FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended September 30, 1997
------------------
Commission file number #0-10786
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Insituform Technologies, Inc.
---------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3032158
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
702 Spirit 40 Park Drive, Chesterfield, Missouri 63005
-------------------------------------------------------
(Address of Principal Executive Offices)
(314) 530-8000
-----------------
(Registrant's telephone number including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at November 1, 1997
- ---------------------- -------------------------------
Class A, Common Stock, 26,946,420 Shares
$.01 par value<PAGE>
<PAGE>
INDEX
Page No.
Part I Financial Information:
Item 1. Financial Statements:
Consolidated Balance Sheets . . . . . . . . . . . . 3
Consolidated Statements of Income . . . . . . . . . 5
Consolidated Statements of Cash Flows . . . . . . . 6
Notes to Consolidated Financial Statements. . . . . 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results
of Operations . . . . . . . . . . . . . . . . . . .13
Part II Other Information and Signatures:
Item 1. Legal Proceedings . . . . . . . . . . . . . . . .19
Item 4. Submission of Matters to a Vote of
Security Holders. . . . . . . . . . . . . . . .20
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . .21
Signatures . . . . . . . . . . . . . . . . . . . . . . . .21
Index to Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . .22
<PAGE>
<PAGE>
<TABLE>
PART I. - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
<CAPTION>
September December
30, 1997 31, 1996
-------- --------
(Unaudited)
<S> <C> <C>
Assets
- ------
Current
- -------
Cash and cash equivalents, restricted
$493 and $573 $34,793 $13,476
Receivables (Note 3) 76,827 68,627
Costs and estimated earnings in excess of
billings 25,130 20,127
Inventories (Note 4) 12,972 15,781
Deferred income taxes 5,187 5,158
Prepaid expenses and miscellaneous 7,661 7,710
------- -------
Total current assets 162,570 130,879
------- -------
Property and equipment, less accumulated
depreciation and amortization (Note 5) 56,437 57,266
Other assets ------- -------
- ------------
Cost in excess of net assets of businesses
acquired, less accumulated amortization of
$11,768 and $9,837 (Note 2) 54,705 56,943
Patents and patent applications, less
accumulated amortization of $4,345 and $3,889 11,126 10,049
Investments in licensees and affiliated
affiliated companies (Note 2) 4,743 3,137
Deferred income taxes 1,871 1,935
Non-compete agreements, less accumulated
amortization of $4,043 and $3,327 1,983 2,699
Miscellaneous 5,688 5,036
------- -------
Total other assets 80,116 79,799
------- -------
$299,123 $267,944
======== ========
</TABLE>
See accompanying summary of accounting policies and notes to
consolidated financial statements.<PAGE>
<PAGE>
<TABLE>
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
<CAPTION>
September December
30, 1997 31, 1996
--------- --------
(Unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities
- -------------------
Notes payable to banks $ 1,661 $ 1,387
Accounts payable and accruals 44,288 40,578
Income taxes payable 2,252 2,801
Deferred income taxes 643 507
Current maturities of long-term
debt (Note 6) 2,376 6,730
------ ------
Total current liabilities 51,220 52,003
Long-term debt, less current
maturities (Note 6)
- --------------------------- 111,530 82,384
Deferred income taxes 3,635 3,635
- ---------------------
Other long-term liabilities 881 1,084
- --------------------------- ------- -------
Total liabilities 167,266 139,106
------- -------
Commitments and contingencies
(Notes 7, 8 and 9)
- -----------------------------
Minority interests 3,756 5,635
- ------------------------------ ------- -------
Common stock and other stockholders'
equity
- ------------------------------------
Preferred stock, undesignated, $.10
par - shares authorized 2,000,000;
none outstanding 0 0
Common stock, $.01 par - shares
authorized 40,000,000; shares out-
standing 27,171,553 and 27,144,331
(Notes 2 and 6) 272 271
Additional paid-in capital 68,036 67,824
Retained earnings 64,626 59,049
------- -------
132,934 127,144
Treasury stock, 255,801 shares (3,269) (3,269)
Cumulative foreign currency
translation adjustments (1,564) (672)
------- -------
Total common stock and other
stockholders' equity 128,101 123,203
------- -------
$299,123 $267,944
======= =======
</TABLE>
See accompanying summary of accounting policies and notes to
consolidated financial statements.<PAGE>
<PAGE>
<TABLE>
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except per share amounts)
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Construction contracts $79,261 $66,994 $218,965 $195,214
Product sales 4,924 2,626 15,125 11,258
Royalties and license fees 1,305 1,027 3,798 4,054
------ ------ ------- -------
Total revenues 85,490 70,647 237,888 210,526
Operating costs and expenses:
Cost of construction contracts 56,712 46,155 158,950 133,956
Cost of product sales 3,070 1,573 10,138 7,496
Royalty expense 129 160 309 419
Selling, administrative and general 14,222 14,079 43,287 43,550
Strategic marketing and product
development 1,691 2,055 5,130 5,812
Unusual items (Note 8) 0 0 3,845 0
------ ------ ------- -------
Total operating costs and expenses 75,824 64,022 221,659 191,233
------ ------ ------- -------
Operating income 9,666 6,625 16,229 19,293
Other expense:
Interest expense (2,250) (1,658) (6,430) (4,809)
Other income (516) 279 131 1,113
------ ------ ------- -------
Total other expense (2,200) (1,379) (5,733) (3,696)
------ ------ ------- -------
Income before taxes on income 6,900 5,246 9,930 15,597
Taxes on income 2,814 2,046 4,119 6,163
------ ------ ------- -------
Income before minority interests and
equity in earnings 4,086 3,200 5,811 9,434
Minority interests in net income 72 (33) (379) (256)
Equity in earnings of affiliated
companies 124 249 370 318
------ ------ ------- -------
Income before extraordinary item 4,282 3,416 5,802 9,496
Extraordinary item - loss on early
retirement of debt 0 0 (225) 0
------ ------ ------- -------
Net income $4,282 $3,416 $5,577 $9,496
====== ====== ======= =======
Earnings (loss) per share of common
stock and common stock equivalents
(Note 2):
Income before extraordinary item $0.16 $0.13 $0.22 $0.35
Extraordinary loss, net of income tax 0 0 (0.01) 0
benefits ------ ------ ------- -------
Net income $0.16 $0.13 $0.21 $0.35
====== ====== ======= =======
Weighted average common and common
equivalent shares 26,965 27,040 26,956 27,173
====== ====== ======= =======
</TABLE>
See accompanying summary of accounting policies and notes to
consolidated financial statements.<PAGE>
<PAGE>
<TABLE>
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<CAPTION>
For the Nine Months
Ended September 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
- ------------------------------------
Net income $ 5,577 $ 9,496
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 14,196 13,285
Miscellaneous (504) (472)
Equity in earnings of affiliated companies (371) (318)
Minority interests 379 256
Deferred income taxes 171 205
Changes in operating assets and liabilities:
Receivables (10,370) 3,259
Costs in excess of billings under construction (5,003) (6,397)
Inventories 2,809 1,355
Prepaid expenses and miscellaneous (123) 2,513
Miscellaneous other assets (587) 124
Accounts payable and accruals 2,324 (108)
Income taxes payable 1,517 1,811
------ ------
Net cash provided (used) by continuing operations 10,015 25,009
------ ------
Cash flows from investing activities:
- ------------------------------------
Capital expenditures (12,594) (11,003)
Proceeds on disposal of property and equipment 304 3
Investments in licensees/affiliated companies 0 (1,129)
Patents and patent applications (1,602) (1,097)
------ ------
Net cash used by investing activities (13,892) (13,226)
------ ------
</TABLE>
(continued)
See accompanying summary of accounting policies and notes to
consolidated financial statements.
<PAGE>
<PAGE>
<TABLE>
INSITUFORM TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
<CAPTION>
For the Nine Months
Ended September 30,
1997 1996
---- ----
<S> <C> <C>
Cash flows from financing activities:
- ------------------------------------
Proceeds from issuance of common stock 213 74
Increase in short-term borrowings 274 (240)
Net borrowings (repayments) of long-term debt (Note 6) 24,983 (3,947)
Minority interests (75) (556)
------- -------
Net cash provided (used) by financing activities 25,395 (4,669)
------- -------
Effect of exchange rates changes on cash (201) 52
------- -------
Net increase (decrease) in cash and cash
equivalents for the period 21,317 7,166
------- -------
Cash and cash equivalents, beginning of period 13,476 11,416
------- -------
Cash and cash equivalents, end of period $34,793 $18,582
======= =======
Supplemental disclosures of cash flows
information: 1997 1996
- -------------------------------------- ---- ----
Cash paid during six months ended September 30, for:
-----------------------------------------------
Interest $5,644 $5,489
Income taxes $ 398 $3,566
Non-cash investing and financing activities:
-------------------------------------------
Stock issued in connection with litigation
settlement $0 $322
</TABLE>
See accompanying summary of accounting policies and notes to
consolidated financial statements.
<PAGE>
<PAGE>
INSITUFORM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
September 30, 1997
1. GENERAL
In the opinion of the Company, the accompanying consolidated
financial statements contain all adjustments (consisting of
only normal recurring adjustments) necessary to present fairly
the financial position as of September 30, 1997 (unaudited) and
the unaudited results of operations and cash flows for the nine
months ended September 30, 1997 and 1996. The financial
statements have been prepared in accordance with the
requirements of Form 10-Q and consequently do not include all
the disclosures normally made in an Annual Report on Form 10-K.
Accordingly, the consolidated financial statements included
herein should be reviewed in conjunction with the financial
statements and the footnotes thereto included in the Company's
1996 Annual Report on Form 10-K.
The results of operations for the nine months ended September
30, 1997 and 1996 are not necessarily indicative of the results
to be expected for the full year.
2. CONDENSED SUMMARY OF ACCOUNTING POLICIES
The consolidated financial statements include the accounts of
the Company and its majority-owned subsidiaries, including a
51% owned United Kingdom subsidiary, Insituform Linings, Plc.,
a 60% owned Chilean subsidiary, United Sistema de Tuberias,
Ltda., a 66% owned French subsidiary, Insituform France, S.A.,
a 55% owned Mexican subsidiary, and United Pipeline de Mexico
S.A. de C.V. All material intercompany balances, transactions
and stockholdings are eliminated.
The net assets of businesses purchased are recorded at their
fair value at the acquisition date and the financial statements
include their operations only from that date. Any excess of
acquisition costs over the fair value of net assets acquired
is included in the balance sheet as "Cost in excess of net
assets of businesses acquired."
Corporate investments are carried at cost if ownership is less
than 20% and on the equity method if the Company's ownership
interest is 20% and greater, but not exceeding 50%.
Investments in partnerships for which the Company's ownership
interest is no greater than 50% are accounted for on the equity
method. In addition, the Company accounts for its interest in
Midsouth Partners, a domestic partnership 57-1/2% owned by the
Company, on the equity method, as a consequence of Midsouth's
management composition. Intercompany profits and losses are
eliminated for those investments carried on the equity method.
<PAGE>
<PAGE>
INSITUFORM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
September 30, 1997
Construction and installation revenues are recognized using the
percentage-of-completion method. Contract costs include all
direct material and labor costs and those indirect costs
related to contract performance, such as indirect labor,
supplies, tools and equipment costs. Changes in estimated total
contract costs are recognized in the period they are
determined. Where a contract loss is forecast, the full amount
of the anticipated loss is recognized in the period the loss
is determined.
Earnings per share have been computed based upon the weighted
average number of common shares and common equivalent shares
outstanding during the respective periods. Common equivalent
shares include shares from the assumed exercise of common stock
options.
3. RECEIVABLES
Receivables consist of the following (in thousands):
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
Trade, less allowance
for possible losses
of $1,136 and $1,031 $61,396 $52,030
Retainage under
construction contracts 13,356 12,456
Refundable income
taxes 2,075 4,141
------- -------
$76,827 $68,627
======= =======
</TABLE>
<PAGE>
INSITUFORM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
September 30, 1997
4. INVENTORIES
Inventories are valued at the lower of cost or market.
Maintenance and office supplies are not inventoried.
Inventories are summarized as follows (in thousands):
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
Construction materials $5,577 $9,615
Raw materials 1,524 968
Manufactured components 2,414 1,921
Work-in-process 1,073 1,289
Finished goods 2,384 1,988
------- -------
$12,972 $15,781
======= =======
</TABLE>
5. PROPERTY AND EQUIPMENT
Property and equipment consists of the following (in thousands):
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
Land and land improvements $2,654 $2,667
Buildings and improvements 15,589 15,715
Machinery and equipment 81,326 77,608
Furniture and fixtures 8,910 8,796
Autos and trucks 2,780 2,647
Construction in progress 3,484 1,730
------ ------
114,743 109,163
Less: accumulated
depreciation (58,306) (51,897)
------- -------
$56,437 $57,266
======= =======
</TABLE>
<PAGE>
<PAGE>
INSITUFORM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
September 30, 1997
6. LONG-TERM DEBT
In October 1995, the Company obtained a credit facility from
SunTrust Bank, Nashville, N.A. ("SunTrust"), as agent, and
a group of participating lenders which provided for advances
through October 1997 on a revolving basis aggregating up to
$105 million (including a $5.0 million standby letter of
credit facility). Of such amount, approximately $66.4 million
was applied to refinance existing debt under the Company's
prior arrangements with SunTrust (approximately $35.9
million), other term loans ($14.5 million), and short-term
debt under line of credit facilities ($16.0 million).
Additional advances were available for the expansion of the
Company's business and for general corporate purposes.
Prior to its prepayment in February 1997, the SunTrust
facility was due to mature in October 2000, with installments
based on a five-year amortization schedule, commencing
December 31, 1997. Interest on indebtedness under the
facility was payable at either (i) SunTrust's prime rate
(8.25% at December 31, 1996), plus a margin of up to .25% in
the event certain financial ratios were not maintained, or
(ii) an adjusted LIBOR rate, plus a margin ranging from 1.00%
to 1.75%, depending on the maintenance of certain financial
ratios. Up to $5 million under the credit facility was
available to be borrowed from SunTrust pursuant to a "swing
line facility," which accrued interest at a rate per annum
equal to 0.5% below SunTrust's prime rate. Such facility
obligated the Company to comply with certain financial ratios
and restrictive covenants that, among other things, limited
the ability of the Company and its subsidiaries to incur
indebtedness, pay dividends, make loans and encumber any
properties, and required guarantees of certain domestic
subsidiaries.
Prior to its prepayment in February 1997, the 8.5% senior
subordinated note was subordinated in right to the Company's
bank and other institutional financing and to deferred
consideration incurred in connection with business
acquisitions. Warrants to purchase 350,877 unregistered
shares of Common Stock were also issued to the lender. The
note was prepayable at the Company's option, at premiums
until July 1998 ranging from 3% to 1% of the amount prepaid.
The subordinated note also restricted the Company's ability
to pay dividends and repurchase outstanding common stock.
On February 14, 1997 the Company completed a $110 million
private debt offering of 7.88% Senior Notes due February 14,
2007 ("Senior Notes"). Interest is payable semi-annually in
August and February of each year, and each year, from<PAGE>
<PAGE>
INSITUFORM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
September 30, 1997
February 2001 to February 2006, inclusive, the Company is
required to make principal repayments of $15,715,000,
together with an equivalent payment at maturity. The Senior
Notes may be prepaid at the Company's option, in whole or in
part, at any time, together with a make-whole premium, and
upon specified change in control events each holder has the
right to require the Company to purchase its Senior Note
without any premium thereon. The agreements pursuant to which
the Senior Notes were acquired obligate the Company to comply
with certain financial ratios and restrictive covenants that,
among other things, place limitations on operations and sales
of assets by the Company or its subsidiaries, and limit the
ability of the Company to incur further secured indebtedness
and liens and of subsidiaries to incur indebtedness, and, in
the event of default under the Senior Notes, limit the
ability of the Company to pay cash dividends or make other
distributions to the holders of its capital stock or to
redeem such stock. Such agreements also obligate the
Company's subsidiaries to provide guarantees to the holders
of the Senior Notes if guaranties are given by them to
certain other lenders.
The transaction costs of $891,000 incurred in connection with
the private debt offering were recorded as deferred charges
and will be amortized over the life of the Senior Notes. The
net proceeds were used to repay existing indebtedness
(approximately $85 million), as discussed above, and for
general corporate purposes. Certain capitalized costs related
to prior existing borrowing arrangements of $0.4 million were
written off as a result. This writeoff has been classified
as an extraordinary loss from early extinguishment of debt.
Effective August 20, 1997, the Company entered into a Loan
Agreement dated such date (the "Credit Agreement") with
NationsBank, N.A. ("NationsBank"), whereby NationsBank will
make available to the Company, until September 1, 2000 (the
"Maturity Date"), a revolving credit line of up to
$20,000,000 aggregate principal amount for working capital
and permitted acquisitions, including $5,000,000 available
for standby and commercial letters of credit. Interest on
outstanding advances accrues, at the election of the Company,
at either the lender's prime rate, payable monthly, or its
LIBO rate, plus a margin ranging from .5% to 1.5% depending
on the maintenance of certain financial ratios, payable at
the end of selected interest periods (from one to six
months). Outstanding principal is subject to repayment on the
Maturity Date, except that advances for permitted
acquisitions must be repaid within six months after
disbursement.
<PAGE>
<PAGE>
INSITUFORM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
September 30, 1997
The Credit Agreement obligates the Company to comply with
certain financial ratios and restrictive covenants that,
among other things, prohibit dividends and stock repurchases
in the event of loan defaults, place limitations on
operations and sales of assets by the Company and its
subsidiaries, and limit the ability of the Company and its
subsidiaries to incur further secured indebtedness and liens
and of subsidiaries to incur additional indebtedness. The
Credit Agreement also obligates certain of the Company's
domestic subsidiaries to guarantee the Company's obligations,
as a result of which the same subsidiaries have also
delivered their guaranty with respect to the Senior Notes.
7. LITIGATION
The Company is involved in certain litigation incidental to
the conduct of its business. In the Company's opinion, none
of these proceedings will have a material adverse effect on
the Company's financial position, results of operations and
liquidity. The financial statements include the estimated
amounts of liabilities that are likely to be incurred from
these and various other pending litigation and claims.
8. RESTRUCTURING
In the second quarter the Company commenced implementing its
plans to combine its corporate headquarters, engineering and
development center, and North American contracting
headquarters in new facilities located in Chesterfield,
Missouri. The location will also combine the offices of
Affholder, Inc., the Company's subsidiary responsible for
tunneling, and the main operations base for the central
region of the Company's domestic pipeline rehabilitation
operations. During the second quarter the Company recorded
in operating expense an unusual item of $3.2 million for
employee severance, and moving employees and offices related
to the restructuring of its corporate headquarters and
related facilities.
9. PROXY CONTEST
In June 1997, a group, including Jerome Kalishman and Robert
Affholder, both directors of the Company, filed an amended
Schedule 13D pursuant to the Securities and Exchange Act of
1934 which stated that it was the intention of Messrs.
Kalishman and Affholder to propose a slate of individuals to
run for election to the Board of Directors of the Company at
its 1997 annual meeting of stockholders in opposition to the
slate proposed by the Company in its original proxy
statement. On July 25, 1997, the Company and Messrs.<PAGE>
<PAGE>
INSITUFORM TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Unaudited)
September 30, 1997
Kalishman and Affholder entered into a settlement agreement
to resolve the outstanding proxy contest. The Company has
accrued the amount of $0.6 million (prior to any effect of
taxes) in the second quarter with respect to such matters.<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of certain
significant factors which have affected the Company's financial
condition and results of operations during the periods included
in the accompanying consolidated financial statements.
GENERAL
The Company's revenues include construction revenues from direct
installation and other contracting activities, product sales of
materials and equipment to licensees and royalty income and
initial license fees received from licensees for the use of the
Company's trenchless rehabilitation processes. Product sales
consist primarily of sales of Insitutubes(R) and NuPipe(R) to
licensees. Construction contract revenue is generated primarily
by the Company's subsidiaries operating in the United States,
Canada, France, the United Kingdom, Chile, Argentina and Mexico.
Royalties and license fees are paid by the Company's 35
unaffiliated Insituform(R) licensees and sub-licensees and its
ten unaffiliated NuPipe(R) licensees.
Product sales and royalties are primarily a function of the
contracts performed by the Company's licensees. However, changes
in product sales may vary from changes in royalties because of
several factors, including differences between the timing of
Insitutube sales and contract performance by licensees and the
accrual by the Company of minimum royalties in excess of
royalties otherwise due for work performed. The Company's
consolidated subsidiaries obtain supplies of Insitutubes and
related materials from the Company.
Fluctuations in the exchange rates between the United States
dollar and the currencies of other countries in which the Company
operates or has licensees may have an impact on the Company's
consolidated results during the relevant reporting period. See
"Results of Operations" below. The Company intends to manage any
such foreign currency exposure, in the context of discrete
commercial transactions and, when appropriate, to offset such
exposure in whole or in part by entering into foreign currency
forward contracts, in order to reduce the impact of such
fluctuations on results of operations. The Company does not
anticipate that the circumstances in which such hedging activity
would be appropriate will have a material effect on the Company's
liquidity.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company had $34.7 million in cash,
U.S. treasury bills, and short-term investments, as compared to
$13.5 million at December 31, 1996. Cash and cash equivalents
increased $21.2 million primarily as a result of the Company's
completion in February 1997 (the "Senior Note Closing") of the
sale, in a private transaction, of $110 million principal amount<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
of its 7.88% Senior Notes, Series A, due February 14, 2007 (the
"Senior Notes"), approximately $85 million of which was applied
at closing to the refinancing of outstanding indebtedness of the
Company and the remainder of which was applied to short term
investments. The Company's working capital ratio was 3.2-to-1.0
at September 30, 1997 representing an increase from 2.5-to-1.0 at
December 31, 1996.
Operations provided cash of $10.0 million during the nine months
ended September 30, 1997, as compared to cash provided of $25.0
million during the same period in 1996. This decrease is due
primarily to an increase in trade receivables (including costs in
excess of billings under construction contracts) of $15.4 million
in first nine months of 1997, as compared to a decrease of $3.3
million in the prior year. Furthermore, unlike the first nine
months of 1996, in which decreases in prepaid expenses and
miscellaneous current assets provided $2.5 million in cash, the
first nine months of 1997 resulted in increases in prepaid
expenses miscellaneous current assets of $0.1 million.
Trade receivables, together with costs and estimated earnings in
excess of billings, increased 18.1% to $99.9 million from $84.6
million at December 31, 1996, reflecting a $9.4 million increase
in trade receivables, a $0.9 million increase in retainage
receivables, and an increase of $5.0 million in costs and
estimated earnings in excess of billings on construction
contracts. This increase is primarily attributable to the 21%
increase in revenue volume during the third quarter of 1997
compared to the third quarter of 1996. The collection cycle for
construction receivables is generally longer than for the
Company's other operations due to provisions for retainage, often
5% to 10% of the contract amount, as well as the slow internal
review processes often employed by the construction subsidiaries'
municipal customers. In the United States, retainage receivables
are generally received within 60 to 90 days after the completion
of a contract.
Capital expenditures were $12.6 million in the first nine months
of 1997, as compared to $11.0 million in the first nine months of
1996. Capital expenditures generally reflect replacement
equipment required by the Company's contracting subsidiaries.
During the second quarter of 1997, the Company commenced
combination of its corporate headquarters, engineering and
development center, and North American contracting headquarters
in new facilities located in Chesterfield, Missouri, a suburb of
St. Louis. The cost of moving employees and offices is estimated
at $3.5 million, including severance of approximately $1.0
million. In the second quarter the Company incurred approximately
$0.8 million and accrued an additional $2.4 million; in the third
quarter $1.1 million was spent and applied to the accrual. The
remaining accrual will be applied to costs to be incurred over
the remaining phases of combination of facilities and employees.<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In addition, during 1997 the Company has commenced the
construction of its new research and development facility. The
total estimated cost of such facility is estimated at $3.5
million, of which $0.7 has been incurred through the end of the
third quarter 1997.
Financing activities provided $25.4 million in cash in the first
nine months of 1997 as compared to cash used of $4.7 million in
the prior year. This difference is primarily related to the cash
generated from the Senior Notes of approximately $25.0 million in
February 1997, as compared to the first nine months of 1996, in
which the Company made net principal payments totaling $5.3
million relating to the Company's prior existing credit facility
with SunTrust Bank, Nashville, N.A. ("SunTrust") and repayment of
the subordinated note issued in connection with the Enviroq
acquisition.
At December 31, 1996, $76.3 million was outstanding under the
Company's credit agreement dated October 25, 1995 (the "SunTrust
Credit Agreement") with SunTrust Bank, as agent, and a group of
participating lenders (the "Lenders"), which provided for
advances by the Lenders through October 1997 on a revolving basis
aggregating up to $105 million (including a $5 million standby
letter of credit facility). Indebtedness pursuant to the SunTrust
Credit Agreement was due to mature in October 2000, with
installments based on a five-year amortization schedule,
commencing December 31, 1997. Interest on indebtedness under the
SunTrust Credit Agreement was payable at a rate per annum
selected by the Company as either SunTrust's prime rate plus a
margin of up to .25% in the event certain financial ratios were
not maintained, or an adjusted LIBOR rate, plus a margin ranging
from 1.00% to 1.75%, depending on the maintenance of certain
financial ratios. Up to $5 million under the SunTrust Credit
Agreement was available for borrowings from SunTrust pursuant to
a swing-line facility, and would accrue interest at a rate per
annum equal to 0.5% below SunTrust's prime rate. The SunTrust
Credit Agreement obligated the Company to comply with certain
financial ratios and restrictive covenants that, among other
things, limited the ability of the Company and its subsidiaries
to incur further indebtedness, pay dividends, make loans and
encumber any properties, and required guarantees of certain
domestic subsidiaries. At the Senior Note Closing, all
outstanding indebtedness to the Lenders under the SunTrust Credit
Agreement, and outstanding indebtedness owed to SunTrust under an
industrial revenue bond encumbering the Company's Batesville
facility ($3.4 million principal amount recorded at December 31,
1996), was prepaid.
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
At the Senior Note Closing, the Company also prepaid amounts
outstanding under the Company's senior subordinated note acquired
by Hanseatic Corporation ("Hanseatic") in July 1993 ($4.8 million
principal amount recorded at December 31, 1996), which required
quarterly payments of interest at 8.5% per annum and installments
of principal in the amount of $1 million on each of the fifth
through eighth anniversary dates of closing, with the entire
remaining principal due nine years after closing. The note was
subordinated to bank and other institutional financing, and
purchase money debt incurred in connection with acquisitions of
businesses. The note was pre-payable at the option of the
Company, at premiums until the fifth anniversary of closing
ranging from 3% to 1% of the amount prepaid ($100,000 paid at the
Senior Note Closing). Warrants with respect to 350,877 shares of
Common Stock issued in connection with such note are exercisable,
at the election of the holder, through July 25, 1998, at a price
per share of Common Stock of $14.25, and such shares are entitled
to demand and incidental registration rights.
The Senior Notes issued by the Company in February 1997 mature on
February 14, 2007, and bear interest, payable semi-annually in
August and February of each year, at the rate per annum of 7.88%.
Each year, from February 2001 to February 2006, inclusive, the
Company will be required to make principal payments of
$15.7 million, together with an equivalent payment at maturity.
The Senior Notes may be prepaid at the Company's option, in whole
or in part, at any time, together with a make whole premium, and
upon specified change in control events each holder has the right
to require the Company to purchase its Senior Note without any
premium thereon.
The note purchase agreements pursuant to which the Senior Notes
were acquired obligate the Company to comply with certain
financial ratios and restrictive covenants that, among other
things, place limitations on operations and sales of assets by
the Company and its subsidiaries, and limit the ability of the
Company to incur further secured indebtedness and liens and of
subsidiaries to incur indebtedness, and, in the event of default
under the Senior Notes, limit the ability of the Company to pay
cash dividends or make other distributions to the holders of its
capital stock or to redeem such stock. Such agreements also
obligate the Company's subsidiaries to provide guaranties to
holders of the Senior Notes if guaranties are delivered by them
to specified other lenders. To the extent not utilized to
refinance indebtedness of the Company at the Senior Note Closing,
proceeds of the sale of the Senior Notes are available for
general corporate purposes, including possible acquisitions of
products, technologies and businesses and repurchases of Common<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Stock. The Company has not reached any determination with respect
to any such transaction, and there can be no assurance that any
such transaction will be undertaken.
Effective August 20, 1997, the Company entered into a Loan
Agreement dated such date (the "Credit Agreement") with
NationsBank, N.A. ("NationsBank"), whereby NationsBank will make
available to the Company, until September 1, 2000 (the "Maturity
Date"), a revolving credit line of up to $20,000,000 aggregate
principal amount for working capital and permitted acquisitions,
including $5,000,000 available for standby and commercial letters
of credit. Interest on outstanding advances accrues, at the
election of the Company, at either the lender's prime rate,
payable monthly, or its LIBOR rate, plus a margin ranging from
.5% to 1.5% depending on the maintenance of certain financial
ratios, payable at the end of selected interest periods (from one
to six months). Outstanding principal is subject to repayment on
the Maturity Date, except that advances for permitted
acquisitions must be repaid within six months after disbursement.
The Credit Agreement obligates the Company to comply with certain
financial ratios and restrictive covenants that, among other
things, prohibit dividends and stock repurchases in the event of
loan defaults, place limitations on operations and sales of
assets by the Company and its subsidiaries and limit the ability
of the Company and its subsidiaries to incur further secured
indebtedness and liens and of subsidiaries to incur additional
indebtedness. The Credit Agreement also obligates certain of the
Company's domestic subsidiaries to guaranty the Company's
obligations, as a result of which the same subsidiaries have also
delivered their guaranty with respect to the Senior Notes.
At September 30, 1997, the Company was obligated on certain notes
issued in connection with the acquisition in October 1994 of all
of the outstanding stock of Gelco and affiliates, aggregating
$1.4 million, to the former Gelco shareholders and their
affiliates, representing net current liabilities of the acquired
companies to related parties and a portion of working capital at
closing. The assets acquired secured the notes issued in the
Gelco closing. In October 1997, these notes were paid in full.
Management believes its working capital and its existing credit
availability will be adequate to meet its capital requirements
for the foreseeable future.
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RECENTLY ISSUED ACCOUNTING STANDARDS
In the first quarter of 1997, the Financial Accounting Standards
Board (the "Board") issued Statement of Financial Accounting
Standards No. 128, Earnings Per Share ("SFAS 128"), effective for
financial statements for both interim and annual periods ending
after December 15, 1997. The new standard replaces the provisions
prescribed by the Accounting Principles Board Opinion 15,
simplifying earnings per share calculations and requiring further
disclosures. In addition, the Board also issued Statement of
Financial Accounting Standards No. 129, Disclosure of Information
about Capital Structure ("SFAS 129"), effective for financial
statements for periods ending after December 15, 1997. SFAS 129
continues the existing requirements to disclose pertinent rights
and privileges of all securities other than ordinary common
stock, but expands the number of companies subject to the
requirements. The Company does not believe the provisions of SFAS
128 and SFAS 129, and its adoption thereof, will have a material
effect on the Company's financial statements.
RESULTS OF OPERATIONS - Nine Months Ended September 30, 1997
Compared to Nine Months Ended September 30, 1996
Revenues. Revenues for the third quarter increased 21.1% to
$85.5 million from $70.6 million in the comparable period of the
prior year, while revenues for the first nine months of 1997
increased 13.0% to $237.9 million from $210.5 million in the
prior year. This increase was a result of an increase in both
construction revenues and product sales, offset by decreases in
royalties and license fees.
Construction revenues during the third quarter increased 18.4% to
$79.3 million from $67.0 million in the comparable period of
1996, while, for the first nine months of 1997, construction
revenues increased by 12.2% to $219.0 million from $195.2 million
in 1996. The increase was primarily as a result of increased
activity in the Company's corrosion and abrasion operations, and
tunneling operations. Fluctuations in currency exchange rates of
the British pound sterling, French franc, Chilean peso and
Canadian dollar to the United States dollar negatively impacted
construction revenues by approximately $0.1 million in the first
nine months of 1997.
Product sales for the third quarter increased 88.5% to $4.9
million from $2.6 million in the comparable period of 1996,
while, product sales for the first nine months of 1997 increased
33.6% to $15.1 million from $11.3 million in 1996. This increase
was primarily attributable to increased sales to independent<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
licensees in the United States, and to a lesser extent, the
Company's offshore manufacturing operations.
Royalty and license fees for the third quarter increased 30.0% to
$1.3 million from $1.0 million in 1996, while, for the first nine
months of 1996, royalties and license fees decreased 7.3% to $3.8
million from $4.1 million in 1996. The increase during the third
quarter was primarily attributable to higher royalties collected
from independent licensees in the United States. The decrease
during the nine-month period was due primarily to the impact of
1996 license fees of $0.3 million from licenses signed in Taiwan
and Germany.
Operating costs and expenses. Cost of construction contracts for
the third quarter increased 22.7% to $56.7 million from $46.2
million in the comparable period of 1996, while, for the first
nine months of 1997, cost of construction contracts increased
18.7% to $159.0 million from $134.0 million in 1996. Construction
costs as a percentage of construction revenues increased in the
third quarter to 71.5% as compared to 69.0% in the third quarter
of 1996. For the first nine months of 1997, construction costs as
a percentage of construction revenues increased to 72.6% from
68.6% in the first nine months of 1996. This increase was due
principally to lower margins achieved by the Company's pipeline
rehabilitation operations, primarily as a result of increased
price competition, along with increased volume by the Company's
corrosion and abrasion operations, and tunneling operations,
which traditionally achieve lower margins.
Cost of product sales for the third quarter increased 93.8% to
$3.1 million from $1.6 million in 1996, while, for the first nine
months of 1997, cost of product sales increased 34.7% to $10.1
million from $7.5 million in 1996. The increase in the third
quarter was due primarily to increased volume primarily in the
United States and to a lesser extent in offshore manufacturing
operations. For the third quarter, cost of product sales as a
percentage of product sales increased to 63.3% from 61.5% in
1996. For the first nine months of 1997, cost of product sales as
a percentage of product sales increased to 66.9% from 66.3% in
1996. Both increases are due principally to slightly lower margin
achievement in the United States, and higher volume from offshore
operations, which traditionally achieve lower margins than the
United States manufacturing operations.
As a percentage of revenues, selling, administrative and general
expenses in the third quarter were 16.6% compared to 20.0% in the
comparable period of 1996, while, for the first nine months of
1997, selling, administrative and general expenses as a
percentage of revenues were 18.2% compared to 20.7% in the first
nine months of 1996. The decrease is attributable primarily to <PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
economies of scale resulting from higher volume, along with
management's effort to control overhead costs throughout the
Company's operations, principally in the United States. In the
third quarter of 1997, selling, administrative and general
expenses increased 0.7% to $14.2 million compared to $14.1
million in the third quarter of 1996, while, in the first nine
months of 1997, selling, administrative and general expenses
decreased 0.7% to $43.3 million from $43.6 million in the first
nine months of 1996. This third quarter increase was due
primarily to third quarter 1996 accrual reversals for incentive
compensation of $1.0 million. Excluding the 1996 benefit of
accrual adjustments in 1996, selling, administrative and general
expenses decreased 5.9%, or $0.9 million. This decrease was
primarily due to cost reorganization of the Company's pipeline
rehabilitation operations through elimination of positions, and
realignment of responsibilities. This was offset slightly by
increased overhead costs related to the buildup of personnel for
the Company's corrosion and abrasion operations in Argentina,
Chile and Mexico.
In the third quarter, strategic marketing and product development
costs decreased 19.0% to $1.7 million compared to $2.1 million in
1996, while, in the first nine months of 1997, strategic
marketing and product development costs decreased 12.1% to $5.1
million compared to $5.8 million. The decrease is primarily due
to controlled spending in advertising and research projects, and
reduction of personnel in industrial marketing.
Unusual Items. During the second quarter of 1997, the Company
recorded in operating expense an unusual item of $3.2 million for
employee severance, and moving employees and offices related to
the restructuring of its corporate headquarters and related
facilities.
In June 1997, a group, including Jerome Kalishman and Robert
Affholder, both directors of the Company, filed an amended
Schedule 13D pursuant to the Securities and Exchange Act of 1934
which stated that it was the intention of Messrs. Kalishman and
Affholder to propose a slate of individuals to run for election
to the Board of Directors for the Company at its 1997 annual
meeting of stockholders in opposition to the slate proposed by
the Company in its original proxy statement. On July 25, 1997 the
Company and Messrs. Kalishman and Affholder entered into a
settlement agreement to resolve the outstanding proxy contest.
The stockholders of the Company approved pertinent proposals
required by the settlement agreement at the Company's annual<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
stockholders' meeting held in October 1997. The costs associated
with the proxy contest, which approximated $0.6 million, were
accrued in the second quarter.
Other income(expense). In the third quarter, interest expense
increased 35.3% to $2.3 million from $1.7 million in 1996, while
during the first nine months, interest expense increased 33.3% to
$6.4 million from $4.8 million in 1996. This increase was
primarily due to increased principal from the Senior Notes
financing in February 1997. In the third quarter, notwithstanding
the return on proceeds invested from a portion of the Senior Note
financing, other income decreased by approximately $0.8 million,
while, during the first half, other income decreased 90.9% to
$0.1 million from $0.9 million. This decrease was primarily due
to an increase in reserves for potentially uncollectible
receivables from abandoned offshore operations, along with
equipment write-downs, and miscellaneous expenses incurred by the
Company's operations in the United States.
Taxes on income. In the third quarter, taxes on income increased
40.0% to $2.8 million from $2.0 million in 1996, due primarily to
an increase in income before taxes on income of $1.7 million. In
the first nine months, taxes on income decreased 33.9% to $4.1
million from $6.2 million, due primarily to a decrease in income
before taxes on income of $6.6 million. The Company's effective
tax rate for the first nine months of 1997, was 41.4%, compared
to 39.5% in 1996, due primarily to an increase in income coming
from tax jurisdictions with higher tax rates.
Extraordinary item. In February 1997, as a result of the closing
of the Senior Notes financing, certain previous debt facilities
were retired. Costs of $0.4 million ($0.2 million after-tax)
associated with these debt facilities which were capitalized,
such as commitment fees and legal costs, were written off.
Net Income. As a result of the foregoing, net income for the
third quarter of 1997 was $4.3 million, an increase of $0.9
million, or 26.5%, from 1996. Net income for the first nine
months of 1997 was $5.6 million, a decrease of $3.9 million, or
41.0%, from 1996.
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company has previously reported pending patent
infringement proceedings brought by the Company in 1990 against
Cat Contracting, Inc., et. al. in the United States District
Court for the Southern District of Texas, Houston Division (Civil
Action No. H-90-1690)(the "Cat Proceeding"). In the Cat
Proceeding, the Company alleged infringement of certain of the
Insituform patents in connection with conduit relining work
performed in Houston by licensees of Kanal Sanierung Hans Muller
GmbH & Co. In such proceeding, defendants asserted counterclaims
alleging that the suit had been brought in bad faith, that the
Company had engaged in certain antitrust violations and further
that the Company had engaged in unfair competition.
In June 1991, the jury in the Cat Proceeding rendered its
verdict finding that the competitors named as defendants had
infringed the Insituform patents at issue and that such patents
were not invalid. In August 1991 in the continuing proceedings,
the court declined to declare such patents invalid, as requested
by defendants and further declined to disturb the jury's verdict
rejecting defendant's counterclaims that the suit had been
brought in bad faith and defendant's claims that plaintiffs had
engaged in unfair competition. The court did, however, grant the
defendants' motion for a new trial on the matter of whether
defendants had infringed certain of the Insituform patents under
the doctrine of equivalents, and the court set aside that portion
of the jury's verdict. The court also granted defendants judgment
notwithstanding the jury verdict on the issue of literal
infringement of that patent.
In October 1995, the court in the Cat Proceeding held the
mandated new trial and then ruled that defendants' serial vacuum
impregnation processes infringed the Company's patent under the
doctrine of equivalents. The Court further issued a permanent
injunction against defendants' use of the processes covered by
such patent and ordered a trial on the issue of damages, the
amount of which had yet to be determined. Defendants filed a
notice of appeal to the United States Court of Appeals for the
Federal Circuit and the Company filed a notice of cross-appeal
from the 1991 judgment.
In November 1996, the Court of Appeals for the Federal
Circuit affirmed the District Court in declining to declare the
Company's serial vacuum impregnation patent invalid and found
that the jury's rejection of defendants' challenge to the
validity of that patent was supported by the evidence. The Court
of Appeals further affirmed the District Court's grant to
defendants of judgment notwithstanding the jury verdict on the<PAGE>
<PAGE>
issue of the literal infringement of the patent, and vacated the
District Court's finding of infringement under the doctrine of
equivalency, holding that the District Court had used incorrect
claim construction. The Court of Appeals remanded the case to the
District Court for new findings on the infringement issue. In
March 1997, defendants sought a writ of certiorari from the U.S.
Supreme Court to review that ruling, which writ was denied by the
Court.
In December 1996, the District Court had earlier issued its
new findings under the guidelines suggested by the Court of
Appeals and again found that both of the processes employed by
defendants infringed the Company's serial vacuum impregnation
patent. In January 1997 defendants appealed from those findings,
as well as from the re\refusal of the District Court to consider
allegedly new evidence on the issue of equivalency. That appeal
has been fully briefed and is awaiting argument, which is
expected to take place early in 1998.
In addition, in February 1996 defendants had filed a motion
with the District Court for a partial new trial, alleging that
the Company gave false testimony at the 1991 trial, and seeking
dismissal of the action and monetary sanctions. The Company
vigorously opposed the motion, which the District Court then
denied. Defendants appealed from that ruling to the United States
Court of Appeals for the Federal Circuit, and in May 1997, the
Court affirmed the District Court's denial of defendants' motion.
The damages portion of the Cat Proceeding was tried before
the District Court in September 1997. The parties now await the
District's Court's decision as to the amount of damages due to
the Company as a result of defendant's infringement of the
Company's serial vacuum impregnation patent during the period of
1989-90 through October 1995.
In other proceedings previously reported by the Company
(Inliner U.S.A. and Cat Contracting, Inc. v. Insituform
Technologies, Inc. and Insituform East, Inc. [Civil Action No. H-
96-3627, United States District Court for the Southern District
of Texas]), on August 26, 1997 the District Court issued its
Memorandum and Order in which it granted the Company's Motion to
Dismiss as to claims arising out of the Cat Proceeding, as well
as Noerr-Pennington immunity for the patent litigation in the Cat
Proceeding and the obtaining of certain product standards, among
other matters, and dismissed plaintiffs' claims that the
acquisition by the Company of a number of its licensees
constituted anti-competitive practices. The court further ordered
plaintiffs to refile an amended complaint alleging with factual
particularity any timely claims for tortious interference with
business and contractual relations, as well as facts
demonstrating certain antitrust injury and section 43(a) Lanham<PAGE>
<PAGE>
Act claims of misrepresentation. Plaintiffs have filed a motion,
which is pending, to file an amended complaint and a second
amended complaint, which purports to add a subsidiary of the
Company, Insituform Gulf South, Inc., as a defendant, and the
Company has asserted that plaintiffs have failed to comply with
the court's Memorandum and Order.
In proceedings also previously reported by the Company
(Western Slopes Utilities, Inc. v. Insituform Technologies, Inc.
and Insituform Netherlands, B.V. [Civil Action No. 96-N2394]),
wherein plaintiffs sought, among other things, a judgment
declaring the Company's serial impregnation patent invalid, on
August 7, 1997 the Company filed a motion to dismiss and, in the
alternative, a motion for summary judgment dismissing, Western
Slopes' declaratory judgment claims. Western Slopes has
acquiesced in the Company's motion to dismiss the declaratory
judgment claims, and, accordingly, the only remaining issues in
the suit entail claims under Section 43(a) of the Lanham Act and
tortious interference with business relations.
Item 4. Submission of Matters to a Vote of Security Holders
(a) On October 8, 1997, the Company convened its Annual
Meeting of Stockholders (the "Annual Meeting").
(b) Not applicable because (i) proxies for the Annual
Meeting were solicited pursuant to Regulation 14A under the
Securities Exchange Act of 1934 together with the Company's Proxy
Statement dated August 25, 1997 (the "Proxy Statement"); (ii)
there was no solicitation in opposition to management's nominees
as listed in the Proxy Statement and (iii) all of such nominees
were elected.
(c) At the Annual Meeting, the stockholders voted in favor
of a proposal to approve an amendment of the Certificate of
Incorporation of the Company to amend Article SIXTH in order to
eliminate the three-year staggered terms of the directors and to
provide for a new procedure to fill vacancies on the Board of
Directors. The holders of 21,618,768 shares voted in favor of,
the holders of 104,923 shares abstained and there were 335,076
broker non-votes with respect to approval of such proposal.
At the Annual Meeting, the stockholders voted in favor of
a proposal to approve an amendment to Article III, Section 2, of
the By-Laws of the Company in order to reduce the size of the
Board of Directors to eight, with an automatic adjustment to nine
upon appointment of an additional director. The holders of
21,640,228 shares voted in favor of, the holders of 335,611
shares voted against, the holders of 104,483 shares abstained and<PAGE>
<PAGE>
there were 219,689 broker non-votes with respect to approval of
such proposal.
At the Annual Meeting, the stockholders voted in favor of
management's nominees for election as directors of the Company.
The holders of 21,982,887 shares voted in favor of, and holders
of 317,124 shares withheld their vote for, the election of Robert
W. Affholder; the holders of 22,000,949 shares voted in favor of,
and holders of 299,062 shares withheld their vote for, the
election of Paul A. Biddelman; the holders of 22,001,099 shares
voted in favor of, and holders of 298,912 shares withheld their
vote for, the election of Stephen P. Cortinovis; the holders of
21,996,324 shares voted in favor of, and holders of 303,687
shares withheld their vote for, the election of Anthony W.
Hooper; the holders of 21,993,723 shares voted in favor of, and
holders of 306,288 shares withheld their vote for, the election
of Jerome Kalishman; the holders of 21,999,245 shares voted in
favor of, and holders of 300,766 shares withheld their vote for,
the election of Silas Spengler; the holders of 22,002,095 shares
voted in favor of, and holders of 297,916 shares withheld their
vote for, the election of Russell B. Wight, Jr.; and the holders
of 22,001,749 shares voted in favor of, and holders of 298,262
shares withheld their vote for, the election of Sheldon Weinig.
(d) The terms of the Company's settlement agreement dated
July 25, 1997 with the Dissident Group (as defined therein) and
the additional incumbents on its Board of Directors are contained
under the caption "IV. Settlement Agreement" contained in the
Proxy Statement, the pertinent information of which is
incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits filed as part of this Quarterly Report on
Form 10-Q are listed on the annexed Index to Exhibits.
(b) During the quarter ended September 30, 1997, the
Company filed: (i) a Current Report on Form 8-K dated July 3,
1997, which, under "Item 5. Other Events" thereunder, reported an
agreement-in-principle to settle a proxy contest; and (ii) a
Current Report on Form 8-K dated July 25, 1997 which, under "Item
5. Other Events" thereunder, reported the definitive settlement
agreement. No financial statements were filed as part of any such
report.
<PAGE>
<PAGE>
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 thereunto duly authorized.
INSITUFORM TECHNOLOGIES, INC.
November 14, 1997 s/William A. Martin
- ----------------- --------------------
William A. Martin
Senior Vice President and
Principal Financial and
Accounting Officer<PAGE>
<PAGE>
INDEX TO EXHIBITS
3(a) - Certificate of Incorporation of the Company.
3(b) - By-Laws of the Company.
10(a) - First Amendment dated as of August 20, 1997 to Note
Purchase Agreements dated as of February 14, 1997
among the Company and, respectively, each of the
lenders listed therein, together with Guaranty
Agreement dated as of August 20, 1997 by each of the
subsidiaries named therein and Intercreditor
Agreement dated as of August 20, 1997 among
NationsBank, N.A. and such lenders.
10(b) - Loan Agreement dated as of August 20, 1997 between
NationsBank, N.A. and the Company together with
Unlimited Guaranty dated as of August 20, 1997 by
each of the subsidiaries named therein and
Contribution Agreement dated August 20, 1997 between
NationsBank, N.A. and such guarantors.
10(c) - Agreement dated July 25, 1997 among Jerome
Kalishman, Nancy F. Kalishman, Robert W. Affholder,
Xanadu Investments L.P., The Jerome and Nancy
Kalishman Family Fund, Paul A. Biddelman, Stephen P.
Cortinovis, Anthony W. Hooper, Silas Spengler,
Sheldon Weinig and Russell B. Wight, Jr.
(Incorporated by reference to Exhibit 99.1 to the
Current Report on Form 8-K dated July 25, 1997).
10(d) - Amendment No. 1 to the Agreement dated July 25, 1997
among Jerome Kalishman, Nancy F. Kalishman, Robert
W. Affholder, Xanadu Investments L.P., The Jerome
and Nancy Kalishman Family Fund, Paul A. Biddelman,
Stephen P. Cortinovis, Anthony W. Hooper, Silas
Spengler, Sheldon Weinig and Russell B. Wight, Jr.
10(e) - Amendment No. 2 dated October 8, 1997 to Agreement
dated October 25, 1995, as supplemented November 18,
1996, between the Company and Jerome Kalishman.
99 - Pages 6 through 9 of the Company's Proxy Statement
dated August 25, 1997.
11 - Statement re computation of per share earnings.
27 - Financial Data Schedule, which is submitted
electronically to the Securities and Exchange
Commission for information only and is not filed.
EXHIBIT 3(a)
CERTIFICATE OF INCORPORATION
OF
INSITUFORM OF NORTH AMERICA, INC.
I, the undersigned, in order to form a corporation for the
purposes hereinafter stated, under and pursuant to the provisions
of the General Corporation Law of the State of Delaware, do
hereby certify as follows:
FIRST: The name of the corporation is
INSITUFORM OF NORTH AMERICA INC.
SECOND: The registered office of the corporation is to be
located at c/o United Corporate Services, Inc., 410 South State
Street, in the City of Dover, County of Kent, State of Delaware.
The name of its registered agent at that address is United
Corporate Services, Inc.
THIRD: The purpose of the corporation is to engage in any
lawful act or activity for which a corporation may be organized
under the General Corporation Law of Delaware.
FOURTH: The corporation shall be authorized to issue two
million five hundred thousand (2,500,000) shares consisting of
one million two hundred fifty thousand (1,250,000) Class A Common
shares, par value one cent ($0.01) per share; seven hundred fifty
thousand (750,000) Class B Common Shares, par value one cent
($0.01) per share; and five hundred thousand (500,000) Preferred
shares, par value ten cents ($0.10) per share.
The designations and the powers, preferences and rights, and
the qualifications or restrictions thereof are as follows:
1. The holders of the Class A Common shares shall be
entitled to vote in all matters requiring shareholder and
shall be entitled to elect one-third (1/3) of the members of
the board of Directors less one (1) director; the holders of
the Class B Common shares shall be entitled to vote in all
matters requiring shareholder and shall be entitled to elect
two-thirds (2/3) of the members of the Board of Directors;
and the holders of the Preferred shares shall have the right
to elect one (1) member of the Board of Directors.
2. The holders of the Preferred shares shall be
entitled to receive one dollar and twenty cents ($1.20) per
share, per annum, cumulative dividends before any dividends
are declared and paid to the holders of the Class A Common
and the Class B Common shares.
<PAGE>
<PAGE>
3. The holders of the Preferred shares shall be
entitled, upon dissolution or liquidation of the
corporation, to share in the assets of the corporation,
ratably , in an aggregate amount of ten dollars ($10.00) per
share plus cumulative dividends declared and unpaid thereon
before any distribution is made to the Class A Common and
Class B Common shares.
4. The holders of the Preferred shares shall, at their
own discretion, be entitled to convert all of their shares
or any part thereof into shares of Class A Common at the
following rates:
(a) Through November 30th, 1983, on a one
Preferred share for one Class A Common share
basis. (b) The number of Class A Common
shares to be issued on conversion of the
Preferred shares shall be reduced by ten
percent (10%) each year thereafter beginning
December 1st, 1983 until November 30th,
1993.
5. The corporation shall, beginning December 1st,
1983, establish a Sinking Fund for the annual retirement of
ten percent (10%) of the outstanding Preferred shares.
FIFTH: The name and address of the incorporator are as
follows:
Name Address
Ray A. Barr 9 East 40th Street
New York, New York 10016
SIXTH: The following provisions are inserted for the
management of the business and for the conduct of the affairs of
the corporation, and for further definition, limitation and
regulation of the powers of the corporation and of its directors
and stockholders:
(1) The number of directors of the corporation shall be such
as from time to time shall be fixed by, or in the manner provided
in the by-laws. Election of directors need not be by ballot
unless the by-laws so provide.
(2) The Board of Directors shall have power without the
assent or vote of the stockholders:
(a) To make, alter, amend, change, add to or repeal the
By-Laws of the corporation; to fix and vary the amount to be
reserved for any proper purpose; to authorize and cause to
be executed mortgages and liens upon all or any part of the
property of the corporation; to determine the use and<PAGE>
<PAGE>
disposition of any surplus or net profits; and to fix the
times for the declaration and payment of dividends.
(b) To determine from time to time whether, and to what
extent, and at what times and places, and under what
conditions the accounts and books of the corporation (other
than the stock ledger) or any of them, shall be open to the
inspection of the stockholders.
(3) The directors at their discretion may submit any
contract or act for approval or ratification at any annual
meeting of the stockholders or at any meeting of the
stockholders called for the purpose of considering any such
act or contract, and any contract or act that shall be
approved or be ratified by the vote of the holders of a
majority of the stock of the corporation which is
represented in person or by proxy at such meeting and
entitled to vote thereat (provided that a lawful quorum of
stockholders be there represented in person or by proxy)
shall be a valid and as binding upon the corporation and
upon all the stockholders as though it had been approved or
ratified by every stockholder of the corporation, whether or
not the contract or act would otherwise be open to legal
attack because of directors' interest, or for any other
reason.
(4) In addition to the powers and authorities
hereinbefore or by statute expressly conferred upon them,
the directors are hereby empowered to exercise all such
powers and do all such acts and things as may be exercised
or done by the corporation; subject, nevertheless, to the
provisions of the statutes of Delaware, of this certificate,
and to any by-laws from time to time made by the
stockholders; provided, however, that no by-laws so made
shall invalidate any prior act of the directors which would
have been valid if such by-law had not been made.
SEVENTH: The corporation shall, to the full extent
permitted by Section 145 of the Delaware General Corporation Law,
as amended, from time to time, indemnify all persons whom it may
indemnify pursuant thereto.
EIGHTH: Whenever a compromise or arrangement is proposed
between this corporation and its creditors or any class of them
and/or between this corporation and its stockholders or any class
of them, any court of equitable jurisdiction within the State of
Delaware, may, on the application in a summary way of this
corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this
corporation under the provisions of Section 291 of Title 8 of the
Delaware Code or on the application of trustees in dissolution or
of any receiver or receivers appointed for this corporation under
the provisions of Section 279 Title 8 of the Delaware Code order<PAGE>
<PAGE>
a meeting of the creditors or class of creditors, and/or of the
stockholders or class of stockholders of this corporation, as the
case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths
(3/4) in value of the creditors or class of creditors, and/or of
the stockholders or class of stockholders of this corporation, as
the case may be, agree to any compromise or arrangement and to
any reorganization of this corporation as consequence of such
compromise or arrangement, the said compromise or arrangement and
the said reorganization shall, if sanctioned by the court to
which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders
or class of stockholders, of this corporation, as the case may
be, and also on this corporation.
NINTH: The corporation reserves the right to amend, alter,
change or repeal any provision contained in this certificate of
incorporation in the manner now or hereafter prescribed by law,
and all rights and powers conferred herein on stockholders,
directors and officers are subject to this reserved power.
IN WITNESS WHEREOF, I have hereunto signed my name and
affirm that the statements made herein are true under the
penalties of perjury, this 12th day of March, 1980.
/s/ RAY A. BARR
Ray A. Barr, Incorporator
<PAGE>
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INSITUFORM OF NORTH AMERICA, INC.
INSITUFORM OF NORTH AMERICA, INC., a corporation organized
and existing under the General Corporation Law of the State of
Delaware (the "Corporation"), does hereby certify:
FIRST: The name of the Corporation is INSITUFORM OF NORTH
AMERICA, INC.
SECOND: The amendment to the Certificate of Incorporation
to be effected hereby is as follows:
Paragraph "FOURTH" of the Certificate of Incorporation,
relating to the number of authorized shares of the Corporation is
hereby amended to read as follows:
FOURTH: The Corporation shall be authorized to issue
five million (5,000,000) shares consisting of three million
seven hundred fifty thousand (3,750,000) Class A common
shares, par value One Cent ($0.01) per share; seven hundred
fifty thousand (750,000) Class B common shares, par value
One Cent ($0.01) per share; and five hundred thousand
(500,000) preferred shares, par value Ten Cents ($0.10) per
share.
The designations and the powers, preferences and rights, and
the qualifications or restrictions thereof are as follows:
1. The holders of the Class A Common shares shall be
entitled to vote in all matters requiring shareholder and
shall be entitled to elect one-third (1/3) of the members of
the Board of Directors less one (1) director; the holders of
the Class B Common shares shall be entitled to vote in all
matters requiring shareholder and shall be entitled to elect
two-thirds (2/3) of the members of the Board of Directors;
and the holders of the Preferred shares shall have the right
to elect one (1) member of the Board of Directors.
2. The holders of the Preferred shares shall be
entitled to receive one dollar and twenty cents ($1.20) per
share, per annum, cumulative dividends before any dividends
are declared and paid to the holders of the Class A Common
and the Class B Common shares.
3. The holders of the Preferred shares shall be
entitled, upon dissolution or liquidation of the
corporation, to share in the assets of the corporation,
ratably, in an aggregate amount of ten dollars ($10.00) per
share plus cumulative dividends declared and unpaid thereon<PAGE>
<PAGE>
before any distribution is made to the Class A Common and
Class B Common shares.
4. The holders of the Preferred shares shall, at their
own discretion, be entitled to convert all of their shares
or any part thereof into shares of Class A Common at the
following rates:
(a) Through November 30th, 1983, on a one
Preferred share for one Class A Common share
basis. (b) The number of Class A Common
shares to be issued on conversion of the
Preferred shares shall be reduced by ten
percent (10%) each year thereafter beginning
December 1st, 1983 until November 30th,
1993.
5. The corporation shall, beginning December 1st,
1983, establish a Sinking Fund for the annual retirement of
ten percent (10%) of the outstanding Preferred shares."
THIRD: This amendment to the Corporation's Certificate of
Incorporation has been authorized by the consent, in writing,
setting forth the action so taken, unanimously signed by the
holders of all the outstanding shares entitled to vote thereon
pursuant to Sections 228 and 242 of the General Corporation Law
of the State of Delaware and by the unanimous consent of all of
the directors of the Corporation, all as duly adopted in
accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, INSITUFORM OF NORTH AMERICA, INC. has
caused this certificate to be signed and attested by duly
authorized officers this 15th day of January, 1981.
INSITUFORM OF NORTH AMERICA, INC.
By: /s/ Matthew McPheely
President
/s/ John Slater
Secretary
<PAGE>
<PAGE>
UNANIMOUS WRITTEN CONSENT
The undersigned, constituting all of the shareholders of
INSITUFORM OF NORTH AMERICA, INC., and its Board of Directors
hereby consent to the adoption of the amendment reflected in the
attached Certificate of Amendment to the Certificate of
Incorporation of INSITUFORM OF NORTH AMERICA, INC. and direct
that it be filed forthwith with the appropriate authorities in
the State of Delaware and elsewhere.
SALISBURY LTD.
By: /s/ Paul Church
Paul Church
RINGWOOD LTD.
By:
Paul Church
<PAGE>
<PAGE>
UNANIMOUS WRITTEN CONSENT
The undersigned, constituting all of the shareholders of
INSITUFORM OF NORTH AMERICA, INC., and its Board of Directors
hereby consent to the adoption of the amendment reflected in the
attached Certificate of Amendment to the Certificate of
Incorporation of INSITUFORM OF NORTH AMERICA, INC. and direct
that it be filed forthwith with the appropriate authorities in
the State of Delaware and elsewhere.
SALISBURY LTD.
By:
Paul Church
RINGWOOD LTD.
By: /s/ Paul Church
Paul Church
<PAGE>
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INSITUFORM OF NORTH AMERICA, INC.
INSITUFORM OF NORTH AMERICA, INC., a corporation organized
and existing under the General Corporation Law of the State of
Delaware (the "Corporation"), does hereby certify:
FIRST: The name of the Corporation is INSITUFORM OF NORTH
AMERICA, INC.
SECOND: The amendment to the Certificate of Incorporation
to be effected hereby is as follows:
Paragraph "FOURTH" of the Certificate of Incorporation,
relating to the number of authorized shares of the Corporation is
hereby amended to read as follows:
"FOURTH: The Corporation shall be authorized to issue
ten million five hundred thousand (10,500,000) shares
consisting of eight million seven hundred fifty thousand
(8,750,000) Class A common shares par value One Cent ($0.01)
per share; one million two hundred fifty thousand
(1,250,000) Class B common shares; par value One Cent
($0.01) per share; and five hundred thousand (500,000)
preferred shares, par value Ten Cents ($0.10) per share.
The designations and the powers, preferences and rights, and
the qualifications or restrictions thereof are as follows:
1. The holders of all Common shares shall have equal
voting rights except in the election of Directors. The
Class A shares shall be entitled to elect as a class
one-third (1/3) of the members of the Board of Directors
less directors elected by the holders of the Company's
preferred stock. The holders of the Class B Common shares
shall be entitled to elect two-thirds (2/3) of the members
of the Board of Directors. Notwithstanding the above, the
Board of Directors may provide that in the event dividends
on one or more series of the Company's preferred stock are
in arrears, the holders of such series may be entitled to
elect additional directors. The class B shares shall be
convertible into class A shares at the option of the holder
thereof on a share for share basis.
2. The preferred shares shall be issued in one or more
series designated by the Board of Directors without further
shareholder action and shall bear such terms and
designations as the Board of Directors may fix, including
dividend rates, redemption rights, conversion rights,
liquidation preferences, voting rights (provided that the<PAGE>
<PAGE>
Board of Directors may designate that the holders of one or
more series of preferred stock shall be entitled as a series
to elect one director and the Board of Directors may at its
discretion grant the holders of one or more series of the
Company's preferred stock the right to elect additional
directors in the event that dividends on such series shall
be in arrears) and such other terms as the Board of
Directors shall determine. Any preferred shares reacquired
by the Company may be reissued without further shareholder
approval.
THIRD: This amendment to the Corporation's Certificate of
Incorporation has been authorized by the consent, in writing,
setting forth the action so taken, unanimously signed by the
holders of all the outstanding shares entitled to vote thereon
pursuant to Sections 228 and 242 of the General Corporation Law
of the State of Delaware and by the unanimous consent of all of
the directors of the Corporation, all as duly adopted in
accordance with the provisions of Section 242 of the General
Corporation Law of the State of Delaware and restates the
provisions of amendments previously filed with the Secretary of
State of Delaware.
IN WITNESS WHEREOF, INSITUFORM OF NORTH AMERICA, INC. has
caused this certificate to be signed and attested by duly
authorized officers as of the 15th day of January, 1981.
INSITUFORM OF NORTH AMERICA, INC.
By: /s/ Matthew McPheely
President
/s/ John Slater
Secretary
<PAGE>
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INSITUFORM OF NORTH AMERICA, INC.
INSITUFORM OF NORTH AMERICA, INC., a corporation organized
and existing under and by virtue of the laws of the State of
Delaware (the "Corporation"), pursuant to the provisions of the
General Corporation Law of the State of Delaware (the "GCL") does
hereby certify as follows:
FIRST: The Certificate of Incorporation is hereby amended
by adding a new Paragraph Tenth after Paragraph Ninth in the
following form:
TENTH: No person who is or was at any
time a director of the corporation shall be
personally liable to the corporation or its
stockholders for monetary damages for any
breach of fiduciary duty by such person as a
director; provided, however, that, unless
and except to the extent otherwise permitted
from time to time by applicable law, the
provisions of this Paragraph Tenth shall not
eliminate or limit the liability of a
director (i) for breach of the director's
duty of loyalty to the corporation or its
stockholders, (ii) for any act or omission
by the director which is not in good faith
or which involves intentional misconduct or
a knowing violation of law, (iii) under
Section 174 of the General Corporation Law
of the State of Delaware, (iv) for any
transaction from which the director derived
an improper personal benefit or (v) for any
act or omission occurring prior to the date
this Paragraph Tenth becomes effective. No
amendment to or repeal of this Paragraph
Tenth shall apply to or have any effect on
the liability or alleged liability of any
director of the corporation for or with
respect to any act or omission of such
director occurring prior to such amendment
or repeal.
SECOND: The amendment to the Certificate of Incorporation
of the Corporation set forth in this Certificate of Amendment has
been duly adopted in accordance with the applicable provisions of
Section 242 of the GCL (a) the Board of Directors of the
Corporation having duly adopted resolutions setting forth such
amendment and declaring their advisability at a meeting of the
Board of Directors of the Corporation duly called and held on<PAGE>
<PAGE>
April 14, 1988 in conformity with the By-laws of the Corporation,
and (b) the stockholders of the Corporation having duly adopted
such amendment by the affirmative vote of the holders of a
majority of the outstanding stock entitled to vote thereon, on
June 14, 1988, taken at the Corporation's annual meeting of
stockholders duly called and held upon notice in accordance with
Section 222 of the GCL.
THIRD: The capital of the Corporation will not be reduced
under or by reason of the amendment to its Certificate of
Incorporation set forth in this Certificate of Amendment.
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be executed on its behalf by Robert M. Leopold,
its Chief Executive Officer and attested by Howard Kailes, its
Secretary, as of this 14th day of June, 1988.
/s/ ROBERT M. LEOPOLD
Robert M. Leopold
Chief Executive Officer
[CORPORATE SEAL]
ATTEST:
/s/ HOWARD KAILES
Howard Kailes
Secretary
<PAGE>
<PAGE>
STATE OF NEW YORK )
) SS.:
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, on this day personally
appeared ROBERT M. LEOPOLD, Chief Executive Officer, of
INSITUFORM OF NORTH AMERICA, INC., known to me to be the person
and officer whose name is subscribed to the foregoing instrument,
and acknowledged to me that he executed same for the purposes and
consideration therein expressed and in the capacity therein
stated as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this 14th day of
June, 1988.
/s/ EVELYN M. THORNLEY
Notary Public in and for the State
of New York
My Commission Expires:
EVELYN M. THORNLEY
Notary Public, State of New York
No. 31-4679747
Qualified in New York County
Commission Expires Sept. 30, 1988
<PAGE>
<PAGE>
CERTIFICATE OF DESIGNATION
OF SERIES C CUMULATIVE, NON-VOTING PREFERRED STOCK
OF
INSITUFORM OF NORTH AMERICA, INC.
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
We, Robert M. Leopold, Chief Executive Officer, and Howard
Kailes, Secretary of Insituform of North America, Inc., a
corporation organized and existing under the General Corporation
Law of the State of Delaware, in accordance with the provisions
of Section 103 thereof, DO HEREBY CERTIFY:
That pursuant to the authority conferred upon the Board of
Directors by Paragraph Fourth of the Certificate of Incorporation
of said Corporation and in accordance with the provisions of
Section 151 of the General Corporation Law of the State of
Delaware, its Board of Directors on November 18, 1988, adopted
the following resolution designating a series of its Preferred
Stock, $.10 par value, as Series C Cumulative, Non-Voting
Preferred Stock:
RESOLVED, that pursuant to the authority vested in
the Board of Directors of this Corporation in
accordance with the provisions of Paragraph Fourth of
its Certificate of Incorporation, a series of Preferred
Stock, $.10 par value, of this Corporation, be and it
hereby is created, and that the designation and amount
thereof and the voting powers, preferences, and other
special rights, qualifications, limitations and
restrictions thereof are as follows:
(A) Designation and Amount. An aggregate of
200,000 shares of Preferred Stock, $.10 par value, of
the Corporation are hereby constituted as a series
designated as "Series C Cumulative, Non-Voting
Preferred Stock (the "Series C Cumulative, Non-Voting
Preferred Stock"). Such number of shares may be
increased or decreased by resolution of the Board of
Directors; provided, that no decrease shall reduce the
number of shares of Series C Cumulative, Non-Voting
Preferred Stock to a number less than the number of
shares then outstanding plus the number of shares
reserved for issuance upon satisfaction of the
conditions under any contingent rights granted by the
Corporation with respect to Series C Cumulative,
Non-Voting Preferred Stock.<PAGE>
<PAGE>
(B) Dividends.
(1) The holders of shares of Series C
Cumulative, Non-Voting Preferred Stock in
preference to the holders of class A common
stock, $.01 par value (the "Class A Common
Stock"), of the Corporation and class B common
stock, $.01 par value (the "Class B Common
Stock"), of the Corporation, and of any other
junior stock, shall be entitled to receive, when,
as and if declared by the Board of Directors out
of funds legally available for that purpose, and
to the extent not in violation of or in conflict
with any covenant made or to be made by the
Corporation under the Loan Agreement dated
December 20, 1985 between The Industrial
Development Board of the City of Memphis and
County of Shelby, Tennessee or the Guaranty dated
as of December 1, 1988 in favor of Third National
Bank in Nashville, as Trustee, or extended on
substantially the same terms in favor of any
other financial institution (collectively, the
"Loan Documents"), semi-annual dividends payable
in cash on the first day of January and July in
each year (each such date being referred to
herein as a "Semi-Annual Dividend Payment Date",
commencing on the first Semi-Annual Dividend
Payment Date after the first issuance of a share
or fraction of a share of Series C Cumulative,
Non-Voting Preferred Stock, in an amount per
share equal to $5.40.
(2) Dividends shall begin to accrue and be
cumulative, whether or not earned or declared, on
outstanding shares of Series C Cumulative,
Non-Voting Preferred Stock from and after the
date of issue of such shares, unless the date of
issue of such shares is prior to the record date
for the first Semi-Annual Dividend Payment Date,
in which case dividends on such shares shall
begin to accrue from the date of issue of such
shares, or unless the date of issue is a
Semi-Annual Dividend Payment Date or is a date
after the record date for the determination of
holders of shares of Series C Cumulative,
Non-Voting Preferred Stock entitled to receive a
Semi-Annual Dividend and before such Semi-Annual
Dividend Payment Date, in either of which events
such dividends shall begin to accrue and be
cumulative for such Semi-Annual Dividend Payment
Date. Accrued but unpaid dividends shall not bear
interest. Dividends paid on the shares of Series
C Cumulative, Non-Voting Preferred Stock in an<PAGE>
<PAGE>
amount less than the total amount of such
dividends at the time accrued and payable on such
shares shall be allocated pro-rata on a share-by-
share basis among all such shares at the time
outstanding. The Board of Directors may fix a
record date for the determination of holders of
shares of Series C Cumulative, Non-Voting
Preferred Stock entitled to receive payment of a
dividend declared, which record date shall not be
more than 60 days prior to the date fixed for the
payment thereof.
(C) Voting Rights. Except as set forth herein, or
as otherwise provided by law, holders of Series C
Cumulative, Non-Voting Preferred Stock shall have no
voting rights. On all matters with respect to which
holders of the Series C Cumulative, Non-Voting
Preferred Stock are entitled to vote as a single class
as aforesaid, each holder of Series C Cumulative,
Non-Voting Preferred Stock afforded such class voting
right shall be entitled to one vote for each share
held.
(D) Certain Restrictions. Whenever semi-annual
dividends payable on the Series C Cumulative,
Non-Voting Preferred Stock as provided in Section B
hereof are in arrears for three consecutive semi-annual
periods, thereafter and until all accrued and unpaid
dividends, whether or not earned or declared, on shares
of Series C Cumulative, Non-Voting Preferred Stock
outstanding shall have been paid in full, the
Corporation shall not:
(1) declare or pay dividends on any shares
of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up)
to the Series C Cumulative, Non-Voting Preferred
Stock;
(2) declare or pay dividends on any shares
ranking pari passu (either as to dividends or
upon liquidation, dissolution or winding up) with
the Series C Cumulative, Non-Voting Preferred
Stock, except dividends paid ratably on the
Series C Cumulative, Non-Voting Preferred Stock
and all such parity stock on which dividends are
payable or in arrears in proportion to the total
amounts to which the holders of all such shares
are then entitled;
<PAGE>
<PAGE>
(3) redeem or purchase or otherwise acquire
for consideration shares of any stock ranking
junior (either as to dividends or upon
liquidation, dissolution or winding up) to the
Series C Cumulative, Non-Voting Preferred Stock,
provided that the Corporation may at any time,
redeem, purchase or otherwise acquire shares of
any such junior stock in exchange for shares of
any stock of this Corporation ranking junior
(either as to dividends or upon dissolution,
liquidation or winding up) to the Series C
Cumulative, Non-Voting Preferred Stock; and
(4) redeem or purchase or otherwise acquire
for consideration shares of Series C Cumulative,
Non-Voting Preferred Stock, or any shares of
stock ranking pari passu with the Series C
Cumulative, Non-Voting Preferred Stock except in
accordance with a purchase offer made in writing
or by publication (as determined by the Board of
Directors) to all holders of such shares upon
such terms as the Board of Directors, after
consideration of the respective annual dividend
rate and other relative rights and preferences of
the respective series and classes, shall
determine in good faith will result in fair and
equitable treatment among the respective series
or classes.
(E) Reacquired Shares. Any shares of the Series
C Cumulative, Non-Voting Preferred Stock purchased or
otherwise acquired by this Corporation in any manner
whatsoever shall be retired and cancelled promptly
after the acquisition thereof. All such shares shall
upon their cancellation become authorized but unissued
as shares of Preferred Stock and may be reissued as
Series C Cumulative, Non-Voting Preferred Stock or as
part of a new series of Preferred Stock subject to the
conditions and restrictions of issuance set forth
herein, in the Certificate of Incorporation or as
otherwise required by law.
(F) Liquidation, Dissolution or Winding Up.
(1) Upon any liquidation, dissolution or
winding up of this Corporation, no distribution
shall be made to the holders of shares of stock
ranking junior (either as to dividends, or upon
liquidation, dissolution or winding up) to the
Series C Cumulative, Non-Voting Preferred Stock
unless prior thereto, the holders of shares of
Series C Cumulative, Non-Voting Preferred Stock
shall have received $200 per share, plus an<PAGE>
<PAGE>
amount equal to accrued and unpaid dividends
thereon, whether or not declared or earned, to
the date of such payment. After such payments to
holders of Series C Cumulative, Non-Voting
Preferred Stock, the holders thereof, as such,
shall not have any right to participate in any
further distribution of or payment out of the
assets of the Corporation.
(2) If upon any voluntary or involuntary
liquidation, dissolution or winding up of the
Corporation, the assets available for
distribution to holders of shares of Series C
Cumulative, Non-Voting Preferred Stock shall be
insufficient to pay such holders the full
preferential amount to which they are entitled,
then such assets shall be distributed ratably
among the shares of Series C Cumulative,
Non-Voting Preferred Stock in accordance with the
respective preferential amounts, including unpaid
cumulative dividends, if any, payable with
respect thereto.
(G) Redemption. Each share of Series C
Cumulative, Non-Voting Preferred Stock shall, out of
funds legally available for that purpose, be redeemed
by the Corporation on the date (the "Redemption Date")
which falls five years from its date of issuance, at a
redemption price of $200, plus an amount equal to all
accrued and unpaid dividends on such share, whether or
not declared or earned, to the Redemption Date. Notice
of each redemption shall be mailed at least 30 days
prior to the Redemption Date with respect thereto,
shall state the date, place and purchase price of such
redemption and shall be given to the holders of record
of the shares of Series C Cumulative, Non-Voting
Preferred Stock to be redeemed, by first class mail,
postage pre-paid, at such holder's address of record.
On the Redemption Date, all dividends on the shares to
be redeemed shall cease to accrue, all rights with
respect to such shares so to be redeemed shall
forthwith on such date cease and determine (except only
the right of the holder to receive the redemption price
therefor, but without any interest), and such shares so
called for redemption shall no longer be deemed
outstanding. On or before each Redemption Date, the
respective holders of record of shares to be redeemed
shall deliver to the Corporation the certificates for
the shares to be redeemed. Notwithstanding any other
provision contained in this Paragraph (G), in the event
and to the extent that any redemption of shares of
Series C Cumulative, Non-Voting Preferred Stock would
violate or conflict with any covenant made or to be<PAGE>
<PAGE>
made by the Corporation under the Loan Documents, the
Redemption Date with respect to such shares shall be
postponed to the earliest date not resulting in such
violation or conflict.
(H) Junior Stock. For purposes hereof, the term
"junior stock" shall mean the Class A Common Stock and
the Class B Common Stock and any other class of stock
of the Corporation hereinafter authorized which shall
rank junior to the Series C Cumulative, Non-Voting
Preferred Stock as to all dividends or preference on
dissolution, liquidation or winding up of the
Corporation.
(I) No Pre-Emption; Amendment. No right to
subscribe for or to take any stock of any class or any
securities convertible to any stock, at any time issued
by the Corporation shall vest in or accrue to any
holder of shares of Series C Cumulative, Non-Voting
Preferred Stock with respect to any shares which he
holds. The Certificate of Incorporation of this
Corporation shall not be amended in any manner which
would materially alter or change the powers,
preferences or special rights of the Series C
Cumulative, Non-Voting Preferred Stock so as to affect
them adversely without the affirmative vote of the
holders of at least two-thirds of the outstanding
shares of Series C Cumulative, Non-Voting Preferred
Stock, voting together as a single series.
This resolution was duly adopted by the Board of Directors
of this Corporation at a meeting thereof duly called and held on
November 18, 1988, at which a quorum was present and acting
throughout.
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be hereunder affixed and this Certificate of Designation
to be signed by Robert M. Leopold, its Chief Executive Officer
and attested to, by Howard Kailes, its Secretary, on the 1st day
of December, 1988.
INSITUFORM OF NORTH AMERICA, INC.
By /s/ ROBERT M. LEOPOLD
Robert M. Leopold
Chief Executive Officer
[SEAL]
Attest:
/s/ HOWARD KAILES
Howard Kailes
Secretary<PAGE>
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INSITUFORM OF NORTH AMERICA, INC.
INSITUFORM OF NORTH AMERICA, INC., a corporation organized
and existing under and by virtue of the laws of the State of
Delaware (the "Corporation"), pursuant to the provisions of the
General Corporation Law of the State of Delaware (the "GCL") does
hereby certify as follows:
FIRST: The Certificate of Incorporation is hereby amended
by deleting the first paragraph of Article Fourth in its present
form and substituting therefor a new paragraph in the following
form:
FOURTH: The Corporation shall be authorized to issue
twenty-eight million two hundred fifty thousand (28,250,000)
shares consisting of twenty-five million (25,000,000) Class
A common shares par value One Cent ($0.01) per share; one
million two hundred fifty thousand (1,250,000) Class B
common shares; par value One Cent ($0.01) per share; and two
million (2,000,000) preferred share, par value Ten Cents
($0.10) per share.
SECOND: The amendment to the Certificate of Incorporation
of the Corporation set forth in this Certificate of Amendment has
been duly adopted in accordance with the applicable provisions of
Section 242 of the GCL (a) the Board of Directors of the
Corporation having duly adopted resolutions setting forth such
amendment and declaring its advisability at a meeting of the
Board of Directors of the Corporation duly called and held on
March 27, 1990 in conformity with the By-laws of the Corporation,
and (b) the stockholders of the Corporation having duly adopted
such amendment by the affirmative vote of the holders of a
majority of the outstanding stock entitled to vote thereon, and
the affirmative vote of a majority of holders of the class A
common stock, $.01 par value, of the Corporation, voting as a
class, on August 24, 1990, taken at the Corporation's annual
meeting of stockholders duly called and held upon notice in
accordance with Section 222 of the GCL.
THIRD: The capital of the Corporation will not be reduced
under or by reason of the amendments to its Certificate of
Incorporation set forth in this Certificate of Amendment.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be executed on its behalf by James D. Krugman,
its Chairman of the Board, and attested by Howard Kailes, its
Secretary, as of this 24th day of August 1990.
/s/ JAMES D. KRUGMAN
James D. Krugman
Chairman of the Board
[Corporate Seal]
ATTEST:
/s/ HOWARD KAILES
Howard Kailes
Secretary
<PAGE>
<PAGE>
STATE OF NEW JERSEY )
)
COUNTY OF BERGEN )
BEFORE ME, the undersigned authority, on this day personally
appeared JAMES D. KRUGMAN, Chairman of the Board, and Howard
Kailes, Secretary, of INSITUFORM OF NORTH AMERICA, INC., known to
me to be the persons and officers whose names are subscribed to
the foregoing instrument, and acknowledged to me that they
executed same for the purposes therein expressed and in the
capacity therein stated as the act and deed of said corporation.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, THIS 24TH DAY OF
AUGUST, 1990.
/S/ Carmen Aiello
Notary Public in and for the
State of New Jersey
My Commission Expires:
CARMEN AIELLO
A Notary Public of New Jersey
My Commission Expires 2/28/96
<PAGE>
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INSITUFORM OF NORTH AMERICA, INC.
INSITUFORM OF NORTH AMERICA, INC., a corporation organized
and existing under the General Corporation Law of the State of
Delaware (the "Corporation") pursuant to the provisions of the
General Corporation Law of the State of Delaware (the "GCL") does
hereby certify as follows:
FIRST: The Certificate of Incorporation is hereby amended
as follows:
(1) Article "FIRST" of the Certificate of Incorporation is
hereby amended in its entirety to read as follows:
"FIRST: The name of the corporation is INSITUFORM
TECHNOLOGIES, INC."
(2) Article "FOURTH" of the Certificate of Incorporation is
hereby amended in its entirety to read as follows:
"FOURTH: The corporation shall be authorized to issue
twenty-seven million (27,000,000) shares, consisting of
twenty-five million (25,000,000) Class A Common shares, par value
one cent ($0.01) per share; and two million (2,000,000) Preferred
shares, par value ten cents ($0.10) per share ("Preferred
Stock").
The shares of Preferred Stock shall be issued in one or
more series designated by the Board of Directors without further
shareholder action and shall bear such terms and designation as
the Board of Directors may fix, including dividend rates,
redemption rights, conversion rights, liquidation preferences,
voting rights (provided that the Board of Directors may designate
that the holders of one or more series of Preferred Stock shall
be entitled as a series to elect one director and the Board of
Directors may at its discretion grant the holders of one or more
series of the corporation's shares of Preferred Stock the right
to elect additional directors in the event that dividends on such
series shall be in arrears) and such other terms as the Board of
Directors shall determine. Any shares of Preferred Stock
reacquired by the corporation may be reissued without further
shareholder approval."
(3) Article "SIXTH" of the Certificate of Incorporation is
hereby amended in its entirety to read as follows:
"SIXTH: The following provisions are inserted for the
management of the business and for the conduct of the
affairs of the corporation, and for further definition,
limitation and regulation of the powers of the corporation
and of its directors and shareholders:<PAGE>
<PAGE>
(1) The number of directors of the corporation
shall be such as from time to time shall be fixed by,
or in the manner provided in, the by-laws; provided,
however, that the number of directors of the
corporation shall not be less than six (6) nor shall
the number of directors of the corporation exceed
fifteen (15). Election of directors need not be by
ballot unless the by-laws so provide.
(2) Effective as of the Effective Date (as such
term is defined in that certain Agreement, dated July
3, 1992, among the corporation, INA Acquisition Corp.
and Insituform Group Limited), as it may be amended
from time to time (the "Acquisition Agreement"), the
Board of Directors shall be divided into three classes,
designated Class I, Class II and Class III, as nearly
equal in number as possible. Members of all three
classes will be appointed on the Effective Date by the
Board of Directors in accordance with the terms of the
Acquisition Agreement. The initial term of office of
directors of Class I shall expire at the annual meeting
of shareholders in 1993; that of Class II shall expire
at the annual meeting of shareholders in 1994; and that
of Class III shall expire at the annual meeting of
shareholders in 1995. At each succeeding annual
meeting of shareholders beginning in 1993, successors
to the class of directors whose term expires at that
annual meeting shall be elected for a three-year term.
Additional directorships resulting from an increase in
number of directors shall be appointed among the
classes as equally as possible. Vacancies, created
from an increase in the size of the Board of Directors,
shall be filled by the affirmative vote of a majority
of the Board of Directors then in office, or such
greater affirmative vote of directors as may be
specified from time to time in the By-laws of the
corporation, provided that a quorum is present, and any
other vacancy occurring in the Board of Directors may
be filled by a majority of the directors then in
office, which appointments shall be made in accordance
with Section 7.3 of the Acquisition Agreement so long
as it is in effect, even if less than a quorum, or by
a sole remaining director. Any additional director of
any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term
that shall coincide with the remaining term of that
class, but in no case will a decrease in the number of
directors shorten the term of any incumbent director.
A director shall hold office until the annual meeting
for the year in which his term expires and until his
successor shall be elected and shall qualify, subject,
however, to prior death, resignation, retirement,
disqualification or removal from office. Any director
elected to fill a vacancy not resulting from an<PAGE>
<PAGE>
increase in the number of directors shall have the same
remaining term as that of his predecessor.
Notwithstanding any provision of this Article
SIXTH, whenever the holders of any one or more series
of Preferred Stock issued by the corporation shall have
the right, voting separately by class or series, to
elect directors at an annual or special meeting of
shareholders or any class or series, the election, term
of office, filling of vacancies and other features of
such directorships shall be governed by the terms of
this Certificate of Incorporation or the resolution or
resolutions adopted by the Board of Directors pursuant
to Article FOURTH hereof applicable thereto, and such
directors so elected shall not be divided into classes
pursuant to this Article SIXTH unless expressly
provided by such terms.
(3) The Board of Directors shall have power without the
assent or vote of the shareholders:
(a) To make, alter, amend, change, add to or
repeal the by-laws of the corporation; to fix and vary
the amount to be reserved for any proper purpose; to
authorize and cause to be executed mortgages and liens
upon all or any part of the property of the
corporation; to determine the use and disposition of
any surplus or net profits; and to fix the times for
the declaration and payment of dividends.
(b) To determine from time to time whether, and to
what extent, and at what times and places, and under
what conditions the accounts and books of the
corporation (other than the stock ledger) or any of
them, shall be open to the inspection of the
shareholders.
(4) The directors at their discretion may submit any
contract or act for approval or ratification at any annual
meeting of shareholders or at any meeting of the
shareholders called for the purpose of considering any such
act or contract, and any contract or act that shall be
approved or be ratified by the vote of the holders of a
majority of the stock of the corporation which is
represented in person or by proxy at such meeting and
entitled to vote thereat (provided that a lawful quorum of
shareholders be there represented in person or by proxy)
shall be as valid and as binding upon the corporation and
upon all the shareholders as though it had been approved or
ratified by every shareholder of the corporation, whether or
not the contract or act would otherwise be open to legal
attack because of directors' interest, or for any other
reason.
<PAGE>
<PAGE>
(5) In addition to the powers and authorities
hereinbefore or by statute expressly conferred upon them,
the directors are hereby empowered to exercise all such
powers and do all such acts and things as may be exercised
or done by the corporation; subject, nevertheless, to the
provisions of the statutes of Delaware, of this certificate,
and to any by-laws from time to time made by the
shareholders; provided, however, that no by-laws so made
shall invalidate any prior act of the directors which would
have been valid if such by-law had not been made."
(4) The Certificate of the Incorporation is hereby amended
to add a new Article "ELEVENTH" after Article "TENTH" in the
following form:
"ELEVENTH: Subject to the rights of the holders of any
class or series of Preferred Stock expressly set forth in
this Certificate of Incorporation, the Certificate of
Designation related to such class or series of Preferred
Stock or as otherwise required by law, any action required
or permitted to be taken by the shareholders of the
corporation must be effected exclusively at a duly called
annual or special meeting of such shareholders and may not
be effected by any consent in writing by such shareholders.
This Article ELEVENTH may not be repealed or amended in any
respect, and no provision inconsistent with this Article
ELEVENTH may be adopted, unless such action is approved by
the affirmative vote of the holders of not less than eighty
(80) percent of the combined voting power of the then
outstanding shares of capital stock of the corporation
entitled to vote generally in the election of directors."
SECOND: The amendments to the Certificate of Incorporation
of the Corporation set forth in this Certificate of Amendment
have been duly adopted in accordance with the applicable
provisions of Section 242 of the GCL (a) the Board of Directors
of the Corporation having duly adopted resolutions setting forth
such amendments and declaring their advisability at a meeting of
the Board of Directors of the Corporation duly called and held on
September 15, 1992 in conformity with the By-laws of the
Corporation, and (b) the stockholders of the Corporation having
duly adopted such amendments by the affirmative vote of the
holders of the majority of the outstanding stock entitled to vote
thereon, and the affirmative vote of a majority of the
outstanding stock of each class entitled to vote thereon, at a
special meeting of stockholders duly called and held on December
3, 1992 upon notice in accordance with Section 222 of the GCL.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, INSITUFORM OF NORTH AMERICA, INC. has
caused this certificate to be signed and attested by duly
authorized officers as of the 9th day of December, 1992.
INSITUFORM OF NORTH AMERICA, INC.
BY:/s/ James D. Krugman
James D. Krugman
Chairman of the Board
ATTEST:
/s/ Howard Kailes
Howard Kailes
Secretary
<PAGE>
<PAGE>
CERTIFICATE ELIMINATING REFERENCE TO
SERIES C CUMULATIVE, NON-VOTING PREFERRED STOCK
FROM THE CERTIFICATE OF INCORPORATION
OF INSITUFORM TECHNOLOGIES, INC.
Pursuant to Section 151(g) of
the General Corporation Law of the State of Delaware
We, Jean-Paul Richard, President and Chief Executive
Officer, and Howard Kailes, Secretary of Insituform Technologies,
Inc., a corporation organized and existing under the General
Corporation Law of the State of Delaware, in accordance with the
provisions of Section 103 thereof, DO HEREBY CERTIFY:
That in accordance with the provisions of Section 151(g) of
the General Corporation Law of the State of Delaware, its Board
of Directors on September , 1995, adopted the following
resolutions eliminating its Series C Cumulative, Non-Voting
Preferred Stock, $.10 par value:
WHEREAS, pursuant to a Certificate of Designation filed
on behalf of the Corporation with the Secretary of State of
Delaware on December 2, 1988, this Corporation created its
Series C Cumulative, Non-Voting Preferred Stock, $.10 par
value (the "Series C Cumulative, Non-Voting Preferred
Stock"); and
WHEREAS, none of the authorized Series C Cumulative,
Non-Voting Preferred Stock so designated is outstanding; and
WHEREAS, none of the said Series C Cumulative,
Non-Voting Preferred Stock of the Corporation will be
issued;
NOW THEREFORE, BE IT RESOLVED, that the appropriate
officers of the Corporation be and hereby are authorized and
directed to file a certificate setting forth this resolution
with the Secretary of State of the State of Delaware
pursuant to the provisions of Section 151(g) of the General
Corporation Law of the State of Delaware for the purpose of
eliminating from the certificate of incorporation of the
Corporation all reference to the said Series C Cumulative,
Non-Voting Preferred Stock.
IN WITNESS WHEREOF, the Corporation has caused its corporate
seal to be hereunder affixed and this Certificate of Designation
to be signed by Jean-Paul Richard, its President and Chief
Executive Officer, and attested to by Howard Kailes, its
Secretary, on the 6th day of September, 1995.
INSITUFORM TECHNOLOGIES, INC.
By /s/ Jean-Paul Richard
Jean-Paul Richard, President
and Chief Executive Officer
<PAGE>
Attest:
/s/ Howard Kailes
Howard Kailes, Secretary<PAGE>
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INSITUFORM TECHNOLOGIES, INC.
INSITUFORM TECHNOLOGIES, INC., a corporation organized and
existing under the General Corporation Law of the State of
Delaware (the "Corporation") pursuant to the provisions of the
General Corporation Law of the State of Delaware (the "GCL") does
hereby certify as follows:
FIRST: The Certificate of Incorporation is hereby amended as
follows:
(1) Article "FOURTH" of the Certificate of Incorporation is
hereby amended in its entirety to read as follows:
"FOURTH: The corporation shall be authorized to
issue forty-two million (42,000,000) shares, consisting
of forty million (40,000,000) Class A Common shares,
par value one cent ($0.01) per share; and two million
(2,000,000) Preferred shares, par value ten cents
($0.10) per share ("Preferred Stock").
The shares of Preferred Stock shall be issued in
one or more series designated by the Board of Directors
without further shareholder action and shall bear such
terms and designation as the Board of Directors may
fix, including dividend rates, redemption rights,
conversion rights, liquidation preferences, voting
rights (provided that the Board of Directors may
designate that the holders of one or more series of
Preferred Stock shall be entitled as a series to elect
one director and the Board of Directors may at its
discretion grant the holders of one or more series of
the corporation's shares of Preferred Stock the right
to elect additional directors in the event that
dividends on such series shall be in arrears) and such
other terms as the Board of Directors shall determine.
Any shares of Preferred Stock reacquired by the
corporation may be reissued without further shareholder
approval."
<PAGE>
<PAGE>
(2) Article "SIXTH" of the Certificate of Incorporation is
hereby amended in its entirety to read as follows:
"SIXTH: The following provisions are inserted for
the management of the business and for the conduct of
the affairs of the corporation, and for further
definition, limitation and regulation of the powers of
the corporation and of its directors and shareholders:
(1) The number of directors of the
corporation shall be such as from time to time
shall be fixed by, or in the manner provided in,
the by-laws; provided, however, that the number
of directors of the corporation shall not be less
than six (6) nor shall the number of directors of
the corporation exceed fifteen (15). Election of
directors need not be by ballot unless the by-
laws so provide.
(2) Effective as of the Effective Date (as
such term is defined in that certain Agreement,
dated July 3, 1992, among the corporation, INA
Acquisition Corp. and Insituform Group Limited),
as it may be amended from time to time (the
"Acquisition Agreement"), the Board of Directors
shall be divided into three classes, designated
Class I, Class II and Class III, as nearly equal
in number as possible. Members of all three
classes will be appointed on the Effective Date
by the Board of Directors in accordance with the
terms of the Acquisition Agreement. The initial
term of office of directors of Class I shall
expire at the annual meeting of shareholders in
1993; that of Class II shall expire at the annual
meeting of shareholders in 1994; and that of
Class III shall expire at the annual meeting of
shareholders in 1995. At each succeeding annual
meeting of shareholders beginning in 1993,
successors to the class of directors whose term
expires at that annual meeting shall be elected
for a three-year term. Additional directorships
resulting from an increase in number of directors
shall be appointed among the classes as equally
as possible. Vacancies, created from an increase
in the size of the Board of Directors, shall be
filled by the affirmative vote of a majority of
the Board of Directors then in office, or such
greater affirmative vote of directors as may be
specified from time to time in the By-laws of the
corporation, provided that a quorum is present,
and any other vacancy occurring in the Board of
Directors may be filled by a majority of the
directors then in office, which appointments<PAGE>
<PAGE>
shall be made in accordance with Section 7.3 of the
Agreement and Plan of Merger dated as of May 23, 1995
among the corporation, ITI Acquisition Corp. and
Insituform Mid-America, Inc. Any additional director of
any class elected to fill a vacancy resulting from an
increase in such class shall hold office for a term
that shall coincide with the remaining term of that
class, but in no case will a decrease in the number of
directors shorten the term of any incumbent director.
A director shall hold office until the annual meeting
for the year in which his term expires and until his
successor shall be elected and shall qualify, subject,
however, to prior death, resignation, retirement,
disqualification or removal from office. Any director
elected to fill a vacancy not resulting from an
increase in the number of directors shall have the same
remaining term as that of his predecessor.
Notwithstanding any provision of this
Article SIXTH, whenever the holders of any one or
more series of Preferred Stock issued by the
corporation shall have the right, voting
separately by class or series, to elect directors
at an annual or special meeting of shareholders
or any class or series, the election, term of
office, filling of vacancies and other features
of such directorships shall be governed by the
terms of this Certificate of Incorporation or the
resolution or resolutions adopted by the Board of
Directors pursuant to Article FOURTH hereof
applicable thereto, and such directors so elected
shall not be divided into classes pursuant to
this Article SIXTH unless expressly provided by
such terms.
(3) The Board of Directors shall have power
without the assent or vote of the shareholders:
(a) To make, alter, amend, change, add
to or repeal the by-laws of the corporation;
to fix and vary the amount to be reserved
for any proper purpose; to authorize and
cause to be executed mortgages and liens
upon all or any part of the property of the
corporation; to determine the use and
disposition of any surplus or net profits;
and to fix the times for the declaration and
payment of dividends.
(b) To determine from time to time
whether, and to what extent, and at what
times and places, and under what conditions
the accounts and books of the corporation
(other than the stock ledger) or any of<PAGE>
<PAGE>
them, shall be open to the inspection of the
shareholders.
(4) The directors at their discretion may
submit any contract or act for approval or
ratification at any annual meeting of
shareholders or at any meeting of the
shareholders called for the purpose of
considering any such act or contract, and any
contract or act that shall be approved or be
ratified by the vote of the holders of a majority
of the stock of the corporation which is
represented in person or by proxy at such meeting
and entitled to vote thereat (provided that a
lawful quorum of shareholders be there
represented in person or by proxy) shall be as
valid and as binding upon the corporation and
upon all the shareholders as though it had been
approved or ratified by every shareholder of the
corporation, whether or not the contract or act
would otherwise be open to legal attack because
of directors' interest, or for any other reason.
(5) In addition to the powers and
authorities hereinbefore or by statute expressly
conferred upon them, the directors are hereby
empowered to exercise all such powers and do all
such acts and things as may be exercised or done
by the corporation; subject, nevertheless, to the
provisions of the statutes of Delaware, of this
certificate, and to any by-laws from time to time
made by the shareholders; provided, however, that
no by-laws so made shall invalidate any prior act
of the directors which would have been valid if
such by-law had not been made."
SECOND: The amendments to the Certificate of Incorporation
of the Corporation set forth in this Certificate of Amendment
have been duly adopted in accordance with the applicable
provisions of Section 242 of the GCL (a) the Board of Directors
of the Corporation having duly adopted resolutions setting forth
such amendments and declaring their advisability at a meeting of
the Board of Directors of the Corporation duly called and held on
August 1, 1995 in conformity with the By-laws of the Corporation,
and (b) the stockholders of the Corporation having duly adopted<PAGE>
<PAGE>
such amendments by the affirmative vote of the holders of the
majority of the outstanding stock entitled to vote thereon at the
annual meeting of stockholders duly called and held on October
12, 1995 upon notice in accordance with Section 222 of the GCL.
IN WITNESS WHEREOF, INSITUFORM TECHNOLOGIES, INC. has caused
this certificate to be signed and attested by duly authorized
officers as of the 25th day of October, 1995.
INSITUFORM TECHNOLOGIES, INC.
By s/James D. Krugman
---------------------------
James D. Krugman
Chairman of the Board
ATTEST:
s/Howard Kailes
- -------------------------
Howard Kailes
Secretary
<PAGE>
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
INSITUFORM CAPITAL CORP.,
a Delaware corporation
INTO
INSITUFORM TECHNOLOGIES, INC.,
a Delaware corporation
(Pursuant to Section 253 of the General Corporation Law of Delaware)
Insituform Technologies, Inc., a Delaware corporation (the
"Corporation"), does hereby certify:
FIRST: That the Corporation is incorporated pursuant to the
General Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding
shares of each class of the capital stock of Insituform Capital
Corp., a Delaware corporation.
THIRD: That the Corporation, by the following resolutions of
its Board of Directors, duly adopted on the 18th day of November,
1996, determined to merge into itself Insituform Capital Corp. on
the conditions set forth in such resolutions:
WHEREAS, this Corporation owns all of the 100 issued
and outstanding shares of the common stock, without par
value, of Insituform Capital Corp., a Delaware
corporation; and
WHEREAS, the Board of Directors of this Corporation
has determined that the merger of Insituform Capital
Corp. into and with this Corporation in accordance with
the provisions of Section 253 of the General Corporation
Law of the State of Delaware would be advisable and in
the best interests of this Corporation;
NOW, THEREFORE, BE IT RESOLVED, that this
Corporation merge Insituform Capital Corp. into and with
this Corporation; that all of the estate, property
rights, privileges, powers and franchises of Insituform
Capital Corp. be vested in and held and enjoyed by this
Corporation as fully and entirely and without change or
diminution as the same were before held and enjoyed by<PAGE>
<PAGE>
Insituform Capital Corp. in its name; and that this
Corporation assume all of the liabilities and obligations of
Insituform Capital Corp.; and it is
FURTHER RESOLVED, that the appropriate officers of
this Corporation be, and they hereby are, authorized and
empowered to execute and acknowledge a certificate of
ownership and merger setting forth a copy of the
resolutions to merge Insituform Capital Corp. into and
with this Corporation, and to assume said subsidiary's
liabilities and obligations, and the date of adoption
thereof; and to file said certificate of ownership and
merger with the appropriate officials in the State of
Delaware, and any county or other subdivision thereof,
together with such other agreements, certificates and
papers as may be necessary or appropriate to permit the
merger of Insituform Capital Corp. into and with this
Corporation pursuant to the provisions of the General
Corporation Law of the State of Delaware; and it is
FURTHER RESOLVED, that the effective date of the
certificate of ownership and merger setting forth a copy
of these resolutions, and the date of the merger therein
provided for, shall be December 31, 1996; and it is
FURTHER RESOLVED, that the appropriate officers of
this Corporation be, and they hereby are, authorized and
empowered to execute and deliver any and all notices,
directions, instructions, authorizations, orders,
certificates, receipts and other documents, instruments,
and papers and to take any and all other action as they
or any of them may deem necessary or appropriate for the
purpose of carrying out the intent of each of the
foregoing resolutions; and that the authority of such
officers to execute and deliver any such documents,
instruments and orders and to take any such other action
shall be conclusively evidenced by their execution and
delivery thereof or their taking thereof; and it is
FURTHER RESOLVED, that the appropriate officers of
this Corporation be, and they hereby are, authorized and
empowered, in the name and on behalf of this Corporation,
to deliver any of the foregoing resolutions duly
certified by the Secretary of this Corporation to such
persons as such officers may deem advisable.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be signed by William A. Martin, its Senior Vice
President, and attested to by Howard Kailes, its Secretary, this
10th day of December, 1996.
ATTEST: INSITUFORM TECHNOLOGIES, INC.
s/Howard Kailes By s/William A. Martin
- ---------------- -------------------
Howard Kailes William A. Martin
Secretary Senior Vice President
<PAGE>
<PAGE>
CERTIFICATE OF OWNERSHIP AND MERGER
MERGING
INSITUFORM MID-AMERICA INVESTMENTS, INC.,
a Delaware corporation
INTO
INSITUFORM TECHNOLOGIES, INC.,
a Delaware corporation
Pursuant to Section 253 of the General Corporation Law of Delaware)
Insituform Technologies, Inc., a Delaware corporation (the
"Corporation"), does hereby certify:
FIRST: That the Corporation is incorporated pursuant to the
General Corporation Law of the State of Delaware.
SECOND: That the Corporation owns all of the outstanding
shares of each class of the capital stock of Insituform Mid-America
Investments, Inc., a Delaware corporation.
THIRD: That the Corporation, by the following resolutions of
its Board of Directors, duly adopted on the 18th day of November,
1996, determined to merge into itself Insituform Mid-America
Investments, Inc. on the conditions set forth in such resolutions:
WHEREAS, this Corporation owns all of the 100 issued
and outstanding shares of the common stock, without par
value, of Insituform Mid-America Investments, Inc., a
Delaware corporation; and
WHEREAS, the Board of Directors of this Corporation
has determined that the merger of Insituform Mid-America
Investments, Inc. into and with this Corporation in
accordance with the provisions of Section 253 of the
General Corporation Law of the State of Delaware would be
advisable and in the best interests of this Corporation;
NOW, THEREFORE, BE IT RESOLVED, that this
Corporation merge Insituform Mid-America Investments,
Inc. into and with this Corporation; that all of the
estate, property rights, privileges, powers and
franchises of Insituform Mid-America Investments, Inc. be<PAGE>
<PAGE>
vested in and held and enjoyed by this Corporation as fully
and entirely and without change or diminution as the same were
before held and enjoyed by Insituform Mid-America Investments,
Inc. in its name; and that this Corporation assume all of the
liabilities and obligations of Insituform Mid-America
Investments, Inc.; and it is
FURTHER RESOLVED, that the appropriate officers of
this Corporation be, and they hereby are, authorized and
empowered to execute and acknowledge a certificate of
ownership and merger setting forth a copy of the
resolutions to merge Insituform Mid-America Investments,
Inc. into and with this Corporation, and to assume said
subsidiary's liabilities and obligations, and the date of
adoption thereof; and to file said certificate of
ownership and merger with the appropriate officials in
the State of Delaware, and any county or other
subdivision thereof, together with such other agreements,
certificates and papers as may be necessary or
appropriate to permit the merger of Insituform Mid-
America Investments, Inc. into and with this Corporation
pursuant to the provisions of the General Corporation Law
of the State of Delaware; and it is
FURTHER RESOLVED, that the effective date of the
certificate of ownership and merger setting forth a copy
of these resolutions, and the date of the merger therein
provided for, shall be December 31, 1996; and it is
FURTHER RESOLVED, that the appropriate officers of
this Corporation be, and they hereby are, authorized and
empowered to execute and deliver any and all notices,
directions, instructions, authorizations, orders,
certificates, receipts and other documents, instruments,
and papers and to take any and all other action as they
or any of them may deem necessary or appropriate for the
purpose of carrying out the intent of each of the
foregoing resolutions; and that the authority of such
officers to execute and deliver any such documents,
instruments and orders and to take any such other action
shall be conclusively evidenced by their execution and
delivery thereof or their taking thereof; and it is
FURTHER RESOLVED, that the appropriate officers of
this Corporation be, and they hereby are, authorized and
empowered, in the name and on behalf of this Corporation,
to deliver any of the foregoing resolutions duly
certified by the Secretary of this Corporation to such
persons as such officers may deem advisable.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this
certificate to be signed by William A. Martin, its Senior Vice
President, and attested to by Howard Kailes, its Secretary, this
10th day of December, 1996.
ATTEST: INSITUFORM TECHNOLOGIES, INC.
s/Howard Kailes By s/William A. Martin
- ------------------------ --------------------
Howard Kailes William A. Martin
Secretary Senior Vice President
<PAGE>
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
INSITUFORM TECHNOLOGIES, INC.
INSITUFORM TECHNOLOGIES, INC., a corporation organized
and existing by virtue of the General Corporation Law of the State
of Delaware (the "Corporation"), pursuant to the provisions of the
General Corporation Law of the State of Delaware (the "GCL") DOES
HEREBY CERTIFY as follows:
FIRST: The Certificate of Incorporation of the
Corporation is hereby amended by deleting paragraph (2) of Article
SIXTH in its entirety and substituting therefor a new paragraph in
the following form:
"(2) Vacancies in the Board of Directors shall be
filled by a majority of the directors then in office;
provided, however, that during the period ending
immediately prior to the 1999 annual meeting of the
stockholders, the appointments to fill such vacancies
shall be made in accordance with the Agreement dated as
of July 25, 1997, among the corporation, Jerome
Kalishman, Nancy F. Kalishman, The Jerome and Nancy
Kalishman Family Fund, Robert W. Affholder, Xanadu
Investments, L.P., Paul A. Biddelman, Stephen P.
Cortinovis, Anthony W. Hooper, Silas Spengler, Sheldon
Weinig and Russell B. Wight, Jr., as it may be amended
from time to time. A director shall hold office until the
annual meeting for the year in which his term expires and
until his successor shall be elected and shall qualify,
subject, however, to prior death, resignation,
retirement, disqualification or removal from office. Any
director elected to fill a vacancy not resulting from an
increase in the number of directors shall have the same
remaining term as that of his predecessor.
Notwithstanding any provision of this Article SIXTH,
whenever the holders of any one or more series of
Preferred Stock issued by the corporation shall have the
right, voting separately by class or series, to elect
directors at an annual or special meeting of shareholders
or any class or series, the election, term of office,
filling of vacancies and other features of such
directorships shall be governed by the terms of this
Certificate of Incorporation or the resolution or
resolutions adopted by the Board of Directors pursuant to
Article FOURTH hereof applicable thereto."<PAGE>
<PAGE>
SECOND: The amendments to the Certificate of
Incorporation of the Corporation set forth in this Certificate of
Amendment have been duly adopted in accordance with the applicable
provisions of Section 242 of the GCL: (a) the Board of Directors of
the Corporation having duly adopted resolutions setting forth the
proposed amendments and declaring their advisability at a meeting
of the Board of Directors of the Corporation duly called and held
on August 18, 1997 in conformity with the By-laws of the
Corporation and (b) the stockholders of the Corporation having duly
adopted such amendments by the affirmative vote of the holders of
a majority of the outstanding stock entitled to vote thereon, on
October 8, 1997, taken at the Corporation's annual meeting of
stockholders duly called and held upon notice in accordance with
Section 222 of the GCL.
IN WITNESS WHEREOF, the Corporation has caused this
Certificate to be executed on its behalf by Anthony W. Hooper, its
President, and attested by Howard Kailes, its Secretary, as of this
8th day of October, 1997.
ATTEST:
s/Howard Kailes s/Anthony W. Hooper
- -------------------- --------------------------
Howard Kailes Anthony W. Hooper
Secretary President
EXHIBIT 3.2
BY-LAWS
OF
INSITUFORM TECHNOLOGIES, INC.
(as amended through November 4, 1997)
ARTICLE I - OFFICES
The principal offices of the corporation in the State of
Delaware shall be located in the City of Dover, County of Kent.
The Corporation may have such other offices, either within or
without the State of incorporation as the board of directors may
designate or as the business of the corporation may from time to
time require.
ARTICLE II - STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders shall be held at
such time and upon such date during the month of June in each
year as the Board of Directors may determine, for the purpose of
electing directors and for the transaction of such other business
as may come before the meeting. If the day fixed for the annual
meeting shall be a legal holiday such meeting shall be held on
the next succeeding business day.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose
or purposes, unless otherwise prescribed by statute, may be
called by either the chairman of the board, the president or by
the directors, and shall be called by the president at the
request of the holders of not less than fifty per cent of all the
outstanding shares of the Corporation entitled to vote at the
meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or
without the State unless otherwise prescribed by statute, as the
place of meeting for any annual meeting or for any special
meeting called by the directors. A waiver of notice signed by all
stockholders entitled to vote at a meeting may designate any
place, either within or without the state unless otherwise
prescribed by statute, as the place for holding such meeting. If
no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal office of the
corporation.
<PAGE>
<PAGE>
4. NOTICE OF MEETING.
Written or printed notice stating the place, day and
hour of the meeting and, in the case of a special meeting, the
purpose or purposes for which the meeting is called, shall be
delivered not less than ten nor more than fifty days before the
date of the meeting, either personally or by mail, by or at the
direction of either the chairman of the board, the president, the
secretary, or the officer or persons calling the meeting, to each
stockholder of record entitled to vote at such meeting. If
mailed, such notice shall be deemed to be delivered when
deposited in the United States mail, addressed to the stockholder
at his address as it appears on the stock transfer books of the
corporation, with postage thereon pre-paid.
5. CLOSING OF TRANSFER BOOKS OR FIXING OF RECORD DATE.
For the purpose of determining stockholders entitled to
notice of or to vote at any meeting of stockholders or any
adjournment thereof, or stockholders entitled to receive payment
of any dividend, or in order to make a determination of
stockholders for any other proper purpose, the directors may fix
in advance a date as the record date for any such determination
of stockholders, such date in any case to be not more than sixty
days and, in case of a meeting of stockholders, not less than ten
days prior to the date on which the particular action requiring
such determination of stockholders is to be taken. If the stock
transfer books are not closed and no record date is fixed for the
determination of stockholders entitled to notice of or to vote at
a meeting of stockholders, or stockholders entitled to receive
payment of a dividend, the date on which notice of the meeting is
mailed or the date on which the resolution of the directors
declaring such dividend is adopted, as the case may be, shall be
the record date for such determination of stockholders. When a
determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this section, such
determination shall apply to any adjournment thereof.
6. VOTING LISTS.
The officer or agent having charge of the stock
transfer books for shares of the corporation shall make, at least
ten days before each meeting of stockholders, a complete list of
the stockholders entitled to vote at such meeting, or any
adjournment thereof, arranged in alphabetical order, with the
address of and the number of shares held by each, which list, for
a period of ten days prior to such meeting, shall be kept on file
at the principal office of the corporation and shall be subject
to inspection by any stockholder at any time during usual
business hours. Such list shall also be produced and kept open at
the time and place of the meeting and shall be subject to the
inspection of any stockholder during the whole time of the
meeting. The original stock transfer book shall be prima facie
evidence as to who are the stockholders entitled to examine such
list or transfer books or to vote at the meeting of stockholders.
<PAGE>
<PAGE>
7. QUORUM.
At any meeting of stockholders a majority of the
outstanding shares of the corporation entitled to vote,
represented in person or by proxy, shall constitute a quorum at
a meeting of stockholders. If less than said number of the
outstanding shares are represented at a meeting, a majority of
the shares so represented may adjourn the meeting from time to
time without further notice. At such adjourned meeting at which
a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as
originally notified. The stockholders present at a duly organized
meeting may continue to transact business until adjournment,
notwithstanding the withdrawal of enough stockholders to leave
less than a quorum.
8. PROXIES.
At all meetings of stockholders, a stockholder may vote
by proxy executed in writing by the stockholder or by his duly
authorized attorney-in-fact. Such proxy shall be filed with the
secretary of the corporation before or at the time of the
meeting.
9. VOTING.
Each stockholder entitled to vote in accordance with
the terms and provisions of the certificate of incorporation and
these by-laws shall be entitled to one vote, in person or by
proxy, for each share of stock entitled to vote held by such
stockholders. Upon the demand of any stockholder, the vote for
directors and upon any question before the meeting shall be by
ballot. All elections for directors shall be decided by plurality
vote; all other questions shall be decided by majority vote
except as otherwise provided by the Certificate of Incorporation
or the laws of this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the
stockholders, shall be as follows:
1. Roll call.
2. Proof of notice of meeting or waiver of notice.
3. Reading of minutes of preceding meeting.
4. Reports of Officer.
5. Reports of Committees.
6. Election of Directors.
7. Unfinished Business.
<PAGE>
<PAGE>
8. New Business.
ARTICLE III - BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be
managed by its board of directors. The directors shall in all
cases act as a board, and they may adopt such rules and
regulations for the conduct of their meetings and the management
of the corporation, as they may deem proper, not inconsistent
with these by-laws and the laws of this State.
2. NUMBER OF DIRECTORS, TENURE AND QUALIFICATIONS.
The Board of Directors shall consist of eight (8)
directors, provided that the size of the Board of Directors shall
increase automatically, without any further amendment to this
Section 2, to nine (9) directors upon the election or appointment
of the Additional Nominee (as defined in that certain Agreement,
dated July 25, 1997, among the corporation, Jerome Kalishman,
Nancy F. Kalishman, The Jerome and Nancy Kalishman Family Fund,
Robert W. Affholder, Xanadu Investments, L.P., Paul A. Biddelman,
Stephen P. Cortinovis, Anthony W. Hooper, Silas Spengler, Sheldon
Weinig and Russell B. Wight, Jr., as it may be amended from time
to time (the "Agreement")) contemplated by, and selected in
accordance with, the provisions of the Agreement. Such directors
(except as hereinafter provided for the filling of vacancies)
shall be elected in accordance with the Corporation's Certificate
of Incorporation by the stockholders by a plurality vote of the
number of shares voting at the meeting at which such election
shall take place.
3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held
without other notice than this by-law immediately after, and at
the same place as, the annual meeting of stockholders. The
directors may provide, by resolution, the time and place for the
holding of additional regular meetings without other notice than
such resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or
at the request of the president, the Chairman of the Board, or
any two directors. The person or persons authorized to call
special meetings of the directors may fix the place either within
or without the state or country, for holding any special meeting
of the directors called by them.
<PAGE>
<PAGE>
5. NOTICE.
Notice of any special meeting shall be given at least
24 hours previously thereto by written notice delivered
personally, or by telegram or telecopy or mailed to each director
at his residence or business address. If mailed, such notice
shall be deemed to be delivered when deposited in the United
States mail so addressed, with postage thereon prepaid. If notice
be given by telegram, such notice shall be deemed to be delivered
when the telegram is delivered to the telegraph company. The
attendance of a director at a meeting shall constitute a waiver
of notice of such meeting, except where a director attends a
meeting for the express purpose of objecting to the transaction
of any business because the meeting is not lawfully called or
convened.
6. QUORUM.
At any meeting of the directors a majority shall
constitute a quorum for the transaction of business, but if less
than said number is present at a meeting, a majority of the
directors present may adjourn the meeting from time to time
without further notice.
7. MANNER OF ACTING.
The act of the majority of the directors present at a
meeting at which a quorum is present shall be the act of the
directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Any vacancy on the Board of Directors and any newly
created directorship resulting from an increase in the number of
directors may be filled by the directors in accordance with the
Corporation's Certificate of Incorporation.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed only for
cause by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written
notice to the board, the president or the secretary of the
corporation. Unless otherwise specified in the notice, the
resignation shall take effect upon receipt thereof by the board
or such officer, and the acceptance of the resignation shall not
be necessary to make it effective.
<PAGE>
<PAGE>
11. COMPENSATION.
The Board of Directors shall have the authority to fix
the compensation of directors. Nothing herein shall preclude any
director from serving the corporation in any other capacity and
receiving compensation therefor. Members of special or standing
committees may be allowed compensation for attending committee
meetings.
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a
meeting of the directors at which action on any corporate matter
is taken shall be presumed to have assented to the action taken
unless his dissent shall be entered in the minutes of the meeting
or unless he shall file his written dissent to such action with
the person acting as the secretary of the meeting before the
adjournment thereof or shall forward such dissent by registered
mail to the secretary of the corporation immediately after the
adjournment of the meeting. Such right to dissent shall not apply
to a director who voted in favor of such action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its
members an executive committee and other committees, each
consisting of one or more directors. Each such committee shall
serve at the pleasure of the board.
14. NOTICE AND APPROVAL OF CERTAIN ACTIONS
Notwithstanding any other provision of these By-laws
(and except for the implementation of Sections 2(a), (b), (c) and
(e) and Section 6 of the Agreement): (a) in the event that any
director proposes to bring before any regular or special meeting
of the Board of Directors any proposal relating to any amendment
of the Corporation's Certificate of Incorporation or these By-
laws or the Agreement (as defined in Article III, Section 2), or
any change in the structure, composition (other than such
director's resignation) or governance of the Board of Directors
(any such action being referred to herein as a "Special Action"),
such director must provide written notice thereof (including a
reasonably detailed description of such proposal) to each member
of the Board of Directors at least seven days prior to the date
of the directors' meeting at which the Special Action is to be
proposed; and (b) the taking of any Special Action by the Board
of Directors must be approved by a majority of all directors then
serving; provided, however, that no Special Action which would
have any effect prior to the 1999 annual meeting of the
stockholders may be taken if such Special Action would conflict
with, have the effect of modifying or otherwise frustrating any
provision of the Agreement, including, without limitation, any
amendment to Article SIXTH of the Corporation's Certificate of
Incorporation or Section 2 of this Article III, as such
provisions will be in effect pursuant to the Agreement following
the 1997 annual meeting of the stockholders.<PAGE>
<PAGE>
ARTICLE IV - OFFICERS
1. NUMBER.
The officers of the corporation shall be a chairman of
the board, a vice chairman of the board,a president, one or more
senior vice presidents, one or more vice presidents, a secretary
and a treasurer, each of whom shall be elected by the directors.
Such other officers and assistant officers as may be deemed
necessary may be elected or appointed by the directors. In
addition, the President may from time to time appoint such
officers of operating divisions of the corporation as he may deem
proper who shall have such authority, subject to the control of
the directors, as the President may from time to time prescribe.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the
directors shall be elected annually at the first meeting of the
directors held after each annual meeting of the stockholders.
Each officer elected by the directors shall hold office until his
successor shall have been duly elected and shall have qualified
or, if earlier, until his death or until he shall resign or shall
have been removed in the manner hereinafter provided. Each
officer of an operating division of the corporation appointed by
the President shall hold office for such period as the President
may from time to time prescribe or, if earlier, until his death
or until he shall resign or shall have been removed in the manner
hereinafter provided.
3. REMOVAL.
Any officer elected or appointed by the directors, or
any officer of an operating division appointed by the President,
may be removed by the directors whenever in their judgment the
best interests of the corporation would be served thereby, but
such removal shall be without prejudice to the contract, if any,
of the person so removed. Any officer of an operating division
appointed by the President may be removed by the President
whenever in his judgment the best interests of the corporation
would be served thereby, but such removal shall be without
prejudice to the contract, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation,
removal, disqualification or otherwise of an officer elected or
appointed by the directors may be filled by the directors for the
unexpired portion of the term. A vacancy in any office because of
death, resignation, removal, disqualification or otherwise of any
officer of an operating division appointed by the President may
be filled by the President for the unexpired portion of the term.
<PAGE>
<PAGE>
4A. CHAIRMAN OF THE BOARD.
The Chairman of the Board shall preside, when present,
at all meetings of the Board of Directors and at all meetings of
the stockholders and will perform such other duties as may be
prescribed from time to time by the Board or these By-laws.
4B. VICE CHAIRMAN OF THE BOARD.
In the absence of the Chairman of the Board or in the
event of his death, inability or refusal to act, the Vice
Chairman of the Board shall perform the duties of the Chairman of
the Board and, when so acting, shall have all the powers of and
be subject to all the restrictions on the Chairman of the Board.
The Vice Chairman of the Board shall perform such other duties as
may be prescribed from time to time by the Board or these by-
laws. Notwithstanding any other provisions of these By-laws, the
Vice Chairman of the Board, acting in any capacity, shall not
have the power to call any special meeting of the Stockholders.
5. PRESIDENT.
The President shall be the chief executive officer of
the corporation and, subject to the control of the Board of
Directors, shall have general and active management of the
business of the corporation, and shall see that all orders and
resolutions of the Board and stockholders are carried into
effect. He shall have the general authority to execute bonds,
deeds and contracts, in the name of the corporation and affix the
corporate seal thereto; to sign stock certificates; to cause the
employment or appointment of such employees and agents of the
corporation as the proper conduct of operations may require, and
to fix their compensation, subject to the provisions of these
By-laws; to remove or suspend any employee or agent who shall
have been employed or appointed under his authority or under
authority of an officer subordinate to him; and, in general, to
exercise all the powers and authority usually appertaining to the
chief executive officer of a corporation.
6. VICE-PRESIDENT.
In the absence of the president or in the event of his
death, inability or refusal to act, one of the vice-presidents
designated by the directors shall perform the duties of the
president, and when so acting, shall have all the powers of and
be subject to all the restrictions upon the president. The
vice-president shall perform such other duties as from time to
time may be assigned to him by the president or by the directors.
7. SECRETARY.
The secretary shall keep the minutes of the
stockholders' and of the directors' meetings in one or more books
provided for that purpose, see that all notices are duly given in
accordance with the provisions of these by-laws or, as required,
be custodian of the corporate records and of the seal of the<PAGE>
<PAGE>
corporation and keep a register of the post office address of
each stockholder which shall be furnished to the secretary by
such stockholder, have general charge of the stock transfer books
of the corporation and in general perform all duties incident to
the office of secretary and such other duties as from time to
time may be assigned to him by the president or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give
a bond for the faithful discharge of his duties in such sum and
with such surety or sureties as the directors shall determine. He
shall have charge and custody of and be responsible for all funds
and securities of the corporation; receive and give receipts for
monies due and payable to the corporation from any source,
whatsoever, and deposit all such monies in the name of
corporation in such banks, trust companies or other depositories
as shall be selected in accordance with these by-laws and in
general perform all of the duties incident to the office of
treasurer and such other duties as from time to time may be
assigned to him by the president or by the directors.
9. SALARIES.
The salaries of those officers elected or appointed by
the directors shall be fixed from time to time by the directors
and no officer shall be prevented from receiving such salary by
reason of the fact that he is also a director of the corporation.
ARTICLE V - CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorized any officer or officers,
agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to
specific instances.
2. LOANS.
No loans shall be contracted on behalf of the
corporation and no evidences of indebtedness shall be issued in
its name unless authorized by a resolution of the directors. Such
authority may be general or confined to specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the
name of the corporation, shall be signed by such officer or
officers, agent or agents of the corporation and in such manner
as shall from time to time be determined by resolution of the
directors.
<PAGE>
<PAGE>
4. DEPOSITS.
All funds of the corporation not otherwise employed
shall be deposited from time to time to the credit of the
corporation in such banks, trust companies or other depositaries
as the directors may select.
ARTICLE VI - CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation
shall be in such form as shall be determined by the directors.
Such certificates shall be signed by any of the chairman of the
board, or the president, as authorized by the directors and the
secretary, or such other officers authorized by law and by the
directors. All certificates for shares shall be consecutively
numbered or otherwise identified. The name and address of the
stockholders, the number of shares and date of issue, shall be
entered on the stock transfer books of the corporation. All
certificates surrendered to the corporation for transfer shall be
cancelled and no new certificate shall be issued until the former
certificate for a like number of shares shall have been
surrendered and cancelled, except that in case of a lost,
destroyed or mutilated certificate a new one may be issued
therefor upon such terms and indemnity to the corporation as the
directors may prescribe.
2. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer
agent of the corporation of a certificate for shares duly
endorsed or accompanied by proper evidence of succession,
assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled
thereto, and cancel the old certificate; every such transfer
shall be entered on the transfer book of the corporation which
shall be kept at its principal office.
(b) The corporation shall be entitled to treat the
holder of record of any share as the holder in fact thereof, and,
accordingly, shall not be bound to recognized any equitable or
other claim to or interest in such share on the part of any other
person whether or not it shall have express or other notice
thereof, except as expressly provided by the laws of this state.
ARTICLE VII - FISCAL YEAR
The fiscal year of the corporation shall begin on the first
day of January in each year.
ARTICLE VIII - DIVIDENDS
The directors may from time to time declare, and the
corporation may pay, dividends on its outstanding shares in the
manner and upon the terms and conditions provided by law.<PAGE>
<PAGE>
ARTICLE IX - SEAL
The directors shall provide a corporate seal which shall be
circular in form and shall have inscribed thereon the name of the
corporation, the state of incorporation, year of incorporation
and the words, "Corporate Seal".
ARTICLE X - WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is
required to be given to any stockholder or director of the
corporation under the provisions of these by-laws or under the
provisions of the articles of incorporation, a waiver thereof in
writing, signed by the person or persons entitled to such notice,
whether before or after the time stated therein, shall be deemed
equivalent to the giving of such notice.
ARTICLE XI - AMENDMENTS
Except as otherwise provided by law, the Board of Directors
may adopt, alter, amend or repeal the by-laws of the Corporation,
provided, however, that the stockholders, representing a majority
of all the shares issued and outstanding at any annual stock-
holders' meeting or at any special stockholders' meeting, may
repeal, alter or amend by-laws adopted by the Board or Directors
and may adopt new by-laws; provided, further, however, that the
size of the Board of Directors, as set forth in Section 2 of
Article III, may only be amended by a vote of at least 80% of the
members of the Board of Directors or by a vote of the
stockholders, representing a majority of all of the shares issued
and outstanding, at any annual stockholders' meeting or at any
special stockholders' meeting.
EXHIBIT 10(a)
Insituform Technologies, Inc.
___________________________________
First Amendment
Dated as of August 20, 1997
to
Note Purchase Agreements
Dated as of February 14, 1997
___________________________________
Re: $110,000,000 7.88% Senior Notes, Series A,
Due February 14, 2007
<PAGE>
<PAGE>
First Amendment to Note Purchase Agreements
This First Amendment dated as of August 20, 1997 (the or this
"First Amendment") to the Note Purchase Agreements, each dated as
of February 14, 1997, is between Insituform Technologies, Inc., a
Delaware corporation (the "Company"), and each of the institutions
which is a signatory to this First Amendment (collectively, the
"Noteholders").
Recitals:
A. The Company and each of the Noteholders have heretofore
entered into separate and several Note Purchase Agreements, each
dated as of February 14, 1997 (collectively, the "Note
Agreements"), pursuant to which the Company has heretofore issued
its 7.88% Senior Notes, Series A, due February 14, 2007, in the
aggregate principal amount of $110,000,000 (the "Notes"). The
Noteholders are the holders of 100% of the outstanding principal
amount of the Notes.
B. The Company proposes to enter into that certain Loan
Agreement dated as of August 20, 1997 (the "Loan Agreement"), with
NationsBank, N.A. (the "Bank"), pursuant to which the Bank will
make available to the Company up to $20,000,000 aggregate principal
amount in revolving credit facilities, which facilities will be
guaranteed by certain Subsidiaries of the Company.
C. The Company and the Noteholders now desire to amend the
Note Agreements in the respects, but only in the respects,
hereinafter set forth in order to reflect certain agreements
between the Company and the Noteholders arising in connection with
the consummation of the Loan Agreement.
D. Capitalized terms used herein shall have the respective
meanings ascribed thereto in the Note Agreements unless herein
defined or the context shall otherwise require.
E. All requirements of law have been fully complied with and
all other acts and things necessary to make this First Amendment a
valid, legal and binding instrument according to its terms for the
purposes herein expressed have been done or performed.
Now, therefore, upon the full and complete satisfaction of the
conditions precedent to the effectiveness of this First Amendment
set forth in Section 3.1 hereof, and in consideration of good and valuable
consideration the receipt and sufficiency of which is hereby
acknowledged, the Company and the Noteholders do hereby agree as
follows:
Section 1. Amendments.
Section 1.1. Section 7.4 of the Note Agreements shall be and
is hereby amended in its entirety to read as follows:<PAGE>
<PAGE>
Section 7.4. Reporting Treatment of Certain
Subsidiaries. Notwithstanding anything to the contrary
contained in this Agreement, including without limitation
the definition of "Subsidiary" contained in Exhibit B, so
long as Midsouth Partners and Insituform Linings Plc each
own less than 1.0% of Consolidated Total Assets and
contribute less than 1.0% of Consolidated Net Earnings in
any fiscal period and do not constitute Subsidiaries (as
defined in Schedule B) during such period, the Company
shall be permitted to include the financial information
of such entities in the consolidated statements of the
Company and its Subsidiaries for purposes of the
financial reporting requirements contained in Sections
7.1(a) and (b), and only for purposes of such Sections,
and in no event for purposes of determining compliance
with any of the covenants contained in Sections 9 or 10
hereof notwithstanding that the information for such
entities is consolidated with the Company and its
Subsidiaries. Notwithstanding anything to the contrary
contained in this Agreement, including without limitation
the definition of "Subsidiary" contained in Exhibit B, if
at any time either Midsouth Partners or Insituform
Linings Plc shall own 1.0% or more of Consolidated Total
Assets or contribute 1.0% or more of Consolidated Net
Earnings in any fiscal period and not be a Subsidiary (as
defined in Schedule B), the Company shall either: (a)
provide consolidating or stand-alone financial statements
setting forth separately the financial information for
Midsouth or Insituform Linings Plc, as the case may be,
for such period, and the financial information of such
entity in the consolidated statements of the Company and
its Subsidiaries for purposes of the financial reporting
requirements contained in Sections 7.1(a) and (b) and
only for purposes of such Sections (and in no event for
purposes of determining compliance with any of the
covenants contained in Sections 9 and 10 hereof
notwithstanding that the information for such entities is
consolidated with the Company and its Subsidiaries) or
(b) exclude the financial information for Midsouth
Partners or Insituform Linings Plc, as the case may be,
from the consolidated financial statements of the Company
and its Subsidiaries required to be delivered by the
Company for such period pursuant to Sections 7.1(a) and
(b) (and in no event shall the Company include the
financial information of such entities for purposes of
any determination of compliance with any of the covenants
contained in Sections 9 or 10 hereof).
Section 1.2. The definition of "Priority Debt" appearing in
Exhibit B of the Note Agreements shall be and is hereby amended in
its entirety to read as follows:
<PAGE>
<PAGE>
"Priority Debt" means, as of the date of any
determination thereof, without duplication, (a) all
Indebtedness of Subsidiaries (other than (i) Indebtedness
owing to the Company or another Wholly-owned Subsidiary,
(ii) the Subsidiary Guaranties and (iii) Specified
Subsidiary Indebtedness) and (b) all Indebtedness of the
Company and its Subsidiaries secured by Liens within the
limitations of Section 10.5(l).
Section 1.3. Exhibit B of the Note Agreements shall be and
is hereby amended by adding thereto the following definitions to
read as follows:
"Loan Agreement" means that certain Loan Agreement
dated as of August 20, 1997, between the Company and
NationsBank, N.A. providing for up to $20,000,000
aggregate principal amount in revolving credit
facilities, and any amendment, renewal, replacement,
refunding or refinancing thereof on terms no less
favorable to the Company in any material respect and
without increase in the aggregate principal amount of
credit available thereunder.
"Specified Subsidiary Indebtedness" means
Indebtedness of Subsidiaries consisting of unsecured
Guaranties of the Company's or another Subsidiary's
obligations under and pursuant to the Loan Agreement,
provided that, within the time period required by Section
9.8 of this Agreement, the Company shall have executed
and delivered, or shall have caused to be executed and
delivered, to the holders of the Notes (a) an executed
counterpart of a Subsidiary Guaranty substantially in the
form of Exhibit 9.8(a) from each of the Subsidiaries
guaranteeing the Company's obligations under such Loan
Agreement and (b) an executed counterpart of an
intercreditor agreement substantially in the form of
Exhibit 9.8(e) among the holders of the Notes, each
Person which is a party to the Loan Agreement as a lender
or creditor, the Company and each such guaranteeing
Subsidiary, all as and to the extent required by Section
9.8 of this Agreement.
Section 2. Representations and Warranties of the Company.
Section 2.1. To induce the Noteholders to execute and
deliver this First Amendment, the Company represents and warrants
(which representations shall survive the execution and delivery of
this First Amendment) to the Noteholders that:
(a) this First Amendment has been duly authorized, executed
and delivered by it and this First Amendment constitutes the legal,
valid and binding obligation, contract and agreement of the Company
enforceable against it in accordance with its terms, except as<PAGE>
<PAGE>
enforcement may be limited by bankruptcy, insolvency, reorgani-
zation, moratorium or similar laws or equitable principles relating
to or limiting creditors' rights generally;
(b) the Note Agreements, as amended by this First Amendment,
constitute the legal, valid and binding obligations, contracts and
agreements of the Company enforceable against it in accordance with
their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws
or equitable principles relating to or limiting creditors' rights
generally;
(c) the execution, delivery and performance by the Company of
this First Amendment (i) has been duly authorized by all requisite
corporate action and, if required, shareholder action, (ii) does
not require the consent or approval of any governmental or
regulatory body or agency, and (iii) will not (A) violate (1) any
provision of law, statute, rule or regulation or its certificate of
incorporation or bylaws, (2) any order of any court or any rule,
regulation or order of any other agency or government binding upon
it, or (3) any provision of any material indenture, agreement or
other instrument to which it is a party or by which its properties
or assets are or may be bound, including, without limitation, the
Loan Agreement, or (B) result in a breach or constitute (alone or
with due notice or lapse of time or both) a default under any
indenture, agreement or other instrument referred to in clause
(iii)(A)(3) of this Section 2.1(c), other than any violation, breach or
default which individually or in the aggregate could not reasonably
be expected to have a Material Adverse Effect;
(d) as of the date hereof and after giving effect to this
First Amendment, no Default or Event of Default has occurred which
is continuing; and
(e) all the representations and warranties contained in
Section 13 of the Loan Agreement are true and correct in all
material respects and are incorporated herein by reference
(including schedules referred to therein and the related
definitions contained or referenced in Section 2 thereof) with the
same force and effect as if made by the Company directly to the
Noteholders on and as of the date hereof, except that all
references to (i) any "Loan Document" shall be references to the
First Amendment, (ii) the "Lender" shall be references to the
Noteholders, (iii) any "Default" or "Event of Default" shall be
references to a Default or Event of Default under the Note
Agreements, and (iv) a "Material Adverse Effect" shall be
references to a Material Adverse Effect under the Note Agreements.
Section 3. Conditions to Effectiveness of This First Amendment.
Section 3.1. This First Amendment shall not become effective
until, and shall become effective when, each and every one of the
following conditions shall have been satisfied:<PAGE>
<PAGE>
(a) executed counterparts of this First Amendment, duly
executed by the Company and the holders of at least 66-2/3% of the
outstanding principal of the Notes, shall have been delivered to
the Noteholders;
(b) executed copies of the Subsidiary Guaranties, duly
executed by the Subsidiaries which are parties thereto, along with
such certificates, documents, evidences and opinions required to be
delivered pursuant to the provisions of Section 9.8 of the Note
Agreements, shall have been delivered to the Noteholders, each of
which shall be in form and substance satisfactory to the
Noteholders;
(c) executed counterparts of the Intercreditor Agreement
required to be delivered pursuant to the provisions of Section 9.8(e)
of the Note Agreements among the Noteholders, the Bank, the Company
and each Subsidiary delivering a Guaranty to the Noteholders and
the Bank, duly executed by the parties thereto, shall have been
delivered to the Noteholders;
(d) copies of the final executed form of the Loan Agreement
between the Company and the Bank, shall have been delivered to the
Noteholders together with copies of each of the Guaranties
delivered by the Subsidiaries in connection therewith, which Loan
Agreement and Guaranties shall be in form and substance
satisfactory to the Noteholders; and
(e) the representations and warranties of the Company set
forth in Section 2 hereof are true and correct on and with respect to the
date hereof and a certificate of a Responsible Officer certifying
the same shall have been delivered to the Noteholders.
Upon receipt of all of the foregoing, this First Amendment shall
become effective. Delivery of this First Amendment to the Company,
duly executed by the holders of at least 66-2/3% of the outstanding
principal amount of the Notes, shall acknowledge satisfaction of
the foregoing conditions.
Section 4. Payment of Noteholders' Counsel Fees and Expenses.
Section 4.1. The Company agrees to pay upon demand, the
reasonable fees and expenses of Chapman and Cutler, counsel to the
Noteholders, in connection with the negotiation, preparation,
approval, execution and delivery of this First Amendment.
Section 5. Miscellaneous.
Section 5.1. This First Amendment shall be construed in
connection with and as part of each of the Note Agreements, and
except as modified and expressly amended by this First Amendment,
all terms, conditions and covenants contained in the Note
Agreements and the Notes are hereby ratified and shall be and
remain in full force and effect.<PAGE>
<PAGE>
Section 5.2. Any and all notices, requests, certificates and
other instruments executed and delivered after the execution and
delivery of this First Amendment may refer to the Note Agreements
without making specific reference to this First Amendment but
nevertheless all such references shall include this First Amendment
unless the context otherwise requires.
Section 5.3. The descriptive headings of the various
Sections or parts of this First Amendment are for convenience only
and shall not affect the meaning or construction of any of the
provisions hereof.
Section 5.4. This First Amendment shall be governed by and
construed in accordance with Illinois law.
Section 5.5. The execution hereof by you shall constitute a
contract between us for the uses and purposes hereinabove set
forth, and this First Amendment may be executed in any number of
counterparts, each executed counterpart constituting an original,
but all together only one agreement.
Insituform Technologies, Inc.
By s/William A. Martin
----------------------------------
Its Senior Vice President-Chief
---------------------------------
Financial Officer
Accepted and agreed to as of
the date first written above:
The Northwestern Mutual Life Insurance Company
By s/Richard A. Strait
-------------------------------
Its Vice President
------------------------------
Principal Mutual Life Insurance Company
By s/Shabnam B. Miglani
-------------------------------
Its Counsel
------------------------------
By s/Sarah J. Pitts
-------------------------------
Its Counsel
------------------------------
<PAGE>
<PAGE>
Allstate Life Insurance Company
By s/Patricia W. Wilson
--------------------------------
By s/Ronald A. Mendel
--------------------------------
Authorized Signatories
Connecticut General Life Insurance Company
By: CIGNA Investments, Inc.
By s/Edward Lewis
--------------------------------
Its Managing Director
-------------------------------
CIGNA Property and Casualty Insurance Company
By: CIGNA Investments, Inc.
By s/Edward Lewis
--------------------------------
Its Managing Director
-------------------------------
Connecticut General Life Insurance Company,
on behalf of one or more separate accounts
By: CIGNA Investments, Inc.
By s/Edward Lewis
--------------------------------
Its Managing Director
-------------------------------
The Security Mutual Life Insurance
Company of Lincoln, Nebraska
By s/Kevin W. Hammond
--------------------------------
Its Vice President-Chief Investment
-------------------------------
Officer
<PAGE>
<PAGE>
The Minnesota Mutual Life Insurance
Company
By: MIMLIC Asset Management Company
By s/Marilyn Froelich
--------------------------------
Its Vice President
-------------------------------
Mutual Trust Life Insurance Company
By: MIMLIC Asset Management Company
By s/Marilyn Froelich
--------------------------------
Its Vice President
-------------------------------
Jefferson-Pilot Life Insurance Company
By s/James E. McDonald, Jr.
--------------------------------
Its Second Vice President
-------------------------------
Alexander Hamilton Life Insurance
Company of America
By s/James E. McDonald, Jr.
--------------------------------
Its Second Vice President
-------------------------------
Northern Life Insurance Company
By s/James V. Wittich
--------------------------------
Its Assistant Treasurer
-------------------------------
ReliaStar United Services Life
Insurance Company
By s/James V. Wittich
--------------------------------
Its Assistant Treasurer
-------------------------------
<PAGE>
<PAGE>
ReliaStar Bankers Security Life
Insurance Company
By s/James V. Wittich
--------------------------------
Its Vice President
-------------------------------
ReliaStar Life Insurance Company
By s/James V. Wittich
--------------------------------
Its Authorized Representative
-------------------------------
Pierce National Life Insurance Company
By s/Douglas W. Kroske
--------------------------------
Its Authorized Officer
-------------------------------
<PAGE>
<PAGE>
Guaranty Agreement
Dated as of August 20, 1997
Re" $110,000,000 7.88% Senior Notes,
Series A,
Due February 14, 2007,
of
Insituform Technologies, Inc.
<PAGE>
<PAGE>
Table of Contents
(Not a part of the Agreement)
Section Heading
Page
Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1. Definitions . . . . . . . . . . . . . . . . . .1
Section 2. Guaranty of Notes and Note Agreement. . . . . .2
Section 3. Guaranty of Payment and Performance . . . . . .2
Section 4. General Provisions Relating to the Guaranty . .3
Section 5. Representations and Warranties of the
Guarantors. . . . . . . . . . . . . . . . . . . . . . . .7
Section 6. Guarantor Covenants . . . . . . . . . . . . . .9
Section 6.1. Compliance with Law . . . . . . . . . . . . . .9
Section 6.2. Insurance . . . . . . . . . . . . . . . . . . .9
Section 6.3. Maintenance of Properties . . . . . . . . . . .9
Section 6.4. Payment of Taxes and Claims . . . . . . . . . .9
Section 6.5. Corporate Existence, etc. . . . . . . . . . . 10
Section 7. Submission to Jurisdiction. . . . . . . . . . 10
Section 8. Judgments . . . . . . . . . . . . . . . . . . 10
Section 9. Notices . . . . . . . . . . . . . . . . . . . 10
Section 10. Amendments and Modifications;
Solicitation of Noteholders . . . . . . . . . 11
Section 11. Proceeds. . . . . . . . . . . . . . . . . . . 12
Section 12. Miscellaneous . . . . . . . . . . . . . . . . 12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 13
____________________
Schedule I to Guaranty Agreement
<PAGE>
<PAGE>
Guaranty Agreement
Re: $110,000,000 7.88% Senior Notes, Series A,
Due February 14, 2007,
of
Insituform Technologies, Inc.
This Guaranty Agreement (the or this "Guaranty") is dated as
of August 20, 1997, and given by the entities identified in
Schedule I hereto which are signatories to this Guaranty
(individually, a "Guarantor" and collectively, the "Guarantors").
R e c i t a l s:
A. The Guarantors are Subsidiaries of Insituform
Technologies, Inc., a Delaware corporation (the "Company").
B. The Company has entered into separate and several Note
Purchase Agreements each dated as of February 14, 1997
(collectively, the "Note Purchase Agreements"), between the
Company and each of the Purchasers named on Schedule A attached
to the Note Purchase Agreements (together with their successors
and assigns, the "Noteholders"), providing for, among other
things, the issue and sale by the Company to the Noteholders of
$110,000,000 aggregate principal amount of its 7.88% Senior
Notes, Series A, due February 14, 2007 (the "Notes").
C. Pursuant to Section 9.8 of the Note Purchase
Agreements, upon which the Noteholders relied at the time of the
original issuance of the Notes, and upon which each subsequent
holder of the Notes relied at the time of its subsequent
acquisition of the Notes, the Company is required to cause the
Guarantors to enter into this Guaranty.
D. The Guarantors are part of an affiliated group of
corporations with the Company and each will receive substantial
direct and indirect benefit by reason of the original issue and
sale by the Company of the Notes.
Now, therefore, in consideration of the premises and in
further consideration of the sum of Ten Dollars ($10.00) paid to
each Guarantor by the Noteholders, the receipt whereof is hereby
acknowledged, each Guarantor does hereby covenant and agree as
follows:
Section 1. Definitions.
Unless the context otherwise requires, capitalized terms
used herein shall have the meanings assigned thereto in the Note
Purchase Agreements and such definitions shall be equally
applicable to both the singular and plural forms of any of the
terms so defined.
<PAGE>
<PAGE>
Section 2. Guaranty of Notes and Note Agreement.
(a) Subject to Section 2(b) below, the Guarantors do
hereby, jointly and severally, irrevocably, absolutely and
uncondition-ally guaranty unto the Noteholders (i) the full and
prompt payment of the principal of, premium, if any, and interest
on the Notes from time to time outstanding, as and when such
payments shall become due and payable, whether by lapse of time,
upon redemption or prepayment, by extension or by acceleration or
declaration or otherwise (including (to the extent legally
enforceable) interest due on overdue payments of principal,
premium, if any, or interest at the rate set forth in the Notes)
in coin or currency of the United States of America which at the
time of payment or demand therefor shall be legal tender for the
payment of public and private debts, (ii) the full and prompt
performance and observance by the Company of each and all of the
obligations, covenants and agreements required to be performed or
owned by the Company under the terms of the Notes and the Note
Purchase Agreements, and (iii) the full and prompt payment, upon
demand by any Noteholder of all costs and expenses, legal or
otherwise (including reasonable attorneys' fees), if any, as
shall have been expended or incurred in the protection or
enforcement of any right or privilege under the Notes or the Note
Purchase Agreements or in the protection or enforcement of any
rights, privileges or liabilities under this Guaranty or in any
consultation or action in connection therewith or herewith and in
each and every case irrespective of the validity, regularity, or
enforcement of any of the Notes or the Note Purchase Agreements
or any of the terms thereof or of any other like circumstance or
circumstances.
(b) The obligations of each Guarantor hereunder shall be
limited to the lesser of (i) the obligations of the Company
guaranteed hereunder, or (ii) a maximum aggregate amount equal to
the largest amount that would not render its obligations
hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States
Code or any applicable provisions of comparable state law
(collectively, the "Fraudulent Transfer Laws"), if and to the
extent such Guarantor (or a trustee on its behalf) has properly
invoked the protections of the Fraudulent Transfer Laws in each
case after giving effect to all other liabilities of such
Guarantor, contingent or otherwise, that are relevant under the
Fraudulent Transfer Laws.
Section 3. Guaranty of Payment and Performance.
This is a guaranty of payment and performance and each
Guarantor hereby waives, to the fullest extent permitted by law,
any right to require that any action on or in respect of any Note
or the Note Purchase Agreements be brought against the Company or
that resort be had to any direct or indirect security for the
Notes or for this Guaranty or any other remedy. Any Noteholder<PAGE>
<PAGE>
may, at its option, proceed hereunder against any Guarantor in
the first instance to collect monies when due, the payment of
which is guaranteed hereby, without first proceeding against the
Company, any other Guarantor or any other Person and without
first resorting to any direct or indirect security for the Notes
or for this Guaranty or any other remedy. The liability of each
Guarantor hereunder shall in no way be affected or impaired by
any acceptance by any Noteholder of any direct or indirect
security for, or other guaranties of, any indebtedness, liability
or obligation of the Company, any other Guarantor or any other
Person to any Noteholder or by any failure, delay, neglect or
omission by the Noteholder to realize upon or protect any such
indebtedness, liability or obligation or any notes or other
instruments evidencing the same or any direct or indirect
security therefor or by any approval, consent, waiver, or other
action taken, or omitted to be taken by any such Noteholder.
Section 4. General Provisions Relating to the Guaranty.
(a) Each Guarantor hereby consents and agrees that any
Noteholder or Noteholders from time to time, with or without any
further notice to or assent from such Guarantor, may, without in
any manner affecting the liability of each such Guarantor under
this Guaranty, upon such terms and conditions as any such
Noteholder may deem advisable:
(i) extend in whole or in part (by renewal or
otherwise), modify, change, compromise, release or extend
the duration of the time for the performance or payment of
any indebtedness, liability or obligation of the Company or
any other Person secondarily or otherwise liable for any
indebtedness, liability or obligations of the Company on the
Notes, or waive any Default with respect thereto, or waive,
modify, amend or change any provision of any other
instruments and this Guaranty; or
(ii) sell, release, surrender, modify, impair, exchange
or substitute any and all property, of any nature and from
whomsoever received, held by, or for the benefit of, any
such Noteholder as direct or indirect security for the
payment or performance of any indebtedness, liability or
obligation of the Company or any other Person secondarily or
otherwise liable for any indebtedness, liability or
obligation of the Company on the Notes; or
(iii) settle, adjust or compromise any claim of the
Company against any other Person secondarily or otherwise
liable for any indebtedness, liability or obligation of the
Company on the Notes.
<PAGE>
<PAGE>
Each Guarantor hereby ratifies and confirms any such
extension, renewal, change, sale, release, waiver, surrender,
exchange, modification, amendment, impairment, substitution,
settlement, adjustment or compromise and that the same shall be
binding upon it, and hereby waives, to the fullest extent
permitted by law, any and all defenses, counterclaims or offsets
which it might or could have by reason thereof, it being
understood that each Guarantor shall at all times be bound by
this Guaranty and remain liable hereunder.
(b) Each Guarantor hereby waives, to the fullest extent
permitted by law: (i) notice of acceptance of this Guaranty by
the Noteholders or of the creation, renewal or accrual of any
liability of the Company, present or future, or of the reliance
of such Noteholders upon this Guaranty (it being understood that
every indebtedness, liability and obligation described in Section
1 shall conclusively be presumed to have been created, contracted
or incurred in reliance upon the execution of this Guaranty);
(ii) demand of payment by any Noteholder from the Company, any
other Guarantor or any other Person indebted in any manner on or
for any of the indebtedness, liabilities or obligations hereby
guaranteed; and (iii) presentment for the payment by any
Noteholder or any other Person of the Notes or any other
instrument, protest thereof and notice of its dishonor to any
party thereto and to such Guarantor. The obligations of each
Guarantor under this Guaranty and the rights of any Noteholder to
enforce such obligations by any proceedings, whether by action at
law, suit in equity or otherwise, shall not be subject to any
reduction, limitation, impairment or termination, whether by
reason of any claim of any character whatsoever or otherwise and
shall not be subject to any defense, set-off, counterclaim (other
than any compulsory counterclaim), recoupment or termination
whatsoever.
(c) The obligations of each Guarantor hereunder shall be
binding upon such Guarantor and its successors and assigns, and
shall remain in full force and effect irrespective of:
(i) the genuineness, validity, regularity or
enforceability of the Notes, the Note Purchase Agreements or
any other instruments relating thereto or any of the terms
of any thereof, the continuance of any obligation on the
part of the Company, any other Guarantor or any other Person
on the Notes or under the Note Purchase Agreements or the
power or authority or the lack of power or authority of the
Company to issue the Notes or execute and deliver the Note
Purchase Agreements or to perform any of its obligations
thereunder or the existence or continuance of the Company,
any other Guarantor or any other Person as a legal entity;
or
<PAGE>
<PAGE>
(ii) any default, failure or delay, willful or
otherwise, in the performance by the Company, any other
Guarantor or any other Person of any obligations of any
kind or character whatsoever of the Company, any other
Guarantor or any other Person (including, without
limitation, the obligations and undertakings of the Company,
any other Guarantor or any other Person under the Notes or
the Note Purchase Agreements); or
(iii) any creditors' rights, bankruptcy, receivership
or other insolvency proceeding of the Company, any other
Guarantor or any other Person or in respect of the property
of the Company, any other Guarantor or any other Person or
any merger, consolidation, reorganization, dissolution,
liquidation or winding up of the Company, any other
Guarantor or any other Person; or
(iv) impossibility or illegality of performance on the
part of the Company, any other Guarantor or any other Person
of its obligations under the Notes, the Note Purchase
Agreements, this Guaranty or any other instruments; or
(v) in respect of the Company, any other Guarantor or
any other Person, any change of circumstances, whether or
not foreseen or foreseeable, whether or not imputable to the
Company, any other Guarantor or any other Person, or other
impossibility of performance through fire, explosion,
accident, labor disturbance, floods, droughts, embargoes,
wars (whether or not declared), civil commotions, acts of
God or the public enemy, delays or failure of suppliers or
carriers, inability to obtain materials, action of any
Federal or state regulatory body or agency, change of law or
any other causes affecting performance, or any other force
majeure, whether or not beyond the control of the Company,
any other Guarantor or any other Person and whether or not
of the kind hereinbefore specified; or
(vi) any attachment, claim, demand, charge, Lien,
order, process, encumbrance or any other happening or event
or reason, similar or dissimilar to the foregoing, or any
withholding or diminution at the source, by reason of any
taxes, assessments, expenses, indebtedness, obligations or
liabilities of any character, foreseen or unforeseen, and
whether or not valid, incurred by or against any Person, or
any claims, demands, charges or Liens of any nature,
foreseen or unforeseen, incurred by any Person, or against
any sums payable under this Guaranty, so that such sums
would be rendered inadequate or would be unavailable to make
the payments herein provided; or
<PAGE>
<PAGE>
(vii) any order, judgment, decree, ruling or
regulation (whether or not valid) of any court of any nation
or of any political subdivision thereof or any body, agency,
department, official or administrative or regulatory agency
of any thereof or any other action, happening, event or
reason whatsoever which shall delay, interfere with, hinder
or prevent, or in any way adversely affect, the performance
by any party of its respective obligations under the Notes,
the Note Purchase Agreements or any instrument relating
thereto; or
(viii) the failure of any Guarantor to receive any
benefit from or as a result of its execution, delivery and
performance of this Guaranty; or
(ix) any failure or lack of diligence in collection or
protection, failure in presentment or demand for payment,
protest, notice of protest, notice of Default and of
nonpayment, any failure to give notice to any Guarantor of
failure of the Company, any other Guarantor or any other
Person to keep and perform any obligation, covenant or
agreement under the terms of the Notes or the Note Purchase
Agreements or failure to resort for payment to the Company,
any other Guarantor or any other Person or to any other
guaranty or to any property, security, Liens or other rights
or remedies; or
(x) the acceptance of any additional security or other
guaranty, the advance of additional money to the Company,
any other Guarantor or any other Person, the renewal or
extension of the Notes or amendments, modifications,
consents or waivers with respect to the Notes or the Note
Purchase Agreements, or the sale, release, substitution or
exchange of any security for the Notes; or
(xi) any defense whatsoever that the Company, any other
Guarantor or any other Person might have to the payment of
the Notes (principal, premium, if any, or interest), other
than payment in cash thereof, or to the performance or
observance of any of the provisions of the Note Purchase
Agreements, whether through the satisfaction or purported
satisfaction by the Company, any other Guarantor or any
other Person of its debts due to any cause such as
bankruptcy, insolvency, receivership, merger, consolidation,
reorganization, dissolution, liquidation, winding-up or
otherwise; or
(xii) any act or failure to act with regard to the
Notes, the Note Purchase Agreements or anything which might
vary the risk of any Guarantor; or
<PAGE>
<PAGE>
(xiii) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, any
Guarantor in respect of the obligations of such Guarantor
under this Guaranty;
provided, that the specific enumeration of the above-mentioned
acts, failures or omissions shall not be deemed to exclude any
other acts, failures or omissions, though not specifically
mentioned above, it being the purpose and intent of this Guaranty
that the obligations of each Guarantor shall be absolute and
unconditional and shall not be discharged, impaired or varied
except by the payment of the principal of, premium, if any, and
interest on the Notes in accordance with their respective terms
whenever the same shall become due and payable as in the Notes
provided and all other sums due and payable under the Note
Purchase Agreements, at the place specified in and all in the
manner and with the effect provided in the Notes and the Note
Purchase Agreements, as amended or modified from time to time.
Without limiting the foregoing, it is understood that repeated
and successive demands may be made and recoveries may be had
hereunder as and when, from time to time, the Company shall
Default under the terms of the Notes or the Note Purchase
Agreements and that notwithstanding recovery hereunder for or in
respect of any given Default or Defaults by the Company under the
Notes or the Note Purchase Agreements, this Guaranty shall remain
in full force and effect and shall apply to each and every
subsequent Default.
(d) Subject to the provisions of the Note Purchase
Agreements, all rights of any Noteholder may be transferred or
assigned at any time and shall be considered to be transferred or
assigned at any time or from time to time upon the transfer of
such Note whether with or without the consent of or notice to any
Guarantor under this Guaranty or the Company.
(e) To the extent of any payments made under this Guaranty,
each Guarantor shall be subrogated to the rights of the
Noteholder upon whose Note such payment was made, but such
Guarantor covenants and agrees that such right of subrogation
shall be subordinate in right of payment to the rights of any
Noteholder for which full payment has not been made or provided
for and, to that end, such Guarantor agrees not to claim or
enforce any such right of subrogation or any right of set-off or
any other right which may arise on account of any payment made by
such Guarantor in accordance with the provisions of this
Guaranty, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or
remedy of any Noteholder or Noteholders against the Company,
whether or not such claim, remedy or right arises in equity or
under contract, statute or common law, including, without
limitation, the right to take or receive from the Company,
directly or indirectly, in cash or other property or by set-off<PAGE>
<PAGE>
or in any other manner, payment or security on account of such
claim, remedy or right unless and until 366 days after all of the
Notes and all other sums due and payable under the Note Purchase
Agreements have been fully paid and discharged. If any amount
shall be paid to any Guarantor in violation of the preceding
sentence at any time prior to the indefeasible cash payment in
full of the Notes and all other amounts payable under the Note
Purchase Agreements and this Guaranty, such amounts shall be held
in trust for the benefit of the Noteholders and shall forthwith
be paid to the Noteholders to be credited and applied to the
amounts due or to become due with respect to the Notes and all
other amounts payable under the Note Purchase Agreements and this
Guaranty, whether matured or unmatured. Each Guarantor
acknowledges that it has received direct and indirect benefits
from the financing arrangements contemplated by the Note Purchase
Agreements and that the waiver set forth in this subsection is
knowingly made as a result of the receipt of such benefits.
(f) Each Guarantor agrees that to the extent the Company,
any other Guarantor or any other Person makes any payment on any
Note, which payment or any part thereof is subsequently
invalidated, voided, declared to be fraudulent or preferential,
set aside, recovered, rescinded or is required to be retained by
or repaid to a trustee, liquidator, receiver, or any other Person
under any bankruptcy code, common law, or equitable cause, then
and to the extent of such payment, the obligation or the part
thereof intended to be satisfied shall be revived and continued
in full force and effect with respect to the Guarantors'
obligations hereunder, as if said payment had not been made. The
liability of the Guarantors hereunder shall not be reduced or
discharged, in whole or in part, by any payment to any Noteholder
from any source that is thereafter paid, returned or refunded in
whole or in part by reason of the assertion of a claim of any
kind relating thereto, including, but not limited to, any claim
for breach of contract, breach of warranty, preference,
illegality, invalidity, or fraud asserted by any account debtor
or by any other Person.
(g) No Noteholder shall be under any obligation (i) to
marshal any assets in favor of any Guarantor or in payment of any
or all of the liabilities of the Company under or in respect of
the Notes or the obligations of any Guarantor hereunder or (ii)
to pursue any other remedy that any Guarantor may or may not be
able to pursue itself and that may lighten such Guarantor's
burden or any right which any Guarantor hereby expressly waives.
(h) The obligations of each Guarantor with respect to the
guaranty and all other obligations under this Guaranty of such
Guarantor are direct and unsecured obligations of such Guarantor
ranking pari passu as against the assets of such Guarantor and
pari passu with all other present and future Indebtedness of such
Guarantor which is not expressed to be subordinate or junior in
rank to any other Indebtedness of such Guarantor (except to the<PAGE>
<PAGE>
extent that the foregoing is not true by virtue of, and solely by
virtue of, Liens expressly permitted by the Note Purchase
Agreements securing other Indebtedness).
Section 5. Representations and Warranties of the Guarantors.
Each Guarantor represents and warrants to you as follows:
(a) Organization; Power and Authority. Such Guarantor is
duly organized, validly existing and, if a corporation, in good
standing under the laws of its jurisdiction of incorporation and
is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect. Such Guarantor has the corporate or
other power and authority to own or hold under lease the
properties it purports to own or hold under lease, to transact
the business it transacts and proposes to transact, to execute
and deliver this Guaranty and to perform the provisions hereof.
(b) Authorization, etc. This Guaranty has been duly
authorized by all necessary corporate or other action under its
organizational and governing instruments on the part of such
Guarantor, and this Guaranty constitutes a legal, valid and
binding obligation of such Guarantor enforceable against such
Guarantor in accordance with its terms, except as such
enforceability may be limited by (1) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (2)
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(c) Compliance with Laws, Other Instruments, etc. (1) The
execution, delivery and performance by such Guarantor of this
Guaranty will not (i) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien
in respect of any property of such Guarantor or any subsidiary
thereof under, any indenture, mortgage, deed of trust, loan,
purchase or credit agreement, lease, corporate charter or
by-laws, or any other agreement or instrument to which such
Guarantor or any subsidiary thereof is bound or by which such
Guarantor or any subsidiary thereof or any of their respective
properties may be bound or affected, (ii) conflict with or result
in a breach of any of the terms, conditions or provisions of any
order, judgment, decree, or ruling of any court, arbitrator or
Governmental Authority applicable to such Guarantor or any
subsidiary thereof or (iii) violate any provision of any statute
or other rule or regulation of any Governmental Authority
applicable to such Guarantor or any subsidiary thereof, other
than any contravention, breach, default, creation, conflict or<PAGE>
<PAGE>
violation under clauses (i) through (iii), inclusive, of this
Section 5(c) which individually or in the aggregate could not
reasonably be expected to have a Material Adverse Effect.
(2) All obligations of such Guarantor under this Guaranty
are direct and unsecured obligations of such Guarantor ranking
pari passu with all other existing unsecured Indebtedness of such
Guarantor (actual or contingent) which is not expressed to be
subordinated or junior in rank to any other unsecured
Indebtedness of such Guarantor.
(d) Governmental Authorizations, etc;. No consent,
approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in
connection with the execution, delivery or performance by such
Guarantor of this Guaranty.
Section 6. Guarantor Covenants.
Section 6.1. Compliance with Law. Each Guarantor will and
will cause each of its subsidiaries to comply with all laws,
ordinances or governmental rules or regulations to which each of
them is subject, including, without limitation, Environmental
Laws and ERISA, and will obtain and maintain in effect all
licenses, certificates, permits, franchises and other
governmental authorizations necessary to the ownership of their
respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that
non-compliance with such laws, ordinances or governmental rules
or regulations or failures to obtain or maintain in effect such
licenses, certificates, permits, franchises and other
governmental authorizations could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse
Effect.
Section 6.2. Insurance. Each Guarantor will and will
cause each of its Subsidiaries to maintain, with financially
sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and
contingencies, of such types, on such terms and in such amounts
(including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is
customary in the case of entities of established reputations
engaged in the same or a similar business and similarly situated.
Section 6.3. Maintenance of Properties. Each Guarantor
will and will cause each of its Subsidiaries to maintain and
keep, or cause to be maintained and kept, their respective
Material properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried
on in connection therewith may be properly conducted at all
times; provided that this Section shall not prevent such
Guarantor or any subsidiary from discontinuing the operation and<PAGE>
<PAGE>
the maintenance of any of its properties if such discontinuance
is desirable in the conduct of its business and such Guarantor
has concluded that such discontinuance could not, individually or
in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 6.4. Payment of Taxes and Claims. Each Guarantor
will and will cause each of its subsidiaries to file all tax
returns required to be filed in any jurisdiction and to pay and
discharge all taxes shown to be due and payable on such returns
and all other taxes, assessments, governmental charges, or levies
imposed on them or any of their properties, assets, income or
franchises, to the extent such taxes and assessments have become
due and payable and before they have become delinquent and all
claims for which sums have become due and payable that have or
might become a Lien on properties or assets of such Guarantor or
any subsidiary thereof; provided that neither such Guarantor nor
any subsidiary need pay any such tax or assessment or claims if
(a) the amount, applicability or validity thereof is contested by
such Guarantor or such subsidiary on a timely basis in good faith
and in appropriate proceedings, and such Guarantor or a
subsidiary has established adequate reserves therefor in
accordance with GAAP on the books of such Guarantor or such
subsidiary or (b) the nonpayment of all such taxes and
assessments in the aggregate could not reasonably be expected to
have a Material Adverse Effect.
Section 6.5. Corporate Existence, etc. Each Guarantor
will at all times preserve and keep in full force and effect its
corporate or other existence, except to the extent otherwise
permitted by the Note Purchase Agreements. Each Guarantor will
at all times preserve and keep in full force and effect the
corporate existence of each of its Subsidiaries and all rights
and franchises of such Guarantor and its subsidiaries unless, in
the good faith judgment of such Guarantor, the termination of or
failure to preserve and keep in full force and effect such right
or franchise could not, individually or in the aggregate, have a
Material Adverse Effect.
Section 7. Submission to Jurisdiction.
Each Guarantor hereby irrevocably submits and consents to
the nonexclusive jurisdiction of the Federal court located within
the Northern District of the State of Illinois (or if such court
lacks jurisdiction, the state courts located therein) and
irrevocably agrees that all actions or proceedings relating to
this Guaranty may be litigated in such courts, and such Guarantor
waives any objection which it may have based on improper venue or
forum non conveniens to the conduct of any proceeding in any such
court and waives personal service of any and all process upon it,
and consents that all such service of process be made by delivery
to it at the address set forth in Section 9 or to its agent
referred to below at such agent's address set forth below and<PAGE>
<PAGE>
that service so made shall be deemed to be completed upon actual
receipt. Each Guarantor hereby irrevocably appoints the Company
as its agent for the purpose of accepting service of any process
within the State of Illinois. Nothing contained in this Section
7 shall affect the right of any Noteholder to serve legal process
in any other manner permitted by law or to bring any action or
proceeding in the courts of any jurisdiction against any
Guarantor or to enforce a judgment obtained in the courts of any
other jurisdiction.
Section 8. Judgments.
Each Guarantor agrees that any payment made by such Guarantor
to any Noteholder or for the account of any such Noteholder in
respect of any amount required to be paid by such Guarantor in
lawful currency of the United States of America, which payment is
made in any currency other than lawful currency of the United
States of America, whether pursuant to any judgment or order of the
court or tribunal or otherwise, shall constitute a discharge of the
obligations of such Guarantor only to the extent of the amount of
lawful currency of the United States of America which may be
purchased with such other currency on the day of payment. Each
Guarantor covenants and agrees that it shall, as a separate and
independent obligation, which shall not be merged in any such
judgment or order, pay or cause to be paid the amount not so
discharged and required to be paid in lawful currency of the United
States of America.
Section 9. Notices.
All communications provided for herein shall be in writing,
and (a) if to the Company or any Guarantor, delivered or mailed
prepaid by registered or certified mail or express commercial air
courier, or by facsimile communication (prompt express commercial
air courier delivery of hard copy to follow such facsimile
communication), or (b) if to any Noteholder, delivered or mailed
prepaid by express commercial air courier, or by facsimile
communication (prompt express commercial air courier delivery of
hard copy to follow such facsimile communication), in any case at
the addresses set forth below, or to such other address as such
person may designate to the other persons named below by notice
given in accordance with this Section 9:
If to any Noteholder: To its address for notices appearing
in Schedule A to the Note Purchase
Agreements, as the case may be
If to a Guarantor: c/o Insituform Technologies, Inc.
702 Spirit 40 Park Drive
Chesterfield, Missouri 63005
Attention: President
<PAGE>
<PAGE>
If to the Company: Insituform Technologies, Inc.
702 Spirit 40 Park Drive
Chesterfield, Missouri 63005
Attention: President
Section 10. Amendments and Modifications; Solicitation of
Noteholders'.
(a) This Guaranty may only be amended and/or modified by an
instrument in writing signed by each Guarantor and by the
Noteholder or Noteholders of at least 66 2/3% in aggregate
principal amount of the Notes then outstanding; provided, that
without the written consent of the Noteholders of all of the Notes
then outstanding, no such waiver, modification, alteration or
amendment shall be effective which will reduce the scope of the
guaranty set forth in this Guaranty or amend the requirements of
Sections 2, 3, 4 or 8 hereof or amend this Section 10. No such
amendment or modification shall extend to or affect any obligation
not expressly amended or modified or impair any right consequent
thereon.
(b) Each Guarantor agrees that it will not solicit, request
or negotiate for or with respect to any proposed waiver or
amendment of any of the provisions of this Guaranty, the Note
Purchase Agreements or the Notes unless each Noteholder
(irrespective of the amount of Notes then owned by it) shall be
informed thereof by such Guarantor and shall be afforded the
opportunity of considering the same for a period of not less than
30 days and shall be supplied by such Guarantor with a brief
statement regarding the reasons for any such proposed waiver or
amendment, a copy of the proposed waiver or amendment and such
other information regarding such amendment or waiver as any
Noteholder shall reasonably request to enable it to make an
informed decision with respect thereto. Executed or true and
correct copies of any waiver or amendment effected pursuant to the
provisions of this Section 10 shall be delivered by such Guarantor
to each Noteholder of outstanding Notes within 30 days following
the date on which the same shall have been executed and delivered
by the holder or holders of the requisite percentage of the
outstanding Notes. Each Guarantor agrees that it will not,
directly or indirectly, pay or cause to be paid any remuneration,
whether by way of supplemental or additional interest, fee or
otherwise, to any Noteholder as consideration for or as an
inducement to the entering into by any Noteholder of any waiver or
amendment of any of the terms and provisions of this Guaranty, the
Note Purchase Agreements or the Notes unless such remuneration is
concurrently paid, on the same terms, ratably to the Noteholders of
all of the Notes then outstanding.
<PAGE>
<PAGE>
Section 11. Proceeds.
Each beneficiary of this Guaranty by its acceptance hereof
agrees that any proceeds recovered hereunder will be shared pro
rata among each beneficiary hereunder or under any other guaranty
of the Guarantors.
Section 12. Miscellaneous.
(a) No remedy herein conferred upon or reserved to any
Noteholder is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given
under this Guaranty now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon
any default, omission or failure of performance 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. In order to entitle
any Noteholder to exercise any remedy reserved to it under this
Guaranty, it shall not be necessary for such Noteholder to
physically produce its Note in any proceedings instituted by it or
to give any notice, other than such notice as may be herein
expressly required.
(b) In case any one or more of the provisions contained in
this Guaranty shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining
provisions contained herein and therein shall not in any way be
affected or impaired thereby.
(c) This Guaranty shall be binding upon each of the
undersigned Guarantors and its respective successors and assigns
and shall inure to the benefit of each Noteholder and its
successors and assigns so long as its Note remains outstanding and
unpaid.
(d) Each Guarantor hereby agrees that the obligations of such
Guarantor hereunder are joint and several with the obligations of
each other Guarantor hereunder and with the obligations of any
other guarantor of all or any portion of the indebtedness
guaranteed hereby.
(e) This Guaranty shall be governed by and construed in
accordance with Illinois law, including all matters of
construction, validity and performance.
In Witness Whereof, each Guarantor has caused this Guaranty to
be duly executed by an authorized officer of such Guarantor as of
the 20th day of August, 1997.
<PAGE>
<PAGE>
Signatures.
Affholder, Inc.
INA Acquisition Corp.
Insituform Central, Inc.
Insituform Gulf South, Inc.
Insituform Mid-America, Inc.
Insituform Midwest, Inc.
Insituform Missouri, Inc.
Insituform North, Inc.
Insituform North America Corp.
Insituform Plains, Inc.
Insituform Rockies, Inc.
Insituform Southeast, Inc.
Insituform Texark, Inc.
Insituform West, Inc.
NuPipe, Inc.
United Pipeline Systems USA, Inc.
By s/William A. Martin
--------------------------------
Vice President of each of the foregoing entities
Insituform Southwest
By: Insituform Southwest, Inc.,
Managing Partner
By s/William A. Martin
---------------------------------
Its Vice President
Insituform of New England, Inc.
By s/William A. Martin
---------------------------------
Its Treasurer and Clerk
Acknowledged By:
Insituform Technologies, Inc.
By s/William A. Martin
---------------------------------
Its Senior Vice President-
Chief Financial Officer
<PAGE>
<PAGE>
Guarantors
Entity Jurisdiction of Organization
Affholder, Inc. Missouri
INA Acquisition Corp. Delaware
Insituform Central, Inc. Delaware
Insituform Gulf South, Inc. Delaware
Insituform Mid-America, Inc. Delaware
Insituform Midwest, Inc. Delaware
Insituform Missouri, Inc. Delaware
Insituform of New England, Inc. Massachusetts
Insituform North, Inc. Delaware
Insituform North America Corp. Tennessee
Insituform Plains, Inc. Delaware
Insituform Rockies, Inc. Delaware
Insituform Southeast, Inc. Florida
Insituform Southwest California
Insituform Texark, Inc. Delaware
Insituform West, Inc. Oregon
NuPipe, Inc. Oregon
United Pipeline Systems USA, Inc. Delaware
<PAGE>
<PAGE>
Intercreditor Agreement
Dated as of August 20, 1997
Among
NationsBank, N.A.
And
The Northwestern Mutual Life Insurance Company
Principal Mutual Life Insurance Company
Allstate Life Insurance Company
Connecticut General Life Insurance Company
CIGNA Property and Casualty Insurance Company
Connecticut General Life insurance Company,
on behalf of one or more separate accounts
Jefferson-Pilot Life Insurance Company
Alexander Hamilton Life Insurance Company of America
The Minnesota Mutual Life Insurance Company
Mutual Trust Life Insurance Company
Northern Life Insurance Company
ReliaStar United Services Life Insurance Company
ReliaStar Bankers Security Life Insurance Company
ReliaStar Life Insurance Company
Pierce National Life Insurance Company
and
The Security Mutual Life Insurance Company of Lincoln, Nebraska
<PAGE>
<PAGE>
Table of Contents
Section Heading Page
Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1. Definitions . . . . . . . . . . . . . . . . . .2
Section 2. Sharing of Recoveries . . . . . . . . . . . . .4
Section 2.1. Pro Rata Share. . . . . . . . . . . . . . . . .4
Section 2.2. Letters of Credit . . . . . . . . . . . . . . .5
Section 3. Agreements Among The Creditors. . . . . . . . .5
Section 3.1. Independent Actions by Creditors. . . . . . . .5
Section 3.2. Relation of Creditors . . . . . . . . . . . . .5
Section 3.3. Acknowledgment of Guaranties. . . . . . . . . .6
Section 3.4. Additional Creditors. . . . . . . . . . . . . .6
Section 4. Miscellaneous . . . . . . . . . . . . . . . . .6
Section 4.1. Entire Agreement. . . . . . . . . . . . . . . .6
Section 4.2. Notices . . . . . . . . . . . . . . . . . . . .6
Section 4.3. Successors and Assigns. . . . . . . . . . . . .6
Section 4.4. Consents, Amendment, Waivers. . . . . . . . . .6
Section 4.5. Governing Law . . . . . . . . . . . . . . . . .7
Section 4.6. Counterparts. . . . . . . . . . . . . . . . . .7
Section 4.7. Sale of Interest. . . . . . . . . . . . . . . .7
Section 4.8. Severability. . . . . . . . . . . . . . . . . .7
Section 4.9. Expenses. . . . . . . . . . . . . . . . . . . .7
Section 4.10. Term of Agreement . . . . . . . . . . . . . . .7
Signature Page . . . . . . . . . . . . . . . . . . . . . . . .1
<PAGE>
<PAGE>
Intercreditor Agreement
This Intercreditor Agreement, dated as of August 20, 1997,
is made among (i) the Lender (as hereinafter defined) and (ii)
each of the Noteholders (as hereinafter defined); the
Noteholders, the Lender and each of the additional Persons, if
any, that become Creditors hereunder as contemplated by Section 3.4
hereof are individually referred to herein as a "Creditor" and
are collectively referred to herein as the "Creditors".
R e c i t a l s:
A. Under and pursuant to the separate and several Note
Purchase Agreements, each dated as of February 14, 1997 (as such
agreements may be modified or amended from time to time,
collectively, the "Note Purchase Agreements"), between Insituform
Technologies, Inc., a Delaware corporation (the "Company"), and
each of the Purchasers named on Schedule A attached thereto
respectively, the Company has heretofore issued and sold its
7.88% Senior Notes, Series A, due February 14, 2007, in the
aggregate principal amount of $110,000,000 (the "Notes"). The
holders of the Notes currently outstanding are referred to herein
individually as a "Noteholder" and collectively as the
"Noteholders."
B. Under and pursuant to that certain Loan Agreement dated
as of August 20, 1997 (as such agreement may be modified,
amended, renewed or replaced, including any increase in the
amount thereof, the "Loan Agreement"), between the Company and
NationsBank, N.A. (the "Lender"), the Lender has made available
to the Company certain revolving credit facilities in a current
aggregate principal amount up to $20,000,000 (all obligations in
respect of said credit facilities being hereinafter collectively
referred to as the "Loans").
C. As required by the Note Purchase Agreements, each of
Affholder, Inc., a Missouri corporation, INA Acquisition Corp.,
a Delaware corporation, Insituform Central, Inc., a Delaware
corporation, Insituform Gulf South, Inc., a Delaware corporation,
Insituform Mid-America, Inc., a Delaware corporation, Insituform
Midwest, Inc., a Delaware corporation, Insituform Missouri, Inc.,
Insituform of New England, Inc., a Massachusetts corporation,
Insituform North, Inc., a Delaware corporation, Insituform North
America Corp., a Tennessee corporation, Insituform Plains, Inc.,
a Delaware corporation, Insituform Rockies, Inc., a Delaware
corporation, Insituform Southeast, Inc., a Florida corporation,
Insituform Southwest, a California partnership, Insituform
Texark, Inc., a Delaware corporation, Insituform West, Inc., an
Oregon corporation, NuPipe, Inc., an Oregon corporation, and
United Pipeline Systems USA, Inc., a Delaware corporation
(collectively, the "Subsidiary Guarantors"), have concurrently
herewith executed and delivered a Guaranty Agreement or Guaranty
Agreements (as such agreement(s) may be modified or amended from<PAGE>
<PAGE>
time to time, collectively, the "Noteholder Guaranty"), each
dated as of August 20, 1997, pursuant to which the Subsidiary
Guarantors have irrevocably, absolutely and unconditionally
guaranteed to the Noteholders the payment of the principal of,
premium, if any, and interest on the Notes and the payment and
performance of all other obligations of the Company under the
Note Purchase Agreements.
D. As required by the Loan Agreement, the Subsidiary
Guarantors have concurrently herewith executed and delivered a
Guaranty Agreement or Guaranty Agreements (as such agreement(s)
may be modified or amended from time to time, collectively, the
"Lender Guaranty"), each dated as of August 20, 1997, pursuant to
which the Subsidiary Guarantors have irrevocably, absolutely and
unconditionally guaranteed to the Lender the payment and
performance of all obligations of the Company under the Loan
Agreement. The Lender Guaranty and the Noteholder Guaranty are
hereinafter referred to as the "Subsidiary Agreements."
E. Pursuant to the requirements of the Note Purchase
Agreements, the Company and the Subsidiary Guarantors have
requested and the Lender has agreed to enter into this Agreement.
Now, Therefore, in consideration of the premises and other
good and valuable consideration, the sufficiency and receipt of
which are hereby acknowledged, the parties hereto hereby agree as
follows:
Section 1. Definitions.
The following terms shall have the meanings assigned to them
below in this Section 1 or in the provisions of this Agreement referred
to below:
"Bankruptcy Proceeding" shall mean, with respect to any
person, (i) the filing by such person, or consent by answer or
otherwise to the filing against it of, a petition for relief or
reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any
bankruptcy, insolvency, reorganization, moratorium or other
similar law of any jurisdiction, (ii) the making of an assignment
for the benefit of such person's creditors, (iii) consent by such
person to the appointment of a custodian, receiver, trustee or
other officer with similar powers with respect to such person or
with respect to any substantial part of its property, (iv) the
adjudication of such person as insolvent or to be liquidated, (v)
the taking by such person of corporate action for the purpose of
any of the foregoing, or (vi) the entry by a court or
governmental authority of competent jurisdiction of an order
appointing, without consent by such person, a custodian,
receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a<PAGE>
<PAGE>
petition for relief or reorganization or any other petition in
bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of such person.
"Company" shall have the meaning assigned thereto in the
Recitals hereof.
"Credit Documents" shall mean, collectively, the Note
Purchase Agreements, the Loan Agreement and each other agreement
or document pursuant to which any Person becomes an additional
Creditor pursuant to Section 3.4.
"Creditor" shall have the meaning assigned thereto in the
introductory paragraph hereto.
"Excess Subsidiary Payment" shall mean as to any Creditor an
amount equal to the Subsidiary Payment received by such Creditor
less the Pro Rata Share of Subsidiary Payments to which such
Creditor is then entitled.
"Lender" shall have the meanings assigned thereto in the
introductory paragraph hereto.
"Lender Guaranty" shall have the meaning assigned thereto in
the Recitals hereof.
"Loan Agreement" shall have the meaning assigned thereto in
the Recitals hereof.
"Loans" shall have the meaning assigned thereto in the
Recitals hereof.
"Note Purchase Agreements" shall have the meaning assigned
thereto in the Recitals hereof.
"Noteholder" and "Noteholders" shall have the meanings
assigned thereto in the introductory paragraph hereto.
"Noteholder Guaranty" shall have the meaning assigned
thereto in the Recitals hereof.
"Notes" shall have the meaning assigned thereto in the
Recitals hereof.
"Person" shall mean an individual, partnership, limited
liability company, corporation, trust or unincorporated
organization, and a government or agency or political subdivision
thereof.
<PAGE>
<PAGE>
"Pro Rata Share of Subsidiary Payments" shall mean as of the
date of any Subsidiary Payment to a Creditor in respect to a
Subsidiary Agreement an amount equal to the product obtained by
multiplying (x) the amount of all Subsidiary Payments made by the
Subsidiary Guarantors to all Creditors concurrently with the
payments to such Creditor less all reasonable costs incurred by
such Creditors in connection with the collection of such
Subsidiary Payments by (y) a fraction, the numerator of which
shall be the Specified Amount owing to such Creditor, and the
denominator of which is the aggregate amount of all outstanding
Subject Obligations (without giving effect to the application of
any such Subsidiary Payments).
"Receiving Creditor" shall have the meaning assigned thereto
in Section 2.
"Specified Amount" shall mean, as to any Creditor, the
aggregate amount of the Subject Obligations owed to such
Creditor.
"Subject Obligations" shall mean (i) all principal of,
premium, if any, and interest on, the Notes and the Loans and all
other obligations of the Company under or in respect of the Notes
and the Loans and under the Note Purchase Agreements and the Loan
Agreement and any other obligations of the Company to the Lender
which are guaranteed by the Lender Guaranty and (ii) all
principal of, premium, if any, and interest on, the obligations
of the Subsidiary Guarantors under or in respect of the
agreements and documents referred to in Section 3.4 hereof pursuant to
which other Persons have become creditors of the Subsidiary
Guarantors and "Creditors" hereunder as contemplated in Section 3.4
hereof; provided that any amount of such Subject Obligations
which is not allowed as a claim enforceable against the Company
in a Bankruptcy Proceeding under applicable law shall be excluded
from the computation of "Subject Obligations" hereunder.
"Subsidiary Agreements" shall have the meaning assigned
thereto in the Recitals hereof.
"Subsidiary Guarantors" shall have the meaning assigned
thereto in the Recitals hereof.
"Subsidiary Payments" shall have the meaning assigned
thereto in Section 2.
Section 2. Sharing of Recoveries.
Section 2.1. Pro Rata Share. Each Creditor hereby agrees
with each other Creditor that payments (including payments made
through setoff of deposit balances or otherwise or payments or
recoveries from any security interest granted to any Creditor
securing any Subsidiary Agreement) made pursuant to the terms of
the Subsidiary Agreements ("Subsidiary Payments") (x) within 90<PAGE>
<PAGE>
days prior to the commencement of a Bankruptcy Proceeding with
respect to the Subsidiary Guarantors or the Company, as the case
may be, or (y) following the acceleration of the Notes generally
or the Loans or the acceleration of any other Subject Obligation,
shall be shared so that each Creditor shall receive its Pro Rata
Share of Subsidiary Payments. Accordingly, each Creditor hereby
agrees that in the event (a) an event described in clauses (x) or
(y) above shall have occurred, (b) any Creditor shall receive a
Subsidiary Payment (a "Receiving Creditor"), and (c) any other
Creditor shall not concurrently receive its Pro Rata Share of
Subsidiary Payments from the Subsidiary Guarantors, then the
Receiving Creditor shall promptly remit the Excess Subsidiary
Payment to each other Creditor who shall then be entitled thereto
so that after giving effect to such payment (and any other
payments then being made by any other Receiving Creditor pursuant
to this Section 2) each Creditor shall have received its Pro Rata Share
of Subsidiary Payments.
Any such payments shall be deemed to be and shall be made in
consideration of the purchase for cash at face value, but without
recourse, ratably from the other Creditors of such amount of
Notes or Loans (or interest therein), as the case may be
(exclusive of any lien or security interest granted to such other
Creditors and not securing a Subsidiary Agreement), necessary to
cause such Creditor to share such Excess Subsidiary Payment with
the other Creditors as hereinabove provided; provided, however,
that if any such purchase or payment is made by any Receiving
Creditor and if such Excess Subsidiary Payment or part thereof is
thereafter recovered from such Receiving Creditor by the
Subsidiary Guarantors (including, without limitation, by any
trustee in bankruptcy of the Subsidiary Guarantors or any
creditor thereof), the related purchase from the other Creditors
shall be rescinded ratably and the purchase price restored as to
the portion of such Excess Subsidiary Payment so recovered, but
without interest; and provided further nothing herein contained
shall obligate any Creditor to resort to any setoff, application
of deposit balance or other means of payment under any Subsidiary
Agreement or avail itself of any recourse by resort to any
property of the Company or the Subsidiary Guarantors, the taking
of any such action to remain within the absolute discretion of
such Creditor without obligation of any kind to the other
Creditors to take any such action.
Section 2.2. Letters of Credit. Notwithstanding anything
herein to the contrary, any amounts to be distributed to the
Lender after an event described in clause (x) or (y) of Section 2.1
above for application as provided in the Loan Agreement with
respect to the undrawn portion of any outstanding letters of
credit issued by the Lender shall be held by the Lender receiving
the same in an interest bearing trust account (the "Special Trust
Account") as collateral security for such liabilities until a
drawing thereon, at which time such amounts, together with the
interest accrued thereon, shall be applied to such letter of<PAGE>
<PAGE>
credit liabilities. If any such letters of credit expire without
having been drawn upon in full, amounts held in the Special Trust
Account with respect to the undrawn portion of such letters of
credit, together with the interest accrued thereon, shall be
treated as a Subsidiary Payment and shared in the manner provided
in Section 2.1 hereof.
Section 3. Agreements Among The Creditors.
Section 3.1. Independent Actions by Creditors. Nothing
contained in this Agreement shall prohibit any Creditor from
accelerating the maturity of, or demanding payment from the
Subsidiary Guarantors on, any Subject Obligation of the Company
or the Subsidiary Guarantors, as the case may be, to such
Creditor or from instituting legal action against the Company or
the Subsidiary Guarantors to obtain a judgment or other legal
process in respect of such Subject Obligation, but any funds
received from the Subsidiary Guarantors in connection with any
recovery under any Subsidiary Agreement (exclusive of recoveries
arising from liens or security interests granted to other
Creditors and not securing any Subsidiary Agreement) shall be
subject to the terms of this Agreement.
Section 3.2. Relation of Creditors. This Agreement is
entered into solely for the purposes set forth herein, and no
Creditor assumes any responsibility to any other party hereto to
advise such other party of information known to such regarding
the financial condition of the Company or the Subsidiary
Guarantors or of any other circumstances bearing upon the risk of
nonpayment of the Subject Obligations. Each Creditor
specifically acknowledges and agrees that nothing contained in
this Agreement is or is intended to be for the benefit of the
Company or the Subsidiary Guarantors and nothing contained herein
shall limit or in any way modify any of the obligations of the
Company or the Subsidiary Guarantors to the Creditors.
Section 3.3. Acknowledgment of Guaranties. The Lender
hereby expressly acknowledges the existence of the Noteholder
Guaranty and the Noteholders hereby expressly acknowledge the
existence of the Lender Guaranty.
Section 3.4. Additional Creditors. Additional Persons
which receive a "Guaranty" of "Indebtedness" of the Company (as
such terms are defined in the Note Purchase Agreements) as
contemplated in Section 9.8 of the Note Purchase Agreements may become
"Creditors" hereunder by executing and delivering to each of the
then existing Creditors (i) a copy of this Agreement so executed
and (ii) a copy of the agreement or documents pursuant to which
such Person becomes a creditor of the Subsidiary Guarantors.
Accordingly, upon the execution and delivery of any such copy of
this Agreement by any such Person, such Person shall thereinafter
become a Creditor for all purposes of this Agreement.
<PAGE>
<PAGE>
Notwithstanding the foregoing or any other provision of this
Agreement, the provisions hereof shall not in any manner modify
any covenant, obligation or agreement of the Company and its
Subsidiaries contained in the Credit Documents with respect to
(x) limitations on additional indebtedness of the Company or any
Subsidiary permitted under any Credit Document or (y) limitations
on liens or security interests which may be created or granted by
the Company or any Subsidiary under such Credit Document.
Section 4. Miscellaneous.
Section 4.1. Entire Agreement. This Agreement represents
the entire Agreement among the Creditors and, except as otherwise
provided, this Agreement may not be altered, amended or modified
except in a writing executed by all the parties to this
Agreement.
Section 4.2. Notices. Notices hereunder shall be given to
the Creditors at their addresses as set forth in the Note
Purchase Agreements or the Loan Agreement, as the case may be, or
at such other address as may be designated by each in a written
notice to the other parties hereto.
Section 4.3. Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of each of the Creditors
and their respective successors and assigns, whether so expressed
or not, and, in particular, shall inure to the benefit of and be
enforceable by any future holder or holders of any Subject
Obligations, and the term "Creditor" shall include any such
subsequent holder of Subject Obligations, wherever the context
permits.
Section 4.4. Consents, Amendment, Waivers. All amendments,
waivers or consents of any provision of this Agreement shall be
effective only if the same shall be in writing and signed by all
of the Creditors.
Section 4.5. Governing Law. This Agreement shall be
governed by and construed in accordance with the laws of the
State of Illinois.
Section 4.6. Counterparts. This Agreement may be executed
in any number of counterparts, all of which taken together shall
constitute one Agreement, and any of the parties hereto may
execute this Agreement by signing any such counterpart.
Section 4.7. Sale of Interest. No Creditor will sell,
transfer or otherwise dispose of any interest in the Subject
Obligations unless such purchaser or transferee shall agree, in
writing, to be bound by the terms of this Agreement, or unless
the Subject Obligations are sold, transferred or disposed of at
a time when the Subsidiary Agreements are no longer in effect for
the benefit of such Subject Obligations.<PAGE>
<PAGE>
Section 4.8. Severability. In case any one or more of the
provisions contained in this Agreement shall be invalid, illegal
or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions of this Agreement
shall not in any way be affected or impaired thereby.
Section 4.9. Expenses. In the event of any litigation to
enforce this Agreement, the prevailing party shall be entitled to
its reasonable attorney's fees (including the allocated costs of
in-house counsel).
Section 4.10. Term of Agreement. This Agreement shall
terminate when all Subject Obligations are paid in full and such
payments are not subject to any possibility of revocation or
rescission or until all of the parties hereto mutually agree in
a writing to terminate this Agreement.
In Witness Whereof, each of the parties hereto has caused
this Agreement to be executed as of the date first above written.
<PAGE>
<PAGE>
Signature Page
The Northwestern Mutual Life Insurance Company
By s/Richard A. Strait
----------------------------------
Its Vice President
---------------------------------
Principal Mutual Life Insurance Company
By s/Shabnam B. Miglani
----------------------------------
Its Counsel
---------------------------------
By s/Sarah J. Pitts
----------------------------------
Its Counsel
---------------------------------
Allstate Life Insurance Company
By s/Ronald A. Mendil
----------------------------------
By Authorized Signatory
---------------------------------
Authorized Signatories
Connecticut General Life Insurance Company
By: CIGNA Investments, Inc.
By s/Edward Lewis
-----------------------------
Its Managing Director
----------------------------
CIGNA Property and Casualty Insurance Company
By: CIGNA Investments, Inc.
By s/Edward Lewis
-----------------------------
Its Managing Director
----------------------------
<PAGE>
<PAGE>
Connecticut General Life Insurance Company,
on behalf of one or more separate accounts
By: CIGNA Investments, Inc.
By
By s/Edward Lewis
-----------------------------
Its Managing Director
----------------------------
The Security Mutual Life Insurance Company
of Lincoln, Nebraska
By s/Kevin W. Hammond
----------------------------
Its Vice President-Chief Investment Officer
---------------------------
Northern Life Insurance Company
By s/James V. Wittich
----------------------------
Its Assistant Treasurer
---------------------------
ReliaStar United Services Life Insurance Company
By s/James V. Wittich
----------------------------
Its Assistant Treasurer
---------------------------
ReliaStar Bankers Security Life Insurance Company
By s/James V. Wittich
----------------------------
Its Vice President, Investments
---------------------------
ReliaStar Life Insurance Company
By s/James V. Wittich
----------------------------
Its Authorized Representative
---------------------------
Pierce National Life Insurance Company
By s/Douglas W. Kroske
----------------------------
Its Authorized Officer
---------------------------
<PAGE>
The Minnesota Mutual Life Insurance Company
By: MIMLIC Asset Management Company
By s/Lynne M. Mills
----------------------------
Its Vice President
---------------------------
Mutual Trust Life Insurance Company
By: MIMLIC Asset Management Company
By s/Lynne M. Mills
----------------------------
Its Vice President
---------------------------
Jefferson-Pilot Life Insurance Company
By s/John E. McDonald, Jr.
----------------------------
Its Second Vice President
---------------------------
Alexander Hamilton Life Insurance
Company of America
By s/John E. McDonald, Jr.
----------------------------
Its Second Vice President
---------------------------
NationsBank, N.A.
By
----------------------------
Its Senior Vice President
---------------------------
<PAGE>
<PAGE>
The undersigned hereby acknowledge and agree to the
foregoing Agreement.
Insituform Technologies, Inc.
By s/William A. Martin
----------------------------
Its Senior Vice President - Chief
Financial Officer
Affholder, Inc.
INA Acquisition Corp.
Insituform Central, Inc.
Insituform Gulf South, Inc.
Insituform Mid-America, Inc.
Insituform Midwest, Inc.
Insituform Missouri, Inc.
Insituform North, Inc.
Insituform North America Corp.
Insituform Plains, Inc.
Insituform Rockies, Inc.
Insituform Southeast, Inc.
Insituform Texark, Inc.
Insituform West, Inc.
NuPipe, Inc.
United Pipeline Systems USA, Inc.
By s/William A. Martin
--------------------------------
Vice President of each of the foregoing entities
Insituform Southwest
By: Insituform Southwest, Inc.,
Managing Partner
By s/William A. Martin
---------------------------------
Its Vice President
Insituform of New England, Inc.
By s/William A. Martin
---------------------------------
Its Treasurer and Clerk
EXHIBIT 10(b)
LOAN AGREEMENT
between
NATIONSBANK, N.A.
as "Lender"
and
INSITUFORM TECHNOLOGIES, INC.
as "Borrower"
Effective August 20, 1997
<PAGE>
<PAGE>
Table of Contents
1. Effective Date. . . . . . . . . . . . . . . . . . . . . . . 1
2. Definitions and Rules of Construction.. . . . . . . . . . . 1
2.1 Listed Definitions. . . . . . . . . . . . . . . . . . . . . 1
2.2. Other Definitions. . . . . . . . . . . . . . . . . 1
2.3. References to Covered Persons. . . . . . . . . . . 1
2.4. Accounting Terms.. . . . . . . . . . . . . . . . . 1
2.5. Meaning of Satisfactory. . . . . . . . . . . . . . 1
2.6. Computation of Time Periods. . . . . . . . . . . . 2
2.7. General. . . . . . . . . . . . . . . . . . . . . . 2
3. Lender's Commitments. . . . . . . . . . . . . . . . . . . . 2
3.1. Revolving Commitment.. . . . . . . . . . . . . . . 2
3.1.1. Revolving Advances. . . . . . . . . . . . 2
3.1.2. Revolving Note. . . . . . . . . . . . . . 3
3.2. Letter of Credit Commitment. . . . . . . . . . . . 3
4. Interest; Yield Protection. . . . . . . . . . . . . . . . . 3
4.1. Interest on Draws on Letters of Credit.. . . . . . 3
4.2. Alternative Rates and Interest Periods for
Tranches of Revolving Loan.. . . . . . . . . . . . 3
4.3. Prime Rate.. . . . . . . . . . . . . . . . . . . . 4
4.4. Adjusted LIBO Rate.. . . . . . . . . . . . . . . . 4
4.5. LIBOR Increment. . . . . . . . . . . . . . . . . . 4
4.6. Conversion of Revolving Loan.. . . . . . . . . . . 6
4.7. Time of Accrual. . . . . . . . . . . . . . . . . . 6
4.8. Computation. . . . . . . . . . . . . . . . . . . . 6
4.9. Rate After Maturity. . . . . . . . . . . . . . . . 6
4.10. Taxes on Payments.. . . . . . . . . . . . . . . . . . 6
4.11. Compensation for Increase In Costs of LIBOR
Tranches.. . . . . . . . . . . . . . . . . . . . . 7
4.11.1. . . . . . . . . . . . . . . . . . . . . . 7
4.11.2. . . . . . . . . . . . . . . . . . . . . . 7
4.12. Losses on LIBOR Tranches. . . . . . . . . . . . . . . 7
5. Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . 9
6. Scheduled Payments. . . . . . . . . . . . . . . . . . . . . 9
6.1. Maturity Date. . . . . . . . . . . . . . . . . . . 9
6.2. Interest Payments Before Maturity Date.. . . . . . 9
7. Voluntary Prepayments.. . . . . . . . . . . . . . . . . . . 10
<PAGE>
<PAGE>
8. Manner of Payments and Timing of
Application of Payments.. . . . . . . . . . . . . . . . . . 10
8.1. Payment Requirement. . . . . . . . . . . . . . . . 10
8.2. Application of Payments and Proceeds.. . . . . . . 10
8.3. Returned Instruments.. . . . . . . . . . . . . . . 10
8.4. Compelled Return of Payments or
Proceeds.. . . . . . . . . . . . . . . . . . . . . 10
8.5. Due Dates Not on Business Days.. . . . . . . . . . 11
9. Procedure for Obtaining Revolving Advances
and Letters of Credit.. . . . . . . . . . . . . . . . . . . 11
9.1. Revolving Advances.. . . . . . . . . . . . . . . . 11
9.2. Lender's Right to Make Other Revolving
Advances.. . . . . . . . . . . . . . . . . . . . . 11
9.3. Letters of Credit. . . . . . . . . . . . . . . . . 11
9.4. Amount, Number, and Purpose Restrictions
on Revolving Advances. . . . . . . . . . . . . . . 11
9.5. Each Request for a Revolving Advance a
Certification. . . . . . . . . . . . . . . . . . . 11
9.6. Requirements for Every Request for an
Revolving Advance. . . . . . . . . . . . . . . . . 12
9.7. Requirements for Every Request for
Issuance of a Letter of Credit.. . . . . . . . . . 12
9.8. Exoneration of Lender. . . . . . . . . . . . . . . 12
10. Security and Guaranties.. . . . . . . . . . . . . . . . . . 12
11. Conditions. . . . . . . . . . . . . . . . . . . . . . . . . 13
11.1. Conditions to Initial Revolving Advance.. . . . . . . 13
11.1.1. Listed Documents and Other
Items.. . . . . . . . . . . . . . . . . . 13
11.1.2. Representations and Warranties. . . . . . 13
11.1.3. No Existing Default.. . . . . . . . . . . 13
11.1.4. Payment of Fees.. . . . . . . . . . . . . 14
11.1.5. No Material Adverse Change. . . . . . . . 14
11.1.6. Other Items.. . . . . . . . . . . . . . . 14
11.2. Conditions to Subsequent Revolving
Advances.. . . . . . . . . . . . . . . . . . . . . 14
11.2.1. Conditions to Initial Revolving
Advances. . . . . . . . . . . . . . . . . 14
11.2.2. Representations and Warranties. . . . . . 14
11.2.3. No Default. . . . . . . . . . . . . . . . 14
11.2.4. No Material Adverse Change. . . . . . . . 14
12. Conditions to Issuance of Letters of Credit.. . . . . . . . 14
12.1. Reimbursement Agreement.. . . . . . . . . . . . . . . 14
12.2. No Prohibitions.. . . . . . . . . . . . . . . . . . . 15
12.3. Conditions to Initial Revolving Advances. . . . . . . 15
12.4. Representations and Warranties. . . . . . . . . . . . 15
<PAGE>
<PAGE>
12.5. No Default. . . . . . . . . . . . . . . . . . . . . . 15
12.6. No Material Adverse Change. . . . . . . . . . . . . . 15
13. Representations and Warranties. . . . . . . . . . . . . . . 15
13.1. Organization and Existence.. . . . . . . . . . . . . 15
13.2. Authorization. . . . . . . . . . . . . . . . . . . . 16
13.3. Due Execution. . . . . . . . . . . . . . . . . . . . 16
13.4. Enforceability of Obligations. . . . . . . . . . . . 16
13.5. Burdensome Obligations.. . . . . . . . . . . . . . . 16
13.6. Legal Restraints.. . . . . . . . . . . . . . . . . . 16
13.7. Labor Disputes.. . . . . . . . . . . . . . . . . . . 16
13.8. No Material Proceedings. . . . . . . . . . . . . . . 16
13.9. Material Licenses. . . . . . . . . . . . . . . . . . 17
13.10. Compliance with Material Laws. . . . . . . . . . . . 17
13.10.1. General Compliance with
Environmental Laws. . . . . . . . . . . . 17
13.10.2. Proceedings. . . . . . . . . . . . . . . 17
13.10.3. Investigations Regarding
Hazardous Materials.. . . . . . . . . . . 17
13.10.4. Notices and Reports Regarding
Hazardous Materials.. . . . . . . . . . . 17
13.10.5. Hazardous Materials on Real
Property. . . . . . . . . . . . . . . . . 17
13.11. Initial Financial Statements.. . . . . . . . . . . . 18
13.12. No Change in Condition.. . . . . . . . . . . . . . . 18
13.13. No Defaults. . . . . . . . . . . . . . . . . . . . . 18
13.14. Tax Liabilities; Governmental Charges. . . . . . . . 18
13.15. Pension Benefit Plans. . . . . . . . . . . . . . . . 18
13.15.1. Prohibited Transactions. . . . . . . . . 18
13.15.2. Claims.. . . . . . . . . . . . . . . . . 19
13.15.3. Reporting and Disclosure
Requirements. . . . . . . . . . . . . . . 19
13.15.4. Accumulated Funding
Deficiency. . . . . . . . . . . . . . . . 19
13.15.5. Multi-employer Plan. . . . . . . . . . . 19
13.16. Welfare Benefit Plans. . . . . . . . . . . . . . . . 19
13.17. State of Property. . . . . . . . . . . . . . . . . . 19
13.18. Subsidiaries and Affiliates. . . . . . . . . . . . . 20
13.19. Margin Stock.. . . . . . . . . . . . . . . . . . . . 20
13.20. Hostile Securities Transactions. . . . . . . . . . . 20
13.21. Investment Company Act, Etc. . . . . . . . . . . . . 20
13.22. Filings. . . . . . . . . . . . . . . . . . . . . . . 20
13.23. Broker's Fees. . . . . . . . . . . . . . . . . . . . 20
13.24. Full Disclosure. . . . . . . . . . . . . . . . . . . 20
14. Survival of Representations.. . . . . . . . . . . . . . . . 20
15. Affirmative Covenants.. . . . . . . . . . . . . . . . . . . 21
15.1. Use of Proceeds.. . . . . . . . . . . . . . . . . . . 21
15.2. Corporate Existence.. . . . . . . . . . . . . . . . . 21
<PAGE>
15.3. Maintenance of Property and Leases. . . . . . . . . . 21
15.4. Insurance.. . . . . . . . . . . . . . . . . . . . . . 21
15.5. Payment of Taxes and Other Obligations. . . . . . . . 21
15.6. Compliance With Laws. . . . . . . . . . . . . . . . . 22
15.6.1. Environmental Laws. . . . . . . . . . . . 22
15.6.2. Pension Benefit Plans.. . . . . . . . . . 22
15.7. Discovery and Clean-Up of Hazardous
Material.. . . . . . . . . . . . . . . . . . . . . 22
15.8. Termination of Pension Benefit Plan.. . . . . . . . . 22
15.9. Notice to Lender of Material Events.. . . . . . . . . 23
15.9.1. . . . . . . . . . . . . . . . . . . . . . 23
15.9.2. . . . . . . . . . . . . . . . . . . . . . 23
15.9.3. . . . . . . . . . . . . . . . . . . . . . 23
15.9.4. . . . . . . . . . . . . . . . . . . . . . 23
15.9.5. . . . . . . . . . . . . . . . . . . . . . 24
15.9.6. . . . . . . . . . . . . . . . . . . . . . 24
15.9.7. . . . . . . . . . . . . . . . . . . . . . 24
15.9.8. . . . . . . . . . . . . . . . . . . . . . 25
15.9.9. . . . . . . . . . . . . . . . . . . . . . 25
15.10. Borrowing Officer. . . . . . . . . . . . . . . . . . 25
15.11. Accounting System. . . . . . . . . . . . . . . . . . 25
15.12. Financial Statements.. . . . . . . . . . . . . . . . 25
15.12.1. Annual Financial Statements.. . . . . . . 25
15.12.2. Quarterly Financial Statements. . . . . . 26
15.13. Other Financial Information. . . . . . . . . . . . . 26
15.13.1. Stockholder and SEC Reports.. . . . . . . 26
15.13.2. Pension Benefit Plan Reports. . . . . . . 26
15.13.3. Tax Returns.. . . . . . . . . . . . . . . 26
15.13.4. Additional. . . . . . . . . . . . . . . . 27
15.14. Forecasts or Projections.. . . . . . . . . . . . . . 27
15.15. Audits by Lender.. . . . . . . . . . . . . . . . . . 27
15.16. Access to Officers and Auditors. . . . . . . . . . . 27
15.17. Further Assurances.. . . . . . . . . . . . . . . . . 28
16. Negative Covenants. . . . . . . . . . . . . . . . . . . . . 28
16.1. Indebtedness. . . . . . . . . . . . . . . . . . . . . 28
16.2. Prepayments.. . . . . . . . . . . . . . . . . . . . . 28
16.3. Security Interests. . . . . . . . . . . . . . . . . . 28
16.3.1. . . . . . . . . . . . . . . . . . . . . . 28
16.3.2. . . . . . . . . . . . . . . . . . . . . . 29
16.3.3. . . . . . . . . . . . . . . . . . . . . . 29
16.3.4. . . . . . . . . . . . . . . . . . . . . . 29
16.3.5. . . . . . . . . . . . . . . . . . . . . . 29
16.3.6. . . . . . . . . . . . . . . . . . . . . . 29
16.4. Acquisitions. . . . . . . . . . . . . . . . . . . . . 29
16.4.1. . . . . . . . . . . . . . . . . . . . . . 29
16.4.2. . . . . . . . . . . . . . . . . . . . . . 29
16.4.3. . . . . . . . . . . . . . . . . . . . . . 29
<PAGE>
<PAGE>
16.4.3.1. . . . . . . . . . . . . 29
16.4.3.2. . . . . . . . . . . . . 29
16.4.4. . . . . . . . . . . . . . . . . . . . . . 30
16.4.5. . . . . . . . . . . . . . . . . . . . . . 30
16.5. Disposal of Property. . . . . . . . . . . . . . . . . 30
16.6. Restricted Payments.. . . . . . . . . . . . . . . . . 30
16.7. Mergers and Consolidations. . . . . . . . . . . . . . 30
16.8. Change of Business. . . . . . . . . . . . . . . . . . 30
16.9. Transactions With Affiliates. . . . . . . . . . . . . 30
16.10.Conflicting Agreements, Etc.. . . . . . . . . . . . . 31
16.11.Sale and Leaseback Transactions.. . . . . . . . . . . 31
16.12.Fiscal Year.. . . . . . . . . . . . . . . . . . . . . 31
16.13.Transactions Having a Material Adverse
Effect on a Covered Person.. . . . . . . . . . . . 31
17. Financial Covenants.. . . . . . . . . . . . . . . . . . . . 31
17.1. Special Definitions.. . . . . . . . . . . . . . . . . 31
17.2. Minimum Fixed Charge Coverage.. . . . . . . . . . . . 33
17.3. Minimum Tangible Net Worth. . . . . . . . . . . . . . 33
17.4. Maximum Funded Debt to EBITDA Ratio.. . . . . . . . . 33
17.5. Funded Debt to Total Capitalization.. . . . . . . . . 33
18. Default.. . . . . . . . . . . . . . . . . . . . . . . . . . 33
18.1. Events of Default.. . . . . . . . . . . . . . . . . . 33
18.1.1. Failure to Pay Principal or
Interest. . . . . . . . . . . . . . . . . 33
18.1.2. Failure to Pay Other Amounts Owed
to Lender.. . . . . . . . . . . . . . . . 33
18.1.3. Failure to Pay Amounts Owed to
Other Persons.. . . . . . . . . . . . . . 33
18.1.4. Acceleration of Other
Indebtedness. . . . . . . . . . . . . . . 34
18.1.5. Representations or Warranties.. . . . . . 34
18.1.6. Certain Covenants.. . . . . . . . . . . . 34
18.1.7. Financial Covenants.. . . . . . . . . . . 34
18.1.8. Other Covenants.. . . . . . . . . . . . . 34
18.1.9. Default Under Other Agreements. . . . . . 34
18.1.10. Bankruptcy; Insolvency; Etc. . . . . . . 34
18.1.11. Judgments; Attachment; Etc.. . . . . . . 35
18.1.12. Pension Benefit Plan
Termination, Etc. . . . . . . . . . . . . 35
18.1.13. Liquidation or Dissolution.. . . . . . . 35
18.1.14. Seizure of Assets. . . . . . . . . . . . 35
18.1.15. Racketeering Proceeding. . . . . . . . . 36
18.1.16. Loan Documents.. . . . . . . . . . . . . 36
18.1.17. Guaranty Default.. . . . . . . . . . . . 36
18.1.18. Qualified Audit Report.. . . . . . . . . 36
18.1.19. Material Adverse Change. . . . . . . . . 36
<PAGE>
<PAGE>
18.2. Rights and Remedies Upon an Event of
Default. . . . . . . . . . . . . . . . . . . . . . 36
18.2.1. Cancellation of Commitments.. . . . . . . 36
18.2.2. Acceleration. . . . . . . . . . . . . . . 36
18.2.3. Right of Set-off. . . . . . . . . . . . . 36
18.2.4. Entry Upon Premises and Access to
Information.. . . . . . . . . . . . . . . 37
18.2.5. Miscellaneous.. . . . . . . . . . . . . . 37
18.3. Application of Funds. . . . . . . . . . . . . . . . . 37
19. General.. . . . . . . . . . . . . . . . . . . . . . . . . . 37
19.1. Lender's Right to Cure. . . . . . . . . . . . . . . . 37
19.2. Rights Not Exclusive. . . . . . . . . . . . . . . . . 38
19.3. Survival of Agreements. . . . . . . . . . . . . . . . 38
19.4. Sale of Participations. . . . . . . . . . . . . . . . 38
19.4.1. . . . . . . . . . . . . . . . . . . . . . 38
19.4.2. . . . . . . . . . . . . . . . . . . . . . 38
19.4.3. . . . . . . . . . . . . . . . . . . . . . 38
19.4.4. . . . . . . . . . . . . . . . . . . . . . 38
19.5. Assignments to Affiliates.. . . . . . . . . . . . . . 39
19.6. Payment of Expenses.. . . . . . . . . . . . . . . . . 39
19.7. General Indemnity.. . . . . . . . . . . . . . . . . . 39
19.7.1. . . . . . . . . . . . . . . . . . . . . . 39
19.7.2. . . . . . . . . . . . . . . . . . . . . . 40
19.7.3. . . . . . . . . . . . . . . . . . . . . . 40
19.8. Revolving Loan Records. . . . . . . . . . . . . . . . 40
19.9. Other Security and Guaranties.. . . . . . . . . . . . 40
20. Miscellaneous.. . . . . . . . . . . . . . . . . . . . . . . 41
20.1. Notices.. . . . . . . . . . . . . . . . . . . . . . . 41
20.2. Amendments, Waivers and Consents. . . . . . . . . . . 41
20.3. Successors and Assigns. . . . . . . . . . . . . . . . 41
20.4. Severability. . . . . . . . . . . . . . . . . . . . . 41
20.5. Counterparts. . . . . . . . . . . . . . . . . . . . . 41
20.6. Governing Law; No Third Party Rights. . . . . . . . . 42
20.7. Counterpart Facsimile Execution.. . . . . . . . . . . 42
20.8. No Other Agreements.. . . . . . . . . . . . . . . . . 42
20.9. Incorporation By Reference. . . . . . . . . . . . . . 42
20.10.Negotiated Transaction. . . . . . . . . . . . . . . . 42
21. Choice of Forum.. . . . . . . . . . . . . . . . . . . . . . 42
22. Service of Process. . . . . . . . . . . . . . . . . . . . . 43
23. Jury Trial. . . . . . . . . . . . . . . . . . . . . . . . . 43
24. Statutory Notice. . . . . . . . . . . . . . . . . . . . . . 43
b.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
c.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
<PAGE>
d. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
e.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
g.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
h.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
<PAGE>
<PAGE>
LOAN AGREEMENT
This is an agreement (this "Agreement") executed on
August 20, 1997, between INSITUFORM TECHNOLOGIES, INC., as
Borrower, and NATIONSBANK, N.A., successor by merger to The
Boatmen's National Bank of St. Louis, as Lender.
In consideration of the mutual agreements herein and
other sufficient consideration, the receipt of which is hereby
acknowledged, Borrower and Lender agree as follows:
1. Effective Date. This Agreement is effective August 20,
1997.
2. Definitions and Rules of Construction.
2.1 Listed Definitions. Capitalized terms defined in
the Glossary and Index of Defined Terms attached hereto as
Exhibit 2.1 shall have such defined meanings wherever used in
this Agreement and the other Loan Documents.
2.2 Other Definitions. If a capitalized term used in
this Agreement is not defined in the Glossary and Index of
Defined Terms, it shall have such meaning as defined elsewhere
herein, or if not defined elsewhere herein, the meaning defined
in the UCC.
2.3 References to Covered Persons. The words Covered
Person, a Covered Person, any Covered Person, each Covered Person
and every Covered Person refer to Borrower and each of its
presently existing or future acquired, organized or created
Subsidiaries (other than the Exempted Subsidiaries) separately.
The words Covered Persons refer to Borrower and its presently
existing or future acquired, organized or created Subsidiaries
(other than the Exempted Subsidiaries) collectively.
2.4 Accounting Terms. Unless the context otherwise
requires, accounting terms herein that are not defined herein
shall be calculated under GAAP. All financial measurements
contemplated hereunder respecting Borrower, including the
calculations contemplated under Sections 4.5, 5 and 17, shall be
made and calculated for Borrower and all of its presently
existing or future acquired, organized or created Subsidiaries,
unless otherwise expressly provided otherwise herein, on a
consolidated basis in accordance with GAAP, and shall be so made
or calculated based on the Financial Statements no earlier than
the delivery thereof as required hereunder.
<PAGE>
<PAGE>
2.5 Meaning of Satisfactory. Wherever herein a
document or matter is required to be satisfactory to Lender,
unless expressly stated otherwise such document must be
satisfactory to Lender in both form and substance, and unless
expressly stated otherwise, Lender shall have the discretion to
determine whether the document or matter is satisfactory, but
such determination must be commercially reasonable under the
circumstances. Any such determination that is based upon
customary banking practice or regulatory requirements shall be
conclusively deemed to be commercially reasonable.
2.6 Computation of Time Periods. In the computation
of periods of time from a specified date to a later specified
date, the word from shall mean from and including and the words
to and until shall each mean to but excluding. Periods of days
referred to in this Agreement shall be counted in calendar days
unless Business Days are expressly prescribed, and references in
this Agreement to months and years shall be to calendar months
and calendar years unless otherwise specified.
2.7 General. Unless the context of this Agreement
clearly requires otherwise: (i) references to the plural include
the singular and vice versa; (ii) references to any Person
include such Person's successors and assigns but, if applicable,
only if such successors and assigns are permitted by this
Agreement; (iii) references to one gender include all genders;
(iv) including is not limiting; (v) or" has the inclusive meaning
represented by the phrase "and/or"; (vi) the words hereof,
herein, hereby, hereunder and similar terms in this Agreement
refer to this Agreement as a whole, including its Exhibits, and
not to any particular provision of this Agreement; (vii) the word
Section or section and Page or page refer to a section or page,
respectively, and the word Exhibit refers to an Exhibit to this
Agreement unless it expressly refers to something else; (viii)
reference to any agreement (including this Agreement), document
or instrument means such agreement, document or instrument as
amended or modified and in effect from time to time in accordance
with the terms thereof and, if applicable, the terms hereof; and
(ix) general and specific references to any Law means such Law as
amended, modified, codified or reenacted, in whole or in part,
and in effect from time to time. Section captions and the Table
of Contents are for convenience only and shall not affect the
interpretation or construction of this Agreement or the other
Loan Documents.
3. Lender's Commitments. Subject to the terms and
conditions hereof, and in reliance upon the representations and
warranties of Borrower herein, and the representations and
warranties of Guarantors in their respective Guaranties, Lender
makes the following commitments to Borrower:<PAGE>
<PAGE>
3.1 Revolving Commitment.
3.1.1 Revolving Advances. Lender will make
available from the Effective Date to the Maturity Date, a
Revolving Commitment of $20,000,000, or such lesser Dollar amount
to which it may have been changed as provided herein, available
as Revolving Advances made from time to time as provided herein.
Subject to any limitations herein, payments and prepayments that
are applied to reduce the Revolving Loan may be reborrowed.
Borrower may reduce the amount of the Revolving Commitment in
whole multiples of $1,000,000 at any time and from time to time,
or to zero at any time, but only if (i) Borrower gives Lender
written notice of Borrower's intention to make such reduction at
least one Business Day prior to the effective date of the
reduction, (ii) Borrower makes a prepayment on the Revolving Loan
in the amount (if any) by which the sum of the Revolving Loan and
the Letter of Credit Exposure exceeds the amount of the Revolving
Commitment, and (iii) Borrower pays any amount that is due to
Lender under Section 4.12 as a consequence of reduction. Any
such reduction of the amount of the Revolving Commitment, whether
scheduled or voluntary, shall be permanent. No Revolving Advance
will be made on or after the Maturity Date. At any time that
there is an Existing Default, the Revolving Commitment may be
canceled as provided in Section 18.2.1.
3.1.2 Revolving Note. The obligation of
Borrower to repay Lender's Revolving Loan shall be evidenced by
a promissory note payable to the order of Lender in a maximum
principal amount equal to the amount of the Revolving Commitment
in the form attached hereto as Exhibit 3.1.2, dated the Effective
Date.
3.2 Letter of Credit Commitment. Lender commits to
issue standby letters of credit and commercial letters of credit
for the account of Borrower or any of its Subsidiaries (other
than Exempted Subsidiaries) from time to time from the Effective
Date to the Maturity Date, but only in connection with
transactions satisfactory to Lender and only if the Letter of
Credit Exposure will not as a result of such issuance exceed the
lesser of (i) $5,000,000 and (ii) any excess of the amount of the
Revolving Commitment over the Revolving Loan. The expiration
date of any Letter of Credit will not be more than one year after
its issuance date. The expiration date of any Letter of Credit
also will not be later than the Maturity Date unless Borrower
provides cash collateral satisfactory to Lender to cover the
Letter of Credit Exposure subsequent to the Maturity Date.
<PAGE>
<PAGE>
4. Interest; Yield Protection.
4.1 Interest on Draws on Letters of Credit. Borrower
shall pay interest on the unreimbursed amount of each draw on a
Letter of Credit at the Prime Rate.
4.2 Alternative Rates and Interest Periods for
Tranches of Revolving Loan. The Revolving Loan may have one
Tranche or multiple Tranches as provided herein and each Tranche
shall bear interest at either the Prime Rate or the Adjusted LIBO
Rate as designated by Borrower as provided herein, provided that
no LIBOR Tranche may be less than $100,000 and there may be no
more than ten different LIBOR Tranches at any one time. If
Borrower designates a Tranche to be a LIBOR Tranche, Borrower
shall also select an Interest Period for it. The Interest Period
shall be either one, two, three, four or six months; provided
that (i) if any Interest Period would otherwise expire on a day
of a calendar month which is not a Business Day, then such
Interest Period shall expire on the next succeeding Business Day
in that calendar month unless the next succeeding Business Day
would be in the following calendar month, in which case it shall
expire on the first preceding Business Day; (ii) any Interest
Period that begins on the last Business Day of a calendar month
(or on a day for which there is no numerically corresponding day
in the calendar month at the end of such Interest Period) shall
end on the last Business Day of a calendar month; (iii) no
Interest Period shall extend beyond the Maturity Date. If a
Tranche is a LIBOR Tranche, it shall bear interest at the
Adjusted LIBO Rate throughout the applicable Interest Period
designated by Borrower as provided herein.
4.3 Prime Rate. The "Prime Rate" shall be the per
annum rate of interest established from time to time by Lender as
its prime rate. Any change in the Prime Rate shall be effective
with respect to each Prime Rate Tranche for the entire day on
which such Prime Rate change is designated by Lender to be
effective. The Prime Rate is a reference rate and does not
necessarily represent the lowest or best rate charged to any
customer of Lender.
4.4 Adjusted LIBO Rate. The "Adjusted LIBO Rate" for
any LIBOR Tranche shall be the LIBO Rate (which shall be
determined before the beginning of the Interest Period for such
Tranche as provided herein and shall apply throughout such
Interest Period) plus the LIBOR Increment determined from time to
time with respect to such Tranche as provided in Section 4.5.
The "LIBO Rate" shall be the interest rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) equal to the
quotient of
<PAGE>
<PAGE>
(i) the rate (rounded upwards, if necessary, to the
nearest 1/100 of 1%) at which Dollar deposits in
immediately available funds, approximately equal in
amount to such Tranche and for a maturity equal to the
applicable Interest Period, are offered or available in
the London Interbank Market for Eurodollars as of 11:00
a.m. (London time) two Business Days before the first day
of such Interest Period as reported on Dow Jones Markets
Page 3750 (or any successor page), or if such page is not
available, as appearing on Reuters Screen LIBO Page;
provided, however, if more than one rate is specified on
Reuters Screen LIBO Page, the applicable rate shall be
the arithmetic mean of all such rates (rounded upwards,
if necessary, to the nearest 1/100 of 1%);
divided by
(ii) a number equal to one minus the decimal equivalent
of the maximum rate at which reserves (including, without
limitation, any marginal, special, supplemental, or
emergency reserves) are required to be maintained under
regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any
successor) by member banks of the Federal Reserve System
against "Eurocurrency liabilities" (as such term is used
in Regulation D); provided, however, that without
limiting the effect of the foregoing, such maximum rate
shall reflect any other reserves required to be
maintained by such member banks with respect to (i) any
category of liabilities which includes deposits by
reference to which the LIBO Rate is to be determined, or
(ii) any category of extensions of credit or other assets
which include a LIBOR Tranche. The Adjusted LIBO Rate
shall be adjusted automatically on and as of the
effective date of any change in such reserve requirement.
4.5 LIBOR Increment. The applicable LIBOR Increment
shall be determined on the Effective Date and quarterly
thereafter in accordance with the following table and based upon
both the ratio of Borrower's Funded Debt to EBITDA and the ratio
of Borrower's Funded Debt to Total Capitalization, with Funded
Debt and Total Capitalization being determined as of the end of
each fiscal quarter of Borrower and EBITDA being determined for
the four fiscal quarters then ended:
<PAGE>
<PAGE>
<TABLE>
Ratio of Funded Debt to EBITDA
<S> <C> <C> <C> <C>
Ratio of Funded Debt to >3.0 <3.0>2.0 <2.0
Total Capitalization
>0.65 1.50% 1.25% 1.00% LIBOR Increment
<0.65>0.50 1.25% 1.00% 0.75% LIBOR Increment
<0.50 1.00% 0.75% 0.50% LIBOR Increment
</TABLE>
The initial LIBOR Increment shall be determined based on
Borrower's Funded Debt and Total Capitalization as of the end of
Borrower's fiscal quarter ended June 30, 1997, and Borrower's
EBITDA for the four quarters then ended. Any change in the LIBOR
Increment shall become applicable, in the case of the first three
fiscal quarters of any fiscal year, on the 50th day, and in the
case of the fourth fiscal quarter of any fiscal year, on the
105th day of the first fiscal quarter beginning after the end of
the fiscal period covered by the most recent Financial Statements
required to be delivered to Lender as provided in Sections
15.12.1 or 15.12.2, as the case may be. If Borrower does not
deliver its Financial Statements for a fiscal period to Lender
before the 50th day, in the case of the first three fiscal
quarters of any fiscal year, and before the 105th day, in the
case of the fourth fiscal quarter of any fiscal year, of the
first fiscal quarter beginning thereafter, the highest possible
LIBOR Increment shall become applicable on the 50th day or 105th
day, respectively, of such subsequent fiscal quarter and shall
remain applicable until, but only until, Borrower delivers such
Financial Statements to Lender. As used in the foregoing table,
the symbol ">" means "equal to or greater than" and the symbol
"<" means "less than".
<PAGE>
<PAGE>
4.6 Conversion of Revolving Loan. Borrower may
(i) at any time convert some or all of a Prime Rate Tranche to a
LIBOR Tranche, or (ii) at the end of any Interest Period of a
LIBOR Tranche, continue some or all of such LIBOR Tranche as a
LIBOR Tranche for an additional Interest Period or convert some
or all of such LIBOR Tranche to a Prime Rate Tranche, and the
amount so converted or continued shall constitute a separate
Tranche, but if such Tranche is a LIBOR Tranche, it may not be
less than the lesser of the amount of the Revolving Loan or
$100,000. To cause any conversion or continuation, Borrower
shall give Lender, prior to 11:00 a.m., St. Louis time, two (2)
Business Days prior to the date the conversion or continuation is
to be effective (the "Conversion Date"), a written request (which
may be mailed, personally delivered or telecopied as provided in
Section 20.1) (a "Notice of Conversion/Continuation")
(i) specifying whether a conversion or continuation is requested
and the amount thereof, (ii) in the case of a conversion,
specifying whether the applicable Tranche is to be a LIBOR
Tranche or Prime Rate Tranche upon the conversion, and (iii) in
the case of conversion to or continuation of a LIBOR Tranche,
specifying the Interest Period therefor. If a Notice of
Conversion/Continuation is not made by 11:00 a.m. St. Louis time
on the second Business Day preceding the last day of the Interest
Period if the Tranche is a LIBOR Tranche, then Borrower shall be
deemed to have timely given a Notice of Conversion/Continuation
to Lender requesting to convert the Tranche to an Prime Rate
Tranche. If the Revolving Loan is a LIBOR Tranche, any
conversion or continuation shall become effective only on the day
following the last day of the current Interest Period.
4.7 Time of Accrual. Interest shall accrue on all
principal amounts outstanding from the date when first
outstanding to the date when no longer outstanding. Amounts
shall be deemed outstanding until payments are applied thereto as
provided herein.
4.8 Computation. Interest shall be computed for the
actual days elapsed over a year deemed to consist of 360 days.
4.9 Rate After Maturity. Borrower shall pay interest
on the Revolving Loan after its Maturity, and (at the option of
Lender) on the Revolving Loan and on the other Loan Obligations
after the occurrence of an Event of Default, at a rate per annum
of 2% plus the Prime Rate.
4.10 Taxes on Payments. If any Tax is required to be
withheld or deducted by Borrower from, or is otherwise payable by
Borrower in connection with, any payment due from Borrower to
Lender under the Loan Documents, Borrower (i) shall, if required,
withhold or deduct the amount of such Tax from such payment and,<PAGE>
<PAGE>
in any case, pay such Tax to the appropriate taxing authority in
accordance with applicable Law and (ii) shall pay to Lender, as
applicable, (a) such additional amounts as may be necessary so
that the net amount received by Lender with respect to such
payment, after withholding or deducting all Taxes required to be
withheld or deducted, is equal to the full amount payable under
the Loan Documents, and (b) an amount equal to all Taxes payable
by Lender as a result of payments made by Borrower (whether to a
taxing authority or to Lender) pursuant to this Section. If any
Tax is withheld or deducted from, or is otherwise payable by
Borrower in connection with, any payment due to Lender under the
Loan Documents, Borrower shall, within 30 days after the date of
such payment, furnish to Lender, as applicable, the original or
a certified copy of a receipt for such Tax from the applicable
taxing authority. If any payment due to Lender under the Loan
Documents is or is expected to be made without withholding or
deducting therefrom, or otherwise paying in connection therewith,
any Tax payable to any taxing authority under circumstances that
would lead Lender to reasonably believe such withholding or
deduction is required, Borrower shall, within 30 days after any
request from Lender, as applicable, furnish to Lender a
certificate from such taxing authority, or an opinion of counsel
satisfactory to Lender, in either case stating that no Tax
payable to such taxing authority was or is, as the case may be,
required to be withheld or deducted from, or otherwise paid by
Borrower in connection with, such payment. For purposes of this
Section only, the term "Tax" shall not be deemed to include any
tax based upon net income, such as but not limited to the tax on
net income imposed under the Code and similar state or
international income taxes.
4.11 Compensation for Increase In Costs of LIBOR
Tranches. If after the Execution Date there is any change in any
Law or in any rule, order, or guideline of any Governmental
Authority (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful, and including
but not limited to any imposition or increase of reserve
requirements) and as a result thereof or as a result of
compliance therewith by Lender or its parent holding company:
4.11.1 Lender is subject to any Tax, duty or
other charge with respect to a LIBOR Tranche, or the basis of
taxation of payments to Lender of the principal of or interest
with respect to such Tranche, or its obligation to make any
Revolving Advance that could be a LIBOR Tranche, change (except
for changes in the rate of Tax on the overall net income of
Lender imposed by the United States or other jurisdiction in
which Lender's principal executive office is located); or
<PAGE>
<PAGE>
4.11.2 any reserve (including, without
limitation, any imposed by the FRB), special deposit, compulsory
loan, assessment, or similar requirement against assets of,
deposits with or for the account of, or credit extended by,
Lender is imposed or deemed applicable or any other condition
affecting a LIBOR Revolving Loan is imposed on Lender or the
London Interbank Market;
and as a result thereof there is any increase in the cost to
Lender of agreeing to maintain a LIBOR Tranche (except to the
extent already included in the determination of the applicable
LIBO Rate), or there is a reduction in the amount received or
receivable by Lender, then Borrower shall from time to time pay
to Lender additional amounts sufficient to compensate Lender in
the amount of such increased cost. If Lender claims compensation
under this Section, Lender shall furnish a certificate to
Borrower that states in reasonable detail the additional amount
or amounts to be paid to it hereunder and the basis therefor.
Borrower shall have the burden of proving that any such
certificate is not correct.
4.12 Losses on LIBOR Tranches. Borrower shall pay to
Lender upon demand an amount sufficient to compensate Lender for
all loss and expense suffered by Lender, including but not
limited to loss of profit and the cost of acquiring funds to
carry a LIBOR Tranche, (i) if any prepayment or repayment with
respect to such LIBOR Tranche or conversion of such LIBOR Tranche
to an Prime Rate Tranche, whether or not required hereby, occurs
on a date which is not the last day of the applicable Interest
Period, or (ii) if Borrower fails to repay such LIBOR Tranche
when required by the terms of this Agreement. The minimum that
Borrower shall be obligated to pay to Lender in any such event
shall be an amount equal to (x) the greater of zero or
[Ax(B-C)xD]
-----------
360
wherein
A is the Affected Principal Amount;
B is the decimal equivalent of the LIBO Rate that is
payable by Borrower with respect to such LIBOR Tranche;
C is the decimal equivalent of the LIBO Rate determined
as provided in Section 4.4 that would apply to a
hypothetical LIBOR Tranche created on the last Business
Day on or before the first day of the Remaining Interest
Period and whose amount and whose Interest Period were
approximately equal, as determined by Lender, to the<PAGE>
<PAGE>
Affected Principal Amount and the Remaining Interest
Period; and
D is the number of days from and including the first day
of the Remaining Interest Period to but excluding the
last day of the Remaining Interest Period;
plus (y) any other out-of-pocket loss or expense (including any
internal processing charge customarily charged by Lender)
suffered by Lender in liquidating deposits prior to maturity in
amounts which correspond to the Affected Principal Amount.
For purposes of this Section:
"Affected Principal Amount" means, as applicable, (i) the
entire principal amount of the applicable LIBOR Tranche
that Borrower fails to repay when required by the terms
of this Agreement, or (ii) the amount of any prepayment
or repayment with respect to such LIBOR Tranche that
occurs, or the entire amount of such LIBOR Tranche if it
converts to an Prime Rate Tranche, whether or not
required hereby, on a date which is not the last day of
the Interest Period therefor.
"Remaining Interest Period" means, as applicable, (i) a
period equal in duration to the Interest Period of such
LIBOR Tranche if Borrower has failed to repay it when
required by the terms of this Agreement, or (ii) if a
prepayment or repayment with respect to such LIBOR
Tranche, or such LIBOR Tranche converts to an Prime Rate
Tranche, whether or not required hereby, prior to the
last day of the Interest Period therefor, the period from
and including the date thereof to but excluding the last
day of such Interest Period.
If Lender claims compensation under this Section, Lender will
furnish a certificate to Borrower that states in reasonable
detail the additional amount to be paid to it hereunder and
includes a description of the method used by Lender in
calculating such amount. Borrower will have the burden of
proving that the amount of any such additional compensation
calculated by Lender is not correct. Any compensation payable by
Borrower to Lender under this Section will be payable without
regard to whether Lender has funded the applicable Tranche
through the purchase of deposits in an amount or of a maturity
corresponding to the deposits used as a reference in determining
the LIBO Rate under Section 4.4.
<PAGE>
<PAGE>
5. Commitment Fee. Borrower shall pay to Lender a
"Commitment Fee" calculated by applying the daily equivalent
(calculated as if a year consisted of 360 days) of the Commitment
Fee Rate to the Unused Revolving Commitment on each day during
the period from the Effective Date to the Maturity Date. The
"Unused Revolving Commitment" on any day shall be the amount of
the Revolving Commitment minus the sum of the Revolving Loan and
the Letter of Credit Exposure. The "Commitment Fee Rate" shall
be an annual rate of 0.25% if the ratio of Borrower's Funded Debt
to EBITDA is greater than or equal to 3.0 to 1.0, or 0.1875% if
the ratio of Borrower's Funded Debt to EBITDA is less than 3.0 to
1.0. Funded Debt and EBITDA and any change in the Commitment Fee
Rate shall be determined and become effective as provided in
Section 4.5. The Commitment Fee shall be payable quarterly in
arrears, commencing on the first day of the first calendar
quarter beginning after the Effective Date and continuing on the
first day of each calendar quarter thereafter and on the Maturity
Date.
6. Scheduled Payments.
6.1 Maturity Date. Borrower shall repay the
Revolving Loan and all unpaid accrued interest thereon on
September 1, 2000. The foregoing notwithstanding, the amount of
each Revolving Advance that is used for funding of amounts
payable by Borrower in connection with any particular Permitted
Acquisition shall be repaid six months after the date of the
first Revolving Advance used for such funding (an "Interim
Repayment"), together with all unpaid accrued interest on such
amount. Any such Interim Repayment will be applied by Lender
first to reduce any outstanding Prime Rate Tranche used for
funding such Permitted Acquisition and then to reduce any
outstanding LIBOR Tranches used for funding such Permitted
Acquisition in the order of the maturities of their Interest
Periods, and Borrower shall pay any amount that is due under
Section 4.12 as a consequence of the reduction of such LIBOR
Tranches.
6.2 Interest Payments Before Maturity Date. While a
Tranche is an Prime Rate Tranche, Borrower shall pay interest
accrued thereon monthly in arrears, commencing on the first day
of the first calendar month beginning after the Effective Date,
and continuing on the first day of each calendar month thereafter
until the Maturity Date. While a Tranche is a LIBOR Tranche,
Borrower shall, until the Maturity Date, pay interest accrued
thereon in arrears at the end of the applicable Interest Period,
and in addition, if the Interest Period is longer than three
months, quarterly on the last Business Day of each calendar
quarter ended during such Interest Period.
<PAGE>
<PAGE>
7. Voluntary Prepayments. Borrower may wholly prepay the
Revolving Loan at any time and may make partial prepayments
thereon from time to time, without penalty or premium, but only
if (i) Borrower gives Lender written notice (which may be mailed,
personally delivered or telecopied as provided in Section 20.1)
of Borrower's intention to make such prepayment at least one
Business Day prior to tendering the prepayment, (ii) the total
amount of the prepayment is a whole multiple of $500,000,
(iii) Borrower pays any accrued interest on the amount prepaid at
the time of such prepayment, and (iv) Borrower pay any amount
that is due under Section 4.12 as a consequence of such
prepayment. Each such prepayment on the Revolving Loan will be
applied by Lender first to reduce any outstanding Prime Rate
Tranche and then to reduce any outstanding LIBOR Tranches in the
order of the maturities of their Interest Periods.
8. Manner of Payments and Timing of Application of Payments.
8.1 Payment Requirement. Unless expressly provided
to the contrary elsewhere herein, Borrower shall make each
payment on the Loan Obligations to Lender as required under the
Loan Documents at the Lending Office. All such payments shall be
made in Dollars on the date when due, without deduction, set-off
or counterclaim.
8.2 Application of Payments and Proceeds. All
payments received by Lender in immediately available funds at or
before 12:00 noon, St. Louis time, on a Business Day will be
applied to the relevant Loan Obligation on the same day. Such
payments received on a day that is not a Business Day or after
12:00 noon on a Business Day will be applied to the relevant Loan
Obligation on the next Business Day.
8.3 Returned Instruments. If a payment is made by
check, draft or other instrument and the check, draft or other
instrument is returned unpaid, the application of the payment to
the Loan Obligations will be reversed and will be treated as
never having been made.
8.4 Compelled Return of Payments or Proceeds. If
Lender is for any reason compelled to surrender any payment
because such payment is for any reason invalidated, declared
fraudulent, set aside, or determined to be void or voidable as a
preference, an impermissible setoff, or a diversion of trust
funds, then this Agreement, the Guaranty and the Loan Obligations
to which such payment was applied or intended to be applied shall
be revived with respect thereto as if such application was never
made; and Borrower shall be liable to pay to Lender, and shall
indemnify Lender for and hold Lender harmless from any loss with
respect to, the amount of such payment surrendered. This Section<PAGE>
<PAGE>
shall be effective notwithstanding any contrary action Lender may
take in reliance upon its receipt of any such payment. Any such
contrary action so taken by Lender shall be without prejudice to
Lender's rights under this Agreement and shall be deemed to have
been conditioned upon the application of such payment having
become final and indefeasible. The provisions of this Section
shall survive termination of the Commitment, the expiration of
the Letters of Credit and the payment and satisfaction of all of
the Loan Obligations.
8.5 Due Dates Not on Business Days. If any payment
required hereunder becomes due on a date that is not a Business
Day, then such due date shall be deemed automatically extended to
the next Business Day; provided, however, that if the next
Business Day would be in the next calendar month, such payment
shall instead be due on the immediately preceding Business Day.
9. Procedure for Obtaining Revolving Advances and Letters of
Credit.
9.1 Revolving Advances. Borrower may request a
Revolving Advance by submitting a request therefor to Lender.
Every request for a Revolving Advance shall specify a date when
the Revolving Advance is requested to be made (the "Revolving
Advance Date") and shall be irrevocable. A request for a
Revolving Advance received by Lender on a day that is not a
Business Day or that is received by Lender after 11:00 a.m.
(St. Louis time) on a Business Day shall be treated as having
been received by Lender at 11:00 a.m. (St. Louis time) on the
next Business Day. Provided that all conditions precedent herein
to a requested Revolving Advance have been satisfied, Lender will
make the amount of such requested Revolving Advance available to
Borrower on the applicable Revolving Advance Date in immediately
available funds in Dollars at the Lending Office. Such funds
will be deposited in an account of Borrower's at the Lending
Office unless Borrower gives Lender contrary specific
disbursement instructions satisfactory to Lender.
9.2 Lender's Right to Make Other Revolving Advances.
If Borrower has at any time not paid a Loan Obligation when it is
due and any grace period for payment thereof has elapsed, Lender
shall have the right to make a Revolving Advance to pay such Loan
Obligation. Lender will give notice to Borrower after any such
Revolving Advance is made. Any such Revolving Advance will be an
Prime Rate Tranche.
9.3 Letters of Credit. Borrower may request the
issuance of a Letter of Credit by submitting an issuance request
to Lender and executing the reimbursement agreement required
under Section 12.1 no less than five Business Days prior to the<PAGE>
<PAGE>
requested issue date for such Letter of Credit. If all
conditions herein to issuance of such Letter of Credit have been
satisfied, Lender will issue such Letter of Credit on the
requested issue date.
9.4 Amount, Number, and Purpose Restrictions on
Revolving Advances. No Revolving Advance will be made unless it
is a whole multiple of $10,000 and not less than $100,000, but if
a Revolving Advance will be a LIBOR Tranche, it shall not be less
than $100,000. On any one day, no more than one Revolving
Advance will be made. Revolving Advances will only be made for
the purposes permitted in Section 15.1.
9.5 Each Request for a Revolving Advance a
Certification. Each submittal by Borrower of a request for a
Revolving Advance shall constitute a certification by Borrower
that (i) there is no Existing Default, (ii) all representations
and warranties of Borrower in this Agreement and each Guarantor
in its Guaranty are then true, with such exceptions as have been
disclosed to Lender in writing by Borrower or such Guarantor, and
will be true on the Revolving Advance Date, as if then made, with
such exceptions as have been disclosed to Lender in writing by
Borrower or such Guarantor, except that with respect to the
representations and warranties made regarding Financial
Statements or financial data, such representations and warranties
shall be deemed made with respect to the most recent Financial
Statements and other financial data delivered by Borrower or such
Guarantor to Lender, and (iii) all conditions herein and in the
other Loan Documents to the making of the requested Revolving
Advance have been satisfied.
9.6 Requirements for Every Request for an Revolving
Advance. A request to Lender for an Revolving Advance may be
oral or in writing, shall be from a Borrowing Officer, and shall
specify the amount of the Revolving Advance to be made, the
Revolving Advance Date, whether the Revolving Advance will be
used to fund payment of amounts payable by Borrower with respect
to a Permitted Acquisition, which portion, if any, of the
Revolving Advance is to be an Prime Rate Tranche and, if any,
each portion of the Revolving Advance that is to be a separate
LIBOR Tranche and the Interest Period therefor. If a request for
an Revolving Advance does not fully meet the foregoing
requirements, Lender may reject it and not treat it as a request
for a Revolving Advance.
9.7 Requirements for Every Request for Issuance of a
Letter of Credit. Only a written request (which may be mailed,
personally delivered or telecopied as provided in Section 20.1)
from a Borrowing Officer to Lender that specifies the amount,
requested issue date (which shall be a Business Day and in no<PAGE>
<PAGE>
event later than 180 days before the Maturity Date) and
beneficiary of the requested Letter of Credit and other
information necessary for its issuance shall be treated as an
issuance request for purposes hereof.
9.8 Exoneration of Lender. Lender shall not incur
any liability to Borrower for treating a request that meets the
express requirements of Section 9.6 or Section 9.7 as a request
for an Revolving Advance or a request for issuance of a Letter of
Credit Request, as applicable, if Lender believes in good faith
that the Person making the request is a Borrowing Officer.
Lender shall not incur any liability to Borrower for failing to
treat any such request as a request for and Revolving Advance or
a request for issuance of a Letter of Credit, as applicable, if
Lender believes in good faith that the Person making the request
is not a Borrowing Officer.
10. Security and Guaranties. As security for payment and
performance of the Loan Obligations, Borrower shall cause to be
executed and delivered to Lender the unconditional, joint and
several guaranty of the Loan Obligations, in the form attached
hereto as Exhibit 10-A, by every Subsidiary of Borrower listed on
Exhibit 10-B hereto. If any fiscal year end balance sheet and
income statements of any Subsidiary of Borrower organized under
the laws of the United States or a state of the United States
existing on the Execution Date (other than an Exempted Subsidiary
or a domesticated foreign Subsidiary) that is not listed on
Exhibit 10-B reflects that the assets (excluding all intercompany
items) of such Subsidiary total $1,000,000 or more as of the end
of such fiscal year, or the revenues (excluding all intercompany
items) of such Subsidiary were $1,000,000 or more in such fiscal
year, then Borrower shall cause such Subsidiary to become a
Guarantor by executing and delivering to Lender no later than
90 days after the end of the relevant fiscal year a joinder to
the Guaranty satisfactory to Lender. If the assets (excluding
all intercompany items) of any Subsidiary of Borrower organized
under the laws of the United States or a state of the United
States, other than a domesticated foreign subsidiary, created or
acquired after the Execution Date total $1,000,000 based on its
balance sheet as of the date of its creation or acquisition or
the end of any fiscal quarter ended thereafter in the then
current fiscal year, or as of the end of any fiscal year ended
thereafter, or if the revenues (excluding all intercompany items)
of such a Subsidiary were $1,000,000 or more as reflected in its
income statements for its latest fiscal year ended before such
acquisition or any four consecutive fiscal quarters ended after
its creation or acquisition and in its then current fiscal year,
or for any fiscal year ended thereafter, then Borrower shall
cause such Subsidiary to become a Guarantor by executing and
delivering to Lender no later than 90 days after the end of the<PAGE>
<PAGE>
relevant fiscal period a joinder to the Guaranty satisfactory to
Lender. If Borrower at any time transfers any of its assets to
a Subsidiary organized under the laws of the United States or a
state of the United states, other than a domesticated foreign
subsidiary, and as a consequence the assets of such Subsidiary
(excluding all intercompany items) total $1,000,000 or more as of
the date of such transfer or the end of its first fiscal quarter
ended thereafter, then Borrower shall cause such Subsidiary, if
not then a Guarantor, to become a Guarantor by executing and
delivering to Lender no later than 90 days after such transfer or
fiscal quarter-end a joinder to the Guaranty satisfactory to
Lender. Each and every obligation to deliver the Guaranty, or
join any Guarantor thereto, contained under this Section 10,
shall be subject to the prior or contemporaneous execution and
delivery by Lender of such agreements as are contemplated by
Section 9.8(e) of the Note Purchase Agreement. Upon Final
Payment, Lender will release the Guaranty, subject to
reinstatement as contemplated in Section 8.4.
11. Conditions.
11.1 Conditions to Initial Revolving Advance. Lender
will have no obligation to fund the initial Revolving Advance
unless:
11.1.1 Listed Documents and Other Items. Lender
shall have received on or before the Effective Date all of the
documents and other items listed or described in Exhibit 11.1.1
hereto as being conditions to the initial Revolving Advances,
with each being satisfactory to Lender and (as applicable) duly
executed and (also as applicable) sealed, attested, acknowledged,
certified, or authenticated.
11.1.2. Representations and Warranties. The
representations and warranties contained herein (except the
representations and warranties in Section 13.18 and as expressly
otherwise contemplated herein) shall be true and correct in all
material respects as of the time of such Revolving Advance and
with the same force and effect as if made at such time with such
exceptions as are satisfactory to Lender (and acknowledged by
Lender in writing) and have been previously disclosed to Lender
in writing by Borrower, and except that representations and
warranties made regarding financial data in Section 13.11 such
representations and warranties shall be deemed made with respect
to the most recent Financial Statements delivered by Borrower to
Lender.
<PAGE>
<PAGE>
11.1.3 No Existing Default. There shall be no
Existing Default and no Default or Event of Default will occur as
a result of the making of the Revolving Advance or Borrower's use
of the proceeds thereof.
11.1.4 Payment of Fees. Borrower shall have paid
and reimbursed to Lender all fees, costs and expenses that are
payable or reimbursable to Lender hereunder on or before the date
of the Revolving Advance.
11.1.5 No Material Adverse Change. There shall
not have been any change since the date of the Initial Financial
Statements which has had or is reasonably likely to have a
Material Adverse Effect.
11.1.6 Other Items. Lender shall have received
on or before the Effective Date such other consents and approvals
required to be obtained by Borrower and an opinion of counsel
meeting the requirements in the specification for the opinion of
counsel attached to Exhibit 11.1.1.
11.2 Conditions to Subsequent Revolving Advances.
Lender will have no obligation to fund any Revolving Advance
after the initial Revolving Advance unless:
11.2.1 Conditions to Initial Revolving Advances.
All of the conditions in Section 11.1 except the condition stated
in Section 11.1.2., have been and remain satisfied.
11.2.2 Representations and Warranties. The
representations and warranties contained herein (except the
representations and warranties in Section 13.18 and as expressly
otherwise contemplated herein) shall be true and correct in all
material respects as of the time of such Revolving Advance and
with the same force and effect as if made at such time, with such
exceptions as are satisfactory to Lender (as acknowledged by
Lender in writing) and have been previously disclosed to Lender
in writing by Borrower, and except that with respect to the
representations and warranties made regarding financial data in
Section 13.11, such representations and warranties shall be
deemed made with respect to the most recent Financial Statements
delivered by Borrower to Lender.
11.2.3 No Default. There shall be no Existing
Default and no Default or Event of Default will occur as a result
of the making of the Revolving Advance or Borrower's use of the
proceeds thereof.
<PAGE>
<PAGE>
11.2.4 No Material Adverse Change. Since the
date of the most recent prior Revolving Advance or issuance of a
Letter of Credit there shall not have been any change which has
had or is reasonably likely to have a Material Adverse Effect.
12. Conditions to Issuance of Letters of Credit. No Letter
of Credit will be issued unless as of the time of such issuance:
12.1 Reimbursement Agreement. Borrower shall have
executed and delivered to Lender an agreement, in Lender's
customary form, under which Borrower undertakes to reimburse to
Lender on demand the amount of each draw on such Letter of
Credit, together with interest from the date of the draw at the
same rate as is then accruing on the Revolving Loan. In the case
of any conflict between such agreement and this Agreement, this
Agreement shall be controlling.
12.2 No Prohibitions. No order, judgment or decree of
any Governmental Authority shall exist which purports by its
terms to enjoin or restrain Lender from issuing such Letter of
Credit, and no Law or request or directive (whether or not having
the force of law) from any Governmental Authority with
jurisdiction over Lender shall exist which prohibits, or requests
that Lender refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular, or imposes upon
Lender with respect to such Letter of Credit any restriction or
reserve or capital requirement (for which Lender is not otherwise
compensable by Borrower hereunder).
12.3 Conditions to Initial Revolving Advances. All of
the conditions in Section 11.1 have been and remain satisfied.
12.4 Representations and Warranties. The
representations and warranties contained herein (except the
representations and warranties in Section 13.18 and as expressly
otherwise contemplated herein) shall be true and correct in all
material respects as of the time of issuance of such Letter of
Credit and with the same force and effect as if made at such
time, with such exceptions (but only in the case of a Letter of
Credit whose issuance is requested after the date hereof as are
satisfactory to Lender (as acknowledged by Lender in writing) and
have been previously disclosed to Lender in writing by Borrower,
and except that with respect to the representations and
warranties made regarding financial data in Section 13.11, such
representations and warranties shall be deemed made with respect
to the most recent Financial Statements delivered by Borrower to
Lender.
<PAGE>
<PAGE>
12.5. No Default. There shall be no Existing Default
and no Default or Event of Default will occur as a result of the
issuance of the Letter of Credit or Borrower's use thereof.
12.6. No Material Adverse Change. Since the date of
the most recent prior Revolving Advance or issuance of a Letter
of Credit, if any, there shall not have been any change which has
had or is reasonably likely to have a Material Adverse Effect.
13. Representations and Warranties. Except as otherwise
described in the disclosure schedule that is attached hereto as
Exhibit 13 (the "Disclosure Schedule"), Borrower represents and
warrants to Lender as follows:
13.1 Organization and Existence. Each Covered Person
is duly organized and existing in good standing under the laws of
the state of its organization, is duly qualified to do business
and is in good standing in every state where the nature or extent
of its business or properties require it to be qualified to do
business, except where the failure to so qualify will not have a
Material Adverse Effect. Each Covered Person has the power and
authority to own its properties and carry on its business as now
being conducted.
13.2 Authorization. Each Covered Person is duly
authorized to execute and perform every Loan Document to which
such Covered Person is a party, and Borrower is duly authorized
to borrow hereunder, and the Loan Documents to which it is a
party have been duly authorized by all requisite corporate (or,
if not a corporation, comparable) action of each Covered Person.
No consent, approval or authorization of, or declaration or
filing with, any Governmental Authority, and no consent of any
other Person, is required in connection with Borrower's
execution, delivery or performance of this Agreement and the
other Loan Documents, except for those already duly obtained or
explicitly contemplated hereunder.
13.3 Due Execution. Every Loan Document to which a
Covered Person is a party has been executed on behalf of such
Covered Person by a legally competent Person duly authorized to
do so.
13.4 Enforceability of Obligations. Each of the Loan
Documents to which a Covered Person is a party constitutes the
legal, valid and binding obligation of such Covered Person,
enforceable against such Covered Person in accordance with its
terms, except to the extent that the enforceability thereof
against such Covered Person may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting<PAGE>
<PAGE>
creditors' rights generally or by equitable principles of general
application.
13.5 Burdensome Obligations. No Covered Person is a
party to or bound by any Contract or is subject to any provision
in the Charter Documents of such Covered Person which would, if
performed by such Covered Person, result in a Default or Event of
Default either immediately or upon the elapsing of time.
13.6 Legal Restraints. The execution of any Loan
Document by a Covered Person will not violate or constitute a
default under the Charter Documents of such Covered Person, any
Material Agreement of such Covered Person, or any Material Law,
and will not, except as expressly contemplated or permitted in
this Agreement, result in any Security Interest being imposed on
any of such Covered Person's property. The performance by any
Covered Person of its obligations under any Loan Document to
which it is a party will not violate or constitute a default
under the Charter Documents of such Covered Person, any Material
Agreement of such Covered Person, or any Material Law, and will
not, except as expressly contemplated or permitted in this
Agreement, result in any Security Interest being imposed on any
of such Covered Person's property.
13.7 Labor Disputes. There is no pending or, to
Borrower's knowledge, threatened, strike, work stoppage, material
unfair labor practice claim or other material labor dispute
against or affecting any Covered Person or its employees, which
is reasonably likely to have a Material Adverse Effect.
13.8 No Material Proceedings. There are no Material
Proceedings pending or, to the best knowledge of Borrower,
threatened, other than as described in item 13.8 of the
Disclosure Schedule or in Item 3 of Borrower's 1996 Form 10-K or
in Item 1 of Part II of Borrower's 1997 Form 10-Qs, copies of
which have been furnished to Lender.
13.9 Material Licenses. All Material Licenses have
been obtained or exist for each Covered Person.
13.10 Compliance with Material Laws. Each Covered
Person is in compliance with all Material Laws. Without limiting
the generality of the foregoing:
13.10.1 General Compliance with Environmental
Laws. The operations and employee compensation practices of
every Covered Person comply in all material respects with all
applicable Environmental Laws, the failure to comply with which
is reasonably likely to have a Material Adverse Effect.
<PAGE>
<PAGE>
13.10.2 Proceedings. None of the operations of
any Covered Person are the subject of any judicial or
administrative complaint, order or proceeding alleging the
violation of any applicable Environmental Laws, which violation
is reasonably likely to have a Material Adverse Effect.
13.10.3 Investigations Regarding Hazardous
Materials. None of the operations of any Covered Person are the
subject of investigation by any Governmental Authority regarding
the improper transportation, storage, disposal, generation or
release into the environment of any Hazardous Material, the
results of which are reasonably likely to have a Material Adverse
Effect.
13.10.4 Notices and Reports Regarding Hazardous
Materials. No notice or report under any Environmental Law
indicating a past or present spill or release into the
environment of any Hazardous Material from any property owned or
operated by a Covered Person has been filed within the
immediately preceding four fiscal years of such Covered Person,
or is required to be filed by any Covered Person, which spill or
release is reasonably likely to result in a Material Adverse
Effect.
13.10.5 Hazardous Materials on Real Property. No
Covered Person, nor to Borrower's knowledge, any other Person,
has at any time transported, stored, disposed of, generated or
released any Hazardous Material on the surface, below the
surface, or within the boundaries of any real property owned or
operated by such Covered Person, which event is reasonably likely
to have a Material Adverse Effect. Borrower has no knowledge of
any Hazardous Material on the surface, below the surface, or
within the boundaries of any real property owned or operated by
such Covered Person, which is reasonably likely to have a
Material Adverse Effect. No property of such Covered Person is
subject to a Security Interest in favor of any Governmental
Authority for any liability under any Environmental Law or
damages arising from or costs incurred by such Governmental
Authority in response to a spill or release of Hazardous Material
into the environment, which is reasonably likely to have a
Material Adverse Effect.
13.11 Initial Financial Statements. The Financial
Statements of Borrower as of June 30, 1997, as delivered to
Lender by Borrower, are complete and correct in all material
respects (subject to normal year-end audit adjustments), have
been prepared in accordance with GAAP, and fairly reflect the
financial condition, results of operations and cash flows of
Borrower as of the date and for the periods stated therein.
<PAGE>
<PAGE>
13.12 No Change in Condition. Since the date of the
Initial Financial Statements delivered to Lender, there has been
no change which is reasonably likely to have a Material Adverse
Effect.
13.13 No Defaults. No Covered Person has breached or
violated or has defaulted under any Material Agreement, or has
defaulted with respect to any Material Obligation of such Covered
Person. There is no Existing Default.
13.14 Tax Liabilities; Governmental Charges. Each
Covered Person has filed or caused to be filed all tax reports
and returns required to be filed by it with any Governmental
Authority, except where extensions have been properly obtained or
where failure to file is not reasonably likely to have a Material
Adverse Effect. Each Covered Person has paid or made adequate
provision for payment of all Taxes of such Covered Person, except
(i) Taxes which are being diligently contested in good faith by
appropriate proceedings and as to which such Covered Person has
established adequate reserves in conformity with GAAP or (ii)
where failure to pay is not reasonably likely to have a Material
Adverse Effect. No Security Interests for any such Taxes has
been filed and no claims are being asserted with respect to any
such Taxes which, if adversely determined, are reasonably likely
to have a Material Adverse Effect. The federal income tax
liability for each Covered Person has been determined by the
Internal Revenue Service and paid for all fiscal years up to and
including the year ended December 31, 1992, except that the
Borrower continues to carry forward net operating losses from the
fiscal years ended December 31, 1979, through December 31, 1985,
and, accordingly, such fiscal years remain open with respect to,
and only with respect to, such carry forwards. There are no
material unresolved issues concerning any liability of a Covered
Person for any Taxes which, if adversely determined, are
reasonably like to have a Material Adverse Effect.
13.15 Pension Benefit Plans. All Pension Benefit Plans
maintained by each Covered Person or an ERISA Affiliate of such
Covered Person qualify under Section 401 of the Code and are in
compliance in all material respects with the provisions of ERISA.
Except with respect to events or occurrences which do not have
and are not reasonably likely to have a Material Adverse Effect:
13.15.1 Prohibited Transactions. None of such
Pension Benefit Plans has participated in, engaged in or been a
party to any non-exempt prohibited transaction as defined in
ERISA or the Code, and no officer, director or employee of a
Covered Person or of an ERISA Affiliate of such Covered Person
has committed a breach of any of the responsibilities or
obligations imposed upon fiduciaries by Title I of ERISA.<PAGE>
<PAGE>
13.15.2 Claims. Other than normal claims for
benefits, there are no claims, pending or threatened, involving
any such Pension Benefit Plan by a current or former employee (or
beneficiary thereof) of such Covered Person or ERISA Affiliate of
such Covered Person, nor is there any reasonable basis to
anticipate any claims involving any such Pension Benefit Plan
which would likely be successfully maintained against such
Covered Person or ERISA Affiliate of such Covered Person.
13.15.3 Reporting and Disclosure Requirements.
There are no violations of any reporting or disclosure
requirements with respect to any such Pension Benefit Plan and
none of such Pension Benefit Plans has violated any applicable
Law, including ERISA and the Code.
13.15.4 Accumulated Funding Deficiency. No such
Pension Benefit Plan has (i) incurred an accumulated funding
deficiency (within the meaning of Section 412(a) of the Code),
whether or not waived; (ii) been a Pension Benefit Plan with
respect to which a Reportable Event (to the extent that the
reporting of such events to the PBGC within thirty days of the
occurrence has not been waived) has occurred and is continuing;
or (iii) been a Pension Benefit Plan with respect to which there
exist conditions or events which have occurred that present a
significant risk of termination of such Pension Benefit Plan by
the PBGC.
13.15.5 Multi-employer Plan. No Covered Person
or ERISA Affiliate of such Covered Person has received notice
that any Multi-employer Plan to which any Covered Person
contributes or is obligated to contribute is in reorganization or
has been terminated within the meaning of Title IV of ERISA, and
no such Multi-employer Plan is reasonably expected to be in
reorganization or to be terminated within the meaning of Title IV
of ERISA.
13.16 Welfare Benefit Plans. No Covered Person or
ERISA Affiliate of such Covered Person maintains a Welfare
Benefit Plan that has a liability which, if enforced or
collected, would have a Material Adverse Effect. Each Covered
Person and ERISA Affiliate of such Covered Person has complied in
all material respects with the applicable requirements of Section
4980B of the Code pertaining to continuation coverage as mandated
by COBRA.
13.17 State of Property. Each Covered Person has good
and marketable or merchantable title to all real and personal
property purported to be owned by it or reflected in the Initial
Financial Statements, except for property sold in the ordinary
course of business after the date of the Initial Financial<PAGE>
<PAGE>
Statements and except for any defects in title which are not
reasonably likely to have a Material Adverse Effect. There are
no Security Interests on any of the property purported to be
owned by any Covered Person except Security Interests permitted
under this Agreement.
13.18 Subsidiaries and Affiliates. Borrower has no
Subsidiaries other than the Subsidiaries listed in item 13.18 of
the Disclosure Schedule, it being acknowledged and agreed that
the representation and warranty contained in this Section 13.18
is not required to remain true and correct for purposes of
Sections 11.1.2, 11.2.2 or 12.4 hereof.
13.19 Margin Stock. Borrower is not engaged and will
not engage, principally or as one of its important activities, in
the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation U), and
none of the proceeds of any Revolving Advance will be used to
purchase or carry any such margin stock or to extend credit to
others for the purpose of purchasing or carrying any such margin
stock or for any purpose which violates, or which would be
inconsistent with, the provisions of Regulation U or
Regulation G. None of the transactions contemplated by any
Permitted Acquisition will violate Regulations G, T, U or X of
the FRB.
13.20 Hostile Securities Transactions. No proceeds of
any Revolving Advance will be used to acquire from any Person any
security in a transaction that is hostile from the point of view
of such Person.
13.21 Investment Company Act, Etc. Borrower is not an
investment company registered or required to be registered under
the Investment Company Act of 1940, as amended, or a company
controlled (within the meaning of such Investment Company Act) by
such an investment company or an affiliated person of, or
promoter or principal underwriter for, an investment company, as
such terms are defined in the Investment Company Act of 1940, as
amended. Borrower is not subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act or the
Interstate Commerce Act.
13.22 Filings. All registration statements, reports,
proxy statements and other documents, if any, required to be
filed by Borrower with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended, and the
Securities Exchange Act of 1934, as amended, have been filed, and
such filings are complete and accurate in all material respects
and contain no untrue statements of material fact or omit to
state any material facts required to be stated therein or<PAGE>
<PAGE>
necessary in order to make the statements therein not misleading
in light of the circumstances in which made.
13.23 Broker's Fees. No broker or finder is entitled
to compensation for services rendered with respect to the loan
transactions contemplated by this Agreement and the other Loan
Documents.
13.24 Full Disclosure. Borrower has disclosed to
Lender all information regarding the business, operations,
property, financial condition, or business prospects of itself
and every Covered Person which is reasonably likely to have a
Material Adverse Effect.
14. Survival of Representations. All representations and
warranties in Section 13, and all representations and warranties
in any certificate delivered by Borrower pursuant hereto, shall
survive execution of each of the Loan Documents and the making of
every Revolving Advance, and may be relied upon by Lender as
being true and correct as of the date when made or deemed made or
reaffirmed until all of the Loan Obligations are fully and
irrevocably paid as contemplated in Section 8.3.
15. Affirmative Covenants. Borrower covenants and agrees
that, until Final Payment (and after any reinstatement as
contemplated in Section 8.4), Borrower shall do, or cause to be
done, the following:
15.1 Use of Proceeds. All proceeds of the Revolving
Loan shall be used solely for working capital and to fund payment
of amounts due from Borrower or any Subsidiary in connection with
Permitted Acquisitions.
15.2 Corporate Existence. Except as a result of a
transaction permitted by Section 16.7, each Covered Person shall
maintain its existence in good standing and shall maintain in
good standing its right to transact business in those states in
which it is now or hereafter doing business, except where the
failure to so qualify is not reasonably likely to have a Material
Adverse Effect. Each Covered Person shall obtain and maintain
all Material Licenses for such Covered Person.
15.3 Maintenance of Property and Leases. Each Covered
Person shall maintain in good condition and working order, and
repair and replace as required, all buildings, equipment,
machinery, fixtures and other real and personal property whose
useful economic life has not elapsed and which is necessary for
the ordinary conduct of the business of such Covered Person, the
failure to maintain which is reasonably likely to have a Material
Adverse Effect. Each Covered Person shall maintain in good<PAGE>
<PAGE>
standing and free of defaults all of its leases of buildings,
equipment, machinery, fixtures and other real and personal
property whose useful economic life has not elapsed and which is
necessary for the ordinary conduct of the business of such
Covered Person, the failure to maintain which is reasonably
likely to have a Material Adverse Effect.
15.4 Insurance. Each Covered Person shall at all
times keep insured or cause to be kept insured, with financially
sound and reputable insurers, all property owned by it of a
character usually insured by others carrying on businesses
similar to that of such Covered Person in such manner and to such
extent and covering such risks as such properties are usually
insured, the failure to insure which is reasonably likely to have
a Material Adverse Effect. Each Covered Person shall at all
times carry insurance, with financially sound and reputable
insurers, against liability on account of damage to persons or
property (including product liability insurance and insurance
required under all applicable workers' compensation laws) and
covering all other liabilities common to such Covered Person's
business, in such manner and to such extent as such coverage is
usually carried by others conducting businesses similar to that
of such Covered Person, the failure to insure which would have a
Material Adverse Effect.
15.5 Payment of Taxes and Other Obligations. Each
Covered Person shall promptly pay and discharge or cause to be
paid and discharged, as and when due, all Taxes lawfully assessed
or imposed upon it, and all Taxes lawfully assessed upon any of
its property, or upon the income or profits therefrom, and all
claims of materialmen, mechanics, carriers, warehousemen,
landlords and other like Persons for labor, materials, supplies,
storage or other items or services which if unpaid might be or
become a Security Interest or charge upon any of its property the
failure to pay which is reasonably likely to have a Material
Adverse Effect; provided, however, that a Covered Person may
diligently contest in good faith by appropriate proceedings the
validity of any such Taxes or claims if Borrower has established
adequate reserves therefor in conformity with GAAP on the books
of such Covered Person, and no Security Interest, other than a
Permitted Security Interest, results from such non-payment.
15.6 Compliance With Laws. Each Covered Person shall
comply with all Material Laws. Without limiting the generality
of the foregoing:
15.6.1 Environmental Laws. Each Covered Person
shall comply and shall use commercially reasonable efforts to
ensure compliance by all tenants, subtenants and other occupants
of the property of such Covered Person, if any, with all<PAGE>
<PAGE>
Environmental Laws whose violation is reasonably likely to have
a Material Adverse Affect.
15.6.2 Pension Benefit Plans. Each Covered
Person and each ERISA Affiliate of such Covered Person shall at
all times make prompt payments or contributions to meet the
minimum funding standards under ERISA and the Code with respect
to any Pension Benefit Plan maintained by such Covered Person or
ERISA Affiliate of such Covered Person, and shall comply with all
reporting and disclosure requirements and all provisions of the
Code and ERISA applicable to any Pension Benefit Plan maintained
by such Covered Person or ERISA Affiliate of such Covered Person,
if non-compliance therewith is reasonably likely to have a
Material Adverse Affect.
15.7 Discovery and Clean-Up of Hazardous Material.
Upon any Covered Person receiving notice of any violation of
Environmental Laws or any similar notice described in Section
15.9.3, or upon any Covered Person otherwise discovering
Hazardous Material on any property owned or operated by such
Covered Person which is in violation of, or which is reasonably
likely to result in liability under, any Environmental Law which
is reasonably likely to have a Material Adverse Effect, Borrower
shall: (i) promptly take such acts as may be necessary to prevent
danger or harm to the affected property or any person therein as
a result of such Hazardous Material, and (ii) take all necessary
steps to initiate and expeditiously complete all removal,
remedial, response, corrective and other action to eliminate any
such environmental problems, and keep Lender informed of such
actions and the results thereof.
15.8 Termination of Pension Benefit Plan. No Covered
Person or ERISA Affiliate of such Covered Person shall terminate
or amend any Pension Benefit Plan maintained by such Covered
Person or ERISA Affiliate of such Covered Person if such
termination or amendment would result in any liability to such
Covered Person or ERISA Affiliate of such Covered Person under
ERISA which is reasonably likely to have a Material Adverse
Effect or any increase in current liability for the plan year for
which such Covered Person or ERISA Affiliate of such Covered
Person is required to provide security to such Pension Benefit
Plan under the Code which is reasonably likely to have a Material
Adverse Effect.
15.9 Notice to Lender of Material Events. Borrower
shall, promptly upon any Responsible Officer of Borrower
obtaining knowledge or notice thereof, give notice to Lender
(together with copies,if applicable) of (i) any breach of any of
the covenants in Section 15, 16, or 17; (ii) any Default or Event
of Default; (iii) the commencement of any Material Proceeding;<PAGE>
<PAGE>
and (iv) any material loss, including loss as a consequence of
condemnation proceedings, of or material damage to any material
part of the assets of a Covered Person, if such loss, damage or
proceeding is reasonably likely to have a Material Adverse
Effect. In addition,
15.9.1 Borrower shall furnish to Lender from time
to time all information which Lender requests with respect to the
status of any Material Proceeding.
15.9.2 Borrower shall furnish to Lender from time
to time all information which Lender requests with respect to any
Pension Benefit Plan established by a Covered Person or ERISA
Affiliate of such Covered Person.
15.9.3 Borrower shall promptly inform Lender of
its receipt of, and deliver to Lender a copy of, any (i) notice
that any violation of any Environmental Law may have been
committed or is about to be committed by any Covered Person,
which violation is reasonably likely to have a Material Adverse
Effect, (ii) notice that any administrative or judicial complaint
or order has been filed or is about to be filed against any
Covered Person alleging violations of any Environmental Law or
requiring such Covered Person to take any action in connection
with the release of any Hazardous Material into the environment,
which event is reasonably likely to have a Material Adverse
Effect, (iii) notice from a Governmental Authority or private
Person alleging that a Covered Person may be liable or
responsible for costs associated with a response to or cleanup of
a release of Hazardous Material into the environment or any
damages caused thereby, which event is reasonably likely to have
a Material Adverse Effect, (iv) notice that a Covered Person is
subject to federal, state or local investigation regarding the
improper transportation, storage, disposal, generation or release
into the environment of any Hazardous Material, which event is
reasonably likely to have a Material Adverse Effect, or
(v) notice that any properties or assets of a Covered Person are
subject to a Security Interest in favor of any Governmental
Authority for any liability under any Environmental Law or
damages arising from or costs incurred by such Governmental
Authority in response to a release of Hazardous Material into the
environment, which event is reasonably likely to have a Material
Adverse Effect.
15.9.4 Borrower shall deliver to Lender notice of
the following events promptly after they occur: (i) the failure
of any Covered Person or ERISA Affiliate of such Covered Person
to make any required installment or any other required payment to
any Pension Benefit Plan in sufficient amount to comply with
ERISA and the Code on or before the due date for such installment<PAGE>
<PAGE>
or payment, which event is reasonably likely to have a Material
Adverse Effect; (ii) the occurrence of any Reportable Event, or
a prohibited transaction or accumulated funding deficiency (as
those terms are defined in ERISA), with respect to any Pension
Benefit Plan maintained or contributed to by a Covered Person or
ERISA Affiliate of such Covered Person, which event is reasonably
likely to have a Material Adverse Effect; (iii) receipt by a
Covered Person or ERISA Affiliate of such Covered Person of any
notice from a Multi-employer Plan regarding the imposition of
withdrawal liability, which event is reasonably likely to have a
Material Adverse Effect; and (iv) receipt by a Covered Person or
ERISA Affiliate of such Covered Person of any notice of the
institution, or a Covered Person's expectancy of the institution,
of any proceeding or receipt by such Covered Person or ERISA
Affiliate of such Covered Person of any notice of the taking, or
such Covered Person's expectancy of the taking, of any other
action which may result in the termination of any Pension Benefit
Plan maintained or contributed to by such Covered Person or ERISA
Affiliate of such Covered Person, or the withdrawal or partial
withdrawal by a Covered Person or ERISA Affiliate of such Covered
Person from any Pension Benefit Plan, and the filing or receipt
by a Covered Person or ERISA Affiliate of such Covered Person of
any such notice and filing or receipt of all subsequent reports
or notices under ERISA with or from the IRS, the PBGC, or the DOL
relating to the same, which event is reasonably likely to have a
Material Adverse Effect; and, in addition to such notice, deliver
to Lender a certificate of a Responsible Officer of Borrower,
setting forth details as to such events and the action that the
affected Covered Person or ERISA Affiliate of such Covered Person
proposes to take with respect thereto. For purposes of this
Section, a Covered Person and any ERISA Affiliate of such Covered
Person shall be deemed to know all facts known by the
administrator of any Plan of which such Covered Person or any
ERISA Affiliate of such Covered Person is the plan sponsor.
15.9.5 Borrower shall promptly deliver to Lender
notice of any default or event of default, or the occurrence of
any event which would with the passage of time, giving of notice
or otherwise, constitute a default or event of default with
respect to any of the Permitted Indebtedness in excess of
$5,000,000.
15.9.6 Borrower shall, promptly after becoming
aware thereof, deliver notice to Lender of any pending or
threatened strike, work stoppage, material unfair labor practice
claim or other material labor dispute affecting a Covered Person
which is reasonably likely to have a Material Adverse Effect.
<PAGE>
<PAGE>
15.9.7 Borrower shall deliver notice to Lender of
any change in the name, state of incorporation, or form of
organization of Borrower or any Guarantor at least 15 days prior
to such change.
15.9.8 Borrower shall, promptly after becoming
aware thereof, deliver notice to Lender of any event that has or
is reasonably likely to have a Material Adverse Effect.
15.9.9 Borrower shall, promptly after becoming
aware thereof, deliver notice to Lender of an actual, alleged, or
potential violation of any Material Law applicable to a Covered
Person.
15.10 Borrowing Officer. Borrower shall keep on file
with Lender at all times an appropriate instrument naming each
Borrowing Officer.
15.11 Accounting System. Each Covered Person shall
maintain a system of accounting established and administered in
accordance with GAAP.
15.12 Financial Statements. Borrower shall deliver to
Lender:
15.12.1 Annual Financial Statements. Within 90
days after the close of each fiscal year of Borrower (unless the
Borrower has timely filed a Form 12b-25 with the Securities and
Exchange Commission with respect to such fiscal year, in which
case such period shall be 105 days after the close of such fiscal
year), year-end consolidated and consolidating Financial
Statements of Borrower and its Subsidiaries, containing an audit
report without qualification (except as set forth therein) with
respect to such consolidated statements by Arthur Andersen LLP or
such other independent certified public accounting firm selected
by Borrower and satisfactory to Lender and in each case
accompanied by (a) a Compliance Certificate of the Chief
Financial Officer of Borrower, (b) a certificate of the
independent certified public accounting firm that examined such
consolidated Financial Statements to the effect that they have
reviewed and are familiar with this Agreement and that, in
examining such consolidated Financial Statements, nothing came to
their attention that caused them to believe that an event or
condition that constitutes a Default or Event of Default has
occurred or existed insofar as such conditions or events relate
to accounting matters, except for those, if any, described in
reasonable detail in such certificate, (c) the management letter
and report on internal controls delivered by such independent
certified public accounting firm in connection with their audit,
and (d) if requested by Lender, any summary prepared by such<PAGE>
<PAGE>
independent certified public accounting firm of the adjustments
proposed by the members of its audit team. If not available at
the time any other items are delivered hereunder, delivery of the
items described under clause (c) in this Section promptly when
available (notwithstanding delivery subsequent to any other date
herein referenced) shall not constitute a Default or Event of
Default.
15.12.2 Quarterly Financial Statements. Within
45 days after the end of each fiscal quarter of Borrower (unless
Borrower has timely filed a Form 12b-25 with the Securities and
Exchange Commission with respect to such fiscal quarter, in which
case such period shall be 50 days after the close of such fiscal
quarter), unaudited consolidated and consolidating Financial
Statements of Borrower and its Subsidiaries for the most recent
quarter not covered by the latest year-end Financial Statements
required hereunder to be delivered to Lender, in each case
accompanied by a Compliance Certificate of the Chief Financial
Officer of Borrower.
Each Compliance Certificate shall be in the form of
Exhibit 15.12, shall contain detailed calculations of the
financial measurements referred to in Section 17 for the relevant
periods, and shall contain statements by the signing officer to
the effect that, except as explained in reasonable detail in such
Compliance Certificate, (i) the attached Financial Statements are
complete and correct in all material respects (subject, in the
case of Financial Statements other than annual, to normal year-
end audit adjustments) and have been prepared in accordance with
GAAP applied consistently throughout the periods covered thereby
and with prior periods (except as disclosed therein), (ii) there
is no Existing Default, and (iii) in the case of each Compliance
Certificate accompanying an annual Financial Statement, that the
representations and warranties of Borrower herein (other than the
representations and warranties in Section 13.18 and as expressly
otherwise contemplated herein) remain true and correct as of the
date of the Compliance Certificate, or that such representations
and warranties are no longer true and correct, in which case such
Compliance Certificate shall describe the nature of any such
changes. If any Compliance Certificate delivered to Lender
discloses that a Default or Event of Default has occurred that
has not been waived in writing by Lender, such Compliance
Certificate shall state what action Borrower has taken or
proposes to take with respect thereto.
<PAGE>
<PAGE>
15.13 Other Financial Information. Borrower shall also
deliver the following to Lender:
15.13.1 Stockholder and SEC Reports. Promptly
after their preparation, copies of any and all (i) proxy
statements, financial statements and reports which Borrower makes
available to its stockholders generally, and (ii) reports,
registration statements and prospectuses, if any, filed by
Borrower with any securities exchange or the Securities and
Exchange Commission or any Governmental Authority succeeding to
any of its functions.
15.13.2 Pension Benefit Plan Reports. Upon the
request of Lender, a copy of each annual report or other filing
or notice filed with respect to each Pension Benefit Plan of any
Covered Person or any ERISA Affiliate.
15.13.3 Tax Returns. Upon the request of Lender,
a copy of each federal, state, or local tax return or report
filed by Borrower.
15.13.4 Additional. Upon the request of Lender,
such additional information about the business, operations,
revenues, financial condition, property, or business prospects of
Borrower as Lender may, from time to time, reasonably request.
15.14 Forecasts or Projections. Within the 120 days
following the first day of each fiscal year of Borrower,
projected or forecasted consolidated balance sheets, statements
of income and expense, and statements of cash flows for Borrower
and its Subsidiaries (including any Subsidiary then proposed to
be acquired, organized or created in connection with a Permitted
Acquisition and to continue in existence after consummation
thereof) as of the end of and for each fiscal quarter in such
fiscal year in such reasonable detail as Lender may require.
15.15 Audits by Lender. Lender or Persons authorized
by and acting on behalf of Lender or any Lender may at any time
and from time to time during normal business hours audit the
books and records, and inspect any of the property, of each
Covered Person from time to time upon reasonable prior notice to
such Covered Person, and in the course thereof may make copies or
abstracts of such books and records and discuss the affairs,
finances and books and records of such Covered Person with its
accountants, officers and employees. Borrower shall cause each
Covered Person to cooperate with Lender and such Persons in the
conduct of such audits and shall deliver to Lender any instrument
necessary for Lender to obtain records from any service bureau
maintaining records for such Covered Person. Borrower shall
reimburse Lender for all reasonable costs and expenses actually<PAGE>
<PAGE>
incurred by it in conducting each audit; provided, however, that
if an Event of Default has not occurred, such reimbursement for
each such audit shall be limited to $500 per day per person
involved in conducting the audit plus Lender's other reasonable
actual out-of-pocket expenses.
15.16 Access to Officers and Auditors. Each Covered
Person shall permit Lender and Persons authorized by Lender, upon
reasonable prior notice and during normal business hours, to
discuss the affairs, finances and accounts of such Covered Person
with its officers and independent auditors as often as Lender may
reasonably request, and such Covered Person shall direct such
officers and independent auditors to cooperate with Lender and
make full disclosure to Lender of those matters that they may
deem relevant to the continuing ability of Borrower timely to pay
and perform the Loan Obligations. Lender agrees that it will not
disclose to third Persons any information that it obtains about
any Covered Person or its operations or finances that are
designated by Borrower or such Covered Person in writing as
confidential or that Borrower or such Covered Person has advised
Lender in writing constitutes non-public information. Lender
may, however, disclose such information to all of its respective
officers, attorneys, auditors, accountants, bank examiners,
agents and representatives who have a need to know such
information in connection with the administration, interpretation
or enforcement of the Loan Documents or the lending and
collection activity contemplated therein or to the extent
required by Law or a Governmental Authority. Lender shall advise
such persons that such information is to be treated as
confidential. Lender may also disclose such information in any
documents that it files in any legal proceeding to pursue,
enforce or preserve its rights under the Loan Documents to the
extent that Lender's counsel advises in writing that such
disclosure is reasonably necessary. Lender's non-disclosure
obligation shall not apply to any information that (i) is
disclosed to Lender by a third Person not affiliated with or
employed by Borrower who does not have a commensurate duty of
non-disclosure, or (ii) becomes publicly known other than as a
result of disclosure by Lender.
15.17 Further Assurances. Borrower shall execute and
deliver, or cause to be executed and delivered, to Lender such
documents and agreements, and shall take or cause to be taken
such actions, as Lender may from time to time reasonably request
to carry out the terms and conditions of this Agreement and the
other Loan Documents.
<PAGE>
<PAGE>
16. Negative Covenants.
Borrower covenants and agrees that, until Final Payment
(and after any reinstatement as contemplated in Section 8.4),
Borrower shall not, directly or indirectly, do any of the
following, or permit any Covered Person to do any of the
following:
16.1 Indebtedness. Create, incur, assume, or allow to
exist any Indebtedness that is "Priority Debt" as defined in the
Note Purchase Agreement (whether or not such agreement remains in
effect) unless and only to the extent that (i) there is no
Existing Default, (ii) no Default or Event of Default will occur
or has occurred or is reasonably likely to occur as a consequence
thereof and (iii) the aggregate amount of all such "Priority
Debt" will not as a consequence thereof exceed 10% of Borrower's
"Consolidated Adjusted Net Worth", as defined in the Note
Purchase Agreement (whether or not such agreement remains in
effect), determined as of the end of the immediately preceding
fiscal quarter of Borrower, it being understood that for purposes
hereof "Priority Debt" shall not include any "Indebtedness"
represented by a "Guaranty" (as both such terms are defined under
the Note Purchase Agreement, whether or not such Agreement
remains in effect) from a Guarantor hereunder.
16.2 Prepayments. Voluntarily prepay any Indebtedness
other than (i) the Loan Obligations in accordance with the terms
of the Loan Documents, (ii) trade payables in the ordinary course
of business, (iii) prepayments of Indebtedness with respect to
industrial revenue bonds outstanding on the Execution Date and
(iv) prepayments on the Senior Notes as permitted or required
under the Note Purchase Agreement.
16.3 Security Interests. Create, incur, assume or
allow to exist any Security Interest upon all or any part of its
property, real or personal, now owned or hereafter acquired,
except the following:
16.3.1 Security Interests for taxes, assessments
or governmental charges not delinquent or being diligently
contested in good faith and by appropriate proceedings and for
which adequate book reserves in accordance with GAAP are
maintained.
16.3.2 Security Interests arising out of pledges
and deposits in connection with workers' compensation insurance,
unemployment insurance, old age pensions, or other social
security or retirement benefits legislation.
<PAGE>
<PAGE>
16.3.3 Security Interests arising out of deposits
or pledges to secure bids, tenders, contracts (other than
contracts for the payment of money), leases, statutory
obligations, surety and appeal bonds, and other obligations of
like nature arising in the ordinary course of business.
16.3.4 Security Interests imposed by any Law,
such as mechanics', workmen's, materialmen's, landlords',
carriers', or other like Security Interests arising in the
ordinary course of business which secure payment of obligations
which are not past due or which are being diligently contested in
good faith by appropriate proceedings and for which adequate book
reserves in accordance with GAAP are maintained.
16.3.5 Security Interests in favor of Lender .
16.3.6 Security Interests that are "Liens" as
defined in the Note Purchase Agreement but permitted thereunder
to be created, incurred, assumed or allowed to exist (whether or
not such agreement remains in effect).
16.4 Acquisitions. Utilize any of the proceeds of any
Revolving Advance to acquire all or a material part of the assets
of a Person, regardless of the form of the transaction, except in
a Permitted Acquisition. A "Permitted Acquisition" is any
acquisition of stock or other equity interest in a Person, or of
all or a material part of the assets of a Person, with respect to
which all of the following requirements have been satisfied:
16.4.1 the Person is engaged in a line of
business substantially the same as conducted by Borrower or any
of its Subsidiaries on the Execution Date or reasonably related
thereto or in furtherance thereof; and
16.4.2 the acquisition is not hostile from the
point of view of such Person; and
16.4.3 either
16.4.3.1 the Person is, or is the parent or
controlling partner or member of, a direct or indirect licensee
or sublicensee of Borrower or any of its then existing
Subsidiaries, provided that such licensee or sublicensee was such
a licensee or sublicensee as of December 31, 1996, and
continuously thereafter; or
16.4.3.2 the Person is a co-partner or co-member
with Borrower or any of its then existing Subsidiaries in a joint
venture, provided that such joint venture existed as of December
31, 1996, and continuously thereafter; and<PAGE>
<PAGE>
16.4.4 there is no Existing Default; and
16.4.5 no Default or Event of Default will occur
or is reasonably likely to occur as a consequence of the
acquisition.
16.5 Disposal of Property. Sell, transfer, exchange,
lease, or otherwise dispose of any of its assets, or enter into
any agreement or arrangement with any Person providing for
Borrower to lease or rent property that Borrower has or will sell
or otherwise transfer to such Person (except (i) sales and leases
of assets in the ordinary course of business and (ii) sales,
transfers, exchanges, and leases, rentals or other dispositions
of assets other than in the ordinary course of business but as
permitted under the Note Purchase Agreement [whether or not such
agreement remains in effect]), exclusive of transfers of assets
to Subsidiaries of Borrower not organized under the laws of the
United States or a state of the United States while United States
Assets aggregate more than 70% of Total Assets.
16.6 Restricted Payments. At any time when there is
an Existing Default, directly or indirectly declare or make, or
incur any liability to make, any Restricted Payment, unless and
only to the extent that such a Restricted Payment is permitted
under the Note Purchase Agreement (whether or not such agreement
remains in effect). For purposes of this Section, a "Restricted
Payment" means and includes (i) any cash dividend, (ii) any
acquisition, redemption or retirement of any outstanding stock,
(iii) any retirement or prepayment of debt securities before
their regularly scheduled maturity dates, (iv) any loan or
advance that is made to a Person in such Person's capacity as a
shareholder, and (v) any "Restricted Payment" as defined in the
Note Purchase Agreement (whether or not such agreement remains in
effect).
16.7 Mergers and Consolidations. Merge or consolidate
with or into another Person except for such mergers and
consolidations as are permitted under the Note Purchase Agreement
(whether or not such agreement remains in effect).
16.8 Change of Business. Engage in any business other
than substantially as conducted on the Execution Date by Borrower
or any of its Subsidiaries or a business reasonably related
thereto or in furtherance thereof.
16.9 Transactions With Affiliates. Except for
transactions with another Covered Person, enter into or be a
party to any transaction or arrangement, including the purchase,
sale or exchange of property of any kind or the rendering of any
service material to the operations of the Borrower and the<PAGE>
<PAGE>
Subsidiaries taken as a whole, with any Affiliate, or make any
loans or advances to any Affiliate. Borrower and any Covered
Person may, however, engage in such transactions if they are in
the ordinary course of business and pursuant to the reasonable
requirements of its business and are on fair and reasonable terms
substantially as favorable to it as those which it could obtain
in a comparable arm's-length transaction with a non-Affiliate.
16.10 Conflicting Agreements, Etc. Enter into any
agreement, engage in any transaction, acquire or create any
Subsidiary, or transfer assets to any Subsidiary (whether or not
it is actively engaged in a trade or business) that would
immediately or in a reasonably foreseeable time result in a
Default or Event of Default; or enter into any agreement that
would immediately or in a reasonably foreseeable time, if fully
complied with or performed by it, result in a Default or Event of
Default.
16.11 Sale and Leaseback Transactions. Enter into any
agreement or arrangement with any Person providing for Borrower
or a Covered Person to lease or rent property that Borrower or a
Covered Person has or will sell or otherwise transfer to such
Person, except upon terms no less favorable than in an arms-
length transaction in which Borrower or such Covered Person will
receive a cash payment upon such sale or transfer equal to the
fair market value of such property.
16.12 Fiscal Year. Change its fiscal year.
16.13 Transactions Having a Material Adverse Effect on
a Covered Person. Enter into any transaction which has or is
reasonably likely to have a Material Adverse Effect.
17. Financial Covenants.
17.1 Special Definitions. As used in this Section 17
and elsewhere in this Agreement, the following capitalized terms
have the following meanings:
"Adjusted EBITDA" means, for any period of calculation,
EBITDA minus Maintenance Capital Expenditures, both as
accrued in such period.
"Current Assets" means, at any date, current assets as
determined in accordance with GAAP.
"Current Liabilities" means, at any date, current
liabilities as determined in accordance with GAAP but
excluding amounts outstanding under the Revolving Loan.
<PAGE>
<PAGE>
"EBITDA" means, for any period of calculation, an amount
equal to the sum of (i) net income, (ii) federal, state
and local income tax expense, (iii) interest expense
(including the interest component of payments on Capital
Leases) in such period, (iv) depreciation and
amortization expense and other non-cash charges that
reduced net income during such period, (v) losses on the
sale or other disposition of assets other than in the
ordinary course of business if included in the
calculation of net income, (vi) extraordinary losses if
included in the calculation of net income, and (vii)
Restructuring Charges, minus (a) gains on the sale or
other disposition of assets other than in the ordinary
course of business if included in net income, and
(b) extraordinary gains if included in net income, all as
accrued in such period.
"Fixed Charges" means, for any period of calculation, the
sum of (i) interest expense, (ii) the sum of all
scheduled principal payments on any long-term
Indebtedness of Borrower (including the Revolving Loan
and other current maturities of long term Indebtedness),
(iii) federal, state and local income taxes payable,
(iv) scheduled payments on Capital Leases, and
(v) dividends paid, all as accrued in such period.
"Funded Debt" means, at any date, the sum of (i) the
principal amount of all Indebtedness for borrowed money
of Borrower and its Subsidiaries on a consolidated basis,
(ii) the unamortized capitalized amount of all Capital
Leases of Borrower and its Subsidiaries on a consolidated
basis, (iii) all Restricted Indirect Obligations of
Covered Persons with respect to Indebtedness for borrowed
money of Persons other than Covered Persons or Exempted
Subsidiaries, without duplication of any amount with
respect to the same Indebtedness, and (iv) all Restricted
Indirect Obligations of Covered Persons with respect to
the unamortized capitalized amount of all Capital Leases
of Persons other than Covered Persons or Exempted
Subsidiaries, without duplication of any amount with
respect to the same Capital Leases, all as of such date.
"Maintenance Capital Expenditures" means, for any period
of calculation, all Capital Expenditures during such
period made for the purpose of maintaining existing
capacity (excluding, without limitation, expenditures for
expanding existing businesses, expanding into new
businesses, properties and product lines, cost
reductions, profit improvements, and other expenditures
based on financial return), to the extent they do not<PAGE>
<PAGE>
exceed the amount needed to meet the requirements of
Section 15.3 as applied to fixed assets of Borrower and
its Subsidiaries.
"Restricted Indirect Obligations" means all Indirect
Obligations except (i) Indirect Obligations of a Covered
Person undertaken in the ordinary course of business of
such Covered Person to secure bids or contracts or
performance bonds relating to work to be performed by any
Covered Person or any joint venture in which any Covered
Person participates; (ii) all Indirect Obligations of a
Covered Person with respect to any trade indebtedness of
such Covered Person incurred in the ordinary course of
business of such Covered Person, whether payable directly
or by reimbursement in connection with any letter of
credit facility; (iii) all Indirect Obligations of a
Covered Person with respect to Security Interests of
Covered Persons permitted under Section 16.3; and
(iv) all Indirect Obligations of Covered Persons with
respect to Obligations of other Covered Persons or
Exempted Subsidiaries.
"Tangible Assets" means, at any date, all assets as
determined in accordance with GAAP except: (a) deferred
assets; (b) patents, copyrights, trademarks, trade names,
franchises, goodwill, and other similar intangibles; (c)
unamortized debt discount and expenses; and (d) fixed
assets to the extent of any write-up in the book value
thereof resulting from a revaluation.
"Tangible Net Worth" means, at any date: (a) the book
value (net of depreciation, obsolescence, amortization,
valuation and other proper reserves determined in
accordance with GAAP) at which Tangible Assets would be
shown on a balance sheet at such date prepared in
accordance with GAAP; less (b) the amount at which all
liabilities would be shown on such balance sheet,
including as liabilities all reserves for contingencies
and other potential liabilities which would be shown on
such balance sheet or disclosed in the notes thereto.
"Total Capitalization" means, at any date, the sum of
Tangible Net Worth plus all Funded Debt, both as of such
date.
17.2 Minimum Fixed Charge Coverage. The ratio of
Borrower's Adjusted EBITDA to Fixed Charges, calculated at the
end of each fiscal quarter of Borrower for the four consecutive
fiscal quarters then ended, shall not be less than 1.0 to 1.0.
<PAGE>
<PAGE>
17.3 Minimum Tangible Net Worth. Borrower's Tangible
Net Worth as of the end of each fiscal quarter of Borrower shall
at no time be less than $50,000,000 plus (i) 50% of cumulative
net income (but not any net loss) for such fiscal periods and
(ii) the amount of the net proceeds received in cash by Borrower
in such periods from the issuance of equity securities (other
than in connection with any employee benefit plan or compensatory
arrangement).
17.4 Maximum Funded Debt to EBITDA Ratio. The ratio
of Borrower's Funded Debt as of the end of any fiscal quarter of
Borrower to Borrower's EBITDA for the four consecutive fiscal
quarters then ended shall not be less than 3.5 to 1.0.
17.5 Funded Debt to Total Capitalization. The ratio
of Borrower's Funded Debt to Borrower's Total Capitalization as
of the end of each fiscal quarter of Borrower shall not be
greater than 0.75 to 1.00.
18. Default.
18.1 Events of Default. Any one or more of the
following shall constitute an Event of Default:
18.1.1 Failure to Pay Principal or Interest.
Failure by Borrower to make any principal or interest payment on
the Revolving Loan within three days after the date when due
under the Loan Documents.
18.1.2 Failure to Pay Other Amounts Owed to
Lender. Failure of Borrower to pay any of the Loan Obligations
(other than principal or interest on the Revolving Loan) or any
other amount owed to Lender within five days after notice from
Lender that the same is due.
18.1.3 Failure to Pay Amounts Owed to Other
Persons. Failure of Borrower to make any payments that are due
on Indebtedness of Borrower exceeding $5,000,000 to any one
Person other than Lender, or exceeding $5,000,000 in the
aggregate to Persons other than Lender, which continue unwaived
beyond any applicable grace periods specified in the documents
evidencing such Indebtedness.
<PAGE>
<PAGE>
18.1.4 Acceleration of Other Indebtedness. Any
Obligation of Borrower (other than the Loan Obligations) for the
payment of borrowed money in an amount over $5,000,000, becomes
or is declared to be due and payable or required to be prepaid
(other than by a regularly scheduled payment or prepayment) prior
to the original maturity thereof.
18.1.5 Representations or Warranties. Any
representation or warranty made or deemed made by Borrower to
Lender hereunder is discovered to have been false in any material
respect when made or deemed made.
18.1.6 Certain Covenants. Failure of Borrower to
comply with the covenants in Section 15.1 or 15.8.
18.1.7 Financial Covenants. Failure of Borrower
to cure a violation of any of the covenants in Section 17 within
20 days after the end of the applicable fiscal quarter of
Borrower.
18.1.8 Other Covenants. Failure of Borrower to
comply with any of the provisions of any of the Loan Documents
that are applicable to it (other than a failure which constitutes
an Event of Default under any of Sections 18.1.1 through 18.1.6)
which is not remedied or waived in writing by Lender within 30
days (or 15 days in the case of failure to deliver Financial
Statements as required under Section 15.12) after notice thereof
from Lender to Borrower.
18.1.9 Default Under Other Agreements. The
occurrence of any default or event of default with respect to any
Obligation of Borrower (other than an Obligation for the payment
of borrowed money) reasonably likely to require monetary payments
from Borrower aggregating $5,000,000 or more, or which has or is
reasonably likely to have a Material Adverse Effect, under any
agreement to which Borrower is a party (other than the Loan
Documents) and which continues unwaived beyond any applicable
grace period provided therein.
18.1.10 Bankruptcy; Insolvency; Etc. Borrower
(i) fails to pay, or admits in writing its inability to pay, its
debts generally as they become due, or otherwise becomes
insolvent (however evidenced); (ii) makes a general assignment
for the benefit of creditors; (iii) files a petition in
bankruptcy, is adjudicated insolvent or bankrupt, petitions or
applies to any tribunal for any receiver or any trustee of
Borrower or any substantial part of its property; (iv) commences
any proceeding relating to Borrower under any reorganization,
arrangement, readjustment of debt, dissolution or liquidation law<PAGE>
<PAGE>
or statute of any jurisdiction, whether now or hereafter in
effect; (v) has commenced against it any such proceeding which
remains undismissed for a period of ninety days, or by any act
indicates its consent to, approval of, or acquiescence in any
such proceeding or the appointment of any receiver of or any
trustee for it or any substantial part of its property, or allows
any such receivership or trusteeship to continue undischarged for
a period of 90 days; or (vi) takes any corporate action to
authorize any of the foregoing.
18.1.11 Judgments; Attachment; Etc. Any one or
more judgments or orders is entered against a Covered Person or
any attachment or other levy is made against the property of a
Covered Person with respect to a claim or claims involving in the
aggregate liabilities (not paid or fully covered by insurance,
less the amount of deductibles satisfactory to Lender) greater
than $3,000,000 becomes final and non-appealable and is not fully
discharged within 45 stays thereafter, or if timely appealed is
not fully bonded and collection thereof stayed pending the
appeal.
18.1.12 Pension Benefit Plan Termination, Etc.
Any termination by the PBGC of a Pension Benefit Plan of Borrower
or an ERISA Affiliate of Borrower or the appointment by the
appropriate United States District Court of a trustee to
administer any Pension Benefit Plan of Borrower or an ERISA
Affiliate of Borrower or to liquidate any Pension Benefit Plan of
Borrower or an ERISA Affiliate of Borrower; or any event which
constitutes grounds either for the termination of any Pension
Benefit Plan of Borrower or an ERISA Affiliate of Borrower by
PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer or liquidate any
Pension Benefit Plan of Borrower or an ERISA Affiliate of
Borrower has occurred and is continuing for 30 days after
Borrower has notice of any such event; or any voluntary
termination of any Pension Benefit Plan of Borrower or an ERISA
Affiliate of Borrower which is a defined benefit pension plan as
defined in Section 3(35) of ERISA while such defined benefit
pension plan has an accumulated funding deficiency, unless Lender
has been notified of such intent to voluntarily terminate such
plan and Lender has given its consent and agreed that such event
shall not constitute an Event of Default; or the plan
administrator of any Pension Benefit Plan of Borrower or an ERISA
Affiliate of Borrower applies under Section 412(d) of the Code
for a waiver of the minimum funding standards of Section 412(1)
of the Code and Lender determines that the substantial business
hardship upon which the application for such waiver is based
could subject Borrower or any ERISA Affiliate of Borrower to a
liability in excess of $3,000,000.
<PAGE>
<PAGE>
18.1.13 Liquidation or Dissolution. Borrower
files a certificate of dissolution under applicable state law or
is liquidated or dissolved, or has commenced against it any
action or proceeding for its liquidation or dissolution which is
not dismissed within 60 days, or takes any corporate action in
furtherance thereof.
18.1.14 Seizure of Assets. All or any material
part of the property of Borrower, is nationalized, expropriated,
seized or otherwise appropriated, or custody or control of such
property or of Borrower is assumed by any Governmental Authority,
unless the same is being contested in good faith by appropriate
proceedings diligently pursued and a stay of enforcement is in
effect.
18.1.15 Racketeering Proceeding. There is filed
against a Covered Person any criminal action, suit or proceeding
under any federal or state racketeering statute (including,
without limitation, the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit or proceeding is
not dismissed within 120 days and could result in the
confiscation or forfeiture of property of such Covered Person
that results or is reasonably likely to result in a Material
Adverse Effect.
18.1.16 Loan Documents. Any Loan Document ceases
to be in full force and effect or is terminated, revoked or
declared void or invalid.
18.1.17 Guaranty Default. Any Guarantor denies
any further liability under the Guaranty, or asserts that the
Guaranty is unenforceable or void.
18.1.18 Qualified Audit Report. Any of the
fiscal year-end Financial Statements required under Section
15.12.1 to be delivered to Lender contains an audit report which
is qualified.
18.1.19 Material Adverse Change. There occurs
any event which is reasonably likely to result in Borrower being
unable to make payments of principal or interest as required
hereunder.
18.2 Rights and Remedies Upon an Event of Default.
18.2.1 Cancellation of Commitments. Upon the
occurrence of an Event of Default described in Section 18.1.10,
the Commitments shall be deemed canceled without presentment,
demand or notice of any kind. Upon any other Event of Default,
and at any time thereafter (unless such Event of Default has been<PAGE>
<PAGE>
waived by Lender or Lender has accepted a tendered complete cure
thereof), Lender may cancel the Commitments. Such cancellation
may be without demand or notice of any kind, which Borrower
expressly waives.
18.2.2 Acceleration. Upon the occurrence of an
Event of Default described in Section 18.1.10, all of the
outstanding Loan Obligations shall automatically become
immediately due and payable. Upon any other Event of Default,
and at any time thereafter, Lender may declare all of the
outstanding Loan Obligations immediately due and payable. Such
acceleration in either case may be without presentment, demand or
notice of any kind, which Borrower expressly waives.
18.2.3 Right of Set-off. Upon the occurrence of
any Event of Default and at any time and from time to time
thereafter, Lender is hereby authorized, without notice to
Borrower (any such notice being expressly waived by Borrower), to
set off and apply against the Loan Obligations any and all
deposits (general or special, time or demand, provisional or
final) at any time held, or any other Indebtedness at any time
owing by Lender to or for the credit or the account of Borrower,
irrespective of whether or not Lender has made any demand under
the Loan Documents and although such Loan Obligations may be
unmatured. The rights of Lender under this Section are in
addition to other rights and remedies (including, without
limitation, other rights of set-off) which Lender may otherwise
have.
18.2.4 Entry Upon Premises and Access to
Information. Upon the occurrence of any Event of Default and
acceleration of the Loan Obligations as provided herein, and at
any time and from time to time thereafter, Lender may (i) enter
any premises owned or operated by Borrower, and (ii) take
possession of, and make copies and abstracts of, Borrower's
original books and records, obtain access to Borrower's data
processing equipment, computer hardware and software relating to
the Loan Obligations, subject to any proprietary rights of third
Persons, use all of the foregoing and the information contained
therein in any manner Lender deems appropriate in connection with
the exercise of Lender's rights.
18.2.5 Miscellaneous. Upon the occurrence of an
Event of Default and at any time thereafter, Lender may exercise
any other rights and remedies available to Lender under the Loan
Documents or otherwise available to Lender at law or in equity.
<PAGE>
<PAGE>
18.3 Application of Funds. Any funds received by
Lender with respect to the Loan Obligations after acceleration of
the Loan Obligations as provided herein shall be applied as
follows: (i) first, to reimburse Lender for any amounts due to
Lender under Section 19.7; (ii) second, to reimburse to Lender
all unreimbursed costs and expenses paid or incurred by Lender
that are payable or reimbursable by Borrower hereunder;
(iii) third, to reimburse to Lender all unreimbursed costs and
expenses paid or incurred by Lender (including costs and expenses
incurred by Lender as Lender that are not reimbursable as
provided in the preceding clause) that are payable or
reimbursable by Borrower hereunder; (iv) fourth, to payment of
accrued and unpaid fees due under the Loan Documents and all
other amounts due under the Loan Documents (other than the
Revolving Loan and interest accrued thereon); (v) fifth, to
payment of interest accrued on the Revolving Loan; (vi) sixth, to
payment of the Revolving Loan; and (vii) seventh, to payment of
the other Loan Obligations. Any amounts remaining after the
application of funds and proceeds as provided in this Section
shall be paid to Borrower, or to such other Persons as are
legally entitled thereto.
19. General.
19.1 Lender's Right to Cure. Lender may from time to
time, in its absolute discretion, for Borrower's account and at
Borrower's expense, pay any amount or do any act required of
Borrower under the Loan Documents or requested by Lender to
preserve, protect, maintain or enforce the Loan Obligations and
which Borrower fails to pay or do, including payment of any
judgment against Borrower, insurance premium, Taxes or
assessments, warehouse charge, finishing or processing charge,
landlord's claim, and any other Security Interest. All payments
that Lender makes pursuant to this Section and all out-of-pocket
costs and expenses that Lender pays or incurs in connection with
any action taken by them hereunder shall be a part of the Loan
Obligations. Any payment made or other action taken by Lender
pursuant to this Section shall be without prejudice to any right
to assert an Event of Default hereunder and to pursue Lender's
other rights and remedies with respect thereto.
19.2 Rights Not Exclusive. Every right granted to
Lender hereunder or under any other Revolving Loan Document or
allowed to them at law or in equity shall be deemed cumulative
and may be exercised from time to time.
19.3 Survival of Agreements. All covenants and
agreements made herein and in the other Loan Documents shall
survive the execution and delivery of this Agreement, the
Revolving Note and other Loan Documents and the making of every<PAGE>
<PAGE>
Revolving Advance. All agreements, obligations and liabilities
of Borrower under the Loan Documents concerning the payment of
money to Lender, including Borrower's obligations under
Sections 19.6 and 19.7, but excluding the obligation to repay the
Revolving Loan and interest accrued thereon, shall survive the
repayment in full of the Revolving Loan and interest accrued
thereon, the return of the Revolving Note to Borrower, and the
termination or cancellation of the Commitments.
19.4 Sale of Participations. Lender may sell
participations to one or more banks or other entities in all or
a portion of its rights and obligations under this Agreement
provided that the terms of sale satisfy the following
requirements:
19.4.1 Lender's obligations under this Agreement
shall remain unchanged.
19.4.2 Lender shall remain solely responsible to
Borrower for the performance of such obligations.
19.4.3 Lender shall remain the holder of the
Revolving Note.
19.4.4 Borrower and Lender shall continue to deal
solely and directly with each other in connection with Lender's
rights and obligations under this Agreement and with regard to
Revolving Advances and payments to be made under this Agreement
and the Revolving Note. Participation agreements between Lender
and its participants may, however, provide that Lender will
obtain the approval of such participant prior to Lender agreeing
to any amendment or waiver of any provisions of this Agreement
which would (i) extend the maturity of the Revolving Note,
(ii) reduce the interest rate on the Revolving Loan, or
(iii) increase the Commitment.
The sale of any such participations which require Borrower to
file a registration statement with the SEC or under the
securities laws of any state shall not be permitted.
19.5 Assignments to Affiliates. Lender may assign all
or any portion of its interest in the Revolving Loan to its
Affiliates without the acceptance or consent of Borrower, and may
assign all or any portion of its interest in the Revolving Loan
to the Federal Reserve Bank without acceptance or approval of
Borrower.
19.6 Payment of Expenses. Borrower agrees to pay or
reimburse to Lender all of Lender's reasonable out-of-pocket
costs incurred in connection with Lender's due diligence review<PAGE>
<PAGE>
before execution of the Loan Documents; the negotiation and
preparation of the commitment letters and the Loan Documents; the
interpretation of any of the Loan Documents; the enforcement of
Lender's rights and remedies under the Loan Documents after a
Default or Event of Default; any amendment of or supplementation
to any of the Loan Documents; and any waiver, consent or
forbearance with respect to any Default or Event of Default.
Borrower further agrees to pay or reimburse to Lender all of
Lender's reasonable out-of-pocket costs incurred in connection
with the enforcement of Lender's rights and remedies under the
Loan Documents after a Default or Event of Default. Out-of-
pocket costs may include but are not limited to the following, to
the extent they are actually paid or incurred; the cost of
searches for Security Interests existing against Borrower;
recording and filing fees; fees for all required appraisals;
environmental consultant fees; litigation costs; and all
attorneys' and paralegals' expenses and reasonable fees.
Attorneys' and paralegals' expenses may include but are not
limited to filing charges; telephone, data transmission,
facsimile and other communication costs; courier and other
delivery charges; and photocopying charges. Litigation costs may
include but are not limited to filing fees, deposition costs,
expert witness fees, expenses of service of process, and other
such costs paid or incurred in any administrative, arbitration,
or court proceedings involving Lender and Borrower, including
proceedings under the Federal Bankruptcy Code. All costs which
Borrower is obligated to pay or reimburse to Lender are Loan
Obligations payable to Lender and are payable on Lender's demand.
19.7 General Indemnity.
19.7.1 Borrower shall indemnify and hold harmless
Lender and its directors, officers, employees, agents, and
representatives (the "Indemnified Parties") for, from and
against, and promptly reimburse the Indemnified Parties for, any
and all claims, damages, liabilities, losses, costs and expenses
(including reasonable attorneys' fees and expenses and amounts
paid in settlement) incurred, paid or sustained by the
Indemnified Parties in connection with, arising out of, based
upon or otherwise involving or resulting from any threatened,
pending or completed action, suit, investigation or other
proceeding by, against or otherwise involving the Indemnified
Parties in any way dealing with, relating to or otherwise
involving this Agreement, any of the other Loan Documents, or any
transaction contemplated hereby or thereby, except to the extent
that they arise from the gross negligence, bad faith or willful
misconduct of any of the Indemnified Parties. Borrower shall
indemnify and hold harmless the Indemnified Parties for, from and
against, and promptly reimburse the Indemnified Parties for, any
and all claims, damages, liabilities, losses, costs and expenses<PAGE>
<PAGE>
(including reasonable attorneys' and consultant fees and
expenses, investigation and laboratory fees, removal, remedial,
response and corrective action costs, and amounts paid in
settlement) incurred, paid or sustained by the Indemnified
Parties as a result of the manufacture, storage, transportation,
release or disposal of any Hazardous Material on, from, over or
affecting any of the assets, properties, or operations of a
Covered Person or any predecessor in interest, directly or
indirectly, except to the extent that they arise from the gross
negligence, bad faith or willful misconduct of any of the
Indemnified Parties.
19.7.2 The obligations of Borrower under this
Section 19.7 shall survive the termination or cancellation of the
Commitments, and the payment and satisfaction of all of the Loan
Obligations.
19.7.3 To the extent that any of the indemnities
required from Borrower under this Section are unenforceable
because they violate any Law or public policy, Borrower shall pay
the maximum amount which it is permitted to pay under applicable
Law.
19.8 Revolving Loan Records. The date and amount of
all Revolving Advances and payments of amounts due from Borrower
under the Loan Documents will be recorded in the Lender's records
and the records that Lender normally maintains for such types of
transactions. The failure to record, or any error in recording,
any of the foregoing shall not, however, affect the obligation of
Borrower to repay the Revolving Loan and other amounts payable
under the Loan Documents. Borrower shall have the burden of
proving that Lender's records are not correct. Borrower agrees
that Lender's books and records showing the Loan Obligations and
the transactions pursuant to this Agreement shall be admissible
in any action or proceeding arising therefrom, and shall
constitute prima facie proof thereof, irrespective of whether any
Revolving Loan Obligation is also evidenced by a promissory note
or other instrument. Lender will provide to Borrower a monthly
statement of Revolving Advances, payments, and other transactions
pursuant to this Agreement. Such statements shall be deemed
correct, accurate and binding on Borrower and an account stated
(except for reversals and reapplications of payments as provided
in Section 8.4 and corrections of errors discovered by Lender),
unless Borrower notifies Lender in writing to the contrary within
30 days after such statement is rendered. In the event a timely
written notice of objections is given by Borrower, only the items
to which exception is expressly made will be considered to be
disputed by Borrower.
<PAGE>
<PAGE>
19.9 Other Security and Guaranties. Lender may,
without notice or demand and without affecting Borrower's
obligations hereunder, from time to time: (a) take from any
Person and hold collateral for the payment of all or any part of
the Loan Obligations and exchange, enforce and release such
collateral or any part thereof; and (b) accept and hold any
endorsement or guaranty of payment of all or any part of the Loan
Obligations and release or substitute any such endorser or
guarantor, or any Person who has given any Security Interest in
any other collateral as security for the payment of all or any
part of the Loan Obligations, or any other Person in any way
obligated to pay all or any part of the Loan Obligations.
20. Miscellaneous.
20.1 Notices. All notices, consents, requests and
demands to or upon the respective parties hereto shall be in
writing, and shall be deemed to have been given or made when
delivered in person to those Persons listed on the signature
pages hereof or two days after being deposited in the United
States mail, postage prepaid, or, in the case of telegraphic
notice, or the overnight courier services, when delivered to the
telegraph company or overnight courier service, or in the case of
telex or telecopy notice, when sent, verification received, in
each case addressed as set forth on the signature pages hereof,
or such other address as either party may designate by notice to
the other in accordance with the terms of this paragraph. No
notice given to or demand made on Borrower by any Lender in any
instance shall entitle Borrower to notice or demand in any other
instance.
20.2 Amendments, Waivers and Consents. Unless
otherwise provided herein, no amendment to or waiver of any
provision of this Agreement, or of any of the other Loan
Documents, nor consent to any departure by Borrower herefrom or
therefrom, shall be effective unless it is in writing and signed
by authorized officers of Borrower and Lender. No notice to or
demand on Borrower in any case shall entitle Borrower to any
other or further notice or demand in similar or other
circumstances. No failure by any Lender to exercise, and no
delay by any Lender in exercising, any right, remedy, power or
privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by Lender of any right, remedy,
power or privilege hereunder preclude any other exercise thereof,
or the exercise of any other right, remedy, power or privilege.
Each and every right granted to Lender hereunder or under any
other Loan Document or other document delivered hereunder or in
connection with this Agreement or allowed to them at law or in
equity shall be deemed cumulative and may be exercised from time
to time.<PAGE>
<PAGE>
20.3 Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and
all future holders of the Revolving Note and their respective
successors and assigns, except that Borrower may not assign,
delegate or transfer any of its rights or obligations under this
Agreement without the prior written consent of Lender. With
respect to Borrower's successors and assigns, such successors and
assigns shall include any receiver, trustee or debtor-in-
possession of or for Borrower.
20.4 Severability. Any provision of this Agreement
which is prohibited, unenforceable or not authorized in any
jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or lack of
authorization without invalidating the remaining provisions
hereof or affecting the validity, enforceability or legality of
such provision in any other jurisdiction unless the
ineffectiveness of such provision would result in such a material
change as to cause completion of the transactions contemplated
hereby to be unreasonable.
20.5 Counterparts. This Agreement may be executed by
the parties hereto on any number of separate counterparts, and
all such counterparts taken together shall constitute one and the
same instrument. It shall not be necessary in making proof of
this Agreement to produce or account for more than one
counterpart signed by the party to be charged.
20.6 Governing Law; No Third Party Rights. This
Agreement, the other Loan Documents and the Revolving Note and
the rights and obligations of the parties hereunder and
thereunder shall be governed by and construed and interpreted in
accordance with the internal laws of the State of Missouri
applicable to contracts made and to be performed wholly within
such state, without regard to choice or conflict of laws
provisions. This Agreement is solely for the benefit of the
parties hereto and their respective successors and assigns, and
no other Person shall have any right, benefit, priority or
interest under, or because of the existence of, this Agreement.
20.7 Counterpart Facsimile Execution. For purposes of
this Agreement, a document (or signature page thereto) signed and
transmitted by facsimile machine or telecopier is to be treated
as an original document. The signature of any Person thereon,
for purposes hereof, is to be considered as an original
signature, and the document transmitted is to be considered to
have the same binding effect as an original signature on an
original document. At the request of any party hereto, any
facsimile or telecopy document is to be re-executed in original
form by the Persons who executed the facsimile or telecopy<PAGE>
<PAGE>
document. No party hereto may raise the use of a facsimile
machine or telecopier or the fact that any signature was
transmitted through the use of a facsimile or telecopier machine
as a defense to the enforcement of this Agreement or any
amendment or other document executed in compliance with this
Section.
20.8 No Other Agreements. There are no other
agreements between Lender and Borrower, oral or written,
concerning the subject matter of the Loan Documents, and all
prior agreements concerning the same subject matter, including
the Commitment Letter, are merged into the Loan Documents and
thereby extinguished.
20.9 Incorporation By Reference. All of the terms of
the other Loan Documents are incorporated in and made a part of
this Agreement by this reference.
20.10 Negotiated Transaction. Borrower and Lender
represent one to the other that in the negotiation and drafting
of this Agreement they have been represented by and have relied
upon the advice of counsel of their choice. Borrower and Lender
affirm that their counsel have both had substantial roles in the
drafting and negotiation of this Agreement and, therefore, this
Agreement shall be deemed drafted by both Borrower and Lender,
and the rule of construction to the effect that any ambiguities
are to be resolved against the drafter shall not be employed in
the interpretation of this Agreement.
21. Choice of Forum. SUBJECT ONLY TO THE EXCEPTION IN THE
NEXT SENTENCE, BORROWER HEREBY AGREES TO THE EXCLUSIVE
JURISDICTION OF THE FEDERAL COURTS OF THE EASTERN DISTRICT OF
MISSOURI, AND THE STATE COURTS OF MISSOURI LOCATED IN ST. LOUIS
COUNTY OR THE CITY OF ST. LOUIS, MISSOURI, OTHER THAN IN ANY
PROCEEDING INITIATED BY A THIRD PARTY, AND WAIVES ANY OBJECTION
BASED ON VENUE OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION
INSTITUTED THEREIN, AND AGREES THAT ANY DISPUTE CONCERNING THE
RELATIONSHIP BETWEEN LENDER AND BORROWER OR THE CONDUCT OF ANY OF
THEM IN CONNECTION WITH THIS AGREEMENT, ANY OTHER LOAN DOCUMENT
OR OTHERWISE MAY BE HEARD IN THE COURTS DESCRIBED ABOVE.
22. Service of Process. BORROWER HEREBY WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT
REQUESTED) DIRECTED TO BORROWER AT ITS ADDRESS SET FORTH ON THE
SIGNATURE PAGES HEREOF, AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO
DEPOSITED IN THE U.S. MAILS CERTIFIED OR REGISTERED. NOTHING IN
THIS SECTION SHALL AFFECT THE RIGHT OF LENDER TO SERVE LEGAL
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.<PAGE>
<PAGE>
23. Jury Trial. BORROWER AND LENDER HEREBY WAIVE ANY RIGHT
TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
(1) ARISING UNDER THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR
(2) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM IN RESPECT OF THIS
AGREEMENT OR ANY OTHER Loan DOCUMENT, OR THE TRANSACTIONS RELATED
HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE.
BORROWER AND LENDER AGREE AND CONSENT THAT ANY SUCH CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY AND THAT ANY OF THEM MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF
THEIR RIGHT TO TRIAL BY JURY.
24. Statutory Notice. The following notice is given pursuant
to Section 432.045 of the Missouri Revised Statutes; nothing
contained in such notice shall be deemed to limit or modify the
terms of the Loan Documents:
ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND
CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT ARE NOT
ENFORCEABLE. TO PROTECT YOU (BORROWER) AND US (CREDITOR)
FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS
WE REACH COVERING SUCH MATTERS ARE CONTAINED IN THIS
WRITING, WHICH IS THE COMPLETE AND EXCLUSIVE STATEMENT OF
THE AGREEMENT BETWEEN US, EXCEPT AS WE MAY LATER AGREE IN
WRITING TO MODIFY IT.
IN WITNESS WHEREOF, the parties have caused this
Agreement to be executed by appropriate duly authorized officers
as of the date first above written.
INSITUFORM TECHNOLOGIES, INC. NATIONSBANK, N.A.
by its Senior Vice President by its Vice President
------------------------ --------------------------
s/William A. Martin s/Emil A. Krueger
- ------------------------------- --------------------------------
William A. Martin Emil A. Krueger
--------------------- ----------------------
Notice Address: Notice Address:
702 Spirit 40 Park Drive 800 Market Street
- ------------------------------ --------------------------------
Chesterfield, MO 63005 St. Louis, MO 63101
- ------------------------------ --------------------------------
Attn: William A. Martin Attn: Emil Krueger
<PAGE>
<PAGE>
FAX # 314-530-8703 FAX # 314-466-7783
------------------------- ---------------------------
TEL # 314-530-8034 TEL # 314-466-5211
------------------------- ---------------------------
<PAGE>
<PAGE>
EXHIBIT 2.1
GLOSSARY AND INDEX OF DEFINED TERMS
Adjusted EBITDA is defined in Section 17.1.
Adjusted LIBO Rate is defined in Section 4.4.
Affected Principal Amount is defined in Section 4.12.
Affiliate - with respect to any Person, (a) any other Person who
is a partner, director or executive officer of such Person; and
(b) any other Person which, directly or indirectly, is in control
of, is controlled by or is under common control with such Person,
and any partner, director or executive officer of such other
Person. For purposes of this Agreement, control of a Person by
another Person shall be deemed to exist if such other Person has
the power, directly or indirectly, either to (i) vote twenty
percent (20%) or more of the securities having the power to vote
in an election of directors of such Person, or (ii) direct the
management of such Person, whether by contract or otherwise and
whether alone or in combination with others.
Agreement is defined on Page 1.
Borrower is defined on Page 1.
Borrowing Officer - each officer of Borrower who is authorized to
submit a request for an Revolving Advance or the issuance of a
Letter of Credit.
Business Day - a day other than a Saturday, Sunday or other day
on which commercial banks are authorized or required to close
under the laws of either the United States or the States of
Missouri.
Capital Expenditure - an expenditure for an asset that must be
depreciated or amortized under GAAP, for goodwill, or for any
asset that under GAAP must be treated as a capital asset,
including payments under Capital Leases. An expenditure for
purposes of this definition includes any deferred or seller
financed portion of the purchase price of an asset and the
original capitalized amount of a Capital Lease.
Capital Lease - any lease that has been or should be capitalized
under GAAP.
<PAGE>
<PAGE>
Charter Documents - the articles or certificate of incorporation
and bylaws of a corporation; the certificate of limited
partnership and partnership agreement of a limited partnership;
the partnership agreement of a general partnership; the articles
of organization of a limited liability company; or the indenture
of a trust, or comparable documents for other entities.
Cobra - The Consolidated Omnibus Budget Reconciliation Act of
1986.
Code - the Internal Revenue Code of 1986 and all regulations
thereunder of the IRS.
Commitment Fee is defined in Section 5.
Commitment Fee Rate is defined in Section 5, 5.
Commitment Letter - That certain letter dated February 11, 1997
between Borrower and Lender.
Commitments - the Revolving Commitment and the Letter of Credit
Commitment.
Commonly Controlled Entity - a Person which is under common
control with another Person within the meaning of Section 414(b)
or (c) of the Code.
Consolidated Adjusted Net Worth is defined in Section 16.1.
Contract - any contract, note, bond, indenture, deed, mortgage,
deed of trust, security agreement, pledge, hypothecation
agreement, assignment, or other agreement or undertaking, or any
security.
Conversion Date is defined in Section 4.6.
Covered Person is defined in Section 2.3.
Current Assets is defined in Section 17.1.
Current Liabilities is defined in Section 17.1.
Default - any of the events listed in Section 18.1 of this
Agreement, without giving effect to any requirement for the
giving of notice, for the lapse of time, or both, or for the
happening of any other condition, event or act.
Disclosure Schedule - the Disclosure Schedule of Borrower
attached hereto as Exhibit 13.
<PAGE>
DOL - the United States Department of Labor.
Dollars - and the sign "$", lawful money of the United States.
EBITDA is defined in Section 17.1.
Effective Date - the date when this Agreement is effective as
provided in Section 1.
Environmental Law - the Resource Conservation and Recovery Act,
the Comprehensive Environmental Response, Compensation and
Liability Act, the Clean Water Act, the Clean Air Act, or any
other Law pertaining to environmental quality or remediation of
Hazardous Material.
ERISA Affiliate - as to any Person, any trade or business
(irrespective of whether incorporated) which is a member of a
group of which such Person is a member and thereafter treated as
a single employer under Section 414(b), (c), (m) or (o) of the
Code or applicable Treasury Regulations.
ERISA - the Employee Retirement Income Security Act of 1974.
Event of Default - any of the events listed in Section 18.1 of
this Agreement as to which any requirement for the giving of
notice, for the lapse of time, or both, or for the happening of
any further condition, event or act has been satisfied.
Execution Date - the date when this Agreement has been executed.
Exempted Subsidiaries - Midsouth Partners and Insituform Linings
Plc.
Existing Default - a Default which has occurred and is
continuing, or an Event of Default which has occurred, and which
has not been waived in writing by Lender.
Final Payment - repayment in full of the Revolving Loans and all
unpaid interest accrued thereon accompanied by the cancellation
or termination of all of the Commitments and expiration of all
outstanding Letters of Credit for which Borrower has not provided
cash collateral satisfactory to Lender as provided herein to
cover the Letter of Credit Exposure with respect thereto.
Financial Statements - the most recent of the Initial Financial
Statements and the financial statements of Borrower that are
furnished to Lender as required in Section 15.12 of this
Agreement; provided, however, that for purposes of calculating
any amount or financial ratio hereunder as of a date or for a
period not entirely covered by the most recent and prior such<PAGE>
<PAGE>
financial statements furnished to Lender, the term "Financial
Statements" shall be deemed to include the financial statements
of Borrower that cover such periods as have been filed by
Borrower with the Securities and Exchange Commission.
Fixed Charges is defined in Section 17.1.
FRB - the Board of Governors of the Federal Reserve System and
any successor thereto or to the functions thereof.
Funded Debt is defined in Section 17.1.
GAAP - those generally accepted accounting principles set forth
in Statements of the Financial Accounting Standards Board and in
Opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants or which have other
substantial authoritative support in the United States and are
applicable in the circumstances, as applied on a consistent
basis.
Governmental Authority - the federal government of the United
States; the government of any foreign country that is recognized
by the United States or is a member of the United Nations; any
state of the United States; any local government or municipality
within the territory or under the jurisdiction of any of the
foregoing; any department, agency, division, or instrumentality
of any of the foregoing; and any court, arbitrator, or board of
arbitrators whose orders or judgements are enforceable by or
within the territory of any of the foregoing.
Guaranty - the guaranty required under Section 10 to be executed
and delivered to Lender.
Guarantor - a Subsidiary of Borrower that has executed and
delivered to Lender either the Guaranty or a joinder to the
Guaranty as required under Section 10.
Hazardous Material - any hazardous, radioactive, toxic, solid or
special waste, material, substance or constituent thereof, or any
other such substance (as defined under any applicable law or
regulation), including Asbestos or asbestos containing material.
"Hazardous Material" does not include materials or products
containing hazardous constituents which are not considered to be
waste under the applicable Environmental Law or which are
considered to be waste but are transported, handled or disposed
of in accordance with the applicable Environmental Law, or
asbestos or asbestos containing material which is not friable.
<PAGE>
<PAGE>
Indebtedness - as to any Person at any particular date, any
contractual obligation enforceable against such Person (i) to
repay borrowed money; (ii) to pay the deferred purchase price of
property or services; (iii) to make payments or reimbursements
with respect to bank acceptances or to a factor; (iv) to make
payments or reimbursements with respect to letters of credit
whether or not there have been drawings thereunder; (v) with
respect to which there is any Security Interest in any property
of such Person; (vi) to make any payment or contribution to a
Multi-Employer Plan; (vii) that is evidenced by a note, bond,
debenture or similar instrument; (viii) under any conditional
sale agreement or title retention agreement; or (ix) to pay
interest or fees with respect to any of the foregoing.
"Indebtedness" also includes any other Obligation that either
(i) is non-contingent and liquidated in amount or (ii) should
under GAAP be included in liabilities and not just as a footnote
on a balance sheet.
Indemnified Parties is defined in Section 19.7.1.
Indirect Obligation - as to any Person, (a) any guaranty by such
Person of any Obligation of another Person; (b) any Security
Interest in any property of such Person that secures any
Obligation of another Person, (c) any enforceable contractual
requirement that such Person (i) purchase an Obligation of
another Person or any property that is security for such
Obligation, (ii) advance or contribute funds to another Person
for the payment of an Obligation of such other Person or to
maintain the working capital, net worth or solvency of such other
Person as required in any documents evidencing an Obligation of
such other Person, (iii) purchase property, securities or
services from another Person for the purpose of assuring the
beneficiary of any Obligation of such other Person that such
other Person has the ability to timely pay or discharge such
Obligation, (iv) grant a Security Interest in any property of
such Person to secure any Obligation of another Person, or
(v) otherwise assure or hold harmless the beneficiary of any
Obligation of another Person against loss in respect thereof; and
(d) any other contractual requirement enforceable against such
Person that has the same substantive effect as any of the
foregoing. The term "Indirect Obligation" does not, however,
include the indorsement by a Person of instruments for deposit or
collection in the ordinary course of business or the liability of
a general partner of a partnership for Obligations of such
partnership. The amount of any Indirect Obligation of a Person
shall be deemed to be the stated or determinable amount of the
Obligation in respect of which such Indirect Obligation is made
or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such
Person in good faith.
<PAGE>
Initial Financial Statements - the financial statements of
Borrower referred to in Section 13.11.
Interest Period - the period during which a particular Adjusted
LIBO Rate applies to a LIBOR Tranche, as selected by Borrower as
provided in Section 4.2.
Interim Repayment is defined in Section 6.1.
IRS - the Internal Revenue Service.
Law - any statute, rule, regulation, order, judgment, award or
decree of any Governmental Authority.
Lender - NationsBank, N.A.
Lending Office - the office of Lender at 800 Market Street, St.
Louis, Missouri, 63101, or such other address as Lender may
designate from time to time by notice to Borrower in accordance
with the terms of Section 20.1.
Letter of Credit - a letter of credit issued by Lender pursuant
to the Letter of Credit Commitment.
Letter of Credit Commitment - the commitment of Lender to issue
letters of credit as provided in Section 3.2.
Letter of Credit Exposure - the undrawn amount of all outstanding
letters of credit issued by Lender for the account of Borrower or
any of its Subsidiaries under the Letter of Credit Commitment
plus all amounts drawn on such letters of credit and not yet
reimbursed to Lender by Borrower.
LIBO Rate is defined in Section 4.4.
LIBOR Increment - is defined in Section 4.5.
LIBOR Tranche - a Tranche on which interest accrues at the
Adjusted LIBO Rate.
Loan Documents - this Agreement, the Revolving Note, the Guaranty
and all other agreements, certificates, documents, instruments
and other writings executed in connection herewith.
Loan Obligations - all of Borrower's Indebtedness owing to Lender
under the Loan Documents, whether as principal, interest, fees or
otherwise, all reimbursement obligations of Borrower to Lender
with respect to the Letter of Credit Exposure, and all other
obligations and liabilities of Borrower to Lender under the Loan
Documents (in each case including all extensions, renewals,<PAGE>
<PAGE>
modifications, rearrangements, restructures, replacements and
refinancings of the foregoing, whether or not the same involve
modifications to interest rates or other payment terms), whether
now existing or hereafter created, absolute or contingent, direct
or indirect, joint or several, secured or unsecured, due or not
due, contractual or tortious, liquidated or unliquidated, arising
by operation of law or otherwise, including but not limited to
the obligation of Borrower to repay future advances by Lender
under the Loan Documents, whether or not made pursuant to
commitment and whether or not presently contemplated by Borrower
and Lender in the Loan Documents.
Maintenance Capital Expenditures is defined in Section 17.1.
Material Adverse Effect - with respect to any event or occurrence
of whatever nature (including any adverse determination in any
litigation, arbitration, investigation or proceeding), a material
adverse effect on the business, operations, revenues, financial
condition or property of the Borrower and its Subsidiaries taken
as a whole, without reference to any Restructuring Charges,or the
ability of the Borrower to timely pay or perform the Borrower's
Obligations generally, or the ability of Borrower to pay or
perform any of the Loan Obligations.
Material Agreement - as to any Person, any Contract to which such
Person is a party or by which such Person is bound which, if
violated or breached, would have a Material Adverse Effect.
Material Law - any Law whose violation by a Person would have a
Material Adverse Effect.
Material License - (i) as to any Person, any license, permit or
consent from a Governmental Authority or other Person and any
registration and filing with a Governmental Authority or other
Person which if not obtained, held or made would have a Material
Adverse Effect, and (ii) as to any Person who is a party to this
Agreement or any of the other Loan Documents, any license, permit
or consent from a Governmental Authority or other Person and any
registration or filing with a Governmental Authority or other
Person that is necessary for the execution or performance by such
party, or the validity or enforceability against such party, of
this Agreement or such other Loan Document.
Material Obligation - as to any Person, an Obligation of such
Person which if not fully and timely paid or performed would have
a Material Adverse Effect.
Material Proceeding - any litigation, investigation or other
proceeding by or before any Governmental Authority (i) which
involves any of the Loan Documents or any of the transactions<PAGE>
<PAGE>
contemplated thereby, or involves a Covered Person or a Guarantor
as a party or any property of Covered Person or a Guarantor, and
is reasonably likely to have a Material Adverse Effect, or
(ii) in which there has been issued an injunction, writ,
temporary restraining order or any other order of any nature
which purports to restrain or enjoin the making of any Revolving
Advance, the consummation of any other transaction contemplated
by the Loan Documents, or the enforceability of any provision of
any of the Loan Documents.
Maturity - as to any Indebtedness, the time when it becomes
payable in full, whether at a regularly scheduled time, because
of acceleration or otherwise.
Maturity Date - the date specified in Section 6.1.
Multi-employer Plan - a Pension Benefit Plan which is a multi-
employer plan as defined in Section 4001(a)(3) of ERISA.
Note Purchase Agreement - the Note Purchase Agreement dated
February 14, 1997, as amended, among Borrower and other parties
signatory thereto under which Borrower issued certain 7.88%
Senior Notes, Series A, Due February 14, 2007, of $110,000,000
aggregate original principal amount.
Notice of Conversion/Continuation is defined in Section 4.6.
Obligation - as to any Person, any Indebtedness of such Person,
any guaranty by such Person of any Indebtedness of another
Person, and any contractual requirement enforceable against such
Person that does not constitute Indebtedness of such Person or a
guaranty by such Person but which would involve the expenditure
of money by such Person if complied with or enforced.
PBGC - the Pension Benefit Guaranty Corporation.
Pension Benefit Plan - any pension or profit-sharing plan which
is covered by Title I of ERISA and all other benefit plans and in
respect of which a Person or a Commonly Controlled Entity of such
Person as an "employer" as defined in Section 3(5) of ERISA.
Permitted Acquisition is defined in Section 16.4.
Permitted Indebtedness - Indebtedness that is permitted under
Section 16.1.
Person - any individual, partnership, corporation, trust,
unincorporated association, joint venture, limited liability
company, limited liability partnership, Governmental Authority,
or other organization in any form that has the legal capacity to<PAGE>
<PAGE>
sue or be sued. If the context so implies or requires, the term
Person includes Borrower.
Prime Rate is defined in Section 4.3.
Prime Rate Tranche - a Tranche on which interest accrues at the
Prime Rate.
Priority Debt is defined in Section 16.1.
Regulation D, Regulation G, Regulation U, Regulation T, and
Regulation X" - respectively, Regulation D issued by the FRB,
Regulation G issued by the FRB, Regulation U issued by the FRB,
Regulation T issued by the FRB and Regulation X issued by the
FRB.
Remaining Interest Period is defined in Section 4.12.
Reportable Event - a reportable event as defined in Title IV of
ERISA or the regulations thereunder.
Responsible Officer - as to any Person that is not an individual,
partnership or trust, the Chairman of the Board of Directors, the
President, the chief executive officer, the chief operating
officer, the chief financial officer, the Treasurer, any
Assistant to the Treasurer, or any Vice President in charge of a
principal business unit; as to any partnership, any individual
who is a general partner thereof or any individual who has
general management or administrative authority over all or any
principal unit of the partnership's business; and as to any
trust, any individual who is a trustee.
Restricted Indirect Obligations is defined in Section 17.1.
Restricted Payment is defined in Section 16.6.
Restructuring Charges - any and all charges and provisions
related to the relocation of Borrower's corporate headquarters,
engineering and development center from Memphis to metropolitan
St. Louis, including severance costs.
Revolving Advance - an advance to Borrower under the Revolving
Commitment.
Revolving Advance Date is defined in Section 9.1.
Revolving Commitment - the commitment of Lender as stated in
Section 3.1.1 to make Revolving Advances.
<PAGE>
Revolving Loan - the from time to time outstanding principal
balance of all Revolving Advances.
Security Interest - as to any item of tangible or intangible
property, any interest therein or right with respect thereto that
secures an Obligation or Indirect Obligation, whether such
interest or right is created under a Contract, or by operation of
law or statute (such as but not limited to a statutory lien for
work or materials), or as a result of a judgment, or which arises
under any form of preferential or title retention agreement or
arrangement (including a conditional sale agreement or a lease)
that has substantially the same economic effect as any of the
foregoing.
Senior Notes - the 7.88% Senior Notes, Series A, Due February 14,
2007 of $110,000,000 aggregate original principal amount that
were issued by Borrower pursuant to the Note Purchase Agreement.
Subsidiary - as to any Person, a corporation with respect to
which more than 50% of the outstanding shares of stock of each
class having ordinary voting power (other than stock having such
power only by reason of the happening of a contingency) is at the
time owned by such Person or by one or more Subsidiaries of such
Person, other than a corporation which has no significant assets
and is not actively engaged in a trade or business.
Tangible Assets is defined in Section 17.1.
Tangible Net Worth is defined in Section 17.1.
Tax - as to any Person, any tax, assessment, fee, or other charge
levied by a Governmental Authority on the income or property of
such Person, including any interest or penalties thereon, and
which is payable by such Person.
Total Assets means the total assets of the Borrower and its
Subsidiaries, as shown on the most recent annual Financial
Statements.
Total Capitalization is defined in Section 17.1.
Tranche - any portion of a Revolving Loan, or an entire Revolving
Loan if applicable, on which interest accrues at a particular
rate as selected by Borrower as provided herein.
UCC - the Uniform Commercial Code as in effect from time to time
in the State of Missouri or such other similar statute as in
effect from time to time in Missouri or any other appropriate
jurisdiction.
<PAGE>
<PAGE>
United States - when used in a geographical sense, all the states
of the United States of America and the District of Columbia; and
when used in a legal jurisdictional sense, the government of the
country that is the United States of America.
United States Assets means the identifiable United States assets
of the Borrower and its Subsidiaries, as shown on the most recent
annual Financial Statements.
Unused Revolving Commitment is defined in Section 5.
Welfare Benefit Plan - any plan described by Section 3(1) of
ERISA.
1996 Form 10-K means Borrower's Annual Report as Form 10-K for
the year ended December 31, 1996, as amended, filed with the
Securities and Exchange Commission.
1997 Form 10-Qs means Borrower's Quarterly Reports on Form 10-Q
for, respectively, the three months ended March 31, 1997, and the
three months ended June 30, 1997, filed with the Securities and
Exchange Commission.
<PAGE>
<PAGE>
EXHIBIT 3.1.2
FORM OF REVOLVING NOTE
<PAGE>
<PAGE>
REVOLVING NOTE
$20,000,000.00 St. Louis, Missouri
August 20, 1997
For value received, Insituform Technologies, Inc.
("Borrower"), promises to pay to the order of the NationsBank,
N.A. ("Lender") the principal sum of $20,000,000.00 or such
lesser outstanding principal amount as has been advanced to
Borrower under the Loan Agreement effective August 20, 1997,
between Borrower and NationsBank, N.A. (as it may be amended,
restated, extended, renewed, replaced, or otherwise modified from
time to time, the "Loan Agreement"), and all unpaid interest
accrued thereon, on September 1, 2000. Borrower further promises
to pay, on such dates as are provided in the Loan Agreement,
interest from the date hereof accrued on the from time to time
outstanding principal balance at the per annum rate or rates as
provided in the Loan Agreement.
All capitalized terms used and not otherwise defined
herein have the meanings given them in the Loan Agreement.
Commencing on the Maturity Date and, if sooner, upon the
occurrence of an Event of Default, all outstanding principal and,
to the extent permitted by law, unpaid interest accrued under
this Note and all other amounts owing hereunder shall bear
interest, payable on demand, at the Default Rate.
All interest payable under this Note shall be computed on
the basis of a year deemed to consist of 360 days and paid for
the actual number of days elapsed and both principal and interest
are payable in Dollars to Lender at the Lending Office.
Payment of this Note is guarantied by the Guarantors as
provided in the Loan Agreement and the Guaranty.
Borrower may prepay the principal amount of this Note to
the extent and upon the conditions provided in the Loan
Agreement.
The date and amount of all disbursements and receipts of
principal and interest with respect to this Note will be recorded
in the records that Lender normally maintains for instruments and
agreements similar to this Note and the other Loan Documents.
The failure to record, or any error in recording, any of the
foregoing does not, however, affect the obligation of Borrower to
pay principal, interest and other amounts as required under the
Loan Documents. Borrower has the burden of proving that Lender's<PAGE>
<PAGE>
records are not correct. Borrower agrees that Lender's books and
records showing disbursements and receipts are admissible in any
action or proceeding arising therefrom, and constitute prima
facie proof thereof. Such records are deemed accurate and
binding on Borrower and an account stated, except as expressly
provided otherwise in the Loan Agreement.
The Loan Agreement contains provisions regarding the
acceleration of the maturity hereof upon the occurrence of any
Event of Default, and such provisions are incorporated herein by
this reference.
If any payment required under this Note or the Loan
Agreement is not made when due, or upon any other Event of
Default, Borrower will pay all costs of collection of this Note,
including but not limited to court costs and reasonable attorneys
fees and actual expenses of such attorneys, whether or not
litigation is commenced, including representation of Lender in
connection with any bankruptcy or insolvency proceeding of
Borrower.
Demand for payment, presentment, protest, notice of
protest and nonpayment, notice of dishonor, and all other notices
and demands under this Note and any and all lack of diligence in
the enforcement of this Note are hereby waived by maker,
Guarantors and all others who become parties to this Note and the
same hereby assent to each and every extension or postponement of
the time of payment, at or after demand, or other indulgence, and
hereby waive any and all notice thereof. Every such party by
becoming a party to this Note further waives any and all defenses
which such party may have based on suretyship or impairment of
collateral with respect to this Note.
No amendment, modification or waiver of any provision of
this Note, or consent to any departure by Borrower herefrom, will
be effective unless the same is in writing signed by an
authorized officer of Lender, and then only in the specific
instance and for the specific purpose for which given. No
failure on the part of Lender to exercise, and no delay in
exercising, any right under this Note operates as a waiver
thereof, and no single or partial exercise by Lender of any right
under this Note precludes any other or further exercise thereof,
or the exercise of any other right. Each and every right granted
to Lender under this Note or allowed to it at law or in equity is
deemed cumulative and such remedies may be exercised from time to
time concurrently or consecutively at Lender's option.
All notices required to be given or which may be given in
connection with this Note are to be given in the manner required
for notices under the Loan Agreement.<PAGE>
<PAGE>
This Note is to be governed by and construed and
interpreted in accordance with the internal laws of the State of
Missouri applicable to contracts made and to be performed wholly
within such state, without regard to choice or conflicts of law
principles.
INSITUFORM TECHNOLOGIES, INC.
by its
-----------------------------
<PAGE>
<PAGE>
EXHIBIT 10-A
FORM OF GUARANTY
<PAGE>
<PAGE>
UNLIMITED GUARANTY
This Unlimited Guaranty (this "Guaranty"), effective
August 20, 1997, (the "Effective Date") is given by each of the
undersigned entities (each a "Guarantor" and collectively the
"Guarantors"), to NATIONSBANK, N.A., a national banking association
("Beneficiary").
To induce, and in consideration of, beneficiary's execution
of the Loan Agreement and Beneficiary's Commitments, and for other
sufficient consideration, the receipt of which is hereby
acknowledged, the Guarantors and Beneficiary hereby agree as
follows:
1. General. Unless the context of this Guaranty
clearly requires otherwise, (i) references to the plural include
the singular and vice versa, (ii) references to any Person include
such Person's successors and assigns but, if applicable, only if
such successors and assigns are permitted by this Guaranty, (iii)
references to one gender include all genders, (iv) "including" is
not limiting, (v) "or" has the inclusive meaning represented by the
phrase "and/or", (vi) the words "hereof", "herein", "hereby",
"hereunder" and similar terms in this Guaranty refer to this
Guaranty as a whole, including its Exhibits, and not to any
particular provision of this Guaranty, (vii) the word "Section" or
"section" and "Page" or "page" refer to a section or page,
respectively, of this Guaranty unless it expressly refers to
something else, (viii) reference to any agreement, document, or
instrument, including this Guaranty, any other Loan Document and
any agreement, document or instrument defined herein, means such
agreement, document, or instrument as it may have been or may be
amended, restated, extended, renewed, replaced, or otherwise
modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms hereof, and includes
all attachments thereto and instruments incorporated therein, if
any, and (ix) general and specific references to any Law means such
Law as amended, modified, codified or reenacted, in whole or in
part, and in effect from time to time. Section captions are for
convenience only and do not affect the interpretation or
construction of this Guaranty.
2. Definitions. All capitalized terms not otherwise
defined herein have the meanings given them in that certain Loan
Agreement of even date herewith by and between Insitutform
Technologies, Inc. ("Borrower") and Beneficiary (as it may be
amended, restated, extended, renewed, replaced, or otherwise
modified from time to time, the "Loan Agreement").<PAGE>
<PAGE>
3. Acknowledgement of Capacity as a Covered Person
Under the Loan Agreement. Each Guarantor acknowledges that it has
reviewed the Loan Agreement and agrees that it is a "Covered
Person" (as that term is defined in the Loan Agreement and used in
the Loan Agreement and the other Loan Documents). All of the
representations and warranties, covenants, and agreements contained
in the Loan Agreement and the other Loan Documents which are
applicable to a Covered Person are incorporated into this Guaranty
by this reference and each Guarantor, as such a Covered Person,
hereby makes such representations and warranties to, and makes such
covenants and agreements with, Beneficiary. Each Guarantor further
acknowledges and agrees that the failure of a Guarantor to comply
with any terms of the Loan Agreement or the other Loan Documents
applicable to such Guarantor as a Covered Person will result in a
Default under the Loan Agreement and the other Loan Documents,
entitling Beneficiary to all of their remedies thereunder and under
applicable law and in equity.
4. Guaranty.
4.1 Unlimited Guaranty of Payment and Performance.
Guarantors hereby jointly and severally guaranty to Beneficiary,
for the benefit of Beneficiary, the full and prompt payment and
performance of the Loan Obligations and all costs of collection
thereof, including reasonable attorneys' fees and expenses (whether
or not there is litigation), court costs and all costs in
connection with any proceedings under the United States Bankruptcy
Code (collectively, the "Guarantied Obligations"). Each Guarantor
understands and acknowledges that there is no limit on the
Guarantied Obligations.
4.2 Nature of Guaranty. This is a continuing, absolute
and unconditional guaranty of payment and performance and not
merely of collection. Each Guarantor's liability with respect to
the Guarantied Obligations is primary, not secondary. Upon the
occurrence of any Event of Default and at any time thereafter,
Beneficiary may proceed directly against any Guarantor without
first proceeding against Borrower, any other Person liable for the
payment or performance of the Guarantied Obligations, or any
Collateral or other security for the Guarantied Obligations.
Beneficiary will not be required to mitigate damages or take any
other action to reduce, collect or enforce the Guarantied
Obligations. Only upon Final Payment will this Guaranty be
released, subject to being automatically reinstated as provided in
Section 7 herein until Final Payment.
4.3 Place for Performance. All obligations of
Guarantors under this Guaranty are performable and payable at the
Lending Office.
<PAGE>
<PAGE>
5. No Release of Guarantors. Each Guarantor's
liability under this Guaranty will not be reduced, extinguished,
discharged or released by, and no Guarantor is entitled to raise as
a defense, any:
5.1 invalidity, irregularity or unenforceability of the
Guarantied Obligations, Borrower's Loan Obligations or other
obligations under the Loan Documents to which it is a party, or of
such Guarantor's obligations under the Loan Documents to which it
is a party, including this Guaranty;
5.2 existing or future offset, claim, counterclaim or
defense of Borrower, such Guarantor or any other party against
Beneficiary or against payment of the Loan Obligations or the
Guarantied Obligations (whether such offset, claim, counterclaim or
defense arises in connection with the Loan Obligations or the
Guarantied Obligations or the transactions creating the Loan
Obligations or the Guarantied Obligations or otherwise);
5.3 failure of such Guarantor to be given notice of a
Default or Event of Default by Borrower;
5.4 waivers of Defaults or Events of Default or other
waivers under the Loan Documents;
5.5 extensions of due dates for payments, modifications
of interest rates or other payment terms with respect to the
Guarantied Obligations or any other accommodation, indulgence or
forbearance granted to Borrower;
5.6 reorganization, merger or consolidation of Borrower
or such Guarantor into or with any other Person;
5.7 release of or non-perfection with respect to any or
all of the Collateral or any other security for the Guarantied
Obligations;
5.8 taking or accepting of any other security or
collateral for, or guaranty of, any or all of the Guarantied
Obligations;
5.9 the death of or release of, or settlement or
compromise with, any one or more other Persons who have guarantied,
or are otherwise liable for the payment or performance of, any or
all of the Guarantied Obligations;
5.10 assignment or other transfer of, or granting of a
participation in, any of the Guarantied Obligations or any
Collateral or other security therefor, by Beneficiary;
<PAGE>
<PAGE>
5.11 other acts or omissions which, in the absence of
this Section 5 would operate so as to reduce, extinguish, discharge
or release such Guarantor's liability under this Guaranty (except
for the full and indefeasible payment of the Guarantied
Obligations, cancellation or termination of the Commitments,
expiration of all Letters of Credit, and termination of any other
commitment to extend credit or make advances to or for the account
of Borrower).
6. Waivers.
6.1 Notice. Each Guarantor hereby waives notice of
(i) acceptance of this Guaranty, (ii) any amendment, restatement or
other modification of any of the Loan Documents (including
modifications to interest rates or other payment terms of the
Guarantied Obligations), (iii) Advances to Borrower by Beneficiary
and fundings of Advances to Borrower by Beneficiary, (iv) the
occurrence of a Default or Event of Default, (v) any matter
referred to in Section 5 of this Guaranty, and (vi) any other
action at any time taken or omitted by Beneficiary, and generally,
all demands and notices of every kind in connection with this
Guaranty and the Loan Documents, except as expressly provided
herein and in the Loan Agreement.
6.2 Right of Contribution, Etc. Each Guarantor hereby
waives any right of contribution, subrogation, reimbursement,
indemnity, or repayment, and any other "claim", as that term is
defined in the United States Bankruptcy Code, which such Guarantor
might now have or hereafter acquire against Borrower or any other
Person liable for the payment or performance of the Loan
Obligations (other than pursuant to the Contribution Agreement of
even date herewith among the Guarantors) that arises from the
existence or performance of such Guarantor's obligations under this
Guaranty; and such Guarantor waives the right to participate in any
existing or future Collateral or other security for the Guarantied
Obligations. Each Guarantor further agrees that such Guarantor
will not enter into any agreement providing, directly or
indirectly, for any contribution, subrogation, reimbursement,
indemnity or repayment by Borrower on account of any payment made
by such Guarantor hereunder, and that any such agreement would be
void. Until Final Payment, no Guarantor has any right of
contribution, subrogation, reimbursement, indemnity or repayment
and no right of recourse to or with respect to any assets or
property of any other guarantor or other Person liable for any of
the Guarantied Obligations (other than pursuant to the Contribution
Agreement of even date herewith among the Guarantors).
<PAGE>
<PAGE>
6.3 Other. Each Guarantor hereby waives (i) diligence,
presentment, demand for payment, protest or notice, whether of
nonpayment, dishonor, protest or otherwise, (ii) any and all
claims, counterclaims or defenses based upon, related to or arising
out of (a) any matter referred to in Section 5 of this Guaranty,
(b) any issue as to whether any sale or other disposition of any
security for the Guarantied Obligations was conducted in a
commercially reasonable fashion, (c) any election of remedies by
Beneficiary, and (d) a theory that this Guaranty should be strictly
construed against Beneficiary and Beneficiary, and (iv) all other
defenses (except Final Payment) under applicable Law that would,
but for this clause (iv), be available to such Guarantor as a
defense against, or a reduction, extinguishment, discharge or
release of its obligations under, this Guaranty.
7. Reinstatement of Guaranty in Certain Circumstances.
Each Guarantor agrees that, if any or all of a payment made by or
on behalf of Borrower of any Guarantied Obligation is returned by
any Person at any time for any reason, including pursuant to any
settlement, order (whether or not final) of a court of competent
jurisdiction, provision of the United States Bankruptcy Code, other
debtor relief Law or other applicable Law or because of acts or
omissions of Borrower, the Guarantied Obligations will not be
deemed to have been satisfied to the extent of the returned payment
and the obligations of such Guarantor will be deemed to be
reinstated automatically and to continue in full force and effect.
If Borrower ceases to be liable to Beneficiary for any of the Loan
Obligations (other than by reason of Final Payment), then any prior
release or discharge from this Guaranty will be without effect and
this Guaranty and the obligations of each Guarantor hereunder will
be automatically reinstated and continue in full force and effect.
8. Representations and Warranties. Each Guarantor
represents and warrants to Beneficiary as follows:
8.1 Authorization. Each Guarantor is duly authorized
to execute and perform this Guaranty and this Guaranty has been
properly authorized by all requisite corporate, membership, or
partnership action (as the case may be) of such Guarantor. No
consent, approval or authorization of, or declaration or filing
with, any Governmental Authority or any other Person, is required
in connection with such Guarantor's execution, delivery or
performance of this Guaranty, except for those already duly
obtained.
8.2 Due Execution. This Guaranty has been executed on
behalf of each Guarantor by a legally competent Person duly
authorized to do so.
<PAGE>
<PAGE>
8.3 Enforceability. This Guaranty constitutes the
legal, valid and binding obligation of each Guarantor, enforceable
against such Guarantor in accordance with its terms, except to the
extent that the enforceability thereof against such Guarantor may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar Laws affecting creditor's rights generally or by equitable
principles of general application.
8.4 Legal Restraints. The execution of this Guaranty
by each Guarantor, and the performance by such Guarantor of its
obligations under this Guaranty, will not violate or constitute a
default under the Charter Documents of such Guarantor, any Material
Agreement, or any Material Law, and will not, except as expressly
contemplated or permitted in this Guaranty, result in any Security
Interest being imposed on any of such Guarantor's property.
8.5 Independent Credit Evaluation. Each Guarantor has
independently, and without reliance on any information supplied by
Beneficiary, taken, and will continue to take, whatever steps such
Guarantor deems necessary to evaluate the financial condition and
affairs of Borrower. Beneficiary has no duty to advise any
Guarantor of information at any time known to Beneficiary regarding
such financial condition or affairs.
8.6 No Representation By Beneficiary or Beneficiary.
Neither Beneficiary has not made any representation, warranty or
statement to any Guarantor to induce such Guarantor to execute this
Guaranty.
9. Survival of Representations. All representations,
warranties, and covenants of each Guarantor contained herein
survive the execution and delivery of this Guaranty, and terminate
only upon the full and indefeasible payment of all of the
Guarantied Obligations, cancellation or termination of all of the
Commitments, expiration of all Letters of Credit, and when
Beneficiary have no other commitment to extend credit or make
advances to or for the account of Borrower.
10. Authorization to Charge Accounts. Each Guarantor
hereby authorizes Beneficiary, if and to the extent any amount
payable by such Guarantor under this Guaranty is not otherwise paid
when due, to charge such amount against any or all of the accounts
of such Guarantor with Beneficiary or any Affiliate of Beneficiary
or any Affiliate of Beneficiary, with such Guarantor remaining
liable for any deficiency.
11. Beneficiary's Offset Rights. Upon the occurrence
of any Event of Default and at any time and from time to time
thereafter, Beneficiary is hereby authorized, without notice to any
Guarantor (any such notice being expressly waived by each<PAGE>
<PAGE>
Guarantor), to setoff against the Guarantied Obligations any and
all deposits (general or special, time or demand, provisional or
final) at any time held, or any other Indebtedness at any time
owing by Beneficiary to or for the credit or the account of such
Guarantor, irrespective of whether or not demand has been made
under the Loan Agreement, any Note, or this Guaranty, and to remit
the proceeds of such setoff to Beneficiary for distribution to
Beneficiary and application to the Loan Obligations as provided in
the Loan Agreement.
12. Enforcement. Each Guarantor acknowledges that all
of the Guarantors are liable jointly and severally for the full
amount of the Guarantied Obligations. Suits for the enforcement of
this Guaranty may be brought, at the option of Beneficiary, against
all Guarantors, or successively against each Guarantor, or against
one or more but not against all Guarantors.
13. Attorney's Fees and Other Costs. If Guarantors
fail to pay the Guarantied Obligations as required by this
Guaranty, then Guarantors will pay all costs incurred by
Beneficiary in enforcing this Guaranty, including reasonable
attorneys' fees and expenses (whether or not there is litigation),
court costs and all costs incurred in connection with any
proceedings under the United States Bankruptcy Code.
14. Records. Beneficiary's books and records showing
the account between Beneficiary and Borrower are admissible in
evidence in any action or proceeding with respect to this Guaranty
and constitute prima facie proof of the information therein.
15. Binding Nature of Certain Adjudications. Each
Guarantor will be conclusively bound by the final adjudication in
any action or proceeding, legal or otherwise, involving any
controversy arising under, in connection with, or in any way
related to, any of the Guarantied Obligations, and by a final
judgment, award or decree entered therein, if such Guarantor had
the right, or was given the opportunity, to participate in such
action or proceeding and was given notice of such action or
proceeding in time to exercise such right or avail itself of such
opportunity.
16. Application of Payments. All payments made under
this Guaranty will be allocated among the principal and interest
and other components of the Guarantied Obligations and the other
obligations of a Guarantor hereunder in such order and amount as
Beneficiary may determine in its sole and absolute discretion.
<PAGE>
<PAGE>
17. Limitation of Liability. Beneficiary will not have
any liability with respect to, and each Guarantor hereby waives,
releases and agrees not to sue for, (i) any loss or damage
sustained by any Guarantor that may occur as a result of, in
connection with, or that is in any way related to, any act or
failure to act referred to in Section 5 of this Guaranty, or
(ii) any special, indirect or consequential damages suffered by any
Guarantor in connection with any claim related to this Guaranty.
18. Miscellaneous.
18.1 Notices. All notices, consents, requests and
demands to or upon the respective parties hereto must be in
writing, and will be deemed to have been given or made when
delivered in person to those Persons listed on the signature pages
hereof or when deposited in the United States mail, postage
prepaid, or, in the case of telegraphic notice, or the overnight
courier services, when delivered to the telegraph company or
overnight courier service, or in the case of telex or telecopy
notice, when sent, verification received, in each case addressed as
set forth on the signature pages hereof, or to such other address
as either party may designate by notice to the other in accordance
with the terms of this Section. No notice given to or demand made
on any Guarantor by Beneficiary or Beneficiary in any instance
entitles Borrower to notice or demand in any other instance.
18.2 Amendments and Waivers. No amendment to, waiver
of, or departure from full compliance with any provision of this
Guaranty, or consent to any departure by any Guarantor herefrom,
will be effective unless it is in writing and signed by authorized
officers of such Guarantor and Beneficiary; provided, however, that
any such waiver or consent will be effective only in the specific
instance and for the purpose for which given. No failure by
Beneficiary to exercise, and no delay by Beneficiary in exercising,
any right, remedy, power or privilege hereunder will operate as a
waiver thereof, nor will any single or partial exercise by
Beneficiary of any right, remedy, power or privilege hereunder
preclude any other exercise thereof, or the exercise of any other
right, remedy, power or privilege.
18.3 Rights Cumulative. Each of the rights and remedies
of Beneficiary and Beneficiary under this Guaranty is in addition
to all of their other rights and remedies under applicable Law, and
nothing in this Guaranty may be construed as limiting any such
rights or remedies.
18.4 Successors and Assigns. This Guaranty binds
Guarantors and their respective successors and assigns and inures
to the benefit of Beneficiary, and each of its successors,
transferees, participants and assignees. No Guarantor may delegate<PAGE>
<PAGE>
or transfer any of its obligations under this Guaranty without the
prior written consent of Beneficiary. With respect to Guarantor's
successors and assigns, such successors and assigns include any
receiver, trustee or debtor-in-possession of or for Guarantor.
18.5 Severability. Any provision of this Guaranty which
is prohibited, unenforceable or not authorized in any jurisdiction
is, as to such jurisdiction, ineffective to the extent of such
prohibition, unenforceability or nonauthorization without
invalidating the remaining provisions hereof or affecting the
validity, enforceability or legality of such provision in any other
jurisdiction.
18.6 Governing Law; No Third Party Rights. This
Guaranty is to be governed by and construed and interpreted in
accordance with the internal Laws of the State of Missouri
applicable to contracts made and to be performed wholly within such
state, without regard to choice or conflicts of law principles.
This Guaranty is solely for the benefit of the parties hereto and
Beneficiary, and their respective successors and assigns, and no
other Person has any right, benefit, priority or interest under, or
because of the existence of, this Guaranty.
18.7 Counterparts. This Guaranty may be executed by the
parties hereto on any number of separate counterparts, and all such
counterparts taken together constitute one and the same instrument.
It is not necessary in making proof of this Guaranty to produce or
account for more than one counterpart signed by the party to be
charged.
18.8 Counterpart Facsimile Execution. For purposes of
this Guaranty, a document (or signature page thereto) signed and
transmitted by facsimile machine or telecopier is to be treated as
an original document. The signature of any Person thereon, for
purposes hereof, is to be considered as an original signature, and
the document transmitted is to be considered to have the same
binding effect as an original signature on an original document.
At the request of any party hereto, any facsimile or telecopy
document is to be re-executed in original form by the Persons who
executed the facsimile or telecopy document. No party hereto may
raise the use of a facsimile machine or telecopier or the fact that
any signature was transmitted through the use of a facsimile or
telecopier machine as a defense to the enforcement of this Guaranty
or any amendment or other document executed in compliance with this
Section.
18.9 Final Expression; No Course of Dealing. This
Guaranty, together with the Loan Agreement, the other Loan
Documents and any other agreement executed in connection herewith
or therewith, is intended by the parties as a final expression of<PAGE>
<PAGE>
their agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof. Acceptance of or
acquiescence in a course of performance or course of dealing
rendered or taken under or with respect to this Guaranty, the Loan
Agreement or the other Loan Documents will not be relevant to
determine the meaning of this Guaranty, the Loan Agreement or the
other Loan Documents even though the accepting or acquiescing party
had knowledge of the nature of the performance and opportunity for
objection.
18.10 Negotiated Transaction. Each Guarantor and
Beneficiary each represent to the other that in the negotiation and
drafting of this Guaranty each has been represented by and has
relied upon the advice of counsel of its choice. Each Guarantor
and Beneficiary affirm that its counsel has had a substantial role
in the drafting and negotiation of this Guaranty; therefore, this
Guaranty will be deemed drafted by each of Borrower and
Beneficiary, and the rule of construction to the effect that any
ambiguities are to be resolved against the drafter will not be
employed in the interpretation of this Guaranty.
18.11 Attorney's Fees and Other Costs. If Guarantors fail
to pay the Guarantied Obligations as required by this Guaranty,
then Guarantors will pay all costs incurred by Beneficiary in
enforcing this Guaranty, including reasonable attorneys' fees and
actual attorneys' expenses (whether or not there is litigation),
court costs and all reasonable costs incurred in connection with
any proceedings under the United States Bankruptcy Code.
18.12 Assignment By Beneficiary. To the extent permitted
in the Loan Agreement, Beneficiary may grant a participation
interest in or assign or transfer to another Person any instrument,
document or agreement evidencing any of the Guarantied Obligations
and Beneficiary's rights under this Guaranty.
18.13 Choice of forum. Guarantors hereby agree to the
exclusive jurisdiction of the federal court of the Eastern District
of Missouri and the state courts of Missouri located in St. Louis
County or the City of St. Louis, Missouri, with respect to any
dispute exclusively between Beneficiary and any Guarantor and waive
any objection based on venue or forum non conveniens with respect
to any action instituted therein, and agree that any dispute
exclusively between Beneficiary and any Guarantor concerning the
relationship between any Guarantor and Beneficiary or the conduct
of any of them in connection with this Guaranty or otherwise may be
heard only in the courts described above.
18.14 Service of process. Each Guarantor hereby waives
personal service of any and all process upon it and consents that
all such service of process may be made by registered mail (return<PAGE>
<PAGE>
receipt requested) directed to such Guarantor at its address set
forth on the signature page hereof, and service so made will be
deemed to be completed five (5) days after the same has so
deposited in the U.S. Mails, certified or registered; or at
Beneficiary's option, by service upon CT Corporation, which each
Guarantor irrevocably appoints as such Guarantor's agent for the
purpose of accepting service of process within the State of
Missouri. Beneficiary will promptly forward by registered mail any
process so served upon said agent to such Guarantor at its address
on the signature page hereof. Nothing in this Section affects the
right of Beneficiary to serve legal process in any other manner
permitted by Law.
18.15 Waiver of jury trial. Each Guarantor and Beneficiary
hereby waive any right to trial by jury of any claim, demand,
action or cause of action (i) arising under this Guaranty or any
other Loan Document, or (ii) in any way connected with or related
or incidental to the dealings of the parties hereto or either of
them in respect of this Guaranty or any other Loan Document, or the
transactions related hereto or thereto, in each case whether now
existing or hereafter arising, and whether sounding in contract or
tort or otherwise. Each Guarantor and Beneficiary agree and
consent that any such claim, demand, action or cause of action will
be decided by court trial without a jury and that either may file
an original counterpart or a copy of this Guaranty with any court
as written evidence of the consent of the parties hereto to the
waiver of their right to trial by jury.
[remainder of page intentionally left blank]<PAGE>
<PAGE>
IN WITNESS WHEREOF, this Guaranty has been duly executed
as of the date first above written.
Affholder, Inc. INA Acquisition Corp.
by its by its
--------------------- --------------------
- --------------------------- -------------------------
Notice address: Notice address:
- --------------------------- -------------------------
- --------------------------- -------------------------
Attn: Attn:
---------------------- --------------------
FAX # FAX #
---------------------- --------------------
TEL # TEL #
---------------------- --------------------
Insituform Central, Inc. Insituform Gulf South,
Inc.
by its by its
--------------------- --------------------
- --------------------------- -------------------------
Notice address: Notice address:
- --------------------------- -------------------------
- --------------------------- -------------------------
---------------------- --------------------
FAX # FAX #
---------------------- --------------------
TEL # TEL #
---------------------- --------------------
Insituform Mid-America, Inc. Insituform Midwest, Inc.
by its by its
--------------------- --------------------
- --------------------------- -------------------------
<PAGE>
<PAGE>
Notice address: Notice address:
- --------------------------- -------------------------
- --------------------------- -------------------------
---------------------- --------------------
FAX # FAX #
---------------------- --------------------
TEL # TEL #
---------------------- --------------------
Insituform Missouri, Inc. Insituform of New England,
Inc.
by its by its
--------------------- --------------------
- --------------------------- -------------------------
Notice address: Notice address:
- --------------------------- -------------------------
- --------------------------- -------------------------
---------------------- --------------------
FAX # FAX #
---------------------- --------------------
TEL # TEL #
---------------------- --------------------
Insituform North, Inc. Insituform North America
Corp.
by its by its
--------------------- --------------------
- --------------------------- -------------------------
Notice address: Notice address:
- --------------------------- -------------------------
- --------------------------- -------------------------
---------------------- --------------------
<PAGE>
<PAGE>
FAX # FAX #
---------------------- --------------------
TEL # TEL #
---------------------- --------------------
Insituform Plains, Inc. Insituform Rockies, Inc.
by its by its
--------------------- --------------------
- --------------------------- -------------------------
Notice address: Notice address:
- --------------------------- -------------------------
- --------------------------- -------------------------
---------------------- --------------------
FAX # FAX #
---------------------- --------------------
TEL # TEL #
---------------------- --------------------
Insituform Southeast, Inc. Insituform Southwest
By: Insituform Southwest,
Inc., Managing Partner
by its by its
--------------------- -------------------
- --------------------------- -------------------------
Notice address: Notice address:
- --------------------------- -------------------------
- --------------------------- -------------------------
---------------------- --------------------
FAX # FAX #
---------------------- --------------------
TEL # TEL #
---------------------- --------------------
<PAGE>
<PAGE>
Insituform Texark, Inc. Insituform West, Inc.
by its by its
--------------------- --------------------
- --------------------------- -------------------------
Notice address: Notice address:
- --------------------------- -------------------------
- --------------------------- -------------------------
---------------------- --------------------
FAX # FAX #
---------------------- --------------------
TEL # TEL #
---------------------- --------------------
NuPipe, Inc. United Pipeline Systems
USA, Inc.
by its by its
--------------------- -------------------
- --------------------------- -------------------------
Notice address: Notice address:
- --------------------------- -------------------------
- --------------------------- -------------------------
---------------------- --------------------
FAX # FAX #
---------------------- --------------------
TEL # TEL #
---------------------- --------------------
<PAGE>
<PAGE>
EXHIBIT 10-B
LIST OF GUARANTOR SUBSIDIARIES AS OF THE EFFECTIVE DATE
Affholder, Inc., a Missouri corporation
INA Acquisition Corp., a Delaware corporation
Insituform Central, Inc., a Delaware corporation
Insituform Gulf South, Inc., a Delaware corporation
Insituform Mid-America, Inc., a Delaware corporation
Insituform Midwest, Inc., a Delaware corporation
Insituform Missouri, Inc., a Delaware corporation
Insituform of New England, Inc., a Massachusetts corporation
Insituform North, Inc., a Delaware corporation
Insituform North America Corp., a Tennessee corporation
Insituform Plains, Inc., a Delaware corporation
Insituform Rockies, Inc., a Delaware corporation
Insituform Southeast, Inc., a Florida corporation
Insituform Southwest, a California partnership
Insituform Texark, Inc., a Delaware corporation
Insituform West, Inc., an Oregon corporation
NuPipe, Inc., an Oregon corporation
United Pipeline Systems USA, Inc., a Delaware corporation
<PAGE>
<PAGE>
EXHIBIT 11.1.1
DOCUMENTS AND REQUIREMENTS LIST
1. Loan Agreement
2. $20,000,000 Revolving Note payable to the order of Lender
3. Joint and Several Unlimited Guaranty executed by all
Guarantors
4. Contribution Agreement executed by Borrower and all
Guarantors
5. Borrower's Initial Advance Request with Disbursement
Direction
6. Opinion of Counsel for Borrower and Guarantors
satisfactory to Lender and covering the subject matter
described in the Opinion Specification attachment hereto
7. Secretary's Certificate (certifying resolutions, all
Charter Documents, and incumbency of officers authorized
to execute Loan Documents) for Borrower and each Guarantor
8. Good Standing Certificates for Borrower and each Guarantor
from the Secretaries of State of the states of their
organization
9. Initial Financial Statements, including copies of
Borrower's most recently filed Forms 10-K and 10Q
10. Certificates showing Borrower and Guarantors have
insurance as required by Loan Agreement
11. Copies of all consents, licenses and approvals required
for execution of Loan Documents (if any)
<PAGE>
<PAGE>
Attachment to Documents and Requirements List
Opinion Specification
Legal opinion of corporate and local counsel to Borrower and
Guarantors must be on firm letterhead and together meet these
requirements
1. Address to NationsBank, N.A. at 800 Market Street, St.
Louis, Missouri 63101.
2. Refer to Loan Agreement and other Loan Documents and use
the Loan Agreement definitions.
3. Give opinions on the subjects covered in all of the
following example paragraphs
a. [Name of Borrower or Guarantor] is a
[corporation] [limited partnership] [limited
liability company] duly formed, validly existing
and in good standing under the Laws of the State
of [name of state] and is duly qualified and
authorized to do business and is in good
standing as a foreign [corporation] [limited
partnership] [limited liability company] in all
states where the nature and extent of the
business transacted by it or the ownership of
its assets makes such qualification necessary,
except where the failure to so qualify will not
have a Material Adverse Effect.
b. Borrower has all requisite power, authority, and
legal capacity (a) to own, lease and operate its
properties and assets and to carry on its
business as now being conducted and (b) to
execute, deliver and perform the terms of the
Loan Documents to which it is a party. Each
Guarantor has all requisite power, authority,
and legal capacity (a) to own, lease and operate
its properties and assets and to carry on its
business as now being conducted and (b) to
execute, deliver and perform the terms of the
Loan Documents to which it is a party.
<PAGE>
<PAGE>
c. All action on the part of Borrower required for
the execution, delivery and performance of the
Loan Documents to which it is a party has been
duly taken. All action on the part of each
Guarantor required for the execution, delivery
and performance of the Loan Documents to which
it is a party has been duly taken.
d. The execution, delivery and performance of the
Loan Documents by Borrower will not (a) violate,
be in conflict with, result in the breach of, or
constitute (with due notice or lapse of time, or
both) a default under (i) Borrower's Charter
Documents, or (ii) to our knowledge any
franchise, agreement, indenture, or other
instrument to which Borrower is a party or by
which it or any of its property is bound or
affected or (iii) any Law or other legal
requirement applicable to Borrower, or (b) to
our knowledge result in the creation or
imposition of a Security Interest of any nature
whatsoever upon Borrower's property or assets.
The execution, delivery and performance of the
Loan Documents by each Guarantor will not
(a) violate, be in conflict with, result in the
breach of, or constitute (with due notice or
lapse of time, or both) a default under (i) such
Guarantor's Charter Documents, or (ii) to our
knowledge any franchise or Contract to which
such Guarantor is a party or by which it or any
of its property is bound or affected or
(iii) any Law or other legal requirement
applicable to such Guarantor, or (b) to our
knowledge result in the creation or imposition
of a Security Interest of any nature whatsoever
upon such Guarantor's property or assets.
e. Borrower has duly executed and delivered each of
the Loan Documents to which it is a party and
each such Loan Document constitutes the legal,
valid and binding obligation of Borrower
enforceable against Borrower in accordance with
its terms. Each Guarantor has duly executed and
delivered each of the Loan Documents to which it
is a party and each such Loan Document
constitutes the legal, valid and binding
obligation of such Guarantor enforceable against
such Guarantor in accordance with its terms.<PAGE>
<PAGE>
f. Each Person who signed any Loan Document as an
officer of Borrower is duly authorized on behalf
of Borrower to execute and deliver such document
on behalf of Borrower. Each Person who signed
any Loan Document as an officer of a Guarantor
is duly authorized on behalf of such Guarantor
to execute, deliver and perform such document on
behalf of such Guarantor.
g. No consent, approval or other authorization of
or by, or registration or filing with, any
Governmental Authority or other Person is
required in connection with the execution,
delivery and performance by Borrower or a
Guarantor of the Loan Documents to which it is a
party that has not already been obtained and a
copy thereof delivered to Lender.
h. There are no actions, proceedings or
investigations pending or threatened against
Borrower or a Guarantor which, alone or
together, might adversely affect the validity or
enforceability of any of the Loan Documents or
the ability of Borrower or a Guarantor to
perform its obligations thereunder, or, except
as set forth in the Loan Documents, which, is
reasonably likely to have a Material Adverse
Effect.
i. The use of the proceeds of the Aggregate Loans
will not violate Regulations G, T, U or X of the
Federal Reserve Board.
j. If a court were to find that the Loan Documents
are governed by, or are to be construed or
interpreted in accordance with, the governing
law set forth in the Loan Documents, the
provisions of the Loan Documents regarding
interest required to be paid by Borrower will
not violate any Law of such State that limits
the amount of interest that may be charged or
collected on a loan of money or the method by
which such interest is computed.
4. Add appropriate exceptions and limitations, all of which
must be satisfactory to Lender.
5. Signature by a partner of the firm in his individual
name or in the name of the firm.
<PAGE>
<PAGE>
<TABLE>
EXHIBIT 13
DISCLOSURE SCHEDULE OF BORROWER
Item 13.8 of Disclosure Schedule of Borrower;
Additional Proceedings
None
Item 13.18 of Disclosure Schedule; Subsidiaries
None
<CAPTION>
% of
JURISDICTION EQUITY
NAME OF SUBSIDIARY OF ORGANIZATION OWNED Owner of Equity
<S> <C> <C> <C>
Affholder, Inc. Missouri 100% Insituform Mid-America Inc.
Comely Investments Isle of Man; 100% INA Acquisition, Inc.
Limited Delaware
E-Midsouth, Inc. Florida 100% Insituform Southeast, Inc.
Enviroq Services, Inc. Florida 100% Insituform Mid-America,Inc.
GelTech Constructors, Oregon 100% INA Acquisition Corp.
Inc.
H.T. Schneider, Inc. New York 100% Insituform Technologies,
Inc.
INA Acquisition Corp. Delaware 100% Insituform Technologies,Inc.
Insituform Belux, NV/SA Belgium 100% INA Acquisition Corp.
Insituform Central, Inc.Delaware 100% Insituform Mid-America,Inc.
Insituform France S.A. France 66-2/3% Insituform Technologies,Inc.
Insituform Gulf South, Delaware 100% Naylor Industries, Inc.
Inc.
Insituform Holdings (UK)United Kingdom 100% INA Acquisition Corp.
Ltd.
Insituform International,Liberia; Delawre100% INA Acquisition Corp.
Inc.
Insituform InternationalNetherland 100% INA Acquisition Corp.
N.V.; Antilles;
Insituform InternationalDelaware
(Antilles) N.V., Inc.
Insituform Italia SR1. Italy 100% INA Acquisition Corp.
Insituform Japan K.K. Japan 100% INA Acquisition Corp.
Insituform Licensees Netherlands; 100% INA Acquisition Corp.
BV/SA;
Insituform Licensees B.V.Delaware
Insituform Linings PLc United Kingdom 51% Insituform Holdings (UK)Ltd.
Insituform Mar-Tech British Columbia 100% INA Acquisition Corp.
Limited
Insituform Mid-America, Delaware 100% Insituform Technologies,
Inc. Inc.
Insituform Midwest, Inc.Delaware 100% Insituform Technologies,Inc.
Insituform Missouri, Inc.Delaware 100%. Insituform Mid-America,Inc.
Insituform (Netherlands)Netherlands 100% Insituform Licensees BV/SA;
B.V.
Insituform (Netherlands)Delaware Insituform Licensees B.V.
B.V., Inc.
Insituform of New Massachusetts 100% H.T. Schneider, Inc.
England, Inc.
Insituform North, Inc. Delaware 100% Insituform Mid-America,Inc.
Insituform North AmericaTennessee 100% Insituform Technologies,
Corp. Inc.
Insituform Overseas United Kingdom 100% Insituform Holdings (UK)
Limited Ltd.
Insituform (Pipes & United Kingdom 100% Insituform Holdings (UK)
Structures) Limited Ltd.
Insituform Plains, Inc. Delaware 100% Insituform Mid-America,Inc.
Insituform de Puerto Delaware 100% Insituform Mid-America, Inc.Inc.
Insituform Rockies, Inc.Delaware 100% Insituform Mid-America,Inc.
Insituform Southeast, Florida 100% Insituform Mid-America, Inc.Inc.
Instiuform Southwest California 100% Insituform Southwest, Inc.
(80%)
NuPipe California, Inc.(20%)
Insituform Southwest, Delaware 100% Insituform Technologies,
Inc. Inc.
Insituform Technical United Kingdom 100% Insituform Holdings (UK)
Limited Ltd.
Insituform Technologies,Alberta 100% Insituform Mid-America, LimitedInc.
Insituform Technologies,United Kingdom 100% Insituform Holdings (UK)
Limited Ltd.
Insituform Texark, Inc. Delaware 100% INA Acquisition Corp.
Insituform West, Inc. Oregon 100% INA Acquisition Corp.
Midsouth Partners Tennessee 57-1/2% E-Midsout, Inc. (42-1/2%)
Insituform Southwest, Inc.
(15%)
Naylor Industries, Inc. Delaware 100% Insituform Technologies,Inc.
NuPipe, Inc. Oregon 100% Insituform Technologies,Inc.
NuPipe California, Inc. Delaware 100% NuPipe, Inc.
NuPipe International, Delaware 100% NuPipe, Inc.
Inc.
NuPipe Limited United Kingdom 100% Insituform Technologies,Inc.
NuPipe New England, Inc.Massachusetts 100% H.T. Schneider, Inc.
PALTEM Systems, Inc. Delaware 100% Insituform Mid-America,Inc.
Pipe Rehab Delaware 100% Insituform Technologies,
International, Inc. Inc.
Titeliner NRO Corp. Alberta 100% Insituform Mid-America,Inc.
United Pipelines Argentina 100% Insituform Mid-America,
Argentina S.A. Inc.
United Pipeline de Mexico 55% INA Acquisition Corp.
Mexico S.A. de C.V.
United Pipeline Systems Delaware 100% Insituform Mid-America, U.S.A.,
Inc. Inc.
United Sistema de Chile 60% Insituform Mid-America, Tuberias
Limitada Inc.
/TABLE
<PAGE>
<PAGE>
EXHIBIT 15.12
FORM OF COMPLIANCE CERTIFICATE
TO: THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
This Compliance Certificate is furnished pursuant to that certain
Loan Agreement executed August 20, 1997 (as the same may be amended,
restated or otherwise modified from time to time, the "Loan Agreement"),
between Insituform Technologies, Inc., as Borrower, and NationsBank, N.A.,
as Lender. Unless otherwise defined herein, capitalized terms used in
this Compliance Certificate have the meanings defined in the Loan
Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am the duly elected of the Borrower.
2. I have reviewed the terms of the Loan Agreement and the Loan
Documents and I have made, or have caused to be made under my
supervision, a review of the transactions and conditions of
Borrower and each other Covered Person during the accounting
period covered by the attached Financial Statements.
3. The examinations described in paragraph 2 did not disclose, and
I have no knowledge of, the existence of any condition or event
which constitutes a Default or Event of Default as of the date
of this Compliance Certificate; {use for annual certificate: and
(except as described in the Disclosure Addendum attached
hereto), all of the representations and warranties of Borrower
contained in the Loan Agreement would be true and correct if
made on the date hereof.)
4. {Use for annual financial statements: Schedule I attached hereto
contains the Financial Statements for Borrower for the fiscal
year ended , which are complete and correct in all
material respects and have been prepared in accordance with GAAP
applied consistently throughout the period and with prior
periods (except as disclosed therein).)
(Use for quarterly: Schedule I attached hereto contains the
Financial Statements for Borrower for the fiscal quarter ended
, which are complete and correct in all material
respects (subject to normal year-end audit adjustments) and have
been prepared in accordance with GAAP applied consistently
throughout the period and with prior periods (except as
disclosed therein).)
<PAGE>
<PAGE>
5. Borrower and every other Covered Person is in compliance with
all of the covenants in the Loan Agreement, including the
financial covenants in Section 17, and Schedule II attached
hereto contains calculations based on Borrower's financial
statements and other financial records that show Borrower's
compliance with such financial covenants. The calculations and
the data upon which they are based are believed by me to be
complete and correct.
This Compliance Certificate, together with the Schedules hereto, is
executed and delivered this day of .
----- -------------
Print Name:
Title: <PAGE>
<PAGE>
SCHEDULE I TO COMPLIANCE CERTIFICATE
<PAGE>
<PAGE>
SCHEDULE II TO COMPLIANCE CERTIFICATE
Calculations of Compliance with Financial Covenants for [fiscal
quarter ended] [fiscal year ended] ______________ (Certification Period)
<PAGE>
<PAGE> UNLIMITED GUARANTY
This Unlimited Guaranty (this "Guaranty"), effective
August 20, 1997, (the "Effective Date") is given by each of the
undersigned entities (each a "Guarantor" and collectively the
"Guarantors"), to NATIONSBANK, N.A., a national banking
association ("Beneficiary").
To induce, and in consideration of, beneficiary's execution
of the Loan Agreement and Beneficiary's Commitments, and for
other sufficient consideration, the receipt of which is hereby
acknowledged, the Guarantors and Beneficiary hereby agree as
follows:
1. General. Unless the context of this Guaranty clearly
requires otherwise, (i) references to the plural include the
singular and vice versa, (ii) references to any Person include
such Person's successors and assigns but, if applicable, only if
such successors and assigns are permitted by this Guaranty, (iii)
references to one gender include all genders, (iv) "including" is
not limiting, (v) "or" has the inclusive meaning represented by
the phrase "and/or", (vi) the words "hereof", "herein", "hereby",
"hereunder" and similar terms in this Guaranty refer to this
Guaranty as a whole, including its Exhibits, and not to any
particular provision of this Guaranty, (vii) the word "Section"
or "section" and "Page" or "page" refer to a section or page,
respectively, of this Guaranty unless it expressly refers to
something else, (viii) reference to any agreement, document, or
instrument, including this Guaranty, any other Loan Document and
any agreement, document or instrument defined herein, means such
agreement, document, or instrument as it may have been or may be
amended, restated, extended, renewed, replaced, or otherwise
modified and in effect from time to time in accordance with the
terms thereof and, if applicable, the terms hereof, and includes
all attachments thereto and instruments incorporated therein, if
any, and (ix) general and specific references to any Law means
such Law as amended, modified, codified or reenacted, in whole or
in part, and in effect from time to time. Section captions are
for convenience only and do not affect the interpretation or
construction of this Guaranty.
2. Definitions. All capitalized terms not otherwise
defined herein have the meanings given them in that certain Loan
Agreement of even date herewith by and between Insitutform
Technologies, Inc. ("Borrower") and Beneficiary (as it may be
amended, restated, extended, renewed, replaced, or otherwise
modified from time to time, the "Loan Agreement").
3. Acknowledgement of Capacity as a Covered Person Under
the Loan Agreement. Each Guarantor acknowledges that it has
reviewed the Loan Agreement and agrees that it is a "Covered
Person" (as that term is defined in the Loan Agreement and used
in the Loan Agreement and the other Loan Documents). All of the <PAGE>
<PAGE>
representations and warranties, covenants, and agreements
contained in the Loan Agreement and the other Loan Documents
which are applicable to a Covered Person are incorporated into
this Guaranty by this reference and each Guarantor, as such a
Covered Person, hereby makes such representations and warranties
to, and makes such covenants and agreements with, Beneficiary.
Each Guarantor further acknowledges and agrees that the failure
of a Guarantor to comply with any terms of the Loan Agreement or
the other Loan Documents applicable to such Guarantor as a
Covered Person will result in a Default under the Loan Agreement
and the other Loan Documents, entitling Beneficiary to all of
their remedies thereunder and under applicable law and in equity.
4. Guaranty.
4.1 Unlimited Guaranty of Payment and Performance.
Guarantors hereby jointly and severally guaranty to Beneficiary,
for the benefit of Beneficiary, the full and prompt payment and
performance of the Loan Obligations and all costs of collection
thereof, including reasonable attorneys' fees and expenses
(whether or not there is litigation), court costs and all costs
in connection with any proceedings under the United States
Bankruptcy Code (collectively, the "Guarantied Obligations").
Each Guarantor understands and acknowledges that there is no
limit on the Guarantied Obligations.
4.2 Nature of Guaranty. This is a continuing, absolute and
unconditional guaranty of payment and performance and not merely
of collection. Each Guarantor's liability with respect to the
Guarantied Obligations is primary, not secondary. Upon the
occurrence of any Event of Default and at any time thereafter,
Beneficiary may proceed directly against any Guarantor without
first proceeding against Borrower, any other Person liable for
the payment or performance of the Guarantied Obligations, or any
Collateral or other security for the Guarantied Obligations.
Beneficiary will not be required to mitigate damages or take any
other action to reduce, collect or enforce the Guarantied
Obligations. Only upon Final Payment will this Guaranty be
released, subject to being automatically reinstated as provided
in Section 7 herein until Final Payment.
4.3 Place for Performance. All obligations of Guarantors
under this Guaranty are performable and payable at the Lending
Office.
5. No Release of Guarantors. Each Guarantor's liability
under this Guaranty will not be reduced, extinguished, discharged
or released by, and no Guarantor is entitled to raise as a
defense, any:
<PAGE>
<PAGE>
5.1 invalidity, irregularity or unenforceability of the
Guarantied Obligations, Borrower's Loan Obligations or other
obligations under the Loan Documents to which it is a party, or
of such Guarantor's obligations under the Loan Documents to which
it is a party, including this Guaranty;
5.2 existing or future offset, claim, counterclaim or
defense of Borrower, such Guarantor or any other party against
Beneficiary or against payment of the Loan Obligations or the
Guarantied Obligations (whether such offset, claim, counterclaim
or defense arises in connection with the Loan Obligations or the
Guarantied Obligations or the transactions creating the Loan
Obligations or the Guarantied Obligations or otherwise);
5.3 failure of such Guarantor to be given notice of a
Default or Event of Default by Borrower;
5.4 waivers of Defaults or Events of Default or other
waivers under the Loan Documents;
5.5 extensions of due dates for payments, modifications of
interest rates or other payment terms with respect to the
Guarantied Obligations or any other accommodation, indulgence or
forbearance granted to Borrower;
5.6 reorganization, merger or consolidation of Borrower or
such Guarantor into or with any other Person;
5.7 release of or non-perfection with respect to any or all
of the Collateral or any other security for the Guarantied
Obligations;
5.8 taking or accepting of any other security or collateral
for, or guaranty of, any or all of the Guarantied Obligations;
5.9 the death of or release of, or settlement or compromise
with, any one or more other Persons who have guarantied, or are
otherwise liable for the payment or performance of, any or all of
the Guarantied Obligations;
5.10 assignment or other transfer of, or granting of a
participation in, any of the Guarantied Obligations or any
Collateral or other security therefor, by Beneficiary;
5.11 other acts or omissions which, in the absence of this
Section 5 would operate so as to reduce, extinguish, discharge or
release such Guarantor's liability under this Guaranty (except
for the full and indefeasible payment of the Guarantied
Obligations, cancellation or termination of the Commitments,
expiration of all<PAGE>
<PAGE>
Letters of Credit, and termination of any other commitment to
extend credit or make advances to or for the account of
Borrower).
6. Waivers.
6.1 Notice. Each Guarantor hereby waives notice of
(i) acceptance of this Guaranty, (ii) any amendment, restatement
or other modification of any of the Loan Documents (including
modifications to interest rates or other payment terms of the
Guarantied Obligations), (iii) Advances to Borrower by
Beneficiary and fundings of Advances to Borrower by Beneficiary,
(iv) the occurrence of a Default or Event of Default, (v) any
matter referred to in Section 5 of this Guaranty, and (vi) any
other action at any time taken or omitted by Beneficiary, and
generally, all demands and notices of every kind in connection
with this Guaranty and the Loan Documents, except as expressly
provided herein and in the Loan Agreement.
6.2 Right of Contribution, Etc. Each Guarantor hereby
waives any right of contribution, subrogation, reimbursement,
indemnity, or repayment, and any other "claim", as that term is
defined in the United States Bankruptcy Code, which such
Guarantor might now have or hereafter acquire against Borrower or
any other Person liable for the payment or performance of the
Loan Obligations (other than pursuant to the Contribution
Agreement of even date herewith among the Guarantors) that arises
from the existence or performance of such Guarantor's obligations
under this Guaranty; and such Guarantor waives the right to
participate in any existing or future Collateral or other
security for the Guarantied Obligations. Each Guarantor further
agrees that such Guarantor will not enter into any agreement
providing, directly or indirectly, for any contribution,
subrogation, reimbursement, indemnity or repayment by Borrower on
account of any payment made by such Guarantor hereunder, and that
any such agreement would be void. Until Final Payment, no
Guarantor has any right of contribution, subrogation,
reimbursement, indemnity or repayment and no right of recourse to
or with respect to any assets or property of any other guarantor
or other Person liable for any of the Guarantied Obligations
(other than pursuant to the Contribution Agreement of even date
herewith among the Guarantors).
6.3 Other. Each Guarantor hereby waives (i) diligence,
presentment, demand for payment, protest or notice, whether of
nonpayment, dishonor, protest or otherwise, (ii) any and all
claims, counterclaims or defenses based upon, related to or
arising out of (a) any matter referred to in Section 5 of this
Guaranty, (b) any issue as to whether any sale or other
disposition of any security for the Guarantied Obligations was
conducted in a commercially reasonable fashion, (c) any election
of remedies by Beneficiary, and (d) a theory that this Guaranty
should be strictly<PAGE>
<PAGE>
construed against Beneficiary and Beneficiary, and (iv) all other
defenses (except Final Payment) under applicable Law that would,
but for this clause (iv), be available to such Guarantor as a
defense against, or a reduction, extinguishment, discharge or
release of its obligations under, this Guaranty.
7. Reinstatement of Guaranty in Certain Circumstances.
Each Guarantor agrees that, if any or all of a payment made by or
on behalf of Borrower of any Guarantied Obligation is returned by
any Person at any time for any reason, including pursuant to any
settlement, order (whether or not final) of a court of competent
jurisdiction, provision of the United States Bankruptcy Code,
other debtor relief Law or other applicable Law or because of
acts or omissions of Borrower, the Guarantied Obligations will
not be deemed to have been satisfied to the extent of the
returned payment and the obligations of such Guarantor will be
deemed to be reinstated automatically and to continue in full
force and effect. If Borrower ceases to be liable to Beneficiary
for any of the Loan Obligations (other than by reason of Final
Payment), then any prior release or discharge from this Guaranty
will be without effect and this Guaranty and the obligations of
each Guarantor hereunder will be automatically reinstated and
continue in full force and effect.
8. Representations and Warranties. Each Guarantor
represents and warrants to Beneficiary as follows:
8.1 Authorization. Each Guarantor is duly authorized to
execute and perform this Guaranty and this Guaranty has been
properly authorized by all requisite corporate, membership, or
partnership action (as the case may be) of such Guarantor. No
consent, approval or authorization of, or declaration or filing
with, any Governmental Authority or any other Person, is required
in connection with such Guarantor's execution, delivery or
performance of this Guaranty, except for those already duly
obtained.
8.2 Due Execution. This Guaranty has been executed on
behalf of each Guarantor by a legally competent Person duly
authorized to do so.
8.3 Enforceability. This Guaranty constitutes the legal,
valid and binding obligation of each Guarantor, enforceable
against such Guarantor in accordance with its terms, except to
the extent that the enforceability thereof against such Guarantor
may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar Laws affecting creditor's rights generally
or by equitable principles of general application.
<PAGE>
<PAGE>
8.4 Legal Restraints. The execution of this Guaranty by
each Guarantor, and the performance by such Guarantor of its
obligations under this Guaranty, will not violate or constitute a
default under the Charter Documents of such Guarantor, any
Material Agreement, or any Material Law, and will not, except as
expressly contemplated or permitted in this Guaranty, result in
any Security Interest being imposed on any of such Guarantor's
property.
8.5 Independent Credit Evaluation. Each Guarantor has
independently, and without reliance on any information supplied
by Beneficiary, taken, and will continue to take, whatever steps
such Guarantor deems necessary to evaluate the financial
condition and affairs of Borrower. Beneficiary has no duty to
advise any Guarantor of information at any time known to
Beneficiary regarding such financial condition or affairs.
8.6 No Representation By Beneficiary or Beneficiary.
Neither Beneficiary has not made any representation, warranty or
statement to any Guarantor to induce such Guarantor to execute
this Guaranty.
9. Survival of Representations. All representations,
warranties, and covenants of each Guarantor contained herein
survive the execution and delivery of this Guaranty, and
terminate only upon the full and indefeasible payment of all of
the Guarantied Obligations, cancellation or termination of all of
the Commitments, expiration of all Letters of Credit, and when
Beneficiary have no other commitment to extend credit or make
advances to or for the account of Borrower.
10. Authorization to Charge Accounts. Each Guarantor
hereby authorizes Beneficiary, if and to the extent any amount
payable by such Guarantor under this Guaranty is not otherwise
paid when due, to charge such amount against any or all of the
accounts of such Guarantor with Beneficiary or any Affiliate of
Beneficiary or any Affiliate of Beneficiary, with such Guarantor
remaining liable for any deficiency.
11. Beneficiary's Offset Rights. Upon the occurrence of
any Event of Default and at any time and from time to time
thereafter, Beneficiary is hereby authorized, without notice to
any Guarantor (any such notice being expressly waived by each
Guarantor), to setoff against the Guarantied Obligations any and
all deposits (general or special, time or demand, provisional or
final) at any time held, or any other Indebtedness at any time
owing by Beneficiary to or for the credit or the account of such
Guarantor, irrespective of whether or not demand has been made
under the Loan Agreement, any Note, or this Guaranty, and to
remit the proceeds of such setoff to Beneficiary for distribution
to Beneficiary and application to the Loan Obligations as
provided in the Loan Agreement.<PAGE>
<PAGE>
12. Enforcement. Each Guarantor acknowledges that all of
the Guarantors are liable jointly and severally for the full
amount of the Guarantied Obligations. Suits for the enforcement
of this Guaranty may be brought, at the option of Beneficiary,
against all Guarantors, or successively against each Guarantor,
or against one or more but not against all Guarantors.
13. Attorney's Fees and Other Costs. If Guarantors fail to
pay the Guarantied Obligations as required by this Guaranty, then
Guarantors will pay all costs incurred by Beneficiary in
enforcing this Guaranty, including reasonable attorneys' fees and
expenses (whether or not there is litigation), court costs and
all costs incurred in connection with any proceedings under the
United States Bankruptcy Code.
14. Records. Beneficiary's books and records showing the
account between Beneficiary and Borrower are admissible in
evidence in any action or proceeding with respect to this
Guaranty and constitute prima facie proof of the information
therein.
15. Binding Nature of Certain Adjudications. Each
Guarantor will be conclusively bound by the final adjudication in
any action or proceeding, legal or otherwise, involving any
controversy arising under, in connection with, or in any way
related to, any of the Guarantied Obligations, and by a final
judgment, award or decree entered therein, if such Guarantor had
the right, or was given the opportunity, to participate in such
action or proceeding and was given notice of such action or
proceeding in time to exercise such right or avail itself of such
opportunity.
16. Application of Payments. All payments made under this
Guaranty will be allocated among the principal and interest and
other components of the Guarantied Obligations and the other
obligations of a Guarantor hereunder in such order and amount as
Beneficiary may determine in its sole and absolute discretion.
17. Limitation of Liability. Beneficiary will not have any
liability with respect to, and each Guarantor hereby waives,
releases and agrees not to sue for, (i) any loss or damage
sustained by any Guarantor that may occur as a result of, in
connection with, or that is in any way related to, any act or
failure to act referred to in Section 5 of this Guaranty, or
(ii) any special, indirect or consequential damages suffered by
any Guarantor in connection with any claim related to this
Guaranty.
<PAGE>
<PAGE>
18. Miscellaneous.
18.1 Notices. All notices, consents, requests and demands
to or upon the respective parties hereto must be in writing, and
will be deemed to have been given or made when delivered in
person to those Persons listed on the signature pages hereof or
when deposited in the United States mail, postage prepaid, or, in
the case of telegraphic notice, or the overnight courier
services, when delivered to the telegraph company or overnight
courier service, or in the case of telex or telecopy notice, when
sent, verification received, in each case addressed as set forth
on the signature pages hereof, or to such other address as either
party may designate by notice to the other in accordance with the
terms of this Section. No notice given to or demand made on any
Guarantor by Beneficiary or Beneficiary in any instance entitles
Borrower to notice or demand in any other instance.
18.2 Amendments and Waivers. No amendment to, waiver of, or
departure from full compliance with any provision of this
Guaranty, or consent to any departure by any Guarantor herefrom,
will be effective unless it is in writing and signed by
authorized officers of such Guarantor and Beneficiary; provided,
however, that any such waiver or consent will be effective only
in the specific instance and for the purpose for which given. No
failure by Beneficiary to exercise, and no delay by Beneficiary
in exercising, any right, remedy, power or privilege hereunder
will operate as a waiver thereof, nor will any single or partial
exercise by Beneficiary of any right, remedy, power or privilege
hereunder preclude any other exercise thereof, or the exercise of
any other right, remedy, power or privilege.
18.3 Rights Cumulative. Each of the rights and remedies of
Beneficiary and Beneficiary under this Guaranty is in addition to
all of their other rights and remedies under applicable Law, and
nothing in this Guaranty may be construed as limiting any such
rights or remedies.
18.4 Successors and Assigns. This Guaranty binds Guarantors
and their respective successors and assigns and inures to the
benefit of Beneficiary, and each of its successors, transferees,
participants and assignees. No Guarantor may delegate or
transfer any of its obligations under this Guaranty without the
prior written consent of Beneficiary. With respect to
Guarantor's successors and assigns, such successors and assigns
include any receiver, trustee or debtor-in-possession of or for
Guarantor.
<PAGE>
<PAGE>
18.5 Severability. Any provision of this Guaranty which is
prohibited, unenforceable or not authorized in any jurisdiction
is, as to such jurisdiction, ineffective to the extent of such
prohibition, unenforceability or nonauthorization without
invalidating the remaining provisions hereof or affecting the
validity, enforceability or legality of such provision in any
other jurisdiction.
18.6 Governing Law; No Third Party Rights. This Guaranty is
to be governed by and construed and interpreted in accordance
with the internal Laws of the State of Missouri applicable to
contracts made and to be performed wholly within such state,
without regard to choice or conflicts of law principles. This
Guaranty is solely for the benefit of the parties hereto and
Beneficiary, and their respective successors and assigns, and no
other Person has any right, benefit, priority or interest under,
or because of the existence of, this Guaranty.
18.7 Counterparts. This Guaranty may be executed by the
parties hereto on any number of separate counterparts, and all
such counterparts taken together constitute one and the same
instrument. It is not necessary in making proof of this Guaranty
to produce or account for more than one counterpart signed by the
party to be charged.
18.8 Counterpart Facsimile Execution. For purposes of this
Guaranty, a document (or signature page thereto) signed and
transmitted by facsimile machine or telecopier is to be treated
as an original document. The signature of any Person thereon,
for purposes hereof, is to be considered as an original
signature, and the document transmitted is to be considered to
have the same binding effect as an original signature on an
original document. At the request of any party hereto, any
facsimile or telecopy document is to be re-executed in original
form by the Persons who executed the facsimile or telecopy
document. No party hereto may raise the use of a facsimile
machine or telecopier or the fact that any signature was
transmitted through the use of a facsimile or telecopier machine
as a defense to the enforcement of this Guaranty or any amendment
or other document executed in compliance with this Section.
18.9 Final Expression; No Course of Dealing. This Guaranty,
together with the Loan Agreement, the other Loan Documents and
any other agreement executed in connection herewith or therewith,
is intended by the parties as a final expression of their
agreement and is intended as a complete and exclusive statement
of the terms and conditions thereof. Acceptance of or
acquiescence in a course of performance or course of dealing
rendered or taken under or with respect to this Guaranty, the
Loan Agreement or the other Loan Documents will not be relevant
to determine the meaning of this<PAGE>
<PAGE>
Guaranty, the Loan Agreement or the other Loan Documents even
though the accepting or acquiescing party had knowledge of the
nature of the performance and opportunity for objection.
18.10 Negotiated Transaction. Each Guarantor and
Beneficiary each represent to the other that in the negotiation
and drafting of this Guaranty each has been represented by and
has relied upon the advice of counsel of its choice. Each
Guarantor and Beneficiary affirm that its counsel has had a
substantial role in the drafting and negotiation of this
Guaranty; therefore, this Guaranty will be deemed drafted by each
of Borrower and Beneficiary, and the rule of construction to the
effect that any ambiguities are to be resolved against the
drafter will not be employed in the interpretation of this
Guaranty.
18.11 Attorney's Fees and Other Costs. If Guarantors fail
to pay the Guarantied Obligations as required by this Guaranty,
then Guarantors will pay all costs incurred by Beneficiary in
enforcing this Guaranty, including reasonable attorneys' fees and
actual attorneys' expenses (whether or not there is litigation),
court costs and all reasonable costs incurred in connection with
any proceedings under the United States Bankruptcy Code.
18.12 Assignment By Beneficiary. To the extent permitted in
the Loan Agreement, Beneficiary may grant a participation
interest in or assign or transfer to another Person any
instrument, document or agreement evidencing any of the
Guarantied Obligations and Beneficiary's rights under this
Guaranty.
18.13 Choice of forum. Guarantors hereby agree to the
exclusive jurisdiction of the federal court of the Eastern
District of Missouri and the state courts of Missouri located in
St. Louis County or the City of St. Louis, Missouri, with respect
to any dispute exclusively between Beneficiary and any Guarantor
and waive any objection based on venue or forum non conveniens
with respect to any action instituted therein, and agree that any
dispute exclusively between Beneficiary and any Guarantor
concerning the relationship between any Guarantor and Beneficiary
or the conduct of any of them in connection with this Guaranty or
otherwise may be heard only in the courts described above.
18.14 Service of process. Each Guarantor hereby waives
personal service of any and all process upon it and consents that
all such service of process may be made by registered mail
(return receipt requested) directed to such Guarantor at its
address set forth on the signature page hereof, and service so
made will be deemed to be completed five (5) days after the same
has so deposited in the U.S. Mails, certified or registered; or
at Beneficiary's option, by service upon CT Corporation, which
each Guarantor irrevocably appoints as such Guarantor's agent for
the<PAGE>
<PAGE>
purpose of accepting service of process within the State of
Missouri. Beneficiary will promptly forward by registered mail
any process so served upon said agent to such Guarantor at its
address on the signature page hereof. Nothing in this Section
affects the right of Beneficiary to serve legal process in any
other manner permitted by Law.
18.15 Waiver of jury trial. Each Guarantor and Beneficiary
hereby waive any right to trial by jury of any claim, demand,
action or cause of action (i) arising under this Guaranty or any
other Loan Document, or (ii) in any way connected with or related
or incidental to the dealings of the parties hereto or either of
them in respect of this Guaranty or any other Loan Document, or
the transactions related hereto or thereto, in each case whether
now existing or hereafter arising, and whether sounding in
contract or tort or otherwise. Each Guarantor and Beneficiary
agree and consent that any such claim, demand, action or cause of
action will be decided by court trial without a jury and that
either may file an original counterpart or a copy of this
Guaranty with any court as written evidence of the consent of the
parties hereto to the waiver of their right to trial by jury.
[remainder of page intentionally left blank]<PAGE>
<PAGE>
IN WITNESS WHEREOF, this Guaranty has been duly executed as
of the date first above written.
Affholder, Inc. INA Acquisition Corp.
by its Vice President by its Vice President
--------------------- -----------------------
s/William A. Martin s/William A. Martin
- --------------------------- ----------------------------
Notice address: Notice address:
702 Spirit 40 Park Drive 702 Spirit 40 Park Drive
- --------------------------- ----------------------------
Chesterfield, MO 63005 Chesterfield, MO 63005
- --------------------------- ----------------------------
Attn: William A. Martin Attn: William A. Martin
---------------------- -----------------------
FAX # 314-530-8703 FAX # 314-530-8703
---------------------- -----------------------
TEL # 314-530-8034 TEL # 314-530-8034
---------------------- -----------------------
Insituform Central, Inc. Insituform Gulf South, Inc.
by its Vice President by its Vice President
--------------------- -----------------------
s/William A. Martin s/William A. Martin
- --------------------------- ----------------------------
Notice address: Notice address:
702 Spirit 40 Park Drive 702 Spirit 40 Park Drive
- --------------------------- ----------------------------
Chesterfield, MO 63005 Chesterfield, MO 63005
- --------------------------- ----------------------------
Attn: William A. Martin Attn: William A. Martin
---------------------- -----------------------
FAX # 314-530-8703 FAX # 314-530-8703
---------------------- -----------------------
TEL # 314-530-8034 TEL # 314-530-8034
---------------------- -----------------------
Insituform Mid-America, Inc. Insituform Midwest, Inc.
by its Vice President by its Vice President
--------------------- -----------------------
s/William A. Martin s/William A. Martin
- --------------------------- ----------------------------
<PAGE>
<PAGE>
Notice address: Notice address:
702 Spirit 40 Park Drive 702 Spirit 40 Park Drive
- --------------------------- ----------------------------
Chesterfield, MO 63005 Chesterfield, MO 63005
- --------------------------- ----------------------------
Attn: William A. Martin Attn: William A. Martin
---------------------- -----------------------
FAX # 314-530-8703 FAX # 314-530-8703
---------------------- -----------------------
TEL # 314-530-8034 TEL # 314-530-8034
---------------------- -----------------------
Insituform Missouri, Inc. Insituform of New England,
Inc.
by its Vice President by its Treasurer
--------------------- -----------------------
s/William A. Martin s/William A. Martin
- --------------------------- ----------------------------
Notice address: Notice address:
702 Spirit 40 Park Drive 702 Spirit 40 Park Drive
- --------------------------- ----------------------------
Chesterfield, MO 63005 Chesterfield, MO 63005
- --------------------------- ----------------------------
Attn: William A. Martin Attn: William A. Martin
---------------------- -----------------------
FAX # 314-530-8703 FAX # 314-530-8703
---------------------- -----------------------
TEL # 314-530-8034 TEL # 314-530-8034
---------------------- -----------------------
Insituform North, Inc. Insituform North America Corp.
by its Vice President by its Vice President
--------------------- -----------------------
s/William A. Martin s/William A. Martin
- --------------------------- ----------------------------
Notice address: Notice address:
702 Spirit 40 Park Drive 702 Spirit 40 Park Drive
- --------------------------- ----------------------------
Chesterfield, MO 63005 Chesterfield, MO 63005
- --------------------------- ----------------------------
Attn: William A. Martin Attn: William A. Martin
---------------------- -----------------------
FAX # 314-530-8703 FAX # 314-530-8703
---------------------- -----------------------
TEL # 314-530-8034 TEL # 314-530-8034
---------------------- -----------------------<PAGE>
<PAGE>
Insituform Plains, Inc. Insituform Rockies, Inc.
by its Vice President by its Vice President
--------------------- -----------------------
s/William A. Martin s/William A. Martin
- --------------------------- ----------------------------
Notice address: Notice address:
702 Spirit 40 Park Drive 702 Spirit 40 Park Drive
- --------------------------- ----------------------------
Chesterfield, MO 63005 Chesterfield, MO 63005
- --------------------------- ----------------------------
Attn: William A. Martin Attn: William A. Martin
---------------------- -----------------------
FAX # 314-530-8703 FAX # 314-530-8703
---------------------- -----------------------
TEL # 314-530-8034 TEL # 314-530-8034
---------------------- -----------------------
Insituform Southeast, Inc. Insituform Southwest
By: Insituform Southwest, Inc.
Managing Partner
by its Vice President by its Vice President
--------------------- ----------------------
s/William A. Martin s/William A. Martin
- --------------------------- ----------------------------
Notice address: Notice address:
702 Spirit 40 Park Drive 702 Spirit 40 Park Drive
- --------------------------- ----------------------------
Chesterfield, MO 63005 Chesterfield, MO 63005
- --------------------------- ----------------------------
Attn: William A. Martin Attn: William A. Martin
---------------------- -----------------------
FAX # 314-530-8703 FAX # 314-530-8703
---------------------- -----------------------
TEL # 314-530-8034 TEL # 314-530-8034
---------------------- -----------------------
Insituform Texark, Inc. Insituform West, Inc.
by its Vice President by its Vice President
--------------------- -----------------------
s/William A. Martin s/William A. Martin
- --------------------------- ----------------------------
<PAGE>
<PAGE>
Notice address: Notice address:
702 Spirit 40 Park Drive 702 Spirit 40 Park Drive
- --------------------------- ----------------------------
Chesterfield, MO 63005 Chesterfield, MO 63005
- --------------------------- ----------------------------
Attn: William A. Martin Attn: William A. Martin
---------------------- -----------------------
FAX # 314-530-8703 FAX # 314-530-8703
---------------------- -----------------------
TEL # 314-530-8034 TEL # 314-530-8034
---------------------- -----------------------
NuPipe, Inc. United Pipeline Systems
USA, Inc.
by its Vice President by its Vice President
--------------------- -----------------------
s/William A. Martin s/William A. Martin
- --------------------------- ----------------------------
Notice address: Notice address:
702 Spirit 40 Park Drive 702 Spirit 40 Park Drive
- --------------------------- ----------------------------
Chesterfield, MO 63005 Chesterfield, MO 63005
- --------------------------- ----------------------------
Attn: William A. Martin Attn: William A. Martin
---------------------- -----------------------
FAX # 314-530-8703 FAX # 314-530-8703
---------------------- -----------------------
TEL # 314-530-8034 TEL # 314-530-8034
---------------------- -----------------------
<PAGE>
<PAGE>
CONTRIBUTION AGREEMENT
This Contribution Agreement ("Agreement") is entered into as
of August 20, 1997, by and among Affholder, Inc., a Missouri
corporation, INA Acquisition Corp., a Delaware corporation,
Insituform Central, Inc., a Delaware corporation, Insituform Gulf
South, Inc., a Delaware corporation, Insituform Mid-America,
Inc., a Delaware corporation, Insituform Midwest, Inc., a
Delaware corporation, Insituform Missouri, Inc., a Delaware
corporation, Insituform of New England, Inc., a Massachusetts
corporation, Insituform North, Inc., a Delaware corporation,
Insituform North America Corp., a Tennessee corporation,
Insituform Plains, Inc., a Delaware corporation, Insituform
Rockies, Inc., a Delaware corporation, Insituform Southeast,
Inc., a Florida corporation, Insituform Southwest, a California
partnership, Insituform Texark, Inc., a Delaware corporation,
Insituform West, Inc., an Oregon corporation, NuPipe, Inc., an
Oregon corporation, and United Pipeline Systems USA, Inc., a
Delaware corporation (each individually a "Contributor", and
collectively the "Contributors") for the benefit of NationsBank,
N.A., a national banking association (the "Beneficiary").
Recitals
--------
A. Insituform Technologies, Inc., a Delaware corporation
("Borrower") and Beneficiary have entered into that certain Loan
Agreement of even date herewith (as it may be amended, restated,
extended, renewed, replaced, or otherwise modified from time to
time, the "Loan Agreement").
B. As a condition, among others, to Beneficiary's
willingness to enter into the Loan Agreement and provide credit
thereunder, Beneficiary has required each of the Contributors to
guaranty the Loan Obligations of Borrower. Each of the
Contributors has executed an Unlimited Guaranty, dated as of even
date herewith (collectively, the "Guaranty"), in which such
Contributor guaranties to Beneficiary the full and prompt payment
and performance of the Loan Obligations and all costs of
collection thereof, including but not limited to reasonable
attorneys' fees and expenses (whether or not there is
litigation), court costs and all costs in connection with any
proceedings under the United States Bankruptcy Code (the
"Guarantied Obligations").
C. Each of the Contributors is engaged in a business
related to the business of each other Contributor. Each
Contributor is a direct or indirect subsidiary of Borrower. Each
of the Contributors will derive direct and indirect economic
benefit from all of the financial accommodations provided by
Beneficiary under the Loan Agreement.
<PAGE>
<PAGE>
Agreement
---------
In consideration of the foregoing, the mutual agreements
below and other sufficient consideration, the receipt of which is
hereby acknowledged, the parties hereto hereby agree as follows
for the benefit of the Beneficiary:
1. Definitions.
1.1. In General. Capitalized terms used and not otherwise
defined herein have the meanings given them in the Loan
Agreement.
1.2. Special Definitions. As used in this Agreement,
1.2.1. "Insolvency Proceeding" means and includes
(i) any judicial or non-judicial proceeding seeking or
involving the appointment of a receiver, trustee,
conservator, or liquidator for a Contributor or its assets,
(ii) an assignment by a Contributor for the benefit of its
creditors, or a composition or arrangement by a Contributor
with its creditors, or (iii) a voluntary or involuntary
proceeding for liquidation or reorganization of a
Contributor under the Bankruptcy Code; and
1.2.2. "Marshalling Event" means and includes
(i) the liquidation of a Contributor in connection with its
dissolution, (ii) the sale of all or substantially all of
the assets of a Contributor, whether or not in connection
with its dissolution, (iii) the dissolution of a
Contributor, or (iv) any other event or transaction in which
the assets or liabilities of a Contributor are marshalled
other than an Insolvency Proceeding, in each case under this
Section 1.2.2, other than in a transaction not prohibited by
the Loan Agreement.
2. Mutual Contribution Obligations.
2.1. To the extent that any Contributor makes a payment on
any of its Guarantied Obligations (a "Guarantied Obligation
Payment"), then such Contributor (the "Entitled Contributor") is
entitled to contribution and indemnification from, and
reimbursement by, each other Contributor in the amount of the
Contribution Obligation of such other Contributor hereunder.
2.2. The "Contribution Obligation" of a Contributor with
respect to a Guarantied Obligation Payment of an Entitled
Contributor is an amount equal to the greater of
(a) the lesser of (i) such Contributor's Guarantied
Obligation Limit at the time the Guarantied Obligation
Payment is made and (ii) such Contributor's Allocable Share
of the Guarantied Obligation Payment, and<PAGE>
<PAGE>
(b) the amount of all proceeds from the Revolving Loans or
the benefit of the Letters of Credit actually received by
such Contributor or applied by Beneficiary or the recipient
thereof directly or indirectly for the benefit of such
Contributor, less the sum of any repayments thereof and any
Guarantied Obligation Payments made by such Contributor
prior to the time the applicable Guarantied Obligation
Payment is made.
2.3. The "Guarantied Obligation Limit" of each Contributor
is the maximum amount of liability which could be asserted and
enforced by Beneficiary against such Contributor with respect to
the Guarantied Obligations as of the time of the applicable
Guarantied Obligation Payment without (i) rendering such
Contributor "insolvent" within the meaning of Section 101(32) of
the Bankruptcy Code, Section 2 of the Uniform Fraudulent Transfer
Act (the "UFTA") or Section 428.014 of the Missouri Revised
Statutes, (ii) leaving such Contributor with unreasonably small
capital, within the meaning of Section 548 of the Bankruptcy
Code, Section 4 of the UFTA or Section 428.024 of the Missouri
Revised Statutes, or (iii) leaving such Contributor unable to pay
its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code, Section 4 of the UFTA or Section 428.024 of
the Missouri Revised Statutes.
2.4. The "Allocable Share" of a Contributor is a fraction,
the numerator of which is such Contributor's Guarantied
Obligation Limit at the time the applicable Guarantied Obligation
Payment is made and the denominator of which is the sum of the
Guarantied Obligation Limit of all of the Contributors as of such
time.
3. Subordination of Intercompany Claims Among Contributors.
3.1. Until Final Payment, and without in any way limiting
any provisions of any Loan Document, the following provisions
apply.
3.1.1. Every claim for contribution, indemnity or
reimbursement arising under Section 2 of this Agreement
(collectively, the "Intercompany Claims"), are hereby
subordinated in right of payment to all of the Guarantied
Obligations of the Contributors, including but not limited
to those which arise after the commencement of an Insolvency
Proceeding with respect to any Contributor, whether or not
allowed or allowable as a claim against such Contributor or
its assets in such Insolvency Proceeding.
3.1.2. No Contributor is entitled to receive any
payments in cash, securities or other property, or by means
of set-off, with respect to any Intercompany Claim.
<PAGE>
<PAGE>
3.1.3. Each Contributor will immediately pay over to
Beneficiary all amounts received by it in payment of its
Intercompany Claims against other Contributors, including
but not limited to all cash, securities or other property
received in any Insolvency Proceeding or in connection with
any Marshalling Event on account of its Intercompany Claims,
in the precise form in which such amounts are received (with
any endorsements thereon or assignments thereof as may be
required by Beneficiary), for application to the Loan
Obligations in such order and relative amounts as
Beneficiary determines in its sole discretion. In the event
a Contributor fails to make any such endorsement or
assignment to Beneficiary, Beneficiary or any of its
officers or employees is hereby irrevocably authorized to do
so on behalf of such Contributor, as such Contributor's
attorney-in-fact. Until so paid over, such Contributor will
hold such amounts in trust for Beneficiary.
3.1.4. No Contributor will, without the prior
written consent of Beneficiary, (a) make demand for,
accelerate, sue for or otherwise enforce, or seek to
enforce, any right or remedy with respect to any
Intercompany Claim or any security therefor, by judicial or
administrative action or otherwise, or (b) file or join the
filing of any petition commencing an Insolvency Proceeding
against another Contributor, or otherwise initiate or
participate in the initiation of any similar proceedings for
the benefit of creditors of another Contributor;
3.1.5. If an Insolvency Proceeding is commenced
with respect to a Contributor, or a Marshalling Event occurs
with respect to a Contributor, each other Contributor will
timely file all claims, proofs of claim or other instruments
of similar character necessary to enforce its Intercompany
Claims. If any such other Contributor fails timely to do
so, Beneficiary, or any of its officers or employees, is
hereby irrevocably authorized to do so as attorney-in-fact
for such other Contributor.
3.1.6. Each Contributor hereby appoints
Beneficiary, or any of its officers or employees, as
attorney-in-fact for such Contributor (which appointment is
acknowledged to be coupled with an interest and is,
therefore, irrevocable), with the power but not the duty to
(i) file any claim, proof of claim or other instrument of
similar character in any Insolvency Proceeding with respect
to another Contributor, to vote claims comprising
Intercompany Claims in any such Insolvency Proceeding, and
to accept or reject any plan of partial or complete
liquidation, reorganization, arrangement, composition or
extension in any such Insolvency Proceeding, (ii) demand,
sue for, collect and receive any moneys, dividends or other <PAGE>
<PAGE>
assets in payment of Intercompany Claims and give
acquittance therefor, and (iii) take such other action in
Beneficiary's own name or in the name of any Contributor as
Beneficiary may deem necessary or advantageous for the
enforcement of Intercompany Claims. Each Contributor will
execute and deliver to Beneficiary such additional powers-
of-attorney and other instruments as Beneficiary may deem
necessary to accomplish the foregoing.
3.2. The provisions of Section 3.1 notwithstanding, so long
as no Event of Default has occurred, Intercompany Claims against
a Contributor may be paid in the ordinary course of such
Contributor's business as conducted on the date of this Agreement
to the extent not prohibited by the Loan Agreement or other Loan
Documents. Following the occurrence of an Event of Default, all
such payments will be made directly to Beneficiary for
application to the Loan Obligations.
4. This is a continuing agreement of each Contributor and
Beneficiary may continue, at any time and without notice to any
Contributor, to extend credit or other financial accommodations
and loan monies to Borrower on the faith hereof. If any
Contributor has a waivable right under applicable law or
otherwise to terminate or revoke the provisions of Section 3,
such Contributor hereby irrevocably waives such right. If any
Contributor has any non-waivable right under applicable law or
otherwise to terminate or revoke the provisions of Section 3,
such termination or revocation is not effective until written
notice of such termination or revocation, signed by such
Contributor, is actually received by Beneficiary. Such
termination or revocation will not affect this Agreement in
relation to any of the Guarantied Obligations which arose prior
to receipt thereof or which are created after receipt thereof, if
such Guarantied Obligations were incurred either through
readvances by Beneficiary pursuant to Beneficiary's financing
arrangements with Borrower or for the purpose of protecting any
of the Collateral, including but not limited to all protective
advances, costs, expenses, and attorneys' fees, whenever made,
advanced or incurred by Beneficiary in connection with the Loan
Obligations. If, in reliance on this Agreement, Beneficiary
extends credit or other financial accommodations or loans monies
to or for the benefit of any Contributor, or takes other action
under the Loan Documents after any such termination or revocation
by a Contributor, but prior to the receipt by Beneficiary of
written notice as required above, the rights of Beneficiary are
the same as if such termination or revocation had not occurred.
<PAGE>
<PAGE>
5. Each Contributor acknowledges that all Advances made by
Beneficiary under the Loan Agreement and other Loan Documents
will be made in reliance upon this Agreement. Each Contributor
expressly waives all notices not specifically required pursuant
to the terms of this Agreement, and each Contributor expressly
waives reliance by Beneficiary upon the subordination and other
agreements herein. Each Contributor acknowledges that no
Contribution Obligation will be diminished or extinguished by,
and that no Contributor is entitled to raise as a defense to any
Contribution Obligation, any:
5.1. invalidity, irregularity or unenforceability of the
Loan Obligations, the Guarantied Obligations, or of any
Contribution Obligation;
5.2. failure of Contributor to be given notice of default
with respect to the Loan Obligations;
5.3. reorganization, merger or consolidation of any Borrower
or Contributor into or with any other Person;
5.4. waiver of Borrower's defaults or extensions of due
dates for payments or other accommodations, indulgences or
forbearance granted to Borrower with respect to the Loan
Obligations or the Loan Documents;
5.5. release of or non-perfection with respect to part or
all of any security for the Loan Obligations;
5.6. taking or accepting of any other security, collateral
or guaranty of payment of any or all of the Loan Obligations;
5.7. release of or settlement or compromise with any one or
more Contributors or by release of or settlement or compromise
with any one or more other Persons who are otherwise liable for
the payment or performance of all or any portion of the Loan
Obligations;
5.8. assignment or other transfer by Beneficiary of any part
of the Loan Obligations or any collateral or security securing
any portion of the Loan Obligations; or
5.9. other acts or omissions which, in the absence of this
Section, would operate so as to impair, diminish or extinguish
any Contributor's liability hereunder, except for full and
irrevocable payment of the Loan Obligations.
<PAGE>
<PAGE>
6. Except as expressly set forth herein, each Contributor
acknowledges that Beneficiary has made no warranties or
representations with respect to the due execution, legality,
validity, completeness or enforceability of any of the Loan
Documents or the collectibility of the Loan Obligations.
Beneficiary is entitled to manage and supervise its loans to
Borrower in accordance with applicable law and Beneficiary's
usual practices, modified from time to time as Beneficiary deems
appropriate under the circumstances, without regard to the
existence of any rights that any Contributor may now or hereafter
have with respect to other Contributors. Beneficiary will not
have any liability to any Contributor for, and each Contributor
hereby waives any claim which any Contributor may now or
hereafter have against, Beneficiary arising out of any actions
which Beneficiary takes or omits to take with respect to any Loan
Documents or to the collection of the Loan Obligations or the
valuation, use, protection or release of any of the Collateral
(including but not limited to actions with respect to the
creation, perfection or continuation of liens or security
interests in any of the Collateral, actions with respect to any
Default or Event of Default, actions with respect to foreclosure
upon, sale, release, or depreciation of, or failure to realize
upon, any of the Collateral, and actions with respect to the
collection of any claim for all or any part of the Loan
Obligations from any account debtor, guarantor or any other
party).
7. Except as provided herein, no Contributor, as a result of
any Intercompany Claim, has any right of contribution,
reimbursement, repayment, subrogation or indemnity or right of
recourse to or with respect to any assets or property of any
other Contributor until Final Payment.
8. Miscellaneous.
8.1. Nothing set forth in this Agreement impairs the
obligations of Borrower to pay any amounts, as and when the same
becomes due and payable in accordance with the terms of the Loan
Agreement or any of the other Loan Documents.
8.2. Each Contributor will maintain a record of all
disbursements of Loan proceeds to, transfers of Loan proceeds to,
transfers of Loan proceeds by, and repayments of Loan proceeds
by, such Contributor.
8.3. The parties hereto acknowledge that the rights of
contribution, indemnification and reimbursement hereunder
constitute assets in favor of each Contributor to which such
contribution, indemnification and reimbursement is owing.
8.4. Each Contributor agrees and acknowledges that each
Intercompany Claim is payable upon demand, subject to the terms
of this Agreement.
<PAGE>
8.5. This Agreement has been delivered in St. Louis,
Missouri and is to be governed by and construed and interpreted
in accordance with the internal laws of the State of Missouri
applicable to contracts made and to be performed wholly within
such state, without regard to choice or conflicts of law
principles.
8.6. Wherever possible, each provision of this Agreement is
to be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is
prohibited by or invalid under such law, such provision is
ineffective to the extent of such prohibition or invalidity
without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
8.7. This Agreement may be executed by the parties hereto on
any number of separate counterparts, and all such counterparts
taken together constitute one and the same instrument. It is not
necessary in making proof of this Agreement to produce or account
for more than one counterpart signed by the party to be charged.
For purposes of this Agreement, a document (or signature page
thereto) signed and transmitted by facsimile machine or
telecopier is to be treated as an original document. The
signature of any Person thereon, for purposes hereof, is to be
considered as an original signature, and the document transmitted
is to be considered to have the same binding effect as an
original signature on an original document. At the request of
any party hereto, any facsimile or telecopy document is to be re-
executed in original form by the Persons who executed the
facsimile or telecopy document. No party hereto may raise the
use of a facsimile machine or telecopier or the fact that any
signature was transmitted through the use of a facsimile or
telecopier machine as a defense to the enforcement of this
Agreement or any amendment or other document executed in
compliance with this Section.
8.8. If one or more Contributors (the "Released
Contributors") is released from the Guaranty by written consent
of Beneficiary, this Agreement will be deemed amended to apply
only to those Contributors which have not been released. In such
event, the calculations described in Section 2 of this Agreement
will be performed as if the Released Contributors were never a
party to this Agreement.
[remainder of page intentionally left blank]<PAGE>
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the date first above written.
Affholder, Inc. INA Acquisition Corp
by its Vice President by its Vice President
-------------------- -------------------------
s/William A. Martin s/William A. Martin
- -------------------------- -------------------------------
Insituform Central, Inc. Insituform Gulf South, Inc.
by its Vice President by its Vice President
-------------------- -------------------------
s/William A. Martin s/William A. Martin
- -------------------------- -------------------------------
Insituform Mid-America, Inc. Insituform Midwest, Inc.
by its Vice President by its Vice President
-------------------- -------------------------
s/William A. Martin s/William A. Martin
- -------------------------- -------------------------------
Insituform Missouri, Inc. Insituform of New England, Inc.
by its Vice President by its Treasurer
-------------------- -------------------------
s/William A. Martin s/William A. Martin
- -------------------------- -------------------------------
Insituform North, Inc. Insituform North America Corp.
by its Vice President by its Vice President
-------------------- -------------------------
s/William A. Martin s/William A. Martin
- -------------------------- -------------------------------
Insituform Plains, Inc. Insituform Rockies, Inc.
by its Vice President by its Vice President
-------------------- -------------------------
s/William A. Martin s/William A. Martin
- -------------------------- -------------------------------
<PAGE>
<PAGE>
Insituform Southeast, Inc. Insituform Southwest (partnership)
By: Insituform Southwest, Inc.
Managing Partner
by its Vice President by its Vice President
-------------------- -------------------------
s/William A. Martin s/William A. Martin
- -------------------------- -------------------------------
Insituform Texark, Inc. Insituform West, Inc.
by its Vice President by its Vice President
-------------------- -------------------------
s/William A. Martin s/William A. Martin
- -------------------------- -------------------------------
NuPipe, Inc. United Pipeline Systems USA, Inc.
by its Vice President by its Vice President
-------------------- -------------------------
s/William A. Martin s/William A. Martin
- -------------------------- -------------------------------
Agreed to and accepted as
of the date first written above
NATIONSBANK, N.A.
by its Vice President
----------------------
s/Emil A. Krueger
- ----------------------------
EXHIBIT 10(d)
Amendment No. 1
Amendment No. 1 to the Agreement dated July 25, 1997, among
the signatories hereto (the "Agreement"). Capitalized terms used
herein have the meaning set forth in the Agreement.
WHEREAS, pursuant to Section 2(f) of the Agreement, no final
determination has been made with respect to the "Additional
Nominee";
WHEREAS, the 1997 Annual Meeting is scheduled for October 8,
1997 and the parties hereto desire, in the interests of the
Company, not to delay the 1997 Annual Meeting;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein the parties hereto agree as follows:
1. Notwithstanding the provisions of Section 2(f)(ii) of the
Agreement, Mr. Wight (or his successor pursuant to the Agreement)
shall have 60 days following the 1997 Annual Meeting to select the
Additional Nominee, and any selection made to date shall be deemed
in abeyance until resubmitted by Mr. Wight (which he shall be
permitted to effect) and any response to such selection by Mr.
Kalishman shall similarly be deemed in abeyance until reiteration
by Mr. Kalishman (which he shall be permitted to effect).
Thereafter, the provisions of Section 2(f)(ii) shall be applicable,
including, without limitation, the right of Mr. Wight to make
further nominations within two months after each non-approval is
finally determined. In the event Mr. Kalishman (or his successor
pursuant to the Agreement) does not approve any nominee selected by
Mr. Wight because of a material financial or a close personal or
familial relationship with another director or affiliate of a
director, the determination of whether such approval has been
unreasonably withheld shall be made by the Board of Directors of
the Company as constituted following the 1997 Annual Meeting.
2. This Amendment No. 1 may be executed in counterparts,
each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, this Amendment No. 1 has been duly
executed by the parties hereto as the date first above written.
XANADU INVESTMENTS L.P. INSITUFORM TECHNOLOGIES, INC.
By: The Jerome Kalishman By: Anthony W. Hooper
Revocable Trust
By: s/Jerome Kalishman By: s/Russell B. Wight, Jr.
-------------------------- ----------------------------
Trustee Russell B. Wight, Jr.
<PAGE>
<PAGE>
By: The Nancy F. Kalishman s/Paul A. Biddelman
Revocable Trust ---------------------------
By: s/Nancy F. Kalishman s/Sheldon Weinig
--------------------------- ---------------------------
Trustee
s/Jerome Kalishman s/Silas Spengler
-------------------------- ---------------------------
s/Nancy Kalishman s/Anthony W. Hooper
-------------------------- ---------------------------
The Jerome and Nancy Kalishman
Family Fund
By: Jerome Kalishman
---------------------------
Trustee
s/Robert W. Affholder
---------------------------
s/Stephen P. Cortinovis
---------------------------
EXHIBIT 10(e)
Amendment No. 2 dated as of October 8, 1997 to Agreement dated
as of October 25, 1995, as supplemented by letter agreement dated
November 18, 1996 (the "Original Agreement"), between Insituform
Technologies, Inc. (the "Corporation") and Jerome Kalishman (the
"Vice Chairman").
W I T N E S S T H:
WHEREAS, the parties have entered into the Original Agreement
and desire to effectuate the amendments thereto hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties agree as follows:
1. Term. Paragraph A of Section II of the Original Agreement
is hereby amended by deleting the reference to "December 9, 1998"
and substituting therefor a reference to "December 9, 1999".
2. Payments. Paragraph A of Section III of the Original
Agreement is hereby deleted in its entirety and the following
paragraph substituted therefor:
"A. The Corporation hereby agrees to pay, and the
Vice Chairman hereby agrees to accept, as full
compensation for the services to be rendered by him under
Section I hereunder, an annual fee of $100,000, payable
in equal installments at the end of such regular payroll
accounting periods as are established by the Corporation,
or in such other installments upon which the parties
hereto shall mutually agree, during the period from the
date hereof through December 9, 1998 (such annual amount
to be appropriately pro rated in the event any period
shorter than one year falls within the period during
which such amount is due)."
3. Office Facilities. The last sentence of Paragraph B of
Section III of the Original Agreement is hereby deleted in its
entirely and the following sentence substituted therefor:
"During the Term, the Corporation shall furnish to the
Vice Chairman office facilities and secretarial services
at the Corporation's head offices equivalent to those
provided to him as of August 1, 1997."
3. Miscellaneous. Except as set forth herein, the Original
Agreement shall remain in full force and effect and continue to
bind the parties hereto. This Amendment No. 2 contains the entire
agreement of the parties with respect to the subject matter herein
and supersedes all other understandings, oral or written, with
respect thereto. This Amendment No. 2 may be executed in
counterparts, each of which shall be deemed an original and both of
which shall constitute one and the same agreement.
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Amendment No. 2 as of the date first-above written.
INSITUFORM TECHNOLOGIES, INC.
By s/Anthony W. Hooper
----------------------------
s/Jerome Kalishman
------------------------------
Jerome Kalishman
EXHIBIT 99
Excerpt from Proxy Statement dated August 28,
1997 of Insituform Technologies, Inc. under
the caption "IV. Settlement Agreement"
(pages 6-9):
Amendments to the Company's Certificate of Incorporation and
By-Laws. Pursuant to the Settlement Agreement, the Company agreed,
subject to the requisite approval of the Stockholders at the Annual
Meeting, to amend Article SIXTH of its Certificate of Incorporation
to eliminate classification of the Board of Directors and to
provide that, subsequent to the succession to office following the
Annual Meeting of the New Nominees, vacancies in the Board of
Directors will no longer be filled as set forth in Section 7.3 of
the Merger Agreement but will be filled as set forth in the
Settlement Agreement.
Pursuant to the Settlement Agreement, the Company also agreed:
(i) subject to the requisite approval of the Stockholders at the
Annual Meeting, to amend Article III, Section 2 of its By-Laws to
reduce the size of the Board of Directors from thirteen directors
to eight directors, provided that the size of the Board of
Directors shall increase automatically to nine directors upon the
election or appointment, in accordance with the terms of the
Settlement Agreement, of an additional nominee to the Board of
Directors, (ii) to amend Article III of the Company's By-Laws to
add a new Section 14 to be entitled "NOTICE AND APPROVAL OF CERTAIN
ACTIONS," which would provide that, notwithstanding any other
provision of the Company's By-Laws (and except for the
implementation of the other amendments to the Company's Certificate
of Incorporation and By-Laws contemplated by the Settlement
Agreement): (x) in the event that any director proposes to bring
before any regular or special meeting of the Company's Board of
Directors any proposal relating to any amendment of the Company's
Certificate of Incorporation or By-Laws or the Settlement
Agreement, or any change in the structure, composition (other than
such director's resignation) or governance of the Board of
Directors (any such action shall be referred to herein as a
"Special Action"), such director must provide written notice
thereof (including a reasonably detailed description of such
proposal) to each member of the Board of Directors at least seven
days prior to the date of the directors' meeting at which the
Special Action is to be proposed; and (y) the taking of any Special
Action by the Board of Directors must be approved by a majority of
all directors then serving; provided, however, that no Special
Action which would have any effect prior to the 1999 Annual Meeting
may be taken if such Special Action would conflict with, have the<PAGE>
<PAGE>
effect of modifying or otherwise frustrating any provision of the
Settlement Agreement, including, without limitation, any amendment
to Article SIXTH of the Company's Certificate of Incorporation or
Article III, Section 2 of the Company's By-Laws, as such provisions
will be in effect following the Annual Meeting; and (iii) to amend
Article IV, Section 4B of the Company's By-Laws to provide that,
notwithstanding any other provision of the Company's By-Laws, the
Vice Chairman of the Board, acting in any capacity, shall not have
the power to call any special meeting of Stockholders.
At a meeting thereof held on August 18, 1997, the Company's
Board of Directors approved the Charter Amendment and the By-Law
Amendment and recommended such amendments for approval by the
Stockholders, and also amended the By-Laws as otherwise
contemplated by the Settlement Agreement. At such meeting, as
contemplated by the Settlement Agreement, the Board of Directors
also authorized cancellation of Section 7.3 of the Merger
Agreement, which contains certain provisions that governed the
structure and composition of the Board of Directors, such
cancellation subject to and effective upon approval of proposals
set forth herein and the Delaware Filing.
Provisions Regarding the Election of Directors at the Annual
Meeting. Pursuant to the Settlement Agreement, the Company obtained
the resignations of Messrs. Chandler, Gorham, Krugman, Roth and
Siteman from the Board of Directors, to be effective upon the
succession to office of the New Nominees or at such earlier time as
they, respectively, may subsequently communicate to the Company.
The Company also agreed, pursuant to the Settlement Agreement, that
the New Nominees would consist of Messrs. Affholder, Biddelman,
Cortinovis, Hooper, Kalishman, Spengler, Weinig and Wight. The
Company also agreed to the appointment to the Board of an
additional nominee who (i) has no material financial or close
personal or familial relationship with any other director or
affiliate of a director and (ii) who is qualified to serve as a
director.
The Settlement Agreement provides that the proposed additional
nominee shall be selected by Mr. Wight on or prior to September 25,
1997, subject to the approval of Mr. Kalishman, which will not be
unreasonably withheld. In the event that Mr. Kalishman withholds
approval of a proposed additional nominee on grounds specified in
(ii) of the preceding paragraph, the matter shall be referred to
Directorship, 8 Sound Shore Drive, Greenwich, Connecticut 06830
("Directorship"), who shall act as an arbitrator to determine
whether such approval was properly withheld by Mr. Kalishman. In
each event of Mr. Kalishman's withholding approval of any proposed
additional nominee pursuant to the Settlement Agreement, Mr. Wight
shall have an additional two months to select another proposed
additional nominee. In the event that Mr. Wight fails to designate
a proposed additional nominee within the required period, the
additional nominee shall be selected by the Nominating Committee
from a list of three candidates provided by Directorship, each of<PAGE>
<PAGE>
whom (x) shall have appropriate qualifications to serve on the
Company's Board of Directors and (y) shall not have a material
financial or a close personal or familial relationship with any
other director or affiliate of a director. In the event that both
members of the Nominating Committee are unable to select a nominee
from the list provided by Directorship within ten business days
after receipt of such list, each member of the Nominating Committee
shall eliminate one candidate from the list and the remaining
candidate shall become the additional nominee. The additional
nominee shall be required to execute a counterpart of the
Settlement Agreement.
Vice Chairmanship Agreement. The Settlement Agreement provides
that the arrangements under which Mr. Kalishman became Vice
Chairman of the Board in October 1995 in connection with the IMA
Merger will be extended for one year, during which salary will not
be payable but benefits and office arrangements will continue. See
"V. Other Information-Director Compensation" below.
Voting Agreement With Respect to the Annual Meeting. Pursuant
to the Settlement Agreement, each party thereto (other than the
Company) agreed to cause all shares of Common Stock beneficially
owned by such party to be voted at the Annual Meeting in favor of
(i) the Charter Amendment, (ii) the By-Law Amendment and (iii) the
election of the New Nominees to the Board of Directors.
Furthermore, each party to the Settlement Agreement (other than the
Company) agreed that it would not bring any business before the
Annual Meeting except as expressly contemplated by the Settlement
Agreement.
Termination of the Proxy Contest. Pursuant to the Settlement
Agreement, the Kalishman/Affholder Group agreed (i) to immediately
terminate all activities with respect to its solicitation of
proxies in connection with the Annual Meeting, (ii) to not directly
or indirectly solicit any proxies or participate in any
solicitation of any proxy with respect to matters to be presented
at the Annual Meeting or become a participant in any election
contest relating to the Annual Meeting, (iii) to promptly remove
Mr. Affholder from the "group" referred to in the amendment to
Schedule 13D dated as of June 11, 1997 filed by members of the
Kalishman/Affholder Group (the Kalishman/Affholder Group without
Mr. Affholder shall be referred to herein as the "Kalishman
Group"), (iv) to promptly file an amendment to such Schedule 13D
and to any and all other statementS filed by any member of the
Kalishman/Affholder Group pursuant to the Exchange Act to reflect
the termination of the proxy contest and the other provisions of
the Settlement Agreement and (v) to not take any other actions
inconsistent with the matters contemplated by the Settlement
Agreement. The Company agreed to bear the reasonable out-of-pocket
costs and expenses not to exceed $150,000 of the Kalishman/
Affholder Group incurred in connection with their activities prior
to the date of the Settlement Agreement with respect to their
solicitation of proxies in connection with the Annual Meeting.<PAGE>
<PAGE>
Election of Directors After the Annual Meeting. Pursuant to
the Settlement Agreement, the Company agreed that it shall nominate
and recommend for re-election to the Board of Directors at the 1998
Annual Meeting and at the 1999 Annual Meeting the then incumbent
members of the Board (the "Company Nominees").
Filling of Vacancies on the Board. Pursuant to the Settlement
Agreement, the Company agreed that if, during the period commencing
with the succession to office of the New Nominees following the
1997 Annual Meeting and ending immediately prior to the 1999 Annual
Meeting, any director then in office resigns or is unable to serve
for any reason, such vacancy shall be filled only with a designee
chosen by both members of the Nominating Committee, subject to the
confirmation of the Board of Directors that such person possesses
no characteristics that would disqualify him under applicable law
from serving as a director, and thereafter the Company shall
nominate and recommend such designee for election to the Board of
Directors; provided, however, that in the event that Mr. Wight and
Mr. Kalishman (or their respective successors, if applicable) are
unable to agree upon a designee to fill a vacancy on the Board of
Directors within 30 days after such vacancy has been created, the
matter shall be referred to Directorship, who shall be instructed
to provide the Nominating Committee with a list of three candidates
(i) who have appropriate qualifications to serve on the Company's
Board of Directors and (ii) who have no material financial, close
personal or familial relationship with any director or affiliate of
a director. In the event that both members of the Committee are
unable to select a designee from the list provided by Directorship
within five business days after receipt of such list, the members
of the Committee shall each eliminate one candidate from the list
and the remaining candidate shall then become the designee.
Voting and Standstill Agreements. Pursuant to the Settlement
Agreement, each party thereto (other than the Company) agreed that
during the period commencing on the date of the Settlement
Agreement and ending immediately prior to the 1999 Annual Meeting,
such party (a) shall cause all shares of capital stock of the
Company which have the right to vote generally in the election of
directors, including, without limitation, shares of Common Stock
(collectively, "Voting Stock"), that are beneficially owned by such
party: (i) to be present, in person or by proxy, at all meetings of
Stockholders so that all such shares may be counted for the purpose
of determining if a quorum is present at such meetings, (ii) to be
voted in favor of all of the matters proposed by the Company at the
Annual Meeting and in favor of the election of the Company Nominees
to the Board of Directors at the 1998 Annual Meeting, and (iii) to
be voted in favor of persons nominated and recommended by the
Company in any other election of directors; (b) shall not directly
or indirectly (except through the Company pursuant to due
authorization) solicit any proxies or consents with respect to
Voting Stock or in any way participate in any solicitation of any
proxy with respect to shares of Voting Stock or become a
participant in any election contest with respect to the Company or<PAGE>
<PAGE>
request or induce or attempt to induce any other person to take any
such actions or attempt to advise, counsel or otherwise influence
in any way any person with respect to the voting of Voting Stock;
provided however that such constraint shall not apply to actions
taken in advance of the 1999 Annual Meeting with respect to actions
to be taken at the 1999 Annual Meeting, including, without
limitation, the election of directors; (c) shall not (i) form, join
or otherwise participate in any "group" (within the meaning of
Section 13(d) (3) of the Exchange Act or Rule 13d-5 thereunder)
with respect to any Voting Stock (a "13D Group"), (ii) otherwise
act in concert with any other person for the purpose of holding or
Voting Stock, or (iii) file any amendment to any Schedule 13D that
relates to a plan or proposal to seek to influence control of the
Company or that contains any statement that is in any way
inconsistent with the provisions of the Settlement Agreement;
provided that such constraint shall not apply to any arrangements
that are reflected in the Original Proxy Statement without
reference to any supplement or amendment thereto or to any 13D
Group formed for the purposes of conducting a solicitation or
otherwise taking action with respect to actions to be taken at the
1999 Annual Meeting, including, without limitation, the election of
directors, and clause (i) (with respect to participation) and
clause (ii) of such constraint shall not apply to the Kalishman
Group; (d) shall not deposit any Voting Stock in a voting trust or
subject any Voting Stock to any arrangement or agreement with
respect to the voting of such Voting Stock or other agreement
having similar effect, except that such constraint shall not apply
to any arrangements that are reflected in the Original Proxy
Statement; (e) except as expressly contemplated by the Settlement
Agreement, shall not make any proposal or bring any business before
any meeting of Stockholders and, other than actions proposed or
taken at any meeting of the Board of Directors, shall not take or
seek to take any action in the name or on behalf of the Company
except pursuant to the performance of any responsibilities
attendant to any office in the Company held by such party or
pursuant to a resolution adopted by the Board of Directors; (f)
shall not call, request the call, or seek to call, any special
meeting of Stockholders; and (g) shall not enter into any
discussions, negotiations, arrangements or understandings with any
other person with respect to any of the foregoing matters. Nothing
in the Settlement Agreement shall, however, prevent any party to
the Settlement Agreement from taking any of the actions referred to
in clauses (b), (c), (d) and (insofar as it relates to clauses (b),
(c) and (d)), clause (g) above, to the extent (but solely to the
extent) that such actions are taken in response to any proposal
relating to matters other than (w) the election of directors, (x)
the election, approval or ratification of accountants, (y) a
proposal made by a Stockholder or (z) a proposal relating to
certain employee compensation plans, that is set forth in any
preliminary or definitive proxy statement filed by the Company with
the Securities and Exchange Commission. Pursuant to the Settlement
Agreement, the parties also agreed that, in the event that any
directors other than the Company Nominees are elected at the 1998<PAGE>
<PAGE>
Annual Meeting as the result, directly or indirectly, of a breach
of the Settlement Agreement or any failure to vote in favor of
matters specified in the Settlement Agreement, by any party or
parties hereto, the voting and standstill obligations of such
breaching or non-voting party or parties, and its affiliates as
described above shall not terminate at the time specified above but
shall terminate on December 31, 1999.
Amendment of the Settlement Agreement. The Settlement
Agreement may be amended or modified only by the written agreement
of each party thereto.
Termination of the Settlement Agreement. The Settlement
Agreement shall automatically terminate in the event that the
Stockholders fail to approve either the Charter Amendment or the
By-Law Amendment. In the event that the Settlement Agreement is
terminated, all obligations of the parties thereto shall terminate
and the Annual Meeting shall be adjourned or postponed and
reconvened on or rescheduled to October 21, 1997; provided that if
such Stockholder non-approval is the result directly or indirectly
of a breach of the Settlement Agreement or any failure to vote in
favor of such matters by any party or parties to the Settlement
Agreement, the obligations of such breaching or non-voting party or
parties and its affiliates under the settlement Agreement shall not
terminate until December 31, 1999 and the Annual Meeting shall be
adjourned and reconvened on such date as shall be determined by the
Board of Directors.
Mutual Releases. Pursuant to the Settlement Agreement, Mr.
Kalishman and Mr. Affholder on the one hand, and the Company, on
the other hand, agreed to release one another from any and all
liabilities, claims and obligations of any kind arising directly or
indirectly from their respective activities prior to the date of
the Settlement Agreement in connection with the pending proxy
contest between the Company and the Kalishman/Affholder Group, the
preparation for the Annual Meeting and the solicitation of proxies
for the Annual Meeting.
<TABLE>
Exhibit 11
INSITUFORM TECHNOLOGIES, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income/(loss) $ 4,282,000 $ 3,416,000 $ 5,577,000 $ 9,496,000
PRIMARY:
Weighted Average
Number of Common Shares
Outstanding 26,927,753 26,991,406 26,918,302 27,085,690
Effect of Shares Issuable
For Stock Options and
Warrants as Determined
by the Treasury Stock
Method 37,411 48,489 37,327 87,200
----------- ----------- ----------- ----------
Weighted Average
Number of Common Shares
Outstanding as Adjusted 26,965,164 27,039,895 26,955,629 27,172,890
=========== =========== =========== ===========
Per Share Computations
Income before extra-
ordinary item $ 0.16 $ 0.13 $ 0.22 $ 0.35
Extraordinary Item - - (0.01) -
----------- ----------- ----------- -----------
Net Income $ 0.16 $ 0.13 $ 0.21 $ 0.35
=========== =========== =========== ===========
FULLY DILUTED
Weighted Average
Number of Common Shares
Outstanding 26,927,753 26,991,406 26,918,302 27,085,690
Effect of Shares Issuable
For Stock Options and
Warrants as Determined
by the Treasury Stock
Method 66,544 49,588 48,325 87,712
----------- ----------- ----------- ----------
Weighted Average
Number of Common Shares
Outstanding as Adjusted 26,994,297 27,040,994 26,966,627 27,173,402
=========== =========== =========== ===========
Per Share Computations
Income before extra-
ordinary item $ 0.16 $ 0.13 $ 0.22 $ 0.35
Extraordinary Item - - (0.01) -
----------- ----------- ----------- -----------
Net Income $ 0.16 $ 0.13 $ 0.21 $ 0.35
=========== =========== =========== ===========
</TABLE>
