time to time pursuant to Section
2.01 of the Loan Agreement: (a) the Base Rate plus the
Applicable Margin, as such rate may change from day to day as
the Base Rate changes, or (b) the 30-day Adjusted LIBOR Rate
plus the Applicable Margin, as such rate may change from month
to month on the first day of each month.
"LIBOR Rate" means the LIBOR rate of interest for one-
month periods, reported by the Telerate Computer Service to
which Lender subscribes, established on the first day of each
month.
<PAGE>
Notwithstanding any provision to the contrary, it is the
intent of Lender, Borrower and all parties liable on this
Note, that neither Lender nor any subsequent holder shall be
entitled to receive, collect, reserve or apply, as interest,
any amount in excess of the maximum lawful rate of interest
permitted to be charged by applicable law or regulations, as
amended or enacted from time to time. In the event the Note
calls for an interest payment that exceeds the maximum lawful
rate of interest then applicable, such interest shall not be
received, collected, charged or reserved until such time as
that interest, together with all other interest then payable,
falls within the then applicable maximum lawful rate of
interest. In the event Lender, or any subsequent holder,
receives any such interest in excess of the then maximum
lawful rate of interest, such amount which would be excessive
interest shall be deemed a partial prepayment of principal and
treated hereunder as such, or, if the principal indebtedness
evidenced hereby is paid in full, any remaining excess funds
shall immediately be paid to Borrower. In determining whether
or not the interest paid or payable, under any specific
contingency, exceeds the maximum lawful rate of interest,
Borrower and Lender shall, to the maximum extent permitted
under applicable law, (a) exclude voluntary prepayments and
the effects thereof, and (b) amortize, prorate, allocate and
spread, in equal parts, the total amount of interest
throughout the entire term of the indebtedness; provided that
if the indebtedness is paid in full prior to the end of the
full contemplated term hereof, and if the interest received
for the actual period of existence hereof exceeds the maximum
lawful rate of interest, the holder of the Note shall refund
to Borrower the amount of such excess or credit the amount of
such excess against the principal portion of the indebtedness
as of the date it was received, and, in such event, Lender
shall not be subject to any penalties provided by any laws for
contracting for, charging, reserving, collecting or receiving
interest in excess of the maximum lawful rate of interest.
The terms and conditions of any prepayment of this Note
shall be governed by the Loan Agreement. Any such
prepayment(s) shall be applied first to accrued interest and
secondly to principal.
Following the occurrence of an Event of Default,
principal and unpaid interest bear interest at the maximum
lawful rate of interest permitted by law until paid. The
undersigned will pay all costs and expenses in connection with
the collection, enforcement, protection and/or litigation with
regard to this Note and/or any of Lender's rights hereunder,
including without limitation reasonable attorneys' fees.
<PAGE>
In the event that there occurs any Event of Default under
the Loan Agreement (any such event constituting an Event of
Default under this Note), then, in such event, at the option
of the holder, the entire indebtedness hereby evidenced shall
become due, payable and collectible then or thereafter,
without further notice, as the holder may elect regardless of
the date of maturity. The holder may waive any default or
Event of Default before or after the same has been declared
and restore this Note to full force and effect without
impairing any rights hereunder, such right of waiver being a
continuing one.
The makers, endorsers, guarantors and all parties to this
Note and all who may become liable for same, jointly and
severally waive presentment for payment, protest, notice of
protest, notice of nonpayment of this Note, demand and all
legal diligence in enforcing collection, and hereby expressly
agree that the lawful owner or holder of this Note may defer
or postpone collection of the whole or any part thereof,
either principal and/or interest, or may extend or renew the
whole or any part thereof, either principal and/or interest,
or may accept additional collateral or security for the
payment of this Note, or may release the whole or any part of
any collateral security and/or liens given to secure the
payment of this Note, or may release from liability on account
of this Note any one or more of the makers, endorsers,
guarantors and/or other parties thereto, all without notice to
them or any of them; and such deferment, postponement,
renewal, extension, acceptance of additional collateral or
security and/or release shall not in any way affect or change
the obligation of any such maker, endorser, guarantor or other
party to this Note, or of any who may become liable for the
payment thereof.
Borrower shall pay a "late charge" of five percent (5%)
of any payments of principal and/or interest due when paid
after the due date thereof (provided that in no event shall
said "late charge" result in the payment of interest in excess
of the maximum lawful rate of interest permitted by applicable
law), to cover the extra expenses involved in handling
delinquent payments.
The term "maximum lawful rate of interest" as used herein
shall mean a rate of interest equal to the higher or greater
of the following: (a) the "applicable formula rate" defined in
Tennessee Code Annotated Section 47-14-102(2), or (b) such
other rate of interest as may be charged under other
applicable laws or regulations.
<PAGE>
This Note has been executed and delivered in, and shall
be governed by and construed according to the laws of the
State of Tennessee except to the extent pre-empted by
applicable laws of the United States of America.
This Note may not be changed or terminated without the
prior written approval of Lender and Borrower. No waiver of
any term or provision hereof shall be valid unless in writing
signed by the holder.
This Note consolidates, increases, amends and restates the
following notes executed by Borrower in favor of Lender: that
certain Promissory Note dated July 12, 1993 in the original
principal amount of up to $30,000,000 and that certain First
Amended and Restated Additional Promissory Note dated October 5,
1994, in the principal amount of up to $12,000,000 (which note
amended and restated that certain Additional Promissory Note dated
August 2, 1994 in the original principal amount of $15,000,000),
and does not constitute, and is not intended to constitute, a
novation of such Prior Notes or any of the existing underlying
indebtedness evidenced thereby.
Executed this the 7th day of June, 1995.
INSITUFORM TECHNOLOGIES, INC.
By:
Title:
<PAGE>
<PAGE>
EXHIBIT B
[Letterhead of Krugman, Chapnick & Grimshaw]
June 7, 1995
Third National Bank in Nashville
201 Fourth Avenue North
Nashville, Tennessee 37219
Ladies and Gentlemen:
We have acted as counsel for Insituform Technologies, Inc., a
Delaware corporation (the "Borrower"), and each of the corporations
(each, a "Guarantor" and, collectively, the "Guarantors") named in
Schedule A attached hereto and made a part hereof in connection
with the loan in the principal amount of up to $50,000,000 (the
"Loan") from Third National Bank in Nashville (the "Lender") to the
Borrower, and related transactions.
As such counsel, we have examined the original or copies,
certified or otherwise authenticated to our satisfaction of, and
are familiar with, the following documents:
1. Amended and Restated Loan Agreement (the "Loan
Agreement") dated as of even date herewith between the Lender and
the Borrower;
2. Consolidated, Amended and Restated Promissory Note dated
as of even date herewith in the principal amount of up to
$50,000,000 executed by the Borrower and payable to the Lender or
its order (the "Note"; the Loan Agreement and the Note are
sometimes referred to herein, collectively, as the "Loan
Documents");
3. Guaranties dated as of even date herewith (each a
"Guaranty" and, collectively, the "Guaranties") executed by each of
the Guarantors, respectively, to the Lender guaranteeing payment of
the Loan.
In addition, we have examined such further documents and
records and such questions of law as we have considered necessary
or appropriate for the purposes of this opinion. On the basis of
the foregoing examination, we advise you that, in our opinion:
<PAGE>
(i) The Borrower is a corporation duly organized, existing
and in good standing under the General Corporation Law of the State
of Delaware and no certificate of dissolution has been filed with
the Secretary of State of Delaware, nor has any legal proceeding
been instituted by the State of Delaware questioning the legal
status of the Borrower as a corporation.
(ii) The Borrower has been qualified as a foreign corporation
in the State of Tennessee, and such qualification has not been
revoked or permitted to lapse.
(iii) The Borrower has the corporate power and corporate
authority under the General Corporation Law of Delaware to own and
operate its properties, to carry on its business as now conducted,
to enter into the Loan Documents and to carry out the terms of the
Loan Documents.
(iv) The Loan Documents have been duly authorized, executed
and delivered by the Borrower, and are valid, binding and
enforceable obligations of the Borrower, in accordance with their
respective terms.
(v) The amounts to be received by the Lender as interest
under the Note constitute lawful interest under applicable law and
are neither usurious nor illegal.
(vi) The execution and delivery by the Borrower of the Loan
Documents and the performance by the Borrower of its obligations
thereunder do not violate any provision of law or any regulation
applicable to the Borrower, or any applicable judgment, writ,
decree, order or regulation of any court or of any public or
governmental agency or authority having jurisdiction over the
Borrower or any of its activities or property and, to the best of
our knowledge after due inquiry of the Borrower, do not conflict
with or result in any breach of or constitute a default under, any
of the provisions of any agreement or instrument to which the
Borrower is a party or by which it is bound (except that, under the
Panola County Bond Obligations, the Shelby County Bond Obligations
and the Hanseatic Obligations [as defined in the Loan Agreement],
the Borrower may be required to obtain waivers of breaches of
certain financial covenants contained in the documents evidencing
such obligations prior to borrowing under the Loan Agreement);
which violation, conflict, breach or default would have a material
adverse effect on the business of the Borrower and the Guarantors
on a consolidated basis.
(vii) All consents, approvals, and authorizations, if any,
of any governmental authority required in connection with the
execution, delivery and performance by the Borrower of its
obligations under the Loan Documents have been obtained.
<PAGE>
(viii) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public
board or body, pending, or, to the best of our knowledge after due
inquiry of the Borrower, threatened against or affecting the
Borrower, nor, to the best of our knowledge, is there any basis
therefor, in each case wherein an unfavorable decision, ruling or
finding could materially adversely affect the transactions
contemplated by, or the validity of, any of the Loan Documents, or
the Borrower's ability to perform its obligations thereunder.
(ix) Each of the Guarantors (other than Insituform Southwest)
is a corporation duly organized, existing and in good standing
under the laws of its state of incorporation and no certificate of
dissolution has been filed with the Secretary of State of such
state of incorporation, nor has any legal proceeding been
instituted by such state questioning the legal status of the
Guarantor as a corporation. Insituform Southwest is a general
partnership duly formed under the laws of the State of California.
(x) Each of the Guarantors (other than Insituform Southwest)
has the corporate power and corporate authority under the
corporation act of its state of incorporation to carry on its
business as now conducted, to enter into its Guaranty and to carry
out the terms of its Guaranty; and Insituform Southwest has the
partnership power and partnership authority to carry on its
business as now conducted, to enter into its Guaranty and carry out
the terms of its Guaranty, in accordance with its terms.
(xi) Each Guaranty has been duly authorized, executed and
delivered by the Guarantor thereof, and is the valid, binding and
enforceable obligation of the Guarantor.
(xii) The execution and delivery by the Guarantors of their
respective Guaranties and performance by the Guarantors of their
respective obligations thereunder do not violate any provisions of
law or any regulation applicable to the Guarantors, or any
applicable judgment, writ, decree, order or regulation of any court
of any public or governmental agency or authority having
jurisdiction over the Guarantors, or any of their activities or
property and, to the best of our knowledge after due inquiry of the
Guarantors, do not conflict with or result in any breach of, or
constitute a default under, any of the provisions of any agreement
or instrument to which any of the Guarantors is a party or by which
they are bound, respectively (except that under the Panola County
Bond Obligations and the Shelby County Bond Obligations and the
Hanseatic Obligations, the Borrower may be required to obtain
waivers of breaches of certain financial covenants contained in the
documents evidencing such obligations prior to borrowing under the
Loan Agreement); which violation, conflict, breach or default would
have a material adverse effect on the business of the Borrower and
the Guarantors on a consolidated basis.
<PAGE>
(xiii) All consents, approvals, and authorizations, if any, of
any governmental authority required in connection with the
execution and delivery and the performance by each of the
Guarantors of its obligations under their respective Guaranties
have been obtained.
(xiv) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, or before or by any court,
public board or body, pending or, to the best of our knowledge
after due inquiry of the Guarantors, threatened against or
affecting any of the Guarantors, nor, to the best of our knowledge,
is there any basis therefor, in each case wherein an unfavorable
decision, ruling or finding would materially adversely affect the
transactions contemplated by or the validity of any Guaranty.
In rendering the opinion expressed above, we advise you that
members of this firm are members of the bars of the States of New
York and New Jersey and the District of Columbia. We do not hold
ourselves out as experts in the law of any other jurisdictions. We
have, however, examined such questions of the laws of such other
jurisdictions as we have considered relevant to our opinion.
To the extent that matters of fact are involved in the
conclusions expressed in the foregoing opinion, such opinion is
based upon certificates of officers of the Borrower or the
Guarantors, respectively, or of public officials. In rendering the
opinion expressed in Paragraphs (viii) and (xiv) above, we have
relied solely upon the litigation files of the Borrower and the
Guarantors. Without limiting the immediately preceding sentence,
insofar as statements are made herein which relate to our knowledge
of certain matters, our inquiry to supplement matters otherwise
actually known to us has been limited to a review of documents in
our files and due inquiry of the Borrower and the Guarantors,
respectively, without any independent review of the records of any
court or governmental agency, except that, in rendering the
opinions expressed in Paragraphs (i), (ii) and (ix) above, we have
relied upon good standing certificates issued by the relevant
jurisdictions in respect of the Borrower and the Guarantors. In
addition, the opinion expressed in Paragraph (viii) above does not
extend to the litigation matters disclosed in the Borrower's Annual
Report on Form 10-K for the year ended December 31, 1994, or its
Quarterly Report on Form 10-Q for the three months ended March 31,
1995, or its Current Report on Form 8-K dated May 23, 1995, in each
case filed with the Securities and Exchange Commission, to the
extent such litigation matters are disclosed therein and to the
extent the status, nature and amount of such litigation, and the
likely outcome thereof, have not materially changed from such
disclosures.
<PAGE>
In rendering the opinion set forth herein, we have also
assumed the genuineness of all signatures on documents not signed
in our presence (and confirm that the Loan Documents and the
Guaranties have been signed in our presence), the authenticity of
all documents submitted to us as originals, the conformity with the
originals of all documents submitted to us as copies and the due
authorization, execution and delivery of the Loan Agreement by the
Lender.
The opinion expressed above is subject to the further
qualification that: (i) the enforceability of the rights and
remedies of the parties thereto in the Loan Documents may be
subject to limitations imposed by any applicable bankruptcy,
insolvency, reorganization, moratorium, or other similar laws
affecting the enforcement of creditors' rights generally or by the
principles governing the availability of equity remedies, and the
unavailability of the remedy of specific performance in certain
cases; and (ii) certain of the remedial provisions in the documents
may be limited or rendered unenforceable under applicable laws and
judicial decisions, provided, however, that the inclusion of such
provisions does not affect the validity of the Loan Documents, and
the Loan Documents contain adequate provision for enforcing payment
of the Note and for the practical realization of the rights and
benefits afforded by the Loan Documents.
This opinion is furnished by us as counsel for the Borrower
and the Guarantors solely for your benefit in connection with the
transactions contemplated by the Loan Agreement. This opinion may
not be relied upon by you for any other purpose, or used or relied
upon by, or circulated, furnished or quoted to, any other person,
firm or corporation for any purpose without our prior written
consent.
Very truly yours,
<PAGE>
<PAGE>
SCHEDULE A
Insituform North America Corp.,
a Tennessee corporation
Insituform Capital Corp.,
a Delaware corporation
Insituform California, Inc.,
a Delaware corporation
Insituform Southwest,
a partnership having Insituform
California, Inc., a Delaware
corporation, and NuPipe
California, Inc., a Delaware
corporation, as sole partners
Pipe Rehab International, Inc.,
a Delaware corporation
NuPipe, Inc.,
an Oregon corporation
NuPipe California, Inc.,
a Delaware corporation
NuPipe International, Inc.,
a Delaware corporation
Insituform of New England, Inc.,
a Massachusetts corporation
INA Acquisition Corp.,
a Delaware corporation
Insituform Midwest, Inc.,
a Delaware corporation
Insituform Gulf South, Inc.,
a Delaware corporation
Gelco Services, Inc.,
an Oregon corporation
GelTech Constructors, Inc.,
an Oregon corporation
<PAGE>
<PAGE>
EXHIBIT C
GUARANTY
THIS GUARANTY ("Guaranty") is executed as of the day
of , 199 , by ,
a corporation ("Guarantor") in favor of THIRD
NATIONAL BANK IN NASHVILLE ("Lender"), a national banking
association with principal offices in Nashville, Tennessee.
W I T N E S S E T H:
WHEREAS, the Guarantor is a direct or indirect subsidiary of
Insituform Technologies, Inc., a Delaware corporation (the
"Borrower"); and
WHEREAS, Borrower and Lender previously executed that certain
Loan Agreement originally dated July 12, 1993 (as supplemented and
amended from time to time) (as amended, the "Prior Loan Agreement")
pursuant to which Lender extended certain credit to Borrower and in
connection therewith Borrower executed in favor of Lender a certain
promissory note originally dated July 12, 1993 in the principal
amount of $30,000,000, and a certain Additional Promissory Note
dated August 2, 1994 in the original principal amount of
$15,000,000, as subsequently amended and restated by that certain
First Amended and Restated Additional Promissory Note dated October
5, 1994, in the amended principal amount of up to $12,000,000 (the
foregoing promissory notes, as amended, being collectively referred
to herein as the "Prior Notes"); and
WHEREAS, Guarantor has requested that Lender extend certain
additional credit to Borrower, increasing the aggregate principal
amount of the credit facility of Borrower with Lender to up to
$50,000,000, and amend and restate the Prior Loan Agreement, and
subject to certain terms and conditions, Lender is willing to
extend certain additional credit to Borrower and to amend and
restate the Prior Loan Agreement as set forth herein; and
WHEREAS, among the conditions to Lender's agreement to extend
any additional credit to Borrower and/or to amend and restate the
Prior Loan Agreement is that Guarantor must guarantee the
obligations of the Borrower to Lender, as described herein, without
which guarantee the Lender would not extend credit to Borrower; and
WHEREAS, Guarantor's business is a specialized part of an
integrated and coordinated enterprise conducted by the Borrower
through the Borrower and the Guarantor for the convenience,
economic advantage and greater profit of the integrated and
coordinated enterprise represented by the Borrower and Guarantor;
<PAGE>
NOW, THEREFORE, as an inducement to cause Lender to extend
credit to Borrower, and for other valuable consideration, the
receipt and sufficiency of which are acknowledged, Guarantor agrees
as follows:
Article I. Definitions.
Section 1.01 The following terms shall have the following
meanings unless the context expressly requires otherwise:
(a) "Borrower" means Insituform Technologies, Inc. and
its successors and assigns, and shall include, without
limitation: (i) the Borrower as debtor-in-possession or any
trustee in any bankruptcy proceeding, (ii) any trustee,
receiver, custodian, conservator, or other similar appointee
over Borrower or over any of Borrower's Property pursuant to
any court proceeding of any kind, and (iii) any successor
corporation or successor Person.
(b) "Collateral" means: (i) any and all Property and
things of value in or against which a lien and/or security
interest has been granted or may in the future be granted to
secure to Lender repayment and performance of the Guaranteed
Obligations; (ii) any and all Property and things of value now
held or which may in the future be held by or for the benefit
of Lender as security for or for application to the Guaranteed
Obligations; and (iii) any and all Property and things of
value assigned to or which may in the future be assigned to or
for the benefit of Lender as security for or for application
to the Guaranteed Obligations.
(c) "Guaranteed Obligations" means any and all
obligations of any kind and character whatsoever of Borrower
to Lender, evidenced by and/or arising in connection with that
certain Consolidated, Amended and Restated Promissory Note
executed by Borrower in favor of Lender, dated as of June ,
1995, in the principal amount of up to $50,000,000 (which note
consolidated, amended and restated the Prior Notes and any and
all amendments, modifications, increases, decreases,
restatements, extensions and renewals thereof, thereto and
therefor, and all notes given in payment and/or replacement
thereof, and all changes in form thereof (collectively
referred to herein as the "Note"), and/or that certain Amended
and Restated Loan Agreement executed by Borrower and Lender
dated as of June , 1995 (amending and restating the Prior
Loan Agreement and any and all modifications, amendments,
supplements, extensions and restatements thereof and thereto,
and all replacements therefor (collectively referred to as the
"Loan Agreement"), and/or any and all applications and/or
agreements for standby letter(s) of credit, reimbursement
agreements, promissory notes and/or other documents,
<PAGE>
instruments or agreements executed from time to time by
Borrower in connection with any letter(s) of credit issued at
any time and/or from time to time by Lender for the account of
Borrower (or any subsidiary of Borrower) or otherwise on
behalf of Borrower or any subsidiary of Borrower for the
benefit of any Person, including without limitation that
certain application and agreement for standby letter of credit
executed by Borrower in favor of Lender, in connection with a
letter of credit bearing the No. AFS-73013, in the original
face amount of $500,000.00, issued for the account of Borrower
and for the benefit of Continental Insurance Company, as
amended by a letter of credit amendment bearing the No. 01
dated June 16, 1994, and a letter of credit bearing file no.
F400059, in the original face amount of $530,000.00, issued
for the account of Borrower and for the benefit of The Aetna
Casualty and Surety Company, and any and all renewals,
replacements, extensions, increases, decreases and/or
substitutions of or to any of the foregoing (all of the
foregoing being collectively referred to as "Letter of Credit
Documents"), plus all costs and expenses (including without
limitation legal fees) incurred in connection with the
enforcement of this Guaranty and/or the Guaranteed
Obligations, whether any of the foregoing indebtednesses and
obligations are now existing or hereafter arising, whether
direct or indirect, whether absolute or contingent, whether
such indebtedness and obligations are from time to time
reduced and thereafter increased or entirely extinguished and
thereafter incurred, whether such indebtedness arises with or
without notice to Guarantor, whether such indebtedness
expressly arises with or without reliance on this Guaranty,
including, without limitation, all renewals, extensions,
amendments, increases, decreases, restatements and
modifications of and to any of the aforementioned, and shall
include all principal, interest, fees, attorney fees, court
costs, and all other monies evidenced by and comprising the
Guaranteed Obligations.
(d) "Guarantor" means
and its successors and assigns, and shall
include without limitation: (i) the Guarantor as debtor-in--
possession or any trustee in any bankruptcy proceeding,
(ii) any trustee, receiver, custodian, conservator or other
similar appointee over Guarantor or over Guarantor's Property
pursuant to any court proceeding of any kind, and (iii) any
successor corporation or successor Person.
(e) "Other Guarantors" means any and all Persons who now
or in the future guarantee to Lender all or any portion of the
Guaranteed Obligations.
<PAGE>
(f) "Person" means any individual, corporation,
partnership, joint venture, association, joint stock company,
trust, unincorporated organization, government, or any agency
or political subdivision thereof, or any other form of entity.
(g) "Property" or "Properties" means any interest in any
kind of property or asset, whether real, personal, or mixed,
or tangible or intangible.
Article II. Representations and Warranties.
To induce Lender to accept this Guaranty and to cause Lender
to extend credit from time to time to Borrower, Guarantor hereby
represents and warrants to Lender the following:
Section 2.01 Corporate Existence. Guarantor is a corporation
duly organized, legally existing, and in good standing under the
laws of the State of and it is duly
qualified as a foreign corporation in all jurisdictions in which
the Property owned or the business transacted by it makes such
qualification necessary, the failure to qualify in which would have
a material adverse effect on the business, Properties, financial
condition or operations of the Guarantor.
[Alternatively: Guarantor is a general partnership duly
organized and legally existing under the laws of the state of
, having as its [sole] general
partner[s] and
, each a corporation duly organized,
legally existing and in good standing under the laws of the
State of Delaware, and it is duly qualified as a foreign
partnership in all jurisdictions in which the Property owned
or the business transacted by it makes such qualification
necessary, the failure to qualify in which would have a
material adverse effect on the business, Properties, financial
condition or operations of the Guarantor.]
Section 2.02 Corporate Power and Authorization. Guarantor is
duly authorized and empowered to execute, deliver, and perform
under this Guaranty; the Guarantor's board of directors and
shareholders [alternatively: the board of directors and
shareholders of Guarantor's general partners] have authorized the
Guarantor to execute and perform under this Guaranty; and all other
corporate and/or shareholder action on Guarantor's part required
for the due execution, delivery, and performance of this Guaranty
has been duly and effectively taken.
Section 2.03 Binding Obligations. This Guaranty is legal,
valid and binding upon and against the Guarantor, enforceable in
accordance with its respective terms, subject to no defense,
counterclaim, set-off, or objection of any kind.
<PAGE>
Section 2.04 No Legal Bar or Resultant Lien. The Guarantor's
execution, delivery and performance of this Guaranty do not
constitute a default under, and will not violate any provisions of
the articles of incorporation (or charter) or bylaws of Guarantor,
any contract, agreement, law, regulation, order, injunction,
judgment, decree, or writ to which Guarantor is subject, or result
in the creation or imposition of any lien upon any Properties of
Guarantor, which violation, creation or imposition would have a
material adverse effect on the business, Properties, financial
condition or operations of the Guarantor.
Section 2.05 No Consent. Guarantor's execution, delivery, and
performance of this Guaranty do not require the consent or approval
of any other Person.
Section 2.06 Solvency. Guarantor is solvent as of the date
hereof. Guarantor is generally paying its debts as they mature and
the fair value of Guarantor's assets substantially exceed the sum
total of Guarantor's liabilities.
Section 2.07 In Furtherance of Business Purposes. The
extension of credit to Borrower by Lender is a direct financial
benefit to Guarantor and the execution of this Guaranty is made in
furtherance of the purposes of the Guarantor.
Section 2.08 Not a Replacement or Substitute Guaranty. This
Guaranty is an amendment and restatement of that certain guaranty
agreement previously executed by Guarantor in favor of Lender,
dated as of , guaranteeing the credit
facility under the Prior Loan (which credit facility has been
increased, amended and restated and is currently evidenced by the
Note, Loan Agreement and related loan documents). This Guaranty is
not a substitute or replacement for any other guaranty executed by
Guarantor or any other Person.
Article III. Covenants and Agreements.
Section 3.01 Guarantee of Payment.
(a) The Guarantor hereby irrevocably and unconditionally
guarantees to the Lender the full and timely payment and
performance of the Guaranteed Obligations.
(b) All payments by the Guarantor shall be paid in
lawful money of the United States of America.
(c) Each and every default in payment of the Guaranteed
Obligations shall give rise to a separate cause of action
hereunder, and separate suits may be brought hereunder by the
Lender as each cause of action arises.
<PAGE>
(d) The Guarantor shall pay on demand to the Lender all
costs and expenses (including legal fees) incurred by the
Lender in the protection, interpretation, and enforcement of
any of its rights or in the pursuance of any of its remedies
in respect of the Guaranteed Obligations or this Guaranty.
Section 3.02 Obligations Continuing and Unconditional. The
obligations of the Guarantor under this Guaranty are continuing,
absolute and unconditional and shall remain in full force and
effect until the entire principal of and interest and expenses on
the Guaranteed Obligations shall have been paid in full and
discharged, and such obligations shall not be affected, modified or
impaired by any state of facts or the happening from time to time
of any event whatsoever, including, without limitation, any of the
following, whether or not with notice to or the consent of the
Guarantor:
(a) the invalidity, irregularity, illegality or
unenforceability of, or any defect in, any instrument,
document, agreement or contract evidencing or comprising the
Guaranteed Obligations;
(b) any present or future law or order of any government
or of any agency thereof purporting to reduce, amend or
otherwise affect the Guaranteed Obligations or any other
obligation of the Borrower or any other obligor or to vary any
terms of payment;
(c) any claim of immunity or defense (other than full
and final payment of the Guaranteed Obligations) on behalf of
the Borrower or any other obligor;
(d) the waiver, compromise, settlement, release or
termination of any or all of the Guaranteed Obligations or the
release of any Collateral or any Other Guarantor;
(e) the failure to give notice to the Guarantor of the
occurrence of any event of default or breach of any of the
Guaranteed Obligations or the breach of any provisions
hereunder;
(f) the extension of the time for payment of any
principal of or interest or premium on any of the Guaranteed
Obligations or of the time for performance of any other
obligations, covenants or agreements under or arising out of
the Guaranteed Obligations;
(g) the modification or amendment (whether material or
otherwise) of any obligation, instrument, contract, covenant
or agreement set forth in, evidencing, or comprising any part
of the Guaranteed Obligations;
<PAGE>
(h) the taking of, or the omission to take, any of the
actions referred to in this Guaranty or in any of the
instruments, documents, agreements, and contracts evidencing
or comprising the Guaranteed Obligations;
(i) any failure, omission or delay on the part of the
Lender or any other Person to enforce, assert or exercise any
right, power or remedy conferred on the Lender or such other
Person in the Guaranty or the Guaranteed Obligations;
(j) the voluntary or involuntary liquidation of,
dissolution of, sale or other disposition of all or
substantially all the assets of, cessation of business of,
marshalling of assets and liabilities of, receivership of,
financial decline of, insolvency of, bankruptcy of, assignment
for the benefit of creditors of, reorganization of,
arrangement of, composition with creditors or readjustment of,
or other similar proceedings affecting, the Borrower or any of
its subsidiaries or assets or any allegation or contest of the
validity of the Guaranteed Obligations or this Guaranty, or
the disaffirmance or attempted disaffirmance of the Guaranteed
Obligations or this Guaranty, in any such proceedings;
(k) the default or failure of the Guarantor fully to
perform any of its obligations set forth in this Guaranty;
(l) the merger or consolidation of Borrower or a change
in Borrower's business operations or management;
(m) the failure of any other Person to guarantee any or
all of the Guaranteed Obligations;
(n) the failure of Lender to take or perfect a lien,
security interest, or any other interest in any Collateral, or
the failure by Lender to give notice to Guarantor of any
foreclosure or other sale of the Collateral by Lender;
(o) the release by Lender of any Collateral or
determination by Lender not to assert a claim against or
proceed against the Borrower, any Collateral or any Other
Guarantor;
(p) Lender's compromise or settlement with or without
release of any other Person liable for any of the Guaranteed
Obligations;
(q) Lender's failure to file suit against Borrower
(regardless whether Borrower is becoming insolvent, is
believed to be about to leave the state, or any other
circumstance);
<PAGE>
(r) Lender's acceleration of any or all of the
Guaranteed Obligations;
(s) the renewal, extension, or amendment of any of the
Guaranteed Obligations;
(t) Lender's failure to exercise diligence in the
collection of the Guaranteed Obligations;
(u) the termination of any relationship of Guarantor
with Borrower or Borrower's business, including, without
limitation, any relationship of employment, ownership,
commerce, or marriage; or
(v) to the extent permitted by law, any event or action
that would, in the absence of this paragraph, result in the
release or discharge of the Guarantor from the performance or
observance of any obligation, covenant or agreement contained
in this Guaranty.
Section 3.03 Waivers by Guarantor.
(a) The Guarantor hereby waives with respect to the
Guaranteed Obligations and this Guaranty: diligence;
presentment; demand of payment; filing of claims with a court
in the event of bankruptcy of the Borrower or any other Person
liable in respect of the Guaranteed Obligations; any right to
require the Lender to proceed first against the Borrower or
any other Person; protest; notice of dishonor or nonpayment of
any such liabilities; notice of the release of any Other
Guarantor; notice of the release or sale of any Collateral;
and any other notice and all demands whatsoever. The Guarantor
hereby waives notice from the Lender and the holders at any
time or from time to time of the Guaranteed Obligations, of
the issuance of the instruments evidencing the Guaranteed
Obligations, and of acceptance of, or notice and proof of
reliance on, the benefits of this Guaranty.
(b) The Guarantor hereby agrees that it shall have no
right of subrogation, reimbursement or indemnity whatsoever
and no right of recourse to or with respect to any assets or
property of Borrower even upon payment in full of the
Guaranteed Obligations.
(c) The obligations of the Guarantor hereunder shall not
be discharged except by full and final payment and discharge
of the Guaranteed Obligations.
Section 3.04 Primary Liability of Guarantor. This Guaranty
constitutes a guarantee of payment and performance and not of
collection. Accordingly, the Lender may enforce this Guaranty
<PAGE>
against Guarantor without first making demand or instituting
collection proceedings upon the Guaranteed Obligations. Guarantor's
liability for the Guaranteed Obligations is hereby declared to be
primary, and not secondary, and each document presently or
hereafter executed by Borrower to evidence or secure an obligation
to the Lender is incorporated herein by reference and shall be
fully enforceable against Guarantor. The Guarantor shall not be
entitled to satisfy this Guaranty by contributing ratably with any
Other Guarantor or otherwise paying less than the entire unpaid
indebtedness comprising the Guaranteed Obligations.
Section 3.05 Subordination. Guarantor agrees that any
presently existing or hereafter arising loan or extension of credit
made by Guarantor to Borrower and any other presently existing or
hereafter arising obligation of Borrower to Guarantor shall be
subordinate to the Guaranteed Obligations as to both payment and
collection. Accordingly, Guarantor agrees not to accept any payment
whatsoever from Borrower or to allow any payment by Borrower on
Guarantor's behalf while any default, event of default, or breach
exists with respect to the Guaranteed Obligations. Guarantor agrees
that in the event of a bankruptcy or other insolvency proceeding
involving Borrower, Guarantor will timely file a claim for the
amount of the subordinated debt, in form reasonably acceptable to
Lender. Guarantor agrees to pursue said claim with diligence. The
proceeds of such claim shall be delivered to the Lender to the
extent Guarantor owes any Lender amounts under this Guaranty.
Section 3.06 Statute of Limitations. Guarantor acknowledges
that the statute of limitations applicable to this Guaranty shall
begin to run only upon Lender's accrual of a cause of action
against Guarantor hereunder caused by Guarantor's refusal to honor
a demand for performance hereunder made by Lender in writing;
provided, however, if, subsequent to the demand upon Guarantor, the
Lender reaches an agreement with Borrower on any terms causing the
Lender to forbear in the enforcement of its demand upon Guarantor,
the statute of limitation shall be reinstated for its full duration
until the Lender subsequently again makes demand upon Guarantor.
Section 3.07 Recovery of Avoided Payments. If any amount
applied by the Lender to the Guaranteed Obligations is subsequently
challenged by a bankruptcy trustee or debtor-in-possession or other
Person as an avoidable transfer on the grounds that the payment
constituted a preferential payment or a fraudulent conveyance under
state law or the Bankruptcy Code or any successor statute thereto
or on any other grounds, the Lender may at its option and in its
sole discretion, elect whether to contest such challenge. If the
Lender contests the avoidance action, all costs of the proceeding,
including Lender's attorneys' fees, will become part of the
Guaranteed Obligations, and shall be due and payable by Guarantor
on demand. If the contested amount is successfully avoided, the
avoided amount will become part of the Guaranteed Obligations
<PAGE>
hereunder and shall be due and payable by Guarantor on demand. If
the Lender elects not to contest the avoidance action, the Lender
may tender the amount subject to the avoidance action to the
bankruptcy court, trustee or debtor-in-possession and the amount so
advanced shall become part of the Guaranteed Obligations hereunder,
and shall be due and payable by Guarantor on demand. Guarantor's
obligation to reimburse the Lender for amounts due under this
section shall survive the purported cancellation hereof.
Article IV. Setoff Rights. In order to further secure the
payment of the Guaranteed Obligations, Guarantor hereby grants the
Lender a right to setoff against all of Guarantor's presently owned
or hereafter acquired monies, securities, deposits, instruments
(including certificates of deposit), and other Property presently
or hereafter in the possession of Lender. By maintaining any such
accounts with Lender or placing Property in Lender's possession,
Guarantor acknowledges that Guarantor voluntarily subjects the
Property to the Lender's rights hereunder.
Article V. Events Requiring Guarantor to Perform.
Section 5.01 Events. Upon the occurrence of any of the
following events, the Guarantor shall immediately and without
notice pay to Lender an amount equal to all Guaranteed Obligations,
and Lender shall be entitled to enforce the provisions hereof, and
to exercise any other rights, powers, and remedies provided
hereunder. The Guarantor agrees that if any of the following events
occurs, the Guarantor shall pay to Lender an amount equal to all
Guaranteed Obligations, regardless whether any of the Guaranteed
Obligations themselves have been accelerated, are past due, or are
in default:
(a) any warranty, representation or other statement by
or on behalf of the Guarantor contained in this Guaranty is
false or misleading in any material respect; or
(b) an Event of Default occurs under or in connection
with any of the Guaranteed Obligations or any of the
instruments, documents, agreements or contracts evidencing the
Guaranteed Obligations, including without limitation the Note,
the Loan Agreement, the Letter of Credit Documents or any of
the other documents, instruments or agreements executed or
delivered at any time in connection with any of the foregoing.
Section 5.02 Remedies; Waiver, Etc.
(a) No remedy herein conferred upon or reserved to the
Lender is intended to be exclusive of any other available
remedy or remedies, but each and every remedy shall be
cumulative and shall be in addition to every other remedy
<PAGE>
given under this Guaranty or now or hereafter existing at law
or in equity or by statute or by contract.
(b) No delay or omission to exercise any right or power
accruing upon the occurrence of any of the events specified in
Section 5.01 hereunder shall impair any such right or power or
shall be construed to be a waiver thereof, but any such right
or power may be exercised from time to time and as often as
may be deemed expedient.
(c) In order to entitle the Lender to exercise any
remedy reserved to it in this Guaranty, it shall not be
necessary to give any notice, except as may be set forth in
the Guaranteed Obligations regarding notice to the Borrower.
(d) In the event any provision contained in this
Guaranty should be breached by any party and thereafter duly
waived by the other party so empowered to act, such waiver
shall be limited to the particular breach so waived and shall
not be deemed to waive any other breach hereunder.
(e) No waiver, amendment, release or modification of
this Guaranty shall be established by conduct, custom or
course of dealing.
Article VI. Miscellaneous
Section 6.01. Notices. All communications under or in con-
nection with this Guaranty shall be in writing and shall be mailed
by first class certified mail, postage prepaid, or otherwise sent
by telex, telegram, telecopy, or other similar form of rapid
transmission confirmed by mailing (in the manner stated above) a
written confirmation at substantially the same time as such rapid
transmission, or personally delivered to an officer of the
receiving party. All such communications shall be mailed, sent, or
delivered as follows:
(a) if to Guarantor, to its address shown below, or to
such other address as Borrower may have furnished to Lender in
writing:
(b) if to Lender, to its address shown below, or to
such other address or to such individual's or department's
attention as it may have furnished Borrower in writing:
<PAGE>
with a copy to:
Third National Bank in Nashville Third National Bank in Nashville
Suite 145, 6000 Poplar Avenue P.O. Box 305110
Memphis, Tennessee 38119 201 Fourth Avenue, North
Attn: Ms. Carol Yochem Nashville, TN 37230-5110
Department: U.S. Banking Attn: Mr. J.H. Miles
Department: U.S. Banking
Any communication so addressed and mailed by certified mail shall
be deemed to be given when so mailed.
Section 6.02. Invalidity. In the event that any one or more
of the provisions contained in this Guaranty for any reason shall
be held invalid, illegal, or unenforceable in any respect, such
invalidity, illegality, or unenforceability shall not affect any
other provision of this Guaranty.
Section 6.03 Survival. All warranties, representations, and
covenants made by the Guarantor herein shall be deemed to have been
relied upon by the Lender and the holder(s) from time to time of
the Guaranteed Obligations and shall survive the delivery to the
Lender of this Guaranty.
Section 6.04 Successors and Assigns. This Guaranty shall
inure to the benefit of and be binding upon the successors and
assigns of each of the parties, except that Guarantor shall not
assign any rights or delegate any obligation hereunder without the
prior written consent of Lender. Any attempted assignment or
delegation without the required prior consent shall be void. The
provisions of this Guaranty are intended to be for the benefit of
the Lender and any other holder or holders of the Guaranteed
Obligations. The Guarantor acknowledges that the Guaranteed
Obligations and this Guaranty may be assigned or sold by the Lender
to one or more third parties.
Section 6.05. Renewal, Extension, or Rearrangement. All
provisions of this Guaranty relating to Guaranteed Obligations
shall apply with equal force and effect to each and all promissory
notes and other documents executed hereafter which in whole or in
part represent a renewal, extension for any period, increase, or
rearrangement of any part of the Guaranteed Obligations originally
represented by any part of such other Guaranteed Obligations.
Section 6.06. Waivers. Pursuant to T.C.A. Section 47-50-112,
no action or course of dealing on the part of Lender, its officers,
employees, consultants, or agents, nor any failure or delay by
Lender with respect to exercising any right, power, or privilege of
Lender under this Guaranty, shall operate as a waiver thereof,
except as otherwise provided in this Guaranty. Lender may from
time to waive any requirement hereof; however no waiver shall be
<PAGE>
effective unless in writing and signed by the Lender. The
execution by Lender of any waiver shall not obligate Lender to
grant any further, similar, or other waivers.
Section 6.07. Cumulative Rights. Rights and remedies of
Lender under this Guaranty shall be cumulative, and the exercise or
partial exercise of any such right or remedy shall not preclude the
exercise of any other right or remedy.
Section 6.08. Construction. This Guaranty constitutes a
contract made under and shall be construed in accordance with and
governed by the laws of the State of Tennessee.
Section 6.09. Titles of Articles, Sections, and Subsections.
All titles or headings to articles, sections, subsections, or other
divisions of this Guaranty or the exhibits to this Guaranty are
only for the convenience of the parties and shall not be construed
to have any effect or meaning with respect to the other content of
such articles, sections, subsections, or other divisions, such
other content being controlling with respect to the agreement
between the parties.
Section 6.10. Time of Essence. Time is of the essence with
regard to each and every provision of this Guaranty.
Section 6.11. Remedies. All remedies for which this Guaranty
provides for Lender shall be in addition to all other remedies
available to Lender under any other document or under the
principles of law and equity, and pursuant to any other body of
law, statutory or otherwise.
Section 6.12 Entire Agreement. This Guaranty represents the
entire agreement between the parties concerning the liability of
Guarantor for the Guaranteed Obligations, and any previously made
oral statements regarding Guarantor's liability for the Guaranteed
Obligations are merged herein. Without limiting the foregoing,
Guarantor acknowledges that the Lender has made no oral statements
to Guarantor that could be construed as a waiver of Lender's right
to enforce this Guaranty by all available legal means.
Section 6.13. Amendments. The parties hereto agree that this
Guaranty may not be modified or amended except in writing signed by
the parties hereto.
Section 6.14. No Partners; No Third Party Beneficiaries.
Nothing contained herein or in any related document shall be deemed
to render Lender a partner of Borrower or Guarantor for any
purpose. This Guaranty and any documents securing the Guaranteed
Obligations have been executed for the sole benefit of the Lender
as an inducement to cause Lender to extend credit to Borrower, and
neither Guarantor nor any other third party is authorized to rely
<PAGE>
upon the Lender's rights hereunder or to rely upon an assumption
that the Lender has or will exercise its rights under any document.
Section 6.15. Indulgence Not Waiver. Lender's indulgence in
the existence of a default hereunder or any other departure in from
the terms of this Guaranty shall not prejudice Lender's rights to
make demand and recover from Guarantor.
Section 6.16. Costs of Collection Against Guarantor. Guarantor
agrees to pay on demand all reasonable costs of collection,
including, without limitation, court costs, attorneys' fees and
compensation for time spent by Lender's employees, that Lender may
incur in enforcing the terms of this Guaranty or that may be
incurred in any legal proceeding brought to construe, enforce, or
apply this Guaranty.
Section 6.17. Governing Law; Consent to Forum. This Guaranty
has been negotiated, executed and delivered at and shall be deemed
to have been made in Nashville, Tennessee. This Guaranty shall be
governed by and construed in accordance with the internal laws of
the State of Tennessee. As part of the consideration for new value
received, and regardless of any present or future domicile or
principal place of business of Guarantor or Lender, Guarantor
hereby consents and agrees that any Tennessee state courts sitting
in Davidson County, Tennessee, or, at Lender's option, the United
States District Court for the Middle District of Tennessee, shall
have jurisdiction to hear and determine any claims or disputes
between Guarantor and Lender pertaining to this Guaranty or to any
matter arising out of or related to this Guaranty; provided,
however, Lender may, at its option, commence any action, suit or
proceeding in any other appropriate forum or jurisdiction to obtain
possession of or foreclosure upon any collateral, to obtain
equitable relief or to enforce any judgment or order obtained by
Lender against Guarantor or with respect to any collateral, to
enforce any other right or remedy under this Guaranty or to obtain
any other relief deemed appropriate by Lender. Guarantor expressly
submits and consents in advance to such jurisdiction in any action
or suit commenced in any such court, and Guarantor hereby waives
any objection which Guarantor may have based upon lack of personal
jurisdiction, improper venue or forum non conveniens and hereby
consents to the granting of such legal or equitable relief as is
deemed appropriate by such court. Guarantor hereby waives personal
service of the summons, complaint and other process issued in any
such action or suit and agrees that service of such summons,
complaint and other process may be made by registered or certified
mail addressed to Guarantor at the address set forth in this
Guaranty and that service so made shall be deemed completed upon
the earlier of Guarantor's actual receipt thereof or three (3) days
after deposit in the U.S. Mails, proper postage prepaid. Nothing
in this Guaranty shall be deemed or operate to affect the right of
Lender to serve legal process in any other manner permitted by law.
<PAGE>
Section 6.18. Gender. Words used herein indicating gender or
number shall be read as context may require.
Section 6.19. Cancellation by Lender. Lender may evidence its
cancellation of this Guaranty and the release of Guarantor from
liability hereunder by delivering to Guarantor an instrument of
release, or by delivering the original of this Guaranty to
Guarantor with a notation on its face signed and dated by an
authorized officer of Lender stating "Cancelled in Full As To All
Guaranteed Obligations." However, the purported cancellation hereof
and release of Guarantor shall not impair Guarantor's continuing
liability for (i) any amount of principal, interest, or expenses
that was mistakenly omitted by Lender in calculating the final
payment due under the Guaranteed Obligations, if the release of
Guarantor was based upon Lender's belief that it had been paid in
full, (ii) liability for avoided payments and expenses related
thereto set forth in Section 3.07 hereto, and (iii) any surviving
liability of Borrower to reimburse Lender or to indemnify Lender
for any amounts whatsoever. Lender shall not be obligated to
release any collateral securing this Guaranty until after all
applicable time periods have expired regarding bankruptcy
preference or other avoidance actions that may be applicable to the
circumstances of payment of any or all of the Guaranteed
Obligations.
Section 6.20. Guaranty Irrevocable. Guarantor's guarantee of
the Guaranteed Obligations is irrevocable, except that the
Guarantor may terminate its continuing obligation to guarantee new
indebtedness of Borrower by providing written notice to Lender of
such termination and obtaining written confirmation thereof by
Lender. No attempted or purported termination by Guarantor shall be
effective unless receipt of the notice of termination is
acknowledged by Lender thereof in writing. Termination shall apply
only to principal portions of the Guaranteed Obligations arising
after Lender has confirmed in writing receipt of such notice of
termination and shall apply only to such Guaranteed Obligations
with respect to which Lender was not obligated to advance credit to
Borrower prior to confirmation in writing of receipt of such notice
of termination. The notice of termination shall not relieve
Guarantor of any of the Guaranteed Obligations: (i) incurred by
Borrower before delivery (and confirmation of receipt thereof) of
the notice of termination; (ii) arising from and out of Lender's
commitments and agreements to extend credit to Borrower made before
delivery (and confirmation of receipt thereof) of the notice of
termination; and (iii) consisting of accrued interest, attorney
fees, premiums, and other costs, charges, and monies owing under or
pursuant to any of the instruments, documents, agreements, or
contracts evidencing or comprising any of the Guaranteed
Obligations. Termination of this Guaranty may constitute an event
of default under the Guaranteed Obligations.
<PAGE>
Section 6.21. No Marshaling of Assets. Lender may proceed
against any Collateral and against parties liable therefor in such
order as it may elect, and Guarantor shall not be entitled to
require Lender to marshal assets. The benefit of any rule of law or
equity to the contrary is hereby expressly waived.
Section 6.22. Bankruptcy, Etc. of Borrower. Without
limitation, the Guarantor's obligations hereunder shall not be
affected by: (a) the filing of a petition in bankruptcy by or
against Borrower under 11 U.S.C. Section 101, et seq., or the
appointment of a trustee, receiver, custodian, conservator, or
other similar appointment over Borrower or any of Borrower's
assets, whether under 11 U.S.C. Section 101, et seq. or other
statutory, administrative, or other laws, rules, or regulations;
(b) any order, ruling, or action taken (by Lender, Borrower, or
others) in any bankruptcy case initiated by or against Borrower or
in any receivership, conservatorship, or other similar estate.
Lender may in its discretion modify any of the terms of the
Guaranteed Obligations with any successor or assignee of the
Borrower or its Property including a debtor-in-possession or
trustee in bankruptcy, receiver, custodian, conservator, or similar
Person, without affecting Guarantor's obligations hereunder. Any
such debtor-in-possession, trustee, receiver, custodian,
conservator, or other similarly appointed Person shall be deemed to
be authorized to act on behalf of Borrower, and Guarantor
authorizes Lender to deal with any such Person as if that Person
were the Borrower for purposes of this Guaranty.
Section 6.23. Guarantor's Independent Decision. Guarantor
delivers this Guaranty based solely on its own independent
investigation and determination, and Guarantor has not relied on
any statement or representation of Lender or its agents with
respect to any matter whatsoever. Guarantor is in a position to and
hereby assumes full responsibility for obtaining any additional
information concerning the Guaranteed Obligations and the Borrower.
ENTERED INTO the date first set forth above.
GUARANTOR:
By:
Title:
<PAGE>
Accepted in Tennessee by:
LENDER:
THIRD NATIONAL BANK IN NASHVILLE
By:
Title:
<PAGE>
<PAGE>
STATE OF ____________________ )
COUNTY OF __________________ )
Before me, ___________________________________, a Notary
Public of said County and State, personally appeared
____________________________, with whom I am personally acquainted
(or proved to me on the basis of satisfactory evidence), and who,
upon oath, acknowledged _______self to be ____________________ (or
other officer authorized to execute the instrument) of
, the within named
bargainor, a corporation, and that _____ as such
_______________________ executed the foregoing instrument for the
purposes therein contained, by signing the name of the corporation
by ______self as ____________________.
Witness my hand and seal, at Office, this ______ day of
__________________, 1995.
Notary Public
My Commission Expires:
<PAGE>
<PAGE>
Exhibit D
CERTIFICATE OF COMPLIANCE
I, , hereby certify
that I am the duly elected and qualified
of Insituform Technologies, Inc. ("Borrower"), and I hereby make
the following certifications as required under the terms of the Amended
and Restated Loan Agreement dated June 7, 1995 (the "Loan Agreement")
by and between Borrower and Third National Bank in Nashville
("Lender"):
1. This Certificate of Compliance is given to Lender on the
day of , 19 . The information set
forth below is derived from Borrower's [check one]
[ ] quarterly [ ] annual financial statements dated
[check one]:
[ ] March 31, 19 [ ] September 30, 19
[ ] June 30, 19 [ ] December 31, 19
The date checked and completed above is referred to herein as the
"Covenant Test Date."
2. On the Covenant Test Date, Borrower's and its Subsidiaries':
(a) Consolidated ratio of Liabilities to Tangible Net Worth
is to ; and
(b) Consolidated ratio of Funded Debt to EBITDA is
to ; and
(c) Consolidated ratio of current assets to current
liabilities is to ; and
(d) Tangible Net Worth (including Offering Proceeds) is
$ .
3. The undersigned certifies that neither the undersigned nor
Borrower has obtained knowledge of any Event of Default, or event
which, after notice or lapse of time (or both), would constitute an
Event of Default.
<PAGE>
4. Capitalized terms appearing herein shall have the meanings
ascribed to them in the Loan Agreement.
INSITUFORM TECHNOLOGIES, INC.
By:
Title:
Exhibit 5(b)
CONSOLIDATED, AMENDED AND RESTATED PROMISSORY NOTE
Nashville, Tennessee
up to $50,000,000
Originally up to $30,000,000, by note dated July 12, 1993
Subsequently increased to up to $45,000,000 by note
dated August 2, 1992, then amended to up to $42,000,000
by note dated October 5, 1994
THIS CONSOLIDATED, AMENDED AND RESTATED PROMISSORY NOTE
("Note") is executed by INSITUFORM TECHNOLOGIES, INC. ("Borrower")
in favor of THIRD NATIONAL BANK IN NASHVILLE ("Lender"), as of the
7th day of June, 1995.
W I T N E S S E T H:
WHEREAS, the Borrower previously executed in favor of Lender:
(a) that certain Promissory Note dated July 12, 1993 in the
original principal amount of up to $30,000,000, and (b) that
certain Additional Promissory Note dated August 2, 1994 in the
original principal amount of up to $15,000,000, as subsequently
amended and restated by that certain First Amended and Restated
Additional Promissory Note dated October 5, 1994, in the amended
principal amount of up to $12,000,000 (the foregoing promissory
notes, as amended, being collectively referred to herein as the
"Prior Notes"); and
WHEREAS, the Prior Notes evidence the existing credit facility
of Borrower with Lender in the aggregate principal amount of up to
$42,000,000 (the "Prior Loan"), and Borrower has requested that
Lender increase the principal amount of the Prior Loan to up to
$50,000,000, and consolidate, amend and restate the Prior Notes as
set forth herein; and
WHEREAS, subject to certain terms and conditions, Lender has
agreed to increase the maximum principal amount of the Prior Loan
to up to $50,000,000 and to consolidate, amend and restate the
Prior Notes; and
WHEREAS, the parties desire to consolidate the Prior Notes
into this Note, and to increase the maximum aggregate principal
amount of the Prior Notes as set forth herein, and to amend and
restate the Prior Notes as set forth herein.
NOW, THEREFORE, in order to induce Lender to extend any
additional credit to Borrower, in consideration of the premises,
and for other good and valuable consideration, the adequacy and
receipt of which are hereby acknowledged, the parties hereby agree
that the Prior Notes are consolidated, increased, amended and
restated to read as follows:
<PAGE>
FOR VALUE RECEIVED, INSITUFORM TECHNOLOGIES, INC.
("Borrower") promises and agrees to pay to the order of THIRD
NATIONAL BANK IN NASHVILLE ("Lender") at Lender's offices in
Nashville, Tennessee, or at such other place as may be
designated in writing by the holder, in lawful money of the
United States of America, the principal sum of Fifty Million
and no/100 Dollars ($50,000,000), or so much thereof as may be
advanced from time to time by Lender, together with interest
from the date hereof on the unpaid principal balance
outstanding from time to time hereon computed from the date of
each advance through the Maturity Date (hereafter defined) at
the applicable Interest Rate Option (hereafter defined).
Capitalized terms used herein and not otherwise defined herein
shall have the meanings ascribed to them in the Amended and
Restated Loan Agreement of even date herewith between Borrower
and Lender, as it may be amended, modified, extended or
renewed from time to time, including without limitation all
restatements thereof, replacements therefor and changes in
form thereto (all of the foregoing being collectively referred
to herein as the "Loan Agreement"). Interest for each year
shall be computed based upon a 360-day year for the actual
number of days elapsed.
In the absence of the occurrence of an Event of Default
hereunder or under the Loan Agreement, the Borrower may
borrow, repay and reborrow hereunder (up to the principal
amount hereof) from time to time until June 7, 1997. After
June 7, 1997, Borrower may not request any further Advances
hereunder.
The terms and conditions in connection with requesting an
Advance by Borrower and for making any Advances by Lender
hereunder shall be governed by the applicable provisions of
the Loan Agreement.
This Note shall be repaid as follows:
(a) Beginning on June 30, 1995 and continuing on
the last business day of each consecutive September,
December, March and June thereafter through June 30,
1997, Borrower shall pay to Lender principal payments of
$500,000 each, plus all then-accrued interest, fees and
other charges due hereunder. Provided, however, that if
Borrower and the intended principal parties to a proposed
Permitted Acquisition (as such term is defined in the
Loan Agreement) have executed a letter of intent with
regard to the Borrower's intent to effectuate a proposed
Permitted Acquisition within six months of the execution
of such letter, then until June 30, 1997 but only so long
as such proposed Permitted Acquisition shall not have
been abandoned by the Borrower and Borrower is actively
pursuing such Permitted Acquisition and the other
principal parties to such Permitted Acquisition have not
abandoned such proposed Permitted Acquisition or
<PAGE>
terminated, revoked or repudiated the letter of intent,
and such letter of intent has not expired, and if no
Event of Default has occurred, the $500,000 quarterly
principal payments shall not be required to be made. If
the proposed Permitted Acquisition is abandoned by
Borrower or Borrower is not actively pursuing the
Permitted Acquisition, or the other principal parties to
the Permitted Acquisition have abandoned or rejected such
proposed Permitted Acquisition or terminated, revoked or
repudiated the letter of intent, or if the letter of
intent has expired or been terminated, or if Borrower
determines not to proceed with such acquisition (any of
the foregoing being referred to herein as a
"Reinstatement Event"), then the $500,000 principal
payment requirement shall be reinstated on the occurrence
of a Reinstatement Event, to be first paid on the last
day of the month in which the Reinstatement Event
occurred, and thereafter to be paid on the last day of
each third month thereafter until June 30, 1997.
(b) Beginning on September 30, 1997 and continuing
on the last day of each consecutive December, March, June
and September thereafter through until the Maturity Date,
Borrower shall pay to Lender principal payments equal to
one-twentieth (1/20th) of the unpaid principal balance
outstanding under this Note as of September 30, 1997,
plus all accrued interest, fees and other charges due
hereunder.
This Note shall mature on June 7, 2000 (the "Maturity
Date"), at which time all outstanding principal, accrued
interest, and all fees or charges hereunder (if any) will be
immediately due and payable.
As used herein, the following terms have the following
definitions:
"Adjusted LIBOR Rate" means the LIBOR Rate adjusted to
include the cost, in basis points, of any applicable reserve
requirements of the Board of Governors of the Federal Reserve
System (or any successor), applicable to "Eurocurrency
Liabilities" pursuant to Regulation D or other then-applicable
regulations of the Board of Governors, if any, and any other
applicable reserve or insurance requirements or costs charged
to the Lender.
"Applicable Margin" means:
(a) During the period beginning on the date of this
Note, and continuing through June 30, 1995, zero for the
Base Rate and two and one-quarter percentage points
(2.25%) above the 30-day Adjusted LIBOR Rate in effect on
the first day of the month during which any calculation
is being made.
<PAGE>
(b) During the period beginning July 1, 1995 and
continuing through the Maturity Date:
(a) If the Borrower's ratio of
Funded Debt to EBITDA is less than 2.0 to
1 and the Borrower's ratio of Liabilities
to Tangible Net Worth is less than 2.0 to
1, zero for the Base Rate and 1.75% per
annum for the Adjusted LIBOR Rate;
(b) If the Borrower's ratio of
Funded Debt to EBITDA is less than 2.0 to
1 and the Borrower's ratio of Liabilities
to Tangible Net Worth is equal to or
greater than 2.0 to 1, zero for the Base
Rate and 2.00% per annum for the Adjusted
LIBOR Rate;
(c) If the Borrower's ratio of
Funded Debt to EBITDA is equal to or
greater than 2.0 to 1 and the Borrower's
ratio of Liabilities to Tangible Net
Worth is less than 2.0 to 1, zero for the
Base Rate and 2.00% per annum for the
Adjusted LIBOR Rate;
(d) If the Borrower's ratio of
Funded Debt to EBITDA is equal to or
greater than 2.0 to 1 and the Borrower's
ratio of Liabilities to Tangible Net
Worth is equal to or greater than 2.0 to
1, .25% per annum for the Base Rate and
2.25% per annum for the Adjusted LIBOR
Rate;
provided, that for purposes of determining the
Applicable Margins: (i) the Borrower's ratios of Funded
Debt to EBITDA and Liabilities to Tangible Net Worth will
be measured quarterly at the end of each calendar quarter
based on Borrower's quarterly and annual Financial
Statements, beginning with the measurements to occur as
of March 31, 1995, and (ii) each Applicable Margin so
determined shall be effective as of the first day of the
second Fiscal Quarter following the date of such
determination.
Each month by the close of Lender's business on the first
day of the month Borrower shall elect which Interest Rate
Option shall apply to all Advances and to all amounts
outstanding under this Note during such month. Borrower shall
notify Lender of its election of the Interest Rate Option by
telephone and, if requested to do so by Lender, in writing. If
Lender does not receive proper notification as aforesaid of
Borrower's election of the Interest Rate Option, the parties
<PAGE>
agree that the Interest Rate Option for such month shall be
the Interest Rate Option in effect for the immediately
preceding month, adjusted appropriately for such new month.
Once the Interest Rate Option has been established for a
month, all Advances made during such month, and all amounts
outstanding under this Note during such month, shall bear
interest at such applicable Interest Rate Option as such rate
may change from day to day (with regard to the Base Rate) or
not change during such month (with regard to the Adjusted
LIBOR Rate), until the first day of the following month, at
which time Borrower shall elect a new Interest Rate Option by
telephonic (or, if requested, written) notice to Lender.
"Base Rate" means the rate of interest established from
time to time and announced by Lender as its "base rate", such
rate being an interest rate used as an index for establishing
interest rates on loans. The Base Rate is determined daily.
"Interest Rate Option" means one of the following rates,
as selected by Borrower from time to time pursuant to Section
2.01 of the Loan Agreement: (a) the Base Rate plus the
Applicable Margin, as such rate may change from day to day as
the Base Rate changes, or (b) the 30-day Adjusted LIBOR Rate
plus the Applicable Margin, as such rate may change from month
to month on the first day of each month.
"LIBOR Rate" means the LIBOR rate of interest for one-
month periods, reported by the Telerate Computer Service to
which Lender subscribes, established on the first day of each
month.
Notwithstanding any provision to the contrary, it is the
intent of Lender, Borrower and all parties liable on this
Note, that neither Lender nor any subsequent holder shall be
entitled to receive, collect, reserve or apply, as interest,
any amount in excess of the maximum lawful rate of interest
permitted to be charged by applicable law or regulations, as
amended or enacted from time to time. In the event the Note
calls for an interest payment that exceeds the maximum lawful
rate of interest then applicable, such interest shall not be
received, collected, charged or reserved until such time as
that interest, together with all other interest then payable,
falls within the then applicable maximum lawful rate of
interest. In the event Lender, or any subsequent holder,
receives any such interest in excess of the then maximum
lawful rate of interest, such amount which would be excessive
interest shall be deemed a partial prepayment of principal and
treated hereunder as such, or, if the principal indebtedness
evidenced hereby is paid in full, any remaining excess funds
shall immediately be paid to Borrower. In determining whether
or not the interest paid or payable, under any specific
contingency, exceeds the maximum lawful rate of interest,
Borrower and Lender shall, to the maximum extent permitted
under applicable law, (a) exclude voluntary prepayments and
<PAGE>
the effects thereof, and (b) amortize, prorate, allocate and
spread, in equal parts, the total amount of interest
throughout the entire term of the indebtedness; provided that
if the indebtedness is paid in full prior to the end of the
full contemplated term hereof, and if the interest received
for the actual period of existence hereof exceeds the maximum
lawful rate of interest, the holder of the Note shall refund
to Borrower the amount of such excess or credit the amount of
such excess against the principal portion of the indebtedness
as of the date it was received, and, in such event, Lender
shall not be subject to any penalties provided by any laws for
contracting for, charging, reserving, collecting or receiving
interest in excess of the maximum lawful rate of interest.
The terms and conditions of any prepayment of this Note
shall be governed by the Loan Agreement. Any such
prepayment(s) shall be applied first to accrued interest and
secondly to principal.
Following the occurrence of an Event of Default,
principal and unpaid interest bear interest at the maximum
lawful rate of interest permitted by law until paid. The
undersigned will pay all costs and expenses in connection with
the collection, enforcement, protection and/or litigation with
regard to this Note and/or any of Lender's rights hereunder,
including without limitation reasonable attorneys' fees.
In the event that there occurs any Event of Default under
the Loan Agreement (any such event constituting an Event of
Default under this Note), then, in such event, at the option
of the holder, the entire indebtedness hereby evidenced shall
become due, payable and collectible then or thereafter,
without further notice, as the holder may elect regardless of
the date of maturity. The holder may waive any default or
Event of Default before or after the same has been declared
and restore this Note to full force and effect without
impairing any rights hereunder, such right of waiver being a
continuing one.
The makers, endorsers, guarantors and all parties to this
Note and all who may become liable for same, jointly and
severally waive presentment for payment, protest, notice of
protest, notice of nonpayment of this Note, demand and all
legal diligence in enforcing collection, and hereby expressly
agree that the lawful owner or holder of this Note may defer
or postpone collection of the whole or any part thereof,
either principal and/or interest, or may extend or renew the
whole or any part thereof, either principal and/or interest,
or may accept additional collateral or security for the
payment of this Note, or may release the whole or any part of
any collateral security and/or liens given to secure the
payment of this Note, or may release from liability on account
of this Note any one or more of the makers, endorsers,
guarantors and/or other parties thereto, all without notice to
<PAGE>
them or any of them; and such deferment, postponement,
renewal, extension, acceptance of additional collateral or
security and/or release shall not in any way affect or change
the obligation of any such maker, endorser, guarantor or other
party to this Note, or of any who may become liable for the
payment thereof.
Borrower shall pay a "late charge" of five percent (5%)
of any payments of principal and/or interest due when paid
after the due date thereof (provided that in no event shall
said "late charge" result in the payment of interest in excess
of the maximum lawful rate of interest permitted by applicable
law), to cover the extra expenses involved in handling
delinquent payments.
The term "maximum lawful rate of interest" as used herein
shall mean a rate of interest equal to the higher or greater
of the following: (a) the "applicable formula rate" defined in
Tennessee Code Annotated Section 47-14-102(2), or (b) such
other rate of interest as may be charged under other
applicable laws or regulations.
This Note has been executed and delivered in, and shall
be governed by and construed according to the laws of the
State of Tennessee except to the extent pre-empted by
applicable laws of the United States of America.
This Note may not be changed or terminated without the
prior written approval of Lender and Borrower. No waiver of
any term or provision hereof shall be valid unless in writing
signed by the holder.
This Note consolidates, increases, amends and restates the
following notes executed by Borrower in favor of Lender: that
certain Promissory Note dated July 12, 1993 in the original
principal amount of up to $30,000,000 and that certain First
Amended and Restated Additional Promissory Note dated October 5,
1994, in the principal amount of up to $12,000,000 (which note
amended and restated that certain Additional Promissory Note dated
August 2, 1994 in the original principal amount of $15,000,000),
and does not constitute, and is not intended to constitute, a
novation of such Prior Notes or any of the existing underlying
indebtedness evidenced thereby.
<PAGE>
<PAGE>
Executed this the 7th day of June, 1995.
INSITUFORM TECHNOLOGIES, INC.
By: s/William A. Martin
--------------------------
Title: Senior Vice President
