<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended March 31, 1995 Commission File No. 0-15280
INSITUFORM MID-AMERICA, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 43-1319439
- -------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
17988 Edison Avenue, Chesterfield, Missouri 63005-3700
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 532-6137
(Not applicable)
- -------------------------------------------------------------------------------
(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 .
--- ---
<TABLE>
As of April 28, 1995, the following number of shares of each class of
the registrant's Common Stock was outstanding:
<CAPTION>
Shares
------
<S> <C>
Class A Common Stock, $.01 par value 8,282,676
Class B Common Stock, $.01 par value 2,472,985
</TABLE>
Page 1 of 17 pages.
<PAGE> 2
<TABLE>
FORM 10-Q
INDEX
Page
Number
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
March 31, 1995 and September 30, 1994 3
Condensed Consolidated Statements of Income
Three months ended March 31, 1995 and 1994;
Six months ended March 31, 1995 and 1994 5
Condensed Consolidated Statements of Cash Flows
Six months ended March 31, 1995 and 1994 6
Notes to Condensed Consolidated Financial
Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 4. Submission of Matters to Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 16
EXHIBIT INDEX 17
</TABLE>
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<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
<TABLE>
INSITUFORM MID-AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<CAPTION>
March 31 September 30
1995 1994
-------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents.................... $ 2,647,576 $ 3,111,664
Accounts receivable.......................... 17,535,307 15,770,080
Costs and estimated earnings in
excess of billings on uncompleted
contracts.................................. 9,228,693 8,419,956
Prepaid/refundable income taxes.............. 392,832 521,272
Inventory.................................... 3,707,037 2,938,463
Prepaid expenses and other current
assets..................................... 2,178,816 2,782,654
----------- -----------
TOTAL CURRENT ASSETS................... 35,690,261 33,544,089
----------- -----------
PROPERTY AND EQUIPMENT......................... 36,407,204 34,025,871
Less accumulated depreciation.................. 14,174,525 12,018,479
----------- -----------
TOTAL PROPERTY AND EQUIPMENT........... 22,232,679 22,007,392
----------- -----------
LICENSE COSTS.................................. 1,829,974 1,770,546
EXCESS OF COST OVER FAIR VALUE OF NET
ASSETS ACQUIRED.............................. 2,072,518 2,141,353
DEFERRED NON-COMPETE EXPENSE................... 820,482 923,046
PATENTS........................................ 3,334,706 3,492,509
OTHER.......................................... 78,743 -
----------- -----------
TOTAL OTHER ASSETS..................... 8,136,423 8,327,454
----------- -----------
$66,059,363 $63,878,935
=========== ===========
(Continued)
See notes to condensed consolidated financial statements.
</TABLE>
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<PAGE> 4
<TABLE>
INSITUFORM MID-AMERICA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(CONTINUED)
<CAPTION>
March 31 September 30
1995 1994
-------- ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable to bank......................... $ 9,875,460 $ 6,460,214
Accounts payable............................. 5,564,382 8,181,616
Accrued income taxes......................... 485,089 411,249
Accrued expenses............................. 4,852,224 6,810,141
Billings in excess of costs and estimated
earnings on uncompleted contracts.......... - 63,071
----------- -----------
TOTAL CURRENT LIABILITIES.............. 20,777,155 21,926,291
----------- -----------
LONG-TERM LIABILITIES
Minority interest............................ 1,311,690 575,501
Deferred income taxes........................ 1,217,641 1,217,641
Other........................................ 282,885 283,748
----------- -----------
TOTAL LONG-TERM LIABILITIES............ 2,812,216 2,076,890
----------- -----------
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Preferred Stock -- $.01 par value, 500,000
shares authorized, none issued or
outstanding................................ - -
Common Stock:
Class A -- $.01 par value 13,000,000
shares authorized, 8,282,676 shares
issued and outstanding at March 31,
1995, 8,279,342 shares issued and
outstanding at September 30, 1994........ 82,827 82,793
Class B -- convertible $.01 par value,
6,000,000 shares authorized, 2,472,985
shares issued and outstanding............ 24,730 24,730
Additional paid-in capital................... 18,348,916 18,333,959
Retained earnings............................ 24,463,079 21,765,402
Cumulative translation adjustments........... (449,560) (331,130)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY............. 42,469,992 39,875,754
----------- -----------
$66,059,363 $63,878,935
=========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
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<PAGE> 5
<TABLE>
INSITUFORM MID-AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
------------------ ------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Contract revenues....................... $24,545,001 $19,546,951 $50,663,251 $36,921,992
Cost of contract revenues............... 18,395,790 13,574,118 37,435,917 26,368,311
----------- ----------- ----------- -----------
Gross profit............................ 6,149,211 5,972,833 13,227,334 10,553,681
Costs and expenses:
General and administrative expenses... 2,267,396 2,198,052 4,655,447 4,097,018
Selling expenses...................... 822,914 803,363 1,556,900 1,608,031
Research and development expenses..... 451,751 - 518,111 -
----------- ----------- ----------- -----------
3,542,061 3,001,415 6,730,458 5,705,049
----------- ----------- ----------- -----------
Income from operations.................. 2,607,150 2,971,418 6,496,876 4,848,632
----------- ----------- ----------- -----------
Interest income......................... 21,341 13,945 57,737 25,404
Interest expense........................ (171,967) (61,085) (324,472) (124,160)
Joint venture income.................... 120,000 20,000 140,000 43,865
Other income (expense).................. 31,769 (85,727) (49,649) (144,985)
----------- ----------- ----------- -----------
Income before income taxes and minority
interest.............................. 2,608,293 2,858,551 6,320,492 4,648,756
Provision for income taxes.............. 886,820 1,086,249 2,148,968 1,766,527
----------- ----------- ----------- -----------
Income before minority interest......... 1,721,473 1,772,302 4,171,524 2,882,229
Minority interest in income of
consolidated subsidiary............... (221,114) (25,759) (736,795) (25,759)
----------- ----------- ----------- -----------
Net income.............................. $ 1,500,359 $ 1,746,543 $ 3,434,729 $ 2,856,470
=========== =========== =========== ===========
Net income per common share............. $.14 $.16 $.31 $.26
==== ==== ==== ====
See notes to condensed consolidated financial statements.
</TABLE>
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<PAGE> 6
<TABLE>
INSITUFORM MID-AMERICA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS
<CAPTION>
Six Months Ended
March 31
----------------
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income......................................... $3,434,729 $2,856,470
Adjustments to reconcile net income to net cash:
Decrease (increase) in accounts receivable....... (1,765,227) 885,121
Increase in costs and estimated earnings in
excess of billings on uncompleted contracts..... (808,737) (661,881)
Increase in inventory............................ (768,574) (514,445)
Decrease in insurance claim receivable........... - 1,515,131
Decrease in prepaid/refundable income taxes...... 128,440 623,611
Decrease (increase) in prepaid expenses and
other current assets............................ 603,838 (4,592)
Decrease in accounts payable..................... (2,617,234) (1,023,839)
Increase in accrued income taxes................. 73,840 62,297
Decrease in accrued expenses..................... (1,957,917) (111,346)
Decrease in billings in excess of costs and
estimated earnings on uncompleted contracts..... (63,071) (376,846)
Depreciation..................................... 2,216,480 1,470,607
Amortization..................................... 369,774 307,211
Loss (gain) on sale of property and equipment.... (128) 273
Deferred income tax provision.................... - (6,163)
Minority interest in income of consolidated
subsidiary...................................... 736,189 25,759
Other, net....................................... (79,589) -
---------- ----------
Net cash provided by (used in) operating
activities.................................... (497,187) 5,047,368
---------- ----------
Cash flows from financing activities:
Increase (decrease) in short-term bank
borrowings........................................ 3,415,246 (1,231,000)
Dividends paid to common stockholders.............. (737,069) (736,798)
Proceeds from exercise of stock options............ 14,991 9,519
Proceeds from minority interest participation...... - 400,000
---------- ----------
Net cash provided by (used in) financing
activities..................................... 2,693,168 (1,558,279)
---------- ----------
Cash flows from investing activities:
Additions to property and equipment................ (2,488,167) (3,181,188)
Proceeds from sale of property and equipment....... 45,744 216,247
Increase in license costs.......................... (100,000) -
---------- ----------
Net cash used by investing activities.......... (2,542,423) (2,964,941)
---------- ----------
Effect of exchange rate changes on cash.............. (117,646) (69,307)
---------- ----------
Net increase (decrease)in cash and cash equivalents.. (464,088) 454,841
Cash and cash equivalents at September 30............ 3,111,664 2,088,966
---------- ----------
Cash and cash equivalents at March 31................ $2,647,576 $2,543,807
========== ==========
See notes to condensed consolidated financial statements.
</TABLE>
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<PAGE> 7
INSITUFORM MID-AMERICA, INC.
Notes to Condensed Consolidated Financial Statements
1. Condensed Consolidated Financial Statements
The accompanying unaudited condensed consolidated financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normally
recurring accruals) considered necessary for a fair presentation
have been included. For further information, refer to the
consolidated financial statements and footnotes thereto included
in the Company's Annual Report to Stockholders for the fiscal
year ended September 30, 1994.
Operating results for the six months ended March 31, 1995 are
not necessarily indicative of the results that may be expected
for the fiscal year ending September 30, 1995.
<TABLE>
2. Computation of Income Per Share
Net income per common share was computed by dividing net income
by the weighted average number of common shares and common share
equivalents outstanding during each period.
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
---------------------- --------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average number
shares outstanding...... 11,104,835 11,125,205 11,074,867 11,113,555
</TABLE>
3. Contingencies
The Company has been cited by the U.S. Occupational Safety and
Health Administration (OSHA) for alleged violations of the
Occupational Safety and Health Act of 1970 in connection with
a jobsite accident. OSHA has assessed penalties aggregating
approximately $1,000,000 arising out of the accident. The
Company believes that OSHA's allegations neither accurately
reflect the facts and circumstances of the accident nor
accurately characterize the Company's strong safety program and
commitment thereto. The Company also is involved in other
litigation. In the opinion of management, the amount of
ultimate liability, if any, with respect to these actions
(including the OSHA citation) will not materially affect the
financial position of the Company.
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<PAGE> 8
4. Acquisition
On April 18, 1995, the Company completed the acquisition of the
pipeline rehabilitation business of ENVIROQ Corporation
("Enviroq"), including Enviroq's Insituform process business
which is conducted by its Insituform Southeast, Inc. subsidiary.
Insituform Southeast, Inc. operates in a licensed territory
consisting of Alabama, Florida, Georgia, North Carolina and
South Carolina. It also owns 42.5% of Midsouth Partners, which
is the licensee of the Insituform process in Tennessee, most of
Kentucky and northern Mississippi.
Under the terms of the transaction, all assets and liabilities
related to Enviroq's interest in Synox Corporation (a
development stage company which is engaged in the business of
developing and testing a process for the treatment of municipal
wastewater "sludge"), and its ownership in SPRAYROQ Corporation
(a development stage company which offers a spray-applied
resinous product used in rehabilitation of manholes, among other
applications) were transferred to a newly organized subsidiary,
the stock of which was distributed to Enviroq's stockholders
immediately prior to the transaction with the Company. In
addition, Enviroq transferred $500,000 cash and the undeveloped
portion of real estate which it owned in Jacksonville, Florida
to the corporation spun-off.
Pursuant to the transaction, which was accounted for as a
purchase, the Company paid $15.25 million cash and issued a $3
million five-year subordinated promissory note in consideration
for a covenant not to compete and entered into an agreement for
consulting services providing for the Company's payment of $1
million over five years.
See Part II--Item 1 of this report with respect to certain
information regarding litigation and claims arising out of this
acquisition.
-8-
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations
-------------------------
Results of Operations
Contract revenues for the second quarter of the current
fiscal year were $24.5 million, an increase of 26% over the
amount reported for the comparable quarter of fiscal 1994.
Corrosion and abrasion protection revenues increased 95% as
a result of contracting operations in Latin America and
improved market conditions in Canada. Tunneling revenues
increased 118% due to the continuation of a return to more
normalized market conditions. Rehabilitation revenues,
generated primarily by the Insituform process, decreased
6%, principally as a result of product mix and the timing
of jobs.
Contract revenues for the six months ended March 31, 1995
were $50.7 million, an increase of 37% from the
corresponding period in fiscal 1994. Corrosion and
abrasion protection revenues increased 199% as a result of
the Latin American contracting operations. Tunneling
revenues increased 106% over the same period in fiscal 1994
as the construction market continued to show improvement.
Rehabilitation revenues declined 7%, due to product mix and
the timing of jobs.
Gross profit for the second quarter of fiscal 1995 was $6.l
million, a 3% increase over gross profit reported in the
corresponding quarter of the prior year. As a percentage
of contract revenues, gross profit was 25.1% compared to
30.6% in the prior year quarter. The increase in gross
profit was the result of increased contract revenues.
Offsetting this increase was a reduction in gross profit
percentage attributable to a change in product mix of
rehabilitation operations which included an increased
percentage of smaller diameter pipes and lower than
historic margins from the corrosion and abrasion business
in Latin America where the Company's operations as a
general contractor carry lower margins than those achieved
on work utilizing proprietary technologies. In addition,
the Company's tunneling business continues to experience
lower than historic margins due to competitive pressures in
the construction market.
Gross profit for the six months ended March 31, 1995 was
$13.2 million, a 25.3% increase versus the amount reported
in the prior year period. The increase primarily resulted
from the above-described contract revenue increases. Gross
profit as a percentage of contract revenues was 26.1% for
the recent year-to-date period, compared to 28.6% in the
corresponding period of the prior year. The reduction in
gross profit percentage for the current year period was
primarily attributable to the Company operating as a
general contractor in its corrosion and abrasion business
in Latin America.
For the second quarter, operating expenses (selling,
general and administrative and research and development)
represented 14.4% of contract revenues compared to
15.4% for the second quarter of fiscal
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<PAGE> 10
1994. For the year-to-date period, operating expenses
represented 13.3% of contract revenues versus 15.5% in the
prior year period, as contract revenue growth continued to
outpace operating expense increases. The 18% increase in
operating expenses for both the quarter and six-month
periods primarily resulted from research and development
costs associated with the PALTEM product line in the
development of high pressure products, and administrative
expenses for the corrosion and abrasion protection
operations in Latin America which commenced in January
1994.
For the second quarter, income from operations decreased
12.3% and represented 10.6% of contract revenues compared
to 15.2% in the prior year quarter. For the first six
months of the current fiscal year income from operations
was 12.8% compared to 13.1% in the prior year period. The
reduction for the second quarter and six months-to-date was
primarily attributable to the factors described above which
affected gross profit margins.
Net income for the second quarter of the current year
decreased 14.1% from that reported in the comparable period
of the prior year and represented 6.1% of contract revenues
compared to 8.9% for the prior year quarter. This decrease
was the result of the above-described factors affecting
gross profit, coupled with the allocation of income to the
owner of the minority interest in the Company's Latin
American subsidiary and higher interest expense, offset
somewhat by a lower effective tax rate and increased joint
venture income. On a year-to-date basis, net income
increased 20.2% over the prior year period and represented
6.8% of contract revenues compared to 7.7% for the
comparable period of the prior year. The reduction in net
income as a percentage of contract revenues was primarily
attributable to the above-described reduced gross profit
margin changes and the increased allocation of income to
the owner of the minority interest in the Company's Latin
American subsidiary. The Company's effective tax rate
decreased from 38% to 34% due to a change in the mix of
profit contributions among non-U.S. operations.
<TABLE>
As of March 31, 1995, the Company's backlog compared to
September 30, 1994 by business type was as follows (in
millions).
<CAPTION>
March 31 September 30
1995 1994
-------- ------------
<S> <C> <C>
Rehabilitation ......................... $25.2 $23.4
Tunneling .............................. 10.0 9.0
Corrosion and abrasion protection ...... 2.1 13.1
----- -----
$37.3 $45.5
===== =====
</TABLE>
The reduction in backlog from September 30, 1994 to March
31, 1995 represents normal seasonal trends. Backlog at
March 31, 1995 reflected a record level for the Company as
of the end of a second quarter.
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<PAGE> 11
Liquidity and Capital Resources
The Company's working capital at March 31, 1995 was $14.9
million, an increase of $3.3 million from September 30,
1994. For the six months ended March 31, 1995, the Company
expended approximately $500,000 in cash for operating
activities. The major uses of cash were: an increase in
accounts receivable of approximately $1.8 million as a
result of the 26% increase in contract revenues for the
second fiscal quarter; an increase in inventory of
approximately $.8 million due to purchases pursuant to the
Company's license agreement for its PALTEM system products;
and an increase of $.8 million in costs and estimated
earnings in excess of billings on uncompleted contracts.
Accounts payable during this period decreased approximately
$2.6 million primarily due to timing of purchases and
payments. Accrued expenses decreased $2.0 million as a
result of the completion of a large construction project in
Latin America. As of March 31, 1995, approximately $1.5
million of cash represented cash of foreign subsidiaries.
Unremitted earnings from foreign subsidiaries as of such
date approximated $3.0 million.
For the six months ended March 31, 1995, the Company
recorded capital expenditures of approximately $2.4 million
of which approximately $1.9 million was for equipment
purchases and $.5 million related to the construction of a
new manufacturing facility.
During the second fiscal quarter, the Company entered into
a new bank credit agreement pursuant to which its short-
term unsecured working capital line of credit was increased
to $20 million. Interest on the line of credit is payable,
at the Company's option, at the bank's prime rate or a rate
tied to LIBOR. The applicable interest rate was 9.0% per
annum at March 31, 1995.
On April 18, 1995 the Company completed the acquisition of
the pipeline rehabilitation business of ENVIROQ
Corporation. Pursuant to the transaction, the Company paid
$15.25 million cash funded by a seven-year term loan from
the Company's banks. Principal payments of such loan
amortize at the rate of $1.5 million per year during the
term thereof. Under the term loan arrangement, the Company
granted first mortgages on various real estate it owns and
pledged all the shares of its U.S. subsidiaries and a
portion of the shares of its Canadian subsidiaries. In
addition, the Company issued a $3.0 million five-year
subordinated promissory note in consideration for a
covenant not to compete and entered into an agreement for
consulting services providing for the Company's payment of
$1.0 million over five years.
During April of 1995, the Company commenced construction of
a manufacturing facility to produce materials used for
proprietary rehabilitation technologies, including those
licensed under its agreement with Ashimori Industry Co.,
Ltd. The Company has received financing commitments to
fund a substantial portion of the construction with a $7.0
million industrial revenue bond issue supported by a
direct-pay bank letter of credit. The Company acquired
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<PAGE> 12
land adjacent to its headquarters building in fiscal 1994
for the construction of the manufacturing facility. It is
presently anticipated that the Company's obligations to
reimburse its bank for drawings under the letter of credit
would be secured by a senior lien on the proposed new
manufacturing facility, including the land, the existing
building and all fixtures and related manufacturing
equipment.
-12-
<PAGE> 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
By letters, dated April 4, 1995, Insituform North America
Corp. and NuPipe, Inc., subsidiaries of Insituform
Technologies, Inc. ("ITI"), notified Insituform Southeast,
Inc. and NuPipe Southeast Corporation, subsidiaries of
ENVIROQ Corporation ("ENVIROQ"), that the corporations
refused to grant their consent under the Insituform and
NuPipe license agreements with the subsidiaries of ENVIROQ
to the transactions contemplated by the acquisition
agreement under which Insituform Mid-America, Inc. acquired
the pipeline rehabilitation business of ENVIROQ. On April
4, 1995, Insituform North America Corp. and NuPipe, Inc.
(collectively, the "ITI Plaintiffs") filed a Complaint for
Declaratory Relief (the "Declaratory Action") against
Insituform Southeast, Inc., NuPipe Southeast Corporation,
ENVIROQ Corporation and Insituform Mid-America, Inc. in the
Chancery Court for the Thirtieth Judicial District at
Memphis, Shelby County, Tennessee. In the Declaratory
Action, the ITI Plaintiffs are seeking a declaratory
judgment that they were within their rights to refuse to
consent under Insituform and NuPipe licensee agreements
with subsidiaries of ENVIROQ, to the transactions
contemplated by the acquisition agreement, and that they
possess all legal rights under such agreements arising out
of the failure by the respective licensees to obtain such
consent. The parties to the Declaratory Action have
executed an Amended and Restated Cooperation Agreement,
dated as of April 28, 1995, pursuant to which they agreed,
with the exception of the defendants' right to seek to
cause the case to be removed to federal court (and the ITI
Plaintiffs' right to oppose such proposed reversal), to
take no further legal action with respect to the ITI
Plaintiff's failure to grant consent, in the Declaratory
Action or otherwise, through May 31, 1995.
Insitu, Inc. ("Insitu"), one of three partners in MidSouth
Partners, a Tennessee general partnership, has filed a
demand for arbitration claiming that E-MidSouth, Inc. ("E-
MidSouth"), another partner in MidSouth Partners and a
wholly-owned subsidiary of Insituform Southeast, Inc. (an
indirect wholly-owned subsidiary of Insituform Mid-America,
Inc.) has breached the partnership agreement by ENVIROQ's
entering into the acquisition agreement with Insituform
Mid-America, Inc. E-MidSouth denies that it has breached
the partnership agreement. The arbitration proceeding has
been stayed until June 1995 by consent of the parties.
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<PAGE> 14
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
<TABLE>
The registrant's annual meeting of stockholders was held
February 14, 1995. At such meeting, all directors were
reelected, with the results of the voting as follows:
<CAPTION>
Class A Directors<F*> Votes For Votes Withheld
--------------------- --------- --------------
<S> <C> <C>
Lee M. Liberman 7,290,131 41,992
Alvin J. Siteman 7,293,429 39,994
Class B Directors<F**>
----------------------
Jerome Kalishman 2,419,653 0
Robert W. Affholder 2,419,653 0
Robert M. Leopold 2,419,653 0
<FN>
<F*> Elected by holders of Class A Common Stock.
<F**> Elected by holders of Class B Common Stock.
</TABLE>
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits:
10.1 Credit Agreement, dated as of February 15,
1995, by and among the registrant, The Boatmen's National
Bank of St. Louis and Mark Twain Bank.
10.2 Term Loan Agreement, dated April 18, 1995,
by and among the registrant, The Boatmen's National Bank
of St. Louis and Mark Twain Bank.
10.3 Promissory Note, dated February 15, 1995,
issued by the registrant to The Boatmen's National Bank
of St. Louis.
10.4 Promissory Note, dated February 15, 1995,
issued by the registrant to Mark Twain Bank.
10.5 Term Note, dated April 18, 1995, issued by
the registrant to The Boatmen's National Bank of St.
Louis.
10.6 Term Note, dated April 18, 1995, issued by
the registrant to Mark Twain Bank.
10.7 Subordinated Promissory Note, dated April 18,
1995, issued by the registrant to New Enviroq Corporation.
10.8 Stock Pledge Agreement, dated April 18,
1995, by and between the registrant and The Boatmen's
National Bank of St. Louis.
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<PAGE> 15
10.9 Covenant Not to Compete, dated April 18,
1995, by and among the registrant, New Enviroq, Inc.,
Marinelli Securities Associates and SCE, Incorporated.
10.10 Employment Agreement, dated April 18,
1995, by and between the registrant and James J. Baird,
Jr.
10.11 Amended and Restated Cooperation
Agreement, dated as of April 28, 1995, among the
registrant, Insituform Technologies, Inc. and IMA Merger
Sub, Inc. (formerly know as "ENVIROQ Corporation").
10.12 Standard Form of Agreement between
Owner and Contractor, dated March 1995, by and between the
registrant and Turner Construction Company.
27 Financial Data Schedule.
(b) Reports on Form 8-K: The registrant filed no report on
Form 8-K during the quarter ended March 31, 1995.
-15-
<PAGE> 16
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 MID-AMERICA, INC.
----------------------------
(Registrant)
Date May 12, 1995 /s/ Jerome Kalishman
---------------------- ----------------------------
Jerome Kalishman
Chairman of the Board
Date May 12, 1995 /s/ Joseph F. Olson
---------------------- ----------------------------
Joseph F. Olson
Chief Financial Officer
-16-
<PAGE> 17
<TABLE>
EXHIBIT INDEX
<CAPTION>
Exhibit
Number Description
- ------- -----------
<C> <S>
10.1 Credit Agreement, dated as of February 15,
1995, by and among the registrant, The
Boatmen's National Bank of St. Louis and Mark
Twain Bank.
10.2 Term Loan Agreement, dated April 18, 1995, by
and among the registrant, The Boatmen's
National Bank of St. Louis and Mark Twain Bank.
10.3 Promissory Note, dated February 15, 1995,
issued by the registrant to The Boatmen's
National Bank of St. Louis.
10.4 Promissory Note, dated February 15, 1995,
issued by the registrant to Mark Twain Bank.
10.5 Term Note, dated April 18, 1995, issued by the
registrant to The Boatmen's National Bank of
St. Louis.
10.6 Term Note, dated April 18, 1995, issued by the
registrant to Mark Twain Bank.
10.7 Subordinated Promissory Note, dated April 18,
1995, issued by the registrant to New Enviroq
Corporation.
10.8 Stock Pledge Agreement, dated April 18, 1995,
by and between the registrant and The Boatmen's
National Bank of St. Louis.
10.9 Covenant Not to Compete, dated April 18, 1995,
by and among the registrant, New Enviroq, Inc.,
Marinelli Securities Associates and SCE,
Incorporated.
10.10 Employment Agreement, dated April 18, 1995, by and
between the registrant and James J. Baird, Jr.
10.11 Amended and Restated Cooperation Agreement, dated as
of April 28, 1995, among the registrant, Insituform
Technologies, Inc. and IMA Merger Sub, Inc.
(formerly known as "ENVIROQ Corporation").
10.12 Standard Form of Agreement between Owner and
Contractor, dated March 1995, by and between the
registrant and Turner Construction Company.
27 Financial Data Schedule.
-17-
</TABLE>
<PAGE> 1
CREDIT AGREEMENT
THIS AGREEMENT made and entered into as of this 15th day
of February, 1995 by and between INSITUFORM MID-AMERICA, INC., a
Delaware corporation (hereinafter referred to as "Borrower"), THE
BOATMEN'S NATIONAL BANK OF ST. LOUIS, in its individual capacity
and MARK TWAIN BANK (such banks and their respective successors and
assigns, hereinafter referred to individually as a "Bank" and
collectively, as the "Banks") and THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS, as agent for the Banks (in such capacity, the "Agent").
WITNESSETH THAT:
WHEREAS, the Borrower desires to borrow from the Banks,
in one or more advances, in an aggregate sum not to exceed TWENTY
MILLION DOLLARS ($20,000,000.00) (hereinafter referred to as the
"Credit"); and
WHEREAS, the Banks are willing to lend said sum, or such
lesser amount as may be desired by the Borrower to the Borrower
subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the
natural agreements herein set forth, the parties hereto hereby
agree as follows:
SECTION 1
DEFINITIONS
As used in this Agreement:
1.1 ADJUSTED LIBOR RATE. "Adjusted LIBOR Rate" shall mean
with respect to any LIBOR Loan for any Interest Period the interest
rate as determined by the Agent equal to the sum of (a) the
Applicable Margin plus (b) the quotient of (x) the LIBOR Rate
applicable to that Interest Period divided by (y) one minus the
Reserve Requirement (expressed as a decimal) applicable to that
Interest Period. Each determination of the adjusted LIBOR Rate
shall be made by the Agent and shall be conclusive absent manifest
error.
1.2 APPLICABLE MARGIN. "Applicable Margin" shall mean 1.75%
with respect to any LIBOR Loan.
1.3 APPLICABLE LENDING OFFICE. "Applicable Lending Office"
shall mean the office of the Agent located at One Boatmen's Plaza,
St. Louis, Missouri 63166 (Attn: Commercial Loan Service
Department).
1.4 BORROWING. "Borrowing" shall mean a borrowing under the
Credit.
1.5 BUSINESS DAY. "Business Day" shall mean any day other
than a Saturday, Sunday or legal holiday in the State of Missouri
on which banks are open for business, except that, if any determi-
nation of a "Business Day" shall relate to a LIBOR Loan, the term
"Business Day" shall in addition exclude any day on which banks are
not open for dealings in dollar deposits in the London Interbank
Market.
1.6 CLOSING DATE. "Closing Date" shall mean February 15,
1995.
1.7 CORPORATE BASE RATE. "Corporate Base Rate" shall mean
the from-time-to-time publicly announced Corporate Base Rate of
interest of the Agent, which rate shall change simultaneously with
each change in the Corporate Base Rate.
1.8 CBR LOAN. "CBR Loan" shall mean any loan which is
currently bearing interest at the Corporate Base Rate.
1.9 GAAP. "GAAP" shall mean those generally accepted
accounting principles set forth in Statements of 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.
1.10 GUARANTORS. "Guarantors" shall mean the present
subsidiaries of the Borrower, including but not limited to:
Affholder, Inc., Insituform Central, Inc., Insituform
Missouri, Inc., Insituform North, Inc.,
<PAGE> 2
Insituform Plains, Inc., Insituform de Puerto Rico, Inc.,
Insituform Rockies, Inc., Insituform Texark, Inc., PALTEM Systems,
Inc., United Pipeline Systems USA, Inc. and United Pipeline
Systems, Inc.
1.11 INDEBTEDNESS. "Indebtedness" of a Person, at a
particular date, shall mean such Person's (i) obligations for
borrowed money, (ii) obligations issued or assumed as the deferred
purchase price of property or services, including, without
limitation, bank acceptances payable and loans and/or advances from
a factor, but excluding trade and other accounts payable arising in
the ordinary course of business in accordance with customary trade
terms or which are being disputed in good faith by such Person and
for which adequate reserves are being provided on the books of such
Person in accordance with GAAP; (iii) the face amount of all
letters of credit issued for the account of such Person and,
without duplication, all drafts drawn thereunder; (iv) all
obligations secured by any lien on any property or asset owned by
such Person, even though such Person has not assumed or become
liable for the payment thereof; (v) any material lease obligation
which has been, or which should be, in accordance with GAAP,
capitalized; and (vi) obligations, or obligations of a commonly
controlled entity, to a Multiemployer Plan.
1.12 INTEREST PERIOD. "Interest Period" shall mean as to
any LIBOR Loan, the period of one, two, or three months' duration,
as specified by the Borrower commencing on the date such LIBOR Loan
shall have been made or immediately upon the expiration of the
preceding Interest Period; provided, however, that (a) if any
Interest Period would end on a day which shall not be a Business
Day, such Interest Period shall be extended to the next succeeding
Business Day unless, with respect to LIBOR Loans only, such next
succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding
Business Day and (b) no Interest Period in respect of any LIBOR
Loan hereunder shall end later than the Termination Date.
1.13 LEGAL FEES. "Legal Fees" shall mean all reasonable
legal fees and actual expenses incurred by Agent plus out-of-pocket
costs in connection with the preparation, negotiation and execution
of documents necessary or reasonably appropriate to consummate the
transactions contemplated by this Agreement.
1.14 LETTER OF CREDIT OBLIGATIONS. "Letter of Credit
Obligations" shall mean the aggregate of the stated amounts of any
and all Standby Letters of Credit issued by Agent on behalf of the
Banks for Borrower's account.
1.15 LIBOR LOAN. "LIBOR Loan" means any loan which is
currently bearing interest at the Adjusted LIBOR Rate.
1.16 LIBOR RATE. "LIBOR Rate" with respect to any LIBOR
Loan for any Interest Period shall mean the rate at which dollar
deposits are offered to the Bank in immediately available funds in
the London Interbank Market by leading banks in the eurodollar
market two Business Days prior to commencement of such Interest
Period for deposits in dollars approximately comparable in
principal amount to the LIBOR Loan and for the maturity comparable
to the applicable Interest Period.
1.17 LOAN. "Loan" shall mean any CBR Loan or LIBOR Loan.
1.18 LOAN DOCUMENTS. "Loan Documents" shall mean this
Agreement, the Notes, the Guaranties and all other agreements,
certificates, documents, instruments and other writings executed in
connection herewith and all amendments thereto.
1.19 MATERIAL ADVERSE EFFECT. "Material Adverse Effect"
shall mean a material adverse effect on (a) the Borrower's ability
to perform in all material respects its obligations under any Loan
Documents, or the legality, validity or enforceability of any Loan
Documents; or (b) the Borrower's financial condition, operations,
assets, business, properties or prospects.
1.20 MULTIEMPLOYER PLAN. "Multiemployer Plan" shall mean
a Pension Benefit Plan which is a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
1.21 NOTES. "Notes" shall mean the promissory notes issued
in accordance with the terms of this Agreement.
-2-
<PAGE> 3
1.22 NOTICE OF BORROWING. "Notice of Borrowing" shall have
the meaning given it in Section 2.6.
1.23 OBLIGATIONS. "Obligations" shall mean all Indebtedness
(whether principal, interest, fees or otherwise), obligations and
liabilities of Borrower or Guarantors, as the case may be, to the
Banks under the Loan Documents, as the same may be renewed,
extended, modified, rearranged, restructured, refinanced or
replaced (including, without limitation, modifications to interest
rates or other payment terms of such indebtedness, including but
not limited to those under this Agreement and the other Loan
Documents), 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, or acquired
by the Banks outright, conditionally or as collateral security from
another, including but not limited to the obligation of Borrower to
repay future advances by the Banks, whether or not made pursuant to
commitment and whether or not presently contemplated by Borrower
and the Banks, and the obligation to repay advances by the Banks
under any letters of credit issued for Borrower's account.
1.24 PENSION BENEFIT PLAN. "Pension Benefit Plan" shall
mean any pension or profit-sharing plan which is covered by Title
I of ERISA and all other benefit plans other than Welfare Benefit
Plans and in respect of which the Borrower or a Commonly Controlled
Entity is an "employer" as defined in Section 3(5) of ERISA.
1.25 PERCENTAGE SHARE. "Percentage Share" shall mean the
percentage of the Loans and commitments to be provided by a Bank
under this Agreement as indicated on Exhibit 1.1 hereof.
1.26 PERSON. "Person" shall mean and include an individual,
a partnership, a corporation, a trust, an unincorporated
association, a joint venture, limited liability company or any
other entity or a government or any agency or political subdivision
thereof.
1.27 REQUIRED BANKS. "Required Banks" shall mean Banks
holding at any time 100.0% of the unpaid principal amounts
outstanding under the Notes, or if no such amounts are outstanding,
100.0% of the Percentage Shares.
1.28 RESERVE REQUIREMENT. "Reserve Requirement" means with
respect to an Interest Period, the daily average during such
Interest Period of the maximum aggregate reserve requirement
(including but not limited to all basic, supplemental, marginal and
other reserves and taking into account any transitional adjustments
or other scheduled changes in reserve requirements during such
Interest Period) which is imposed on the Bank under Regulation D of
the Board of Governors of the Federal Reserve (the "FRB") on
eurocurrency liabilities.
1.29 TERMINATION DATE. "Termination Date" shall mean
February 15, 1996 for purposes of the Revolving Commitment and
January 31, 1997 for purposes of the expiration of any Standby
Letter of Credit.
SECTION 2
CONDITIONS OF LENDING
2.1 REVOLVING COMMITMENT. Subject to the terms and
conditions hereof, and in reliance upon the representations and
warranties of Borrower contained herein, the Banks hereby severally
commit to make available to Borrower a revolving credit facility of
up to Twenty Million Dollars ($20,000,000.00) (the "Revolving
Commitment"). Each Bank hereby severally agrees to make advances
of funds to Borrower from time to time during the period commencing
with the Closing Date and ending on the Termination Date in such
amounts as Borrower may request, up to such Bank's Percentage Share
of the Revolving Commitment and to provide Bank's Percentage Share
for each Standby Letter of Credit issued hereunder prior to the
Termination Date for Standby Letters of Credit; provided, however,
that the sum of (i) the aggregate principal amount of all such
advances under the Revolving Commitment by the Banks at any one
time outstanding, plus (ii) the aggregate amount of Letter of
Credit Obligations outstanding at such time, shall not exceed the
Revolving Commitment. Borrower may use the Revolving Commitment by
borrowing, repaying and reborrowing, all in accordance with the
terms and conditions hereof. There may be more than one Borrowing
on any day. Advances made pursuant hereto by each Bank shall, at
the option of Borrower, be either CBR Loans or LIBOR Loans. Banks
acknowledge that despite the expiration of the Revolving
Commitment, they may still be obligated for their Percentage Share
with respect to Standby Letters of Credit issued hereunder.
-3-
<PAGE> 4
2.2 CLEAN-UP PERIOD. Notwithstanding the terms of Section
2.1 above, the Borrower shall reduce the outstanding principal
balance of borrowings hereunder to not more than $7,000,000.00 for
a period of at least 30 consecutive calendar days prior to the
Revolving Commitment Termination Date ("Clean-up Period"). In the
event that Borrower has failed to designate a Clean-up Period prior
to January 16, 1996, then the period of January 16, 1996 through
the Revolving Commitment Termination Date shall be deemed to be the
Clean-up Period and Borrower shall pay Agent any outstanding
amounts necessary to reduce the outstanding principal balance to
not more than $7,000,000.00. The outstanding aggregate balance of
Standby Letters of Credit shall not be considered in the
calculation of the maximum $7,000,000.00 balance required during
the Clean-up Period (Example: Borrower may have a maximum of
$5,000,000.00 outstanding for issued Standby Letters of Credit and
an additional amount of borrowings up to $7,000,000.00 during the
Clean-up Period).
2.3 LETTERS OF CREDIT.
(I) STANDBY LETTERS OF CREDIT. Subject to the terms
and conditions hereof, and subject to Borrower's compliance
with such application and other standard procedures as Agent
may require for the issuance of any Standby Letter of
Credit, Agent may in its sole and absolute discretion from
time to time issue one or more Standby Letters of Credit for
the account of Borrower up to a maximum aggregate amount of
$5,000,000.00 for all Standby Letters of Credit. Each Bank
hereby agrees to reimburse Agent for such Bank's Percentage
Share of the amount of each Standby Letter of Credit issued
by Agent pursuant to the terms and conditions hereof, and
honored by Agent in conformance with the terms of such
Standby Letter of Credit. The issuance of a Standby Letter
of Credit shall be considered as an advance for purposes of
determining the available amount of the Revolving Commitment
from the time of issuance of such Standby Letter of Credit
up to the Termination Date for the Revolving Commitment. In
the event of the presentment to Agent for payment, and the
payment by Agent, of any Standby Letter of Credit prior to
the Termination Date for the Revolving Commitment, shall be
deemed a Notice of Borrowing by Borrower for a CBR Loan in
an amount equal to the amount of Borrower's obligation to
repay Agent as a result of Agent's payment of such Standby
Letter of Credit. Notwithstanding the contrary provisions
of Section 2.11, if such Standby Letter of Credit is
presented for payment prior to 11:00 a.m., St. Louis time,
on any Business Day, the Borrowing Date shall be the same
Business Day as such notice was received by Agent, and if
such Standby Letter of Credit is presented for payment after
11:00 a.m., St. Louis time, on any Business Day, the
Borrowing Date shall be the Business Day immediately
following the date on which such Standby Letter of Credit
was presented for payment. Any presentment after the
Termination Date for the Revolving Commitment shall be paid
in accordance with the terms and conditions of the
application associated with such Standby Letter of Credit
without regard to any cure period provided in Section 7 of
this Agreement.
(II) LIMITATIONS ON LETTERS OF CREDIT. The expiration
date (including rights of renewal) of all Standby Letters of
Credit shall be no later than one Business Day prior to the
Standby Letter of Credit Termination Date.
(III) STANDBY LETTER OF CREDIT FEE. The fee charged to
Borrower for each Standby Letter of Credit issued by Agent
under the terms hereof shall be the sum of 3/4% per annum of
the stated amount of such Standby Letter of Credit, which
shall be payable to Agent as a fee for issuing the same and
also payable upon any renewal or re-issuance of any said
Standby Letter of Credit.
2.4 CANCELLATION AND REDUCTION OF COMMITMENTS. Borrower
shall have the right, upon at least five (5) Business Days' prior
written notice to Agent, at any time, to cancel or from time to
time reduce the Revolving Commitment; provided, however, that if
the amount of such reduction shall cause the Revolving Commitment
to be less than the aggregate principal amount outstanding under
the Revolving Loan on the date of such reduction, then such
reduction shall not occur until the amount of such excess is
repaid; and provided further, that, if the amount of such reduction
would otherwise exceed the aggregate principal amount of the Loans
that are CBR Loans outstanding on the date of such reduction, then
such reduction shall not occur until such date as shall be the last
day of Interest Periods applicable to LIBOR Loans that are Loans in
an aggregate principal amount of no less than the amount of such
excess. Any such reduction of the Revolving Commitment shall
(i) be in the amount of One Hundred Thousand Dollars ($100,000.00)
or any whole multiple thereof; and (ii) reduce permanently the
amount of the Revolving Commitment then in effect.
-4-
<PAGE> 5
2.5 REVOLVING LOAN COMMITMENT FEE. Borrower shall pay to
the Agent, for the sole benefit of The Boatmen's National Bank of
St. Louis, a Revolving Loan Commitment Fee (the "Revolving Loan
Commitment Fee") of $9,480.00 on the Closing Date.
2.6 NOTICE OF BORROWING.
(I) Whenever Borrower desires to make a Borrowing here-
under, it shall give Agent at least two (2) Business Days'
prior written notice (or telephonic notice promptly
confirmed in writing) of each LIBOR Loan to be made
hereunder, each such notice to be given prior to 11:00 a.m.
(St. Louis time) on the date specified and notice by 11:00
a.m. on the day of any CBR Loan. Each such notice (each, a
"Notice of Borrowing") shall be irrevocable and specify the
aggregate principal amount of the Revolving Loan to be made
pursuant to such Borrowing, the date of Borrowing (which
shall be a Business Day; the "Borrowing Date"), whether the
Revolving Loan(s) being made pursuant to such Borrowing are
to be CBR Loans or LIBOR Loans and (in the case of LIBOR
Loans) the Interest Period or Interest Periods to be
applicable thereto. If no election is specified in the
notice then the Loan shall be deemed to be a CBR Loan. The
Borrower shall give the same notice at least two Business
Days before the expiration of each Interest Period with
respect to any LIBOR Loans. If no such notice is given,
then on the expiration of such Interest Period the Loan will
convert to a CBR Loan.
(II) Without in any way limiting the Borrower's
obligation to confirm in writing any telephonic notice,
Agent may act without liability upon the basis of any
telephonic notice believed by Agent in good faith to be from
the Borrower prior to receipt of written confirmation. In
each such case, Borrower hereby waives the right to dispute
Agent's record of the terms of such telephonic Notice of
Borrowing.
(III) Agent shall promptly give each Bank telephonic
notice (confirmed in writing) of the proposed Borrowing, of
such Bank's Percentage Share thereof and of the other
matters covered by the Notice of Borrowing. Neither Agent
nor the Banks shall incur any liability to Borrower for
Agent acting upon any telephonic notice referred to herein
which Agent believes in good faith to have been given by a
duly authorized officer or other Person authorized to borrow
on behalf of Borrower.
(IV) The aggregate principal amount of each Borrowing of
LIBOR Loans hereunder shall be not less than $100,000.00 and
in integral multiples of $100,000.00; and the aggregate
principal amount of each Borrowing of CBR Loans hereunder
shall be not less than $25,000.00, or, if less, the
aggregate amount of the unused corresponding commitments.
(V) Each submission of a Notice of Borrowing given by
Borrower to Agent for any Borrowing shall constitute a
certification by Borrower that, to the best of the knowledge
of the Person giving the same after due inquiry, there has
occurred no Default or Event of Default of Borrower under
this Agreement which is continuing unwaived and that all
representations and warranties under this Agreement are true
as of the Borrowing Date and that all required conditions to
the making of such Borrowing have been met.
2.7 DISBURSEMENT OF FUNDS. Provided all conditions to the
making of the advance pursuant to the current Notice of Borrowing
required under Section 2.6 have been met, each Bank will make
available on the Borrowing Date such Bank's Percentage Share of the
amount of any Borrowing requested to be made on such date in
immediately available funds at the Applicable Lending Office.
2.8 AGENT'S AVAILABILITY ASSUMPTION. Unless Agent shall
have been notified by any Bank in writing prior to any Borrowing
Date that such Bank does not intend to make available to Agent such
Bank's Percentage Share of any Borrowing which it shall be
obligated to make available on such date, Agent may assume that
such Bank has made such amount available to Agent on the Borrowing
Date and Agent may, in reliance upon such assumption, make
available to Borrower a corresponding amount. If such
corresponding amount is not in fact made available to Agent by such
Bank on such Borrowing Date, Agent shall be entitled to recover
such corresponding amount on demand from such Bank, which demand
shall be made in a reasonably prompt manner. If such Bank does not
pay such corresponding amount upon Agent's demand, Agent shall
promptly notify Borrower and the other Banks, and Borrower shall
pay such corresponding amount to Agent. Agent shall also
-5-
<PAGE> 6
be entitled to recover from such defaulting Bank or from Borrower
interest on such corresponding amount in respect of each day from
the date such corresponding amount was made available by Agent to
Borrower, to the date such corresponding amount is recovered by
Agent, at a rate per annum equal to (a) if paid by such Bank, the
cost to Agent of funding such amount at the federal funds rate as
notified in writing by Agent to such Bank, or (b) if paid by
Borrower, the applicable interest rate for the Revolving Loan.
Nothing herein shall be deemed to relieve any Bank from its
obligation to fund its Percentage Share of any Borrowing hereunder,
nor shall any other Bank's Percentage Share of any Borrowing
hereunder be increased as a result of such default of any other
Bank. Each Bank shall be obligated to the extent of its Percentage
Share, as provided herein, regardless of the failure of any other
Bank to fulfill its obligations hereunder.
2.9 SUBSTITUTE FOR DEFAULTING BANK. If any Bank shall fail
to fulfill its obligation to fund its Percentage Share of any
Borrowing within two (2) Business Days after it shall be obligated
to do so, the other Banks and Borrower shall be entitled to assume
that such Bank does not intend to fulfill any such obligations
thereafter, and, without affecting any of such other Banks' or
Borrower's rights as against such defaulting Bank, such other Banks
may, but are not obligated to, elect to fund such defaulting Bank's
Percentage Share, as they may mutually agree to divide such
Percentage Share between themselves, as if it were a part of each
such other Bank's Percentage Share, and, if such other Banks cannot
or do not agree in writing as to such funding within ten (10)
Business Days after a written request from Borrower so to agree,
Borrower may select another bank (a "Substitute Bank") to enter
into the Agreement to fund such defaulting Bank's Percentage Share,
of unfunded and future Borrowings, subject to all the terms and
conditions hereof, such Substitute Bank to be reasonably acceptable
to the non-defaulting Banks.
2.10 PRO RATA TREATMENT OF PAYMENTS. Except as otherwise
contemplated by this Agreement, each Borrowing by Borrower from the
Banks, each payment on account of the principal of and interest,
all fees described in this Agreement (other than those designated
to be paid to Agent for its own account), and all setoffs by the
Banks made in accordance with the provisions hereof, shall be made
pro rata to or by, as the case may be, each Bank pro rata according
to the respective Percentage Share of each Bank. Agent will
distribute each payment to the Banks promptly upon receipt thereof
(and in any event on the same Business Day as the date when
received, if such payment is received at or prior to 1:00 p.m. St.
Louis time).
2.11 METHOD AND TIME OF PAYMENT. All payments received by
Agent shall be applied against the Obligations on the Business Day
received, provided, however, for purposes of interest calculation
under this Agreement, (A) cash and wire-transfers of immediately
available funds received by Agent shall be applied against the
Obligations on the Business Day received and (B) checks,
instruments and other items of payment (other than cash and
wire-transfers of immediately available funds) shall be deemed to
have been applied against the Obligations on the Business Day
immediately following receipt thereof by Agent. All payments to be
made by Borrower hereunder or under any of the other Loan
Documents, shall be made to Agent in dollars and in immediately
available funds, at the Applicable Lending Office not later than
2:00 p.m., St. Louis time, on the date on which such payment shall
become due; and funds received after that hour shall be deemed to
have been received by Agent on the next succeeding Business Day.
If any principal of or interest on any Note or any other amount
payable hereunder falls due on a date which is not a Business Day,
then such due date shall be extended to the next succeeding
Business Day, and interest on such principal shall be payable in
respect of such extension. Borrower authorizes Agent and the Banks
to charge any account maintained by it with Agent or any Bank or
cause an advance to be made hereunder, to the extent that funds are
available, in order to cause timely payment to be made to Agent of
principal and interest on the Notes and any other amounts payable
by it to Agent hereunder or under any of the other Loan Documents.
2.12 PREPAYMENTS. The Borrower shall have the right at any
time and from time-to-time to prepay any CBR Loan, in whole or in
part, without premium or penalty. The Borrower shall not have the
right to prepay in whole or part any LIBOR Loan except on the
expiration date of any applicable Interest Period and upon not less
than two Business Days' prior written notice; provided, however,
-------- -------
that each such partial prepayment shall be in the minimum principal
amount of $100,000.00 or a multiple thereof. Any such prepayment
shall include the accrued interest thereon to the prepayment date
and shall increase the unused portion of the Revolving Commitment
available for borrowing until the Revolving Commitment Termination
Date.
-6-
<PAGE> 7
2.13 NOTES.
(I) REVOLVING NOTES. The Loans made by the Banks
hereunder shall be evidenced by two notes (the "Notes") in
substantially the forms attached hereto and marked Exhibit
A-1 and A-2, respectively, one payable to the order of each
of the Banks in each such Bank's Percentage Share of the
principal amount of the total Revolving Commitment, and
representing the obligation of Borrower to pay the amount of
the Revolving Commitment or the aggregate unpaid principal
amount of all Borrowings under the Revolving Loan pursuant
to this Agreement, whichever is less, and all accrued
interest thereon. The Notes shall be dated as of the
Closing Date and shall be payable in the principal amount of
the Revolving Commitment. The Loans may be paid, reborrowed
and repaid subject to the conditions set forth in Section 2
and shall be payable in full on the Revolving Commitment
Termination Date.
(II) LOAN RECORDS. The date, amount, type and (in the
case of LIBOR Loans) the Interest Period with respect to the
making or payment of each Loan of a Bank shall be recorded
on the schedule (or continuation thereof) attached to the
appropriate Note made and delivered to such Bank or on any
similar record maintained by such Bank with respect
thereto. The failure to record, or any error in recording,
any such Loan or repayment on such schedule (or continuation
thereof) or similar records shall not, however, affect the
obligations of Borrower hereunder or under any Note to repay
the principal amount of the Loans together with all interest
accruing thereon. Each such schedule (or continuation
thereof) or similar record as maintained by each Bank shall
constitute prima facie evidence of the outstanding amount of
its Loans hereunder.
2.14 GENERAL INTEREST PROVISION.
(I) TIME OF ACCRUAL. Interest on each Loan shall accrue
from and including the date of each advance on such Loan to
but excluding the date of any repayment thereof.
(II) COMPUTATION. Interest on each Loan shall be
computed on the basis of a year deemed to consist of 360
days and paid for the actual number of days elapsed. Any
change in the interest rate on any Loan or any portion
thereof resulting from a change in the CBR shall be
effective for the entire day on which such change in the CBR
shall become effective.
2.15 USURY. It is the intention of the parties to comply
with all applicable usury laws. Accordingly, it is agreed that
notwithstanding any provisions to the contrary in the Loan
Documents, in no event shall the Loan Documents require the payment
or permit the collection of interest in excess of the maximum
amount permitted by such laws. If any such excess interest is
contracted for, charged or received under the Loan Documents, or in
the event the maturity of the Indebtedness evidenced by such Loan
Documents is accelerated in whole or in part, or in the event that
all or a part of the principal or interest of the Notes shall be
prepaid, so that under any such circumstances the amount of
interest contracted for, charged or received shall exceed the
maximum amount of interest permitted by the applicable usury laws,
then in any such event (i) the provisions of this Section shall
govern or control; (ii) neither Borrower nor any Person now or
hereafter liable for repayment of such Indebtedness shall be
obligated to pay the amount of such interest not permitted by the
applicable usury laws; (iii) any such excess which may have been
collected shall be refunded to Borrower or such other Person; and
(iv) the effective rate of interest for the Notes shall be deemed
automatically reduced to the maximum lawful rate allowed under
applicable usury laws.
2.16 INCREASED COSTS.
(I) If, by reason of (a) after the date hereof, the
introduction of or any change (including, without limitation, any
change by way of imposition or increase of reserve requirements)
in or in the interpretation of any law rule or regulation, or
(b) the compliance with any guideline or request from any central
bank or other governmental authority or quasi-governmental
authority exercising control over banks or financial institutions
generally (whether or not having the force of law):
(1) any Bank shall be subject to any tax, duty or other
charge with respect to its LIBOR Loans or its obligation to
make the same, or the basis of taxation of payments to any
Bank of the principal of or interest on its LIBOR Loans
or its obligation to make the same shall change (except
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for changes in the rate of tax on the overall net income of
such Bank imposed by the jurisdiction in which such Bank's
principal executive office is located); or
(2) any reserve (including, without limitation, any
imposed by the FRB), special deposit or similar requirement
against assets of, deposits with or for the account of, or
credit extended by, any Bank shall be imposed or deemed
applicable or any other condition affecting its LIBOR Loans
or its obligation to make them shall be imposed on any Bank
or the London Interbank Market;
and as a result thereof there shall be any increase in the cost to
such Bank of agreeing to make or making, funding or maintaining
LIBOR Loans (except to the extent already included in the
determination of the applicable Adjusted LIBOR Rate for LIBOR
Loans), or there shall be a reduction in the amount received or
receivable by such Bank, then the Borrower shall from time to time,
upon written notice from and demand by such Bank (with a copy of
such notice and demand to Agent), pay to Agent for the account of
such Bank, within five (5) Business Days after the date specified
in such notice and demand, additional amounts sufficient to
indemnify such Bank against such increased cost. A certificate of
such Bank claiming compensation under this Section shall be
delivered to Borrower by such Bank and shall set forth the
additional amount or amounts to be paid to it hereunder and
supporting calculations in reasonable detail.
(II) If any Bank shall advise the Agent that at any
time, because of the circumstances described in clauses (a) or (b)
in Section 2.16(i) or any other circumstances arising after the
date hereof affecting such Bank or the London Interbank Market or
such Bank's position in such market, the LIBOR Rate, as determined
by Agent, will not adequately and fairly reflect the cost to such
Bank of funding its LIBOR Loans, as the case may be, then, and in
any such event:
(a) Agent shall forthwith give notice (by telephone,
confirmed in writing) to Borrower and to the Banks of such
advice;
(b) Borrower's right to request from such Bank and such
Bank's obligation to make LIBOR Loans, as the case may be,
shall be immediately suspended; and
(c) such Bank shall thereupon make a Loan as part of any
requested Borrowing of LIBOR Loans as a CBR Loan, which CBR
Loan shall, for all other purposes, be considered part of
each such Borrowing.
2.17 CAPITAL ADEQUACY. If after the date hereof, any Bank
shall determine that the adoption or the taking effect of any
applicable law, rule or regulation regarding capital adequacy, or
any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank
or comparable agency or compliance by the such Bank with any
request or directive regarding capital adequacy (whether or not
having the force of law) of any such authority, central bank or
comparable agency, has or would have the effect of reducing the
rate of return on or increasing the cost of maintaining the Bank's
capital as a consequence of its obligations hereunder (taking into
consideration such Bank's policies with respect to capital
adequacy) then from time to time, within fifteen (15) days after
demand by such Bank, Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank for such
reduction or increase. A certificate of such Bank claiming
compensation under this Section shall be delivered to Borrower by
such Bank and shall set forth the additional amount or amounts to
be paid to it hereunder and supporting calculations in reasonable
detail.
2.18 INTEREST RATE NOT ASCERTAINABLE, ETC. In the event
that Agent shall have determined (which determination shall, absent
manifest error, be final, conclusive and binding upon all parties)
that on any date for determining the LIBOR Rate for any Interest
period, by reason of any changes arising after the date of this
Agreement affecting the London Interbank Market, or any Bank's
position in such market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for
in the definition of LIBOR Rate, then, and in any such event, Agent
shall forthwith give notice (by telephone, confirmed in writing) to
Borrower and to the Banks of such determination. Until Agent
notifies Borrower that the circumstances giving rise to the
suspension described herein no longer exist, (a) the obligations of
the Banks to make LIBOR Loans, as the case may be shall be
suspended, and (b) Borrower shall convert the entire outstanding
principal of any outstanding LIBOR Loans into CBR Loans on the last
day of each Interest Period applicable to each such LIBOR Loan.
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2.19 ILLEGALITY.
(I) In the event that any Bank shall have determined
(which determination shall, absent manifest error, be final,
conclusive and binding upon all parties) at any time that
the making or continuance of any LIBOR Loan has become
unlawful by compliance by such Bank in good faith with any
applicable law, governmental rule, regulation, guideline or
order (whether or not having the force of law and whether or
not failure to comply therewith would be unlawful), then, in
any such event, such Bank shall give prompt notice (by
telephone, confirmed in writing) to Borrower and to Agent of
such determination (which notice Agent shall promptly
transmit to the other Banks).
(II) Upon the giving of the notice to Borrower referred
to in Section 2.19(i) above, (i) Borrower's right to request
from such Bank and such Bank's obligation to make LIBOR
Loans shall be immediately suspended, and such Bank shall
make a Loan as part of the requested Borrowing of LIBOR
Loans as a CBR Loan, which CBR Loan shall, for all other
purposes, be considered part of each such Borrowing, and
(ii) if the affected LIBOR Loan or Loans are then
outstanding, Borrower shall immediately or, if permitted by
applicable law, no later than the date permitted thereby,
upon at least one (1) Business Day's written notice to Agent
and the affected Bank, convert each such Loan into a CBR
Loan or Loans, provided that if more than one Bank is
affected at any time, then all affected Banks shall be
treated the same pursuant to this Section.
2.20 FUNDING LOSSES. Borrower shall compensate each Bank,
upon its written request (which request shall set forth in
reasonable detail the basis for requesting such amounts), for all
losses, expenses and liabilities (including, without limitation,
any interest paid by such Bank to lenders of funds borrowed by it
to make or carry its LIBOR Loans to the extent not recovered by
such Bank in connection with the re-employment of such funds and
including loss of anticipated profits), which such Bank may
sustain: (i) if for any reason (other than a default by such Bank)
a Borrowing of LIBOR Loans does not occur on the date specified
therefor in a Notice of Borrowing (whether or not withdrawn),
(ii) if any prepayment, repayment or conversion of any of its LIBOR
Loans, whether or not required hereby, occurs on a date which is
not the last day of an Interest Period applicable thereto or
(iii) if, for any reason, Borrower defaults in its obligation to
repay its LIBOR Loans when required by the terms of this Agreement.
SECTION 3
CONDITIONS OF LENDING
3.1 CONDITIONS TO INITIAL BORROWING. As conditions
precedent to Banks' obligations to fund the initial Borrowings,
Borrower shall comply with the following:
(I) CERTAIN DOCUMENTS. Borrower shall furnish or cause
to be furnished to Agent the following, all in form and
substance reasonably satisfactory to the Banks:
(A) LOAN AGREEMENT. This Agreement, duly executed by
Borrower.
(B) NOTES. The Notes, duly executed by Borrower.
(C) GUARANTIES. Unlimited guaranties duly executed
by the Guarantors ("Guaranties").
(D) GOOD STANDING CERTIFICATES. A copy of the
certificates of good standing of Borrower and Guarantors
in each state of incorporation and in each state of
qualification, issued by the Secretary of State of such
states.
(E) SECRETARY'S CERTIFICATE. A Certificate of the
Secretary or Assistant Secretary of Borrower attaching
and/or certifying (i) copies of Borrower's articles or
certificate of incorporation and bylaws (also certified
by the Secretary of State of Borrower's incorporation) as
accurate, complete and containing all amendments thereto
as of the date of this Agreement, (ii) resolutions
adopted by the Board of Directors of Borrower authorizing
the execution, delivery and performance of the Loan
Documents, and the Borrowings by Borrower under this Loan
Agreement, and (iii) the names, titles, incumbency and
true signatures of the corporate officers who are
authorized to sign the Loan Documents.
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<PAGE> 10
(F) GUARANTORS' SECRETARIES' CERTIFICATES. A
Certificate of the Secretary or Assistant Secretary of
each Guarantor attaching and/or certifying (i) copies of
such Guarantor's articles or certificate of incorporation
and bylaws furnished to the Banks as accurate, complete
and containing all amendments thereto as of the date of
this Agreement, (ii) resolutions adopted by the Board of
Directors of such Guarantor authorizing the execution,
delivery and performance of the Guaranty to be executed
by such Guarantor and ratifying the actions of Borrower,
and (iii) the names, titles, incumbency and true
signatures of the corporate officers who are authorized
to sign the Loan Documents to be executed by such
Guarantor.
(G) CONSENTS; LICENSES; APPROVALS. Copies of all
consents, licenses and approvals, if any, obtained by
Borrower in connection with the execution, delivery,
performance, validity and enforceability of the Loan
Documents.
(H) OTHER. Such other certificates, approvals,
opinions or documents as Agent or its counsel may
reasonably request.
(II) OTHER MATTERS.
(A) NO DEFAULT. No Default or Event of Default shall
have occurred or will occur as a result of the funding of
the initial Borrowings or the application of the proceeds
thereof.
(B) REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in the Loan
Documents shall be true and correct.
(C) PAYMENT OF FEES. Borrower shall have paid to
Agent the Legal Fees and Revolving Loan Commitment Fee.
(D) ADDITIONAL MATTERS. All other documents and
legal matters in connection with the transactions
contemplated by the Loan Documents and related documents
shall be in form and substance reasonably satisfactory to
the Banks.
3.2 CONDITIONS TO SUBSEQUENT BORROWINGS. The obligation of
the Banks to make any subsequent advances under the Revolving
Commitment shall be subject to the prior or concurrent fulfillment
of each of the following additional conditions precedent, all in a
manner reasonably satisfactory to the Banks:
(I) GENERAL CONDITIONS. All of the conditions to the
initial Borrowing shall have been satisfied.
(II) REPRESENTATIONS AND WARRANTIES. The
representations and warranties contained in the Loan
Documents shall be true and correct on the date of each such
Borrowing.
(III) NO DEFAULT. No Default or Event of Default shall
have occurred or will occur as a result of the requested
Borrowing, or the application of the proceeds thereof.
(IV) NO LEGAL RESTRAINTS. There shall be (i) no
litigation, investigation or other proceeding, by or before
any court, arbitrator or governmental authority, with
respect to any of the Loan Documents or any of the
transactions contemplated thereby, pending or threatened
against Borrower or any of its property, and (ii) no
injunction, writ, temporary restraining order or any order
of any nature issued by any court or other governmental
authority which purports to restrain or enjoin the making of
the Loans or any Borrowing or the consummation of any other
transaction contemplated by the Loan Documents.
Each Borrowing by Borrower shall be deemed to constitute a
representation and warranty by it to the effect of this Section.
SECTION 4
REPRESENTATIONS AND WARRANTIES
4.1 The Borrower expressly represents and warrants that:
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<PAGE> 11
(I) It is a corporation duly organized and validly existing
and in good standing under the laws of the State of Delaware.
(II) It has corporate power and authority to own its
property and to carry on its business as now being conducted, and
it is duly qualified to do business and is in good standing in
every jurisdiction in which the conduct of its business or the
ownership of its property is such as to require such qualification,
and where failure to so qualify would have a Material Adverse
Effect.
(III) It has full corporate power and authority to execute
this Agreement and the Notes and any other Loan Documents, and that
the execution and delivery of the Loan Documents by the officers of
the Borrower who are executing and delivering the same have been
duly and lawfully authorized and that all corporate acts and
proceedings necessary or proper in the premises have been duly
done, performed and taken, and the Loan Documents constitute the
legal, valid and binding obligations of the Borrower enforceable in
accordance with their respective terms, except as the enforceabil-
ity thereof may be limited by applicable bankruptcy, insolvency or
other similar laws affecting creditors' rights generally.
(IV) The execution and delivery of the Loan Documents and
the compliance by the Borrower with their terms and conditions,
will not violate the Certificate of Incorporation or By-Laws of the
Borrower.
(V) The execution and delivery of the Loan Documents and
the compliance by the Borrower with their terms and conditions will
not violate any contract to which the Borrower is a party, and will
not violate any law, regulation, rule or order of any governmental
body or agency.
(VI) It has good title to its property and assets, free and
clear of all mortgages, liens and encumbrances, except such as
individually or in the aggregate do not have a Material Adverse
Effect.
(VII) It has filed all tax returns required to be filed with
the United States or any state or political subdivision thereof or
other taxing authority to which it is known to be subject, and the
failure of which to file would have a Material Adverse Effect and
has paid all taxes, interest and penalties which have or may become
due pursuant to said returns or provided adequate reserves for the
payment thereof.
(VIII) There are no suits or administrative proceedings
pending or, to the knowledge of the Borrower threatened against or
affecting the Borrower which might have a Material Adverse Effect.
SECTION 5
AFFIRMATIVE COVENANTS
5.1 So long as the Banks are obligated to lend hereunder or
any part of the Credit or a Standby Letter of Credit remains
outstanding, the Borrower covenants and agrees that it will:
(I) Furnish to Agent within 120 days after the close of each
fiscal year, an audited balance sheet of Borrower and its
subsidiaries prepared on a consolidated basis without footnotes,
and income statement for each fiscal year of Borrower and its
subsidiaries prepared on a consolidated basis, certified to by a
certified public accountant reasonably satisfactory to the Banks.
(II) Furnish to Agent quarterly condensed consolidated
balance sheets and income statements of Borrower and its
subsidiaries prepared by Borrower on a consolidated basis, but
without footnotes and certified by a responsible officer of the
Borrower within 90 days of the close of each fiscal quarter.
(III) Furnish to Agent such other financial and operating
information, and permit representatives of Banks to examine its
books and records, all as may be reasonably requested by Banks from
time to time.
(IV) Keep insured all property owned by it of a character
usually insured by business similar to Borrower with responsible
companies in such amounts and against such risks as is usually
carried by owners of similar businesses and property in the same
general area in which Borrower operates, including fire, flood and
casualty insurance.
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<PAGE> 12
(V) Pay and discharge when due all taxes and claims which
might result in a lien, unless the same is being contested in good
faith by the Borrower in proper proceedings and for which a
sufficient reserve has been established.
(VI) Cause to be done all things necessary to preserve and
keep in full force and effect the corporate existence of Borrower,
and comply with and cause to be complied with all laws, ordinances
and regulations applicable to Borrower, including ERISA, if
Borrower has a pension and/or profit sharing plan.
SECTION 6
NEGATIVE COVENANTS
6.1 So long as the Banks are obligated to lend hereunder or
any part of the Credit or any Standby Letter of Credit remains
outstanding, the Borrower covenants and agrees that, without the
prior written consent of Agent, it will not:
(I) Create or incur any Indebtedness, except (a)
Indebtedness to the Banks; (b) to vendors and suppliers in the
ordinary course of business consistent with past practice; (c)
purchase money security interests and leases entered into in
connection with the acquisition of capital assets in the ordinary
course of Borrower's business consistent with past practice; and
(d) the subordinated promissory note in principal amount of
$3,000,000 which Borrower plans to issue to New Enviroq Corporation
in connection with Borrower's proposed acquisition of the pipeline
rehabilitation business of ENVIROQ Corporation.
(II) Mortgage, pledge or otherwise encumber or permit any
lien to be placed upon or against any assets now owned or
hereinafter acquired, except (a) those existing at the date hereof
and disclosed in writing to the Banks; (b) security interests
granted pursuant to Indebtedness which Borrower may incur without
the Banks consent pursuant to Sections 6.1(i)(a), (c) and (d); and
(c) such liens as do not individually or in the aggregate have a
Material Adverse Effect.
(III) Purchase, retire or redeem any shares of its capital
stock or increase the cash dividends per share on its capital stock
to amounts per annum greater than those in effect pursuant to the
dividend policy in effect on the date hereof.
(IV) Merge or consolidate with or into any other entity
other than a wholly-owned subsidiary, or sell, lease or otherwise
dispose of all or a substantially all its properties and assets.
(V) Make any investment other than (i) investments in (A)
obligations issued or guaranteed, directly or indirectly, by the
United States Government, (B) commercial paper or certificates of
deposit issued by any commercial bank located in the United States
having a combined capital and surplus of not less than $50,000,000;
(ii) direct and indirect investments in Borrower's operating
subsidiaries in the ordinary course of Borrower's business
consistent with past practice and (iii) foreign currency risk
hedging transactions in the ordinary course of business.
(VI) Make any loans or advances to others, or guaranty or
otherwise become, directly or indirectly liable for or upon the
obligations of others, other than in the ordinary course of
Borrower's business consistent with past practice.
SECTION 7
EVENTS OF DEFAULT
Each of the following shall severally be considered an "Event of
Default" for purposes of this Agreement:
7.1 Failure for a period of ten (10) Business Days after
oral or written notice from Agent, to pay any installment of
principal or interest on the Note issued hereunder when due,
whether by acceleration or otherwise.
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<PAGE> 13
7.2 If any representation or warranty made by Borrower or
a Guarantor in this Agreement or in the Loan Documents should prove
to be untrue in any material respect, as of the date made.
7.3 Default by the Borrower for a period of twenty (20)
Business Days after notice from the Agent, in the performance or
observance of any other covenant, term or agreement contained in
this Agreement or in the Loan Documents.
7.4 Occurrence of any event or condition which constitutes,
or upon the lapse of time or the giving of notice, or both, would
constitute, a default or an event of default under any other
agreement or evidence of indebtedness relating to any obligation of
the Borrower for borrowed money, or failure by the Borrower to pay
under any obligation for borrowed money to which it is a party or
which purports to be binding upon it.
7.5 Occurrence of any of the following:
(I) Adjudication by a court of competent jurisdiction
that the Borrower is a bankrupt or insolvent or the appointment of
a receiver for the Borrower or for all or any part of its
respective property;
(II) Filing by the Borrower or by any of its creditors
of a petition under the provisions of the Bankruptcy Code as now
enacted or hereafter amended;
(III) Making by the Borrower of a general assignment for
the benefit of creditors or an admission in writing by the Borrower
of inability to pay indebtedness.
7.6 If any final judgment against the Borrower or any
attachment or other levy against any of its property for an amount
in excess of $5,000 remains unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for more than 10 days.
7.7 Any Reportable Event that the Agent determines in good
faith would constitute grounds for the termination of any Plan or
for the appointment by the appropriate United States District Court
of a trustee to administer any Plan shall have occurred and shall
continue for 30 days after written notice to such effect shall have
been given to the Borrower by the Agent, or any Plan shall be
terminated, or a trustee shall be appointed by an appropriate
United States District Court to administer any Plan, or the Pension
Benefit Guaranty Corporation shall institute proceedings to
terminate any plan or to appoint a trustee to administer any Plan.
7.8 Any substantial change in control of the Borrower or if
both Jerry Kalishman and Robert W. Affholder cease to serve as
executive officers of the Borrower.
7.9 Bankruptcy, insolvency of, appointment of a receiver for
any part of the property of, assignment for the benefit of
creditors by, or commencement of any proceeding under any
bankruptcy or insolvency laws by or against, any Guarantor or
surety hereunder for the Borrower or the giving of any notice, or
the occurrence of any event, terminating the liability of any such
Guarantor or surety as to any obligations of the Borrower,
including obligations not then incurred.
SECTION 8
RIGHTS AND REMEDIES IN THE EVENT OF DEFAULT
8.1 Upon the occurrence of an Event of Default and at any
time thereafter, the Agent may on written request of the Required
Banks, declare all of the indebtedness outstanding hereunder
immediately due and payable without demand or notice of any kind,
the same being hereby expressly waived, and such indebtedness shall
thereupon be and become immediately due and payable and the
obligation of the bank to make additional advances shall cease, and
further, upon the occurrence of an Event of Default, Banks may
suspend all further Borrowings during any cure periods provided in
Section 7.
8.2 No failure on the part of any Bank to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise by any Bank of
any right hereunder preclude any other or further exercise thereof,
or the exercise of any other right. Each and every right granted
to the Banks hereunder or under any document delivered hereunder or
in connection therewith or allowed to it at law or in equity shall
be deemed cumulative and may be exercised from time to time.
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<PAGE> 14
8.3 It is agreed by the Borrower that any Event of Default
will constitute an event of default under all other agreements and
evidences of indebtedness between the Borrower and the Banks
whether now existing or hereafter executed and whether or not such
is an event of default specified therein.
8.4 Upon the occurrence and during the continuance of any
Event of Default, Agent and the Banks are hereby authorized at any
time and from time to time, without prior notice to Borrower (any
such notice being expressly waived by Borrower), to set off and
apply any and all deposits (general or special, time or demand,
provisional or final) at any time held by any Bank and any other
Indebtedness at any time owing by any Bank to or for the credit or
the account of Borrower against any and all of the Obligations,
irrespective of whether or not Agent or any Bank shall have made
any demand under this Agreement or the Notes and although such
Obligations may be unmatured. The rights of Agent and the Banks
under this Section are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the
same may otherwise have. Agent shall give Borrower prompt notice
following the exercise of the remedy provided by this Section.
SECTION 9
THE AGENT
9.1 APPOINTMENT. The Boatmen's National Bank of St. Louis
is hereby appointed Agent hereunder and under the Notes and the
other Loan Documents, and each of the Banks irrevocably authorizes
the Agent to act as the agent of such Bank hereunder and under the
Notes and the other Loan Documents. The Agent agrees to act as
such upon the express conditions set out in this Section 9.
9.2 POWERS. The Agent shall have and may exercise such
powers hereunder and under the Notes and the other Loan Documents
as are specifically delegated to the Agent by the terms hereof,
together with such powers as are reasonably incidental thereto.
The Agent shall have no implied duties to the Banks or any
obligation to the Banks to take any action hereunder or thereunder
except any action specifically provided by this Agreement or the
other Loan Documents to be taken by the Agent.
9.3 GENERAL IMMUNITY. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the
Banks or any Bank for any action taken or omitted to be taken by it
or them hereunder or under the Notes or the other Loan Documents,
including this Agreement, or in connection herewith or therewith
except for its or their own gross negligence or willful misconduct.
9.4 NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. The Agent
shall not be responsible to the Banks for any recitals, reports,
statements, warranties or representations herein or in the other
Loan Documents, or for any Loans hereunder or to be bound to
ascertain or inquire as to the performance or observance of any of
the terms of this Agreement or the other Loan Documents, or to
inspect the properties, books or records of Borrower.
9.5 RIGHT TO INDEMNITY. The Agent shall be fully justified
in failing or refusing to take any action hereunder or under the
Notes or other Loan Documents unless it shall first be indemnified
to its satisfaction by the Banks pro rata against any and all
liability and expense which may be incurred by it by reason of
taking or continuing to take any such action.
9.6 ACTION ON INSTRUCTIONS OF BANKS. The Agent shall in all
cases be fully protected in acting, or in refraining from acting,
hereunder or under the Notes or other Loan Documents in accordance
with written instructions signed by the Required Banks, and such
instructions and any action taken or failure to act pursuant
thereto shall be binding on all the Banks and on all holders of the
Notes.
9.7 AGENT'S DUTIES ON DEFAULT. Agent shall not be deemed
to have knowledge or notice of the occurrence of any Default or
Event of Default hereunder unless Agent shall have received notice
from a Bank or Borrower referring to this Agreement, describing
such Default or Event of Default and stating that such notice is a
"notice of default." In the event that Agent receives such a
notice, Agent shall give prompt notice thereof to the Banks. Agent
shall take such action with respect to such Default or Event of
Default as shall be reasonably directed by the Required Banks;
provided, however, that, unless and until Agent shall have received
such directions, Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to
such Default or Event of Default as Agent shall deem advisable in
the best interest of the Banks.
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<PAGE> 15
9.8 LIMITATION ON AGENT'S DUTIES. Notwithstanding any other
provision of this Section 9, or any indemnity or instructions
provided by any or all of the Banks, the Agent shall not be
required to take any action which exposes the Agent to personal
liability or which is contrary to this Agreement or applicable law.
9.9 EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may execute
any of its duties as Agent hereunder or under the Notes or other
Loan Documents by or through employees, agents, and attorneys-in-
fact and shall not be answerable to the Banks, except as to money,
securities or collateral for the Loans received by it or its
authorized agents, for the default or misconduct of any such agents
or attorneys-in-fact selected by it with reasonable care. The
Agent shall be entitled to advice of counsel concerning all matters
pertaining to the agency hereby created and its duties hereunder or
under the Notes or other Loan Documents.
9.10 RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be
entitled to rely upon any Note, notice, consent, certificate,
affidavit, letter, telex, telegram, telecopy, statement, paper or
document believed by it to be genuine and correct and to have been
signed or sent by the proper Person or Persons, and, in respect to
legal matters, upon the opinion of counsel selected by the Agent.
9.11 MAY TREAT BANK AS OWNER. The Agent may deem and treat
each Bank as the owner of such Bank's Note for all purposes hereof
unless and until a written notice of the assignment or transfer
thereof shall have been filed with the Agent. Any request,
authority or consent of any Person who at the time of making such
request or giving such authority or consent is the owner of the
Note shall be conclusive and binding on any subsequent owner,
transferee or assignee of such Note.
9.12 AGENT'S REIMBURSEMENT. Each Bank agrees to reimburse
the Agent in the amount of such Bank's pro rata share of the
Revolving Commitments for any expenses not reimbursed by or for the
account of the Borrower (i) for which the Agent is entitled to
reimbursement by the Borrower under this Agreement, the Notes or
other Loan Documents and (ii) for any other expenses incurred by
the Agent on behalf of the Banks, in connection with the
preparation, execution, delivery, administration and enforcement of
this Agreement, the Notes and the other Loan Documents.
9.13 RIGHTS AS A BANK. With respect to its Percentage Share
of the Revolving Commitment and Loans made by the Agent, the Agent
shall have the same rights and powers hereunder as any Bank and may
exercise the same as though it were not the Agent, and the term
"Bank" or "Banks" shall, unless the context otherwise indicates,
include the Agent in its individual capacity. The Agent may accept
deposits from, lend money to, and generally engage in any kind of
banking or trust business with the Borrower as if it were not the
Agent.
9.14 BANK CREDIT DECISION. Each Bank acknowledges that it
has, independently and without reliance upon the Agent or any other
Bank and based on the financial statements provided by the Borrower
and such other documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Bank also acknowledges that it will,
independently and without reliance upon the Agent or any other Bank
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions
in taking or not taking action under this Agreement, the Notes or
the other Loan Documents. Except for notices, reports and other
documents expressly required to be furnished to the Banks by Agent
hereunder, Agent shall not have any duty or responsibility to
provide any Bank with any credit or other information concerning
the business, operations, property, financial and other condition
or creditworthiness of Borrower or any Guarantor which may come
into the possession of Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
SECTION 10
MISCELLANEOUS
10.1 AGENCY AGREEMENT. The Banks have appointed Agent to act
as agent under this Agreement, the other Loan Documents and the
Notes. Borrower shall be entitled to rely on a written notice or
response from the Agent as being based on the written concurrence
or consent of all the Banks unless otherwise expressly stated in
the Agent's notice or response. Borrower will deal with Agent with
regard to this Agreement, the other Loan Documents, the Notes and
all other matters in connection herewith or therewith.
-15-
<PAGE> 16
10.2 SEVERAL OBLIGATIONS. The respective obligations of the
Banks under this Agreement are several and not joint, and no Bank
shall be deemed the partner or agent of any other (except to the
extent the Agent is authorized to act as agent). The failure of
any Bank to perform any of its obligations hereunder shall not
relieve any other Bank from any of such other Bank's obligations
hereunder.
10.3 TERMS DEFINED BY REFERENCE. As used in this Agreement
and in any certificate, report or other document made or delivered
pursuant hereto, unless the context otherwise requires, accounting
terms not otherwise defined or only partly defined herein (to the
extent not defined) shall be construed, calculations hereunder
shall be made and financial data required hereunder shall be
prepared, both as to classification of items and as to amounts, in
accordance with GAAP.
10.4 NOTICES. Unless otherwise specified herein, 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, or
three (3) days after deposited in the United States mail, first
class postage prepaid, or, in the case of telegraphic notice, or
the overnight courier services, one (1) Business Day after
delivered to the telegraph company or overnight courier service
with payment provided for, or in the case of telex or telecopy
notice, when sent, verification received, in each case, with
respect to Agent and the Banks addressed as set forth on Exhibit
1.1, and with respect to Borrower as set forth below, or such other
address as either party may designate by notice to the other in
accordance with the terms of this Section.
Borrower: Insituform Mid-America, Inc.
17988 Edison Avenue
Chesterfield, MO 63017-1026
ATTN: Joseph F. Olson
Vice-President Finance & Administration
Telephone: (314) 532-6137
10.5 AMENDMENTS AND WAIVERS; NON-EXCLUSIVE RIGHTS. No
amendment, modification or waiver of any provision of this
Agreement, or any of the other Loan Documents, nor consent to any
departure by Borrower herefrom or therefrom, shall be effective
unless the same shall be in writing signed by an authorized officer
of each of the Required Banks (and, if the rights or duties of the
Agent are affected thereby, by the Agent) and Borrower (except that
waivers need only be signed by an authorized officer of each of the
Required Banks), and then only in the specific instance and for the
purpose for which given. Anything in the foregoing to the contrary
notwithstanding, no such amendment or waiver shall, unless signed
by all the Banks, (i) increase the Revolving Commitment or
Percentage Share of any Bank or subject any Bank to any additional
obligation, (ii) change the principal of or rate of interest on the
Notes or any fees hereunder, (iii) postpone the date fixed for any
payment of principal of or interest on the Notes or any fees
hereunder, or (iv) change the definition of Required Banks. 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 on the part of Agent or any Bank to
exercise, and no delay in exercising, any right, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise by Agent or any Bank of any right hereunder
preclude any other or further exercise thereof, or the exercise of
any other right. Each and every right granted to Agent and the
Banks hereunder or under any document delivered hereunder or in
connection with this Agreement or allowed to it at law or in equity
shall be deemed cumulative and may be exercised from time to time.
10.6 INJUNCTIVE RELIEF. Borrower recognizes that if
Borrower fails to perform, observe or discharge any of its
obligations under the Loan Documents, no remedy at law will provide
adequate relief to the Banks; therefore, Borrower agrees that the
Banks shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual
damages.
10.7 SURVIVAL OF AGREEMENTS. All agreements,
representations and warranties made herein and in the other Loan
Documents, and in any certificates delivered pursuant hereto shall
survive the execution and delivery of this Agreement, the execution
and delivery of the Notes and the making of the Loans. All
agreements, obligations and liabilities of Borrower under this
Agreement concerning the payment of money to the Banks, other than
the obligation to pay principal of and interest on the Loans, shall
survive the repayment in full of the Loans and the Notes and the
termination of this Agreement.
-16-
<PAGE> 17
10.8 SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and all
future holders of the Notes and their respective successors and
assigns, except that Borrower may not assign or transfer any of its
rights under this Agreement without the prior written consent of
the Required Banks. Any Bank may, in the ordinary course of its
commercial banking business and in accordance with applicable law
at any time sell to one or more participants any commitment of such
Bank or sell to one or more purchasing banks a portion of its
rights and obligations under this Agreement and the Notes held by
it. Borrower may, for all purposes under this Agreement, treat any
Bank as the holder of any Note or Notes drawn to such Bank's order
(and owner of the Loan or Loans evidenced thereby) until written
notice of assignment, participation or other transfer thereof shall
have been received by Borrower.
10.9 PAYMENT OF EXPENSES AND TAXES. Borrower agrees to pay
or reimburse Agent and the Banks for all reasonable costs and
expenses incurred in connection with the enforcement or
preservation of any of its rights under the Loan Documents,
including, without limitation, attorneys' reasonable fees and
actual costs, and court costs. Borrower also agrees to pay, and to
save the Banks and Agent harmless from and against any and all
recording and filing fees and taxes, expenses for title surveys,
title insurance and redatings thereof and any and all liabilities
with respect to, or resulting from any delay in paying stamp,
mortgage and other taxes, if any, which may be payable or
determined to be payable in connection with the execution and
delivery of, or consummation of any of the transactions
contemplated by, or any amendment or modification of, or any waiver
or consent under or in respect of, the Loan Documents. The
agreements in this Section shall survive the repayment in full of
the Loans and the Notes and the termination of this Agreement.
10.10 PAYMENT OF LEGAL FEES. Borrower shall pay all Legal
Fees. Further, if at any time or times hereafter Agent or any Bank
shall employ counsel for advice or other representation (i) to
represent the same in any litigation, contest, dispute, suit or
proceeding or to commence, defend, petition, intervene or take any
other action in or with respect to any of the same (whether
instituted by Agent, a Bank, Borrower or any other Person) in any
way relating to any collateral securing the obligations of any of
the parties under the Loan Documents; (ii) to attempt to enforce
any security interest of a Bank in any such collateral securing the
obligations of any of the parties under the Loan Documents; (iii)
to enforce any right of Agent or a Bank against Borrower or against
any other Person that may be obligated to Agent or a Bank by virtue
of the Loan Documents; (iv) to amend, release or otherwise modify
the Loan Documents, or any of them; then in the event of any of the
foregoing, all reasonable attorneys' fees arising from such
services and all actual expenses, costs and charges in any respect
arising in connection with the Loan Documents or relating thereto
shall constitute a part of the Obligations owing by Borrower to the
Banks, be payable on demand and shall be secured by the collateral
securing the obligations of the parties under the Loan Documents.
The agreements in this Section shall survive the repayment in full
of the Loans and the Notes and the termination of this Agreement.
10.11 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 nonauthorization 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.
10.12 INDEPENDENCE OF COVENANTS. All covenants of Borrower
hereunder shall be given independent effect so that, if a
particular action or condition is prohibited by any of such
covenants, the fact that it would be permitted by an exception to,
or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default or Event of Default if such
action is taken or condition exists.
10.13 INDEMNITY. Borrower irrevocably and unconditionally
agrees to pay, indemnify and hold harmless Agent and the Banks from
and against, and promptly to reimburse Agent and the Banks for, any
and all claims, damages, liabilities, losses, costs and expenses
(including, without limitations, reasonable attorneys' fees and
disbursements and amounts paid in settlement) incurred, paid or
sustained by Agent or the Banks 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 Agent or the Banks
(except for such of the same as are between Agent and/or the Banks
on the one hand and Borrower on the other hand) and 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; provided, however, that Borrower shall have no
-17-
<PAGE> 18
obligation to indemnify Agent or any Bank hereunder with respect to
liability arising from Agents or such Bank's gross negligence or
intentional misconduct or with respect to any controversy solely
between the Banks.
10.14 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.
10.15 GOVERNING LAW; NO THIRD PARTY RIGHTS. This Agreement,
the other Loan Documents and the Notes and the rights and
obligations of the parties hereunder and thereunder shall be
governed by and construed and interpreted in accordance with the
laws of the State of Missouri applicable to contracts made and to
be performed wholly within such State, without regard to any choice
or conflict of laws rules. 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.
10.16 CAPTIONS. Any Section captions used in this Agreement
are for convenience only and shall not affect the interpretation or
construction of this Agreement or the Notes.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their duly authorized officers as of
the day and year first above written.
INSITUFORM MID-AMERICA, INC.
By: ------------------------------
Title:
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS MARK TWAIN BANK
By: ------------------------------ BY:------------------------------
Christy B. Goudy Katherine Floyd
Assistant Vice President Regional Senior Vice President
-18-
<PAGE> 19
<TABLE>
Exhibit 1.1
<CAPTION>
BANK NAME PERCENTAGE SHARE
- --------- ----------------
<S> <C>
1. THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
One Boatmen's Plaza
800 Market Street
St. Louis, MO 63101
Attn: Christy B. Goudy
Phone: 314-466-7630
Fax: 314-466-7783 65%
2. MARK TWAIN BANK
1795 Clarkson Road
Chesterfield, MO 63017-4975
Attn: Katherine Floyd
Phone: 314-532-5800
Fax: 314-532-0140 35%
----
100%
</TABLE>
<PAGE> 20
EXHIBIT A-1
PROMISSORY NOTE
$13,000,000.00 St. Louis, Missouri
February 15, 1995
FOR VALUE RECEIVED, on February 15, 1996, INSITUFORM MID-
AMERICA, INC., (the "Borrower"), hereby promises to pay to the
order of THE BOATMEN'S NATIONAL BANK OF ST. LOUIS (the "Bank") in
lawful money of the United States at the principal office of the
Agent in St. Louis, Missouri the principal sum of THIRTEEN MILLION
DOLLARS ($13,000,000.00) or the aggregate unpaid principal amount
of all advances made by the Bank, to the Borrower (which aggregate
unpaid principal amount shall be the amount duly endorsed in the
records of Bank), whichever is less. All Loans made pursuant to
this Note shall be payable at maturity. Loans made hereunder shall
bear interest at a rate per annum equal the CBR Rate or the
Adjusted LIBOR Rate (the "Note Rates") as provided in the Credit
Agreement (as defined below) for periods of time expiring on the
dates shown in Agent's records as the expiration date of the Note
Rates. If such Note Rates are not renegotiated after the date
indicated as the expiration date of the Note Rates, such Loans
shall convert to CBR Loans. After maturity, whether by
acceleration or otherwise, advances shall bear interest at a rate
per annum equal to two percent (2%) in excess of the Corporate Base
Rate. The Agent shall endorse the Note Rate and expiration date of
that Note Rate applicable to each advance, and also shall endorse
each repayment in its records which shall be conclusive evidence of
the amounts due in the absence of manifest error. Interest shall
be computed on the basis of a year of 360 days for the actual
number of days involved, which interest shall be payable monthly or
upon any payment of principal.
The obligation of the Borrower to repay each Loan made
hereunder shall be absolute and unconditional, notwithstanding any
failure of the Bank to endorse the sheet attached to this Note.
This Note arises out of that certain Credit Agreement
dated February 15, 1995, among the Borrower an the Banks parties
thereto (the "Credit Agreement"). Reference is made to the Credit
Agreement for rights of the holder as to acceleration of this Note
and for rights of the undersigned as to prepayment and for
definition of terms.
If this Note is not paid when due and is referred to an
attorney for collection (whether or not litigation is commenced) or
for representation of the holder in proceedings under the
Bankruptcy Reform Act of 1978 or other insolvency proceedings, the
undersigned promises to pay, and the holder shall be entitled to
recover, the reasonable fees and expenses of such attorney in
addition to the full amount due hereon.
Demand for payment, protest and notice of dishonor are
hereby waived by all who are or shall become parties to this
instrument, whether as endorsers, or otherwise, and all such
parties consent to any extension of time or other indulgence
granted by the holder. Protest and notice of dishonor are hereby
waived by any guarantor who shall become party to this instrument
and such guarantor consents to any extension of time or other
indulgence granted by the holder.
INSITUFORM MID-AMERICA, INC.
By: -----------------------------
Title
<PAGE> 21
EXHIBIT A-2
PROMISSORY NOTE
$7,000,000.00 St. Louis, Missouri
February 15, 1995
FOR VALUE RECEIVED, on February 15, 1996, INSITUFORM MID-
AMERICA, INC., (the "Borrower"), hereby promises to pay to the
order of MARK TWAIN BANK (the "Bank") in lawful money of the United
States at the principal office of the Agent in St. Louis, Missouri
the principal sum of SEVEN MILLION DOLLARS ($7,000,000.00) or the
aggregate unpaid principal amount of all advances made by the Bank,
to the Borrower (which aggregate unpaid principal amount shall be
the amount duly endorsed in the records of Bank), whichever is
less. All Loans made pursuant to this Note shall be payable at
maturity. Loans made hereunder shall bear interest at a rate per
annum equal the CBR Rate or the Adjusted LIBOR Rate (the "Note
Rates") as provided in the Credit Agreement (as defined below) for
periods of time expiring on the dates shown in Agent's records as
the expiration date of the Note Rates. If such Note Rates are not
renegotiated after the date indicated as the expiration date of the
Note Rates, such Loans shall convert to CBR Loans. After maturity,
whether by acceleration or otherwise, advances shall bear interest
at a rate per annum equal to two percent (2%) in excess of the
Corporate Base Rate. The Agent shall endorse the Note Rate and
expiration date of that Note Rate applicable to each advance, and
also shall endorse each repayment in its records which shall be
conclusive evidence of the amounts due in the absence of manifest
error. Interest shall be computed on the basis of a year of 360
days for the actual number of days involved, which interest shall
be payable monthly or upon any payment of principal.
The obligation of the Borrower to repay each Loan made
hereunder shall be absolute and unconditional, notwithstanding any
failure of the Bank to endorse the sheet attached to this Note.
This Note arises out of that certain Credit Agreement
dated February 15, 1995, among the Borrower and the Banks parties
thereto (the "Credit Agreement"). Reference is made to the Credit
Agreement for rights of the holder as to acceleration of this Note
and for rights of the undersigned as to prepayment and for
definition of terms.
If this Note is not paid when due and is referred to an
attorney for collection (whether or not litigation is commenced) or
for representation of the holder in proceedings under the
Bankruptcy Reform Act of 1978 or other insolvency proceedings, the
undersigned promises to pay, and the holder shall be entitled to
recover, the reasonable fees and expenses of such attorney in
addition to the full amount due hereon.
Demand for payment, protest and notice of dishonor are
hereby waived by all who are or shall become parties to this
instrument, whether as endorsers, or otherwise, and all such
parties consent to any extension of time or other indulgence
granted by the holder. Protest and notice of dishonor are hereby
waived by any guarantor who shall become party to this instrument
and such guarantor consents to any extension of time or other
indulgence granted by the holder.
INSITUFORM MID-AMERICA, INC.
By: -----------------------------
Title
<PAGE> 1
$15,250,000
TERM LOAN
PROVIDED BY
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
AS "AGENT"
AND
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
AND
MARK TWAIN BANK
AS "LENDERS"
TO
INSITUFORM MID-AMERICA, INC.
April 18, 1995
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<S> <C>
1. General. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Effective Date.. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Defined Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3. Singular and Plural Forms. . . . . . . . . . . . . . . . . . . . . . 1
1.4. References.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.5. References to Applicable Lending Office. . . . . . . . . . . . . . . 1
1.6. References to Covered Person.. . . . . . . . . . . . . . . . . . . . 1
1.7. Accounting Terms with GAAP Meanings; Consolidated
Basis. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.8. "Satisfactory to Agent", "Satisfactory to Lenders".. . . . . . . . . 2
1.9. Computation of Time Periods. . . . . . . . . . . . . . . . . . . . . 2
2. Term Commitment. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3. Interest.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
3.1. Interest Rate on Term Loan . . . . . . . . . . . . . . . . . . 2
3.1.1. Definition of Adjusted LIBO Rate . . . . . . . . . . . . . . . . . . 2
3.1.1.1. "LIBO Rate . . . . . . . . . . . . . . . . . . . . . 2
3.1.1.2. The "LIBOR Increment . . . . . . . . . . . . . . . . 3
3.2. Interest Periods . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2.1. Failure to Select Interest Period. . . . . . . . . 3
3.3. Rate After Maturity. . . . . . . . . . . . . . . . . . . . . . . . . 3
3.4. Time of Accrual. . . . . . . . . . . . . . . . . . . . . . . . 4
3.5. Computation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.6. Usury. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4. Fees.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.1. Term Commitment Fee. . . . . . . . . . . . . . . . . . . . . . . . . 4
5. Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
i
<PAGE> 3
5.1. Scheduled Payments on Term Loan. . . . . . . . . . . . . . . . . . . 4
5.1.1. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.1.2. Principal. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.2. Prepayments and Reduction of Term Loan . . . . . . . . . . . . . . . 4
5.2.1. Voluntary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.2.1.1. Term Loan. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5.2.1.2. Premiums.. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.2.2. Mandatory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.2.2.1. Proceeds from Sales of Assets. . . . . . . . . . . . . . . . . 5
5.2.2.2. Application of Insurance/Condemnation Proceeds . . . . . . . . 5
5.3. Manner of Payments and Timing of Application of
Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5.3.1. Payment Requirement. . . . . . . . . . . . . . . . . . . . . . . . . 5
5.3.2. Application of Payments and Proceeds . . . . . . . . . . . . . . . . 5
5.3.3. Interest Calculation . . . . . . . . . . . . . . . . . . . . . . . . 5
5.3.4. Returned Instruments . . . . . . . . . . . . . . . . . . . . . . . . 6
5.3.5. Compelled Return of Payments or Proceeds . . . . . . . . . . . . . . 6
5.4. Due Dates Not on Business Days.. . . . . . . . . . . . . . . . . . . 6
6. Borrowing Procedure and Limits . . . . . . . . . . . . . . . . . . . 6
7. Capital Adequacy Reimbursement.. . . . . . . . . . . . . . . . . . . 6
8. LIBO Rate Not Ascertainable, Etc.. . . . . . . . . . . . . . . . . . 6
9. Security.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9.1. Security Agreements. . . . . . . . . . . . . . . . . . . . . . . . . 7
9.1.1. ENVIROQ Security Agreement . . . . . . . . . . . . . . . . . . . . . 7
9.2. Deeds of Trust.. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
9.3. Guaranties.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ii
<PAGE> 4
9.4. Stock Pledge Agreements. . . . . . . . . . . . . . . . . . . . . . . 7
9.5. Acquisition Agreement Assignment.. . . . . . . . . . . . . . . . . . 7
10. Power of Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . 8
11. Yield Protection.. . . . . . . . . . . . . . . . . . . . . . . . . . 8
11.1. Compensation for Increase In LIBOR Loan
Costs. . . . . . . . . . . . . . . . . . . . . . . . . . 8
11.2. Funding Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
12. Conditions of Lending. . . . . . . . . . . . . . . . . . . . . . . . 10
12.1. Listed Documents and Other Items . . . . . . . . . . . . . . . . . . 10
12.2. Subordinated Indebtedness. . . . . . . . . . . . . . . . . . . . . . 10
12.3. Financial Condition. . . . . . . . . . . . . . . . . . . . . . . . . 10
12.4. No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
12.5. Perfection of Security Interests . . . . . . . . . . . . . . . . . . 10
12.6. Representations and Warranties . . . . . . . . . . . . . . . . . . . 10
12.7. Material Adverse Change. . . . . . . . . . . . . . . . . . . . . . . 10
12.8. Pending Material Proceedings.. . . . . . . . . . . . . . . . . . . . 10
12.9. Payment of Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
12.10. Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
12.11. Related Transaction Documents. . . . . . . . . . . . . . . . . . . . 10
12.12. Consummation of ENVIROQ Acquisition. . . . . . . . . . . . . . . . . 10
12.13. Other Items. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
13. Representations and Warranties . . . . . . . . . . . . . . . . . . . 10
13.1. Organization and Existence . . . . . . . . . . . . . . . 11
13.2. Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
13.3. Due Execution. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
13.4. Enforceability of Obligations. . . . . . . . . . . . . . . . . . . . 11
13.5. Burdensome Obligations . . . . . . . . . . . . . . . . . . . . . . . 11
iii
<PAGE> 5
13.6. Legal Restraints . . . . . . . . . . . . . . . . . . . . . . . . . . 11
13.7. Labor Disputes.. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
13.8. No Material Proceedings. . . . . . . . . . . . . . . . . . . . . . . 11
13.9. Material Licenses. . . . . . . . . . . . . . . . . . . . . . . . . . 11
13.10. Compliance with Laws.. . . . . . . . . . . . . . . . . . . . . . . . 12
13.10.1. Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13.10.2. Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . 12
13.10.3. Investigations . . . . . . . . . . . . . . . . . . . . . . . . 12
13.10.4. Notices; Reports . . . . . . . . . . . . . . . . . . . . . . . 12
13.10.5. Real Property. . . . . . . . . . . . . . . . . . . . . . . . . 12
13.10.6. Environmental Property Transfer Acts.. . . . . . . . . . . . . 12
13.11. Other Names. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13.12. Prior Transactions.. . . . . . . . . . . . . . . . . . . . . . . . . 12
13.13. Capitalization.. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13.14. Solvency.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13.15. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 13
13.16. No Change in Condition . . . . . . . . . . . . . . . . . . . . . . . 13
13.17. No Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13.18. Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13.19. Indebtedness.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13.20. Indirect Obligations.. . . . . . . . . . . . . . . . . . . . . . . . 13
13.21. Encumbrances.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13.22. Operating Leases.. . . . . . . . . . . . . . . . . . . . . . . . . . 13
13.23. Capital Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
13.24. Tax Liabilities; Governmental Charges. . . . . . . . . . . . . . . . 13
iv
<PAGE> 6
13.25. Pension Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . 14
13.25.1. Prohibited Transactions. . . . . . . . . . . . . . . . . . . . 14
13.25.2. Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
13.25.3. Reporting and Disclosure Requirements. . . . . . . . . . . . . 14
13.25.4. Accumulated Funding Deficiency . . . . . . . . . . . . . . . . 14
13.25.5. Multi-employer Plan. . . . . . . . . . . . . . . . . . . . . . 14
13.26. Welfare Benefit Plans. . . . . . . . . . . . . . . . . . . . . . . . 14
13.27. Retiree Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 14
13.28. Real Estate; Leases. . . . . . . . . . . . . . . . . . . . . . . . . 14
13.29. State of Collateral and other Property . . . . . . . . . . . . . . . 15
13.29.1. Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13.29.2. Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13.29.3. Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
13.29.4. Documents, Instruments and Chattel Paper.. . . . . . . . . . . 16
13.30. Chief Place of Business; Locations of Collateral . . . . . . . . . . 16
13.31. Negative Pledges . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13.32. Security Documents . . . . . . . . . . . . . . . . . . . . . . . . . 16
13.32.1. Security Agreements. . . . . . . . . . . . . . . . . . . . . . 16
13.32.2. Deeds of Trust . . . . . . . . . . . . . . . . . . . . . . . . 16
13.32.3. Acquisition Agreement Assignment.. . . . . . . . . . . . . . . 16
13.33. S Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13.34. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13.35. Bank Accounts and Lockboxes. . . . . . . . . . . . . . . . . . . . . 16
13.36. Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
13.37. Investment Company Act, Etc. . . . . . . . . . . . . . . . . . . . . 17
v
<PAGE> 7
13.38. No Material Misstatements or Omissions . . . . . . . . . . . . . . . 17
13.39. Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
14. Survival of Representations. . . . . . . . . . . . . . . . . . . . . 17
15.1. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . 17
15.2. Corporate Existence; Material Licenses . . . . . . . . . . . . . . . 17
15.3. Maintenance of Property and Leases . . . . . . . . . . . . . . . . . 18
15.4. Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15.5. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15.6. Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15.7. Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . . . 18
15.7.1. Environmental Laws . . . . . . . . . . . . . . . . 18
15.7.2. Pension Benefit Plans. . . . . . . . . . . . . . . 18
15.7.3. Employment Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
15.8. Discovery and Clean-Up of Hazardous Waste. . . . . . . . . . . . . . 19
15.8.1. In General.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
15.8.2. Asbestos Clean-Up. . . . . . . . . . . . . . . . . . . . . . . . . . 19
15.9. Termination of Pension Benefit Plan. . . . . . . . . . . . . . . . . 19
15.10. Notice of Material Events. . . . . . . . . . . . . . . . . . . . . . 19
15.11. Maintenance of Security Interests of Security
Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
15.11.1. Preservation and Perfection of Security Interests. . . . . . . 21
15.11.2. Collateral Held by Warehouseman, Bailee,
etc. . . . . . . . . . . . . . . . . . . . . . . . 21
15.11.3. Compliance With Terms of Security Documents. . . . . . . . . . 21
15.12. Accounting System. . . . . . . . . . . . . . . . . . . . . . . . . . 21
15.12.1. Account Records. . . . . . . . . . . . . . . . . . . . . . . . 22
15.12.2. Inventory Records. . . . . . . . . . . . . . . . . . . . . . . 22
15.13. Financial Statements.. . . . . . . . . . . . . . . . . . . . . . . . 22
15.13.1. Annual Financial Statements. . . . . . . . . . . . . . . . . . 22
vi
<PAGE> 8
15.13.2. Quarterly Financial Statements.. . . . . . . . . . . . . . . . 22
15.14. Other Financial Information. . . . . . . . . . . . . . . . . . . . . 22
15.14.1. Agings Report. . . . . . . . . . . . . . . . . . . . . . . . . 22
15.14.2. Other Reports or Information Concerning Accounts . . . . . . . 23
15.14.3. Stockholder and SEC Reports. . . . . . . . . . . . . . . . . . 23
15.14.4. Pension Benefit Plan Reports.. . . . . . . . . . . . . . . . . 23
15.14.5. Federal Tax Returns. . . . . . . . . . . . . . . . . . . . . . 23
15.15. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.16. Audits by Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15.17. Verification of Accounts.. . . . . . . . . . . . . . . . . . . . . . 23
15.18. Inventory Appraisals.. . . . . . . . . . . . . . . . . . . . . . . . 23
15.19. Appraisals of Collateral.. . . . . . . . . . . . . . . . . . . . . . 23
15.20. Access to Officers and Auditors. . . . . . . . . . . . . . . . . . . 24
15.21. Proformas for Permitted Acquisition; Permitted
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
15.22. Rate Protection Agreement. . . . . . . . . . . . . . . . . . . . . . 24
15.23. Acquisition Agreement. . . . . . . . . . . . . . . . . . . . . . . . 24
15.23.1. Consummation of Acquisition. . . . . . . . . . . . . . . . . . 24
15.24. Surveys; Title Insurance.. . . . . . . . . . . . . . . . . . . . . . 25
15.25. Further Assurances.. . . . . . . . . . . . . . . . . . . . . . . . . 25
16. Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 25
16.1. Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
16.2. Indebtedness.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
16.3. Capital Expenditures.. . . . . . . . . . . . . . . . . . . . . . . . 26
16.4. Payments on Subordinated Debt. . . . . . . . . . . . . . . . . . . . 26
16.5. Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
vii
<PAGE> 9
16.6. Indirect Obligations.. . . . . . . . . . . . . . . . . . . . . . . . 26
16.7. Security Interests. . . . . . . . . . . . . . . . . . . . . . . . . 27
16.8. Change of Control. . . . . . . . . . . . . . . . . . . . 27
16.9. Acquisitions.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
16.10. Bailments; Consignments; Warehousing.. . . . . . . . . . . . . . . . 27
16.11. Disposal of Property . . . . . . . . . . . . . . . . . . . . . . . . 27
16.12. Change of Business . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.13. Debt Payments and Material Agreements. . . . . . . . . . . . . . . . 28
16.14. Conflicting Agreements . . . . . . . . . . . . . . . . . . . . . . . 28
16.15. Sale and Leaseback Transactions. . . . . . . . . . . . . . . . . . . 28
16.16. New Subsidiaries.. . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.17. Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
16.18. Transactions Having Material Adverse Effect. . . . . . . . . . . . . 28
17. Covenants Regarding Transactions with Affiliates.. . . . . . . . . . 28
17.1. Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . 28
17.1.1. Subordination. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
17.2. Management Contracts, Etc. . . . . . . . . . . . . . . . . . . . . . 28
17.3. Prohibited Distributions.. . . . . . . . . . . . . . . . . . . . . . 28
18. Financial Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 29
18.1. Special Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 29
18.1.1. Minimum Tangible Net Worth.. . . . . . . . . . . . . . . . . . . . . 30
--------------------------
18.1.2. EBITDA to Fixed Charges. . . . . . . . . . . . . . . . . . . . . . . 30
-----------------------
18.1.3. Minimum Current Ratio. . . . . . . . . . . . . . . . . . . . . . . . 30
---------------------
18.1.4. Total Liabilities to Tangible Net Worth. . . . . . . . . . . . . . . 30
---------------------------------------
19. Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
viii
<PAGE> 10
19.1. Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . 30
19.1.1. Failure to Pay Principal or Interest . . . . . . . . . . . . . . . . 30
19.1.2. Failure to Pay Other Amounts Owed to Lenders.. . . . . . . . . . . . 30
19.1.3. Failure to Pay Amounts Owed to Other Persons.. . . . . . . . . . . . 30
19.1.4. Representations or Warranties. . . . . . . . . . . . . . . . . . . . 30
19.1.5. Certain Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . 30
19.1.6. Other Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . 30
19.1.7. Subordinated Debt. . . . . . . . . . . . . . . . . . . . . . . . . . 30
19.1.8. Acceleration of Other Indebtedness . . . . . . . . . . . . . . . . . 30
19.1.9. Default Under Other Agreements . . . . . . . . . . . . . . . . . . . 31
19.1.10. Bankruptcy; Insolvency; Etc. . . . . . . . . . . . . . . . . . 31
19.1.11. Judgments; Attachment; Etc . . . . . . . . . . . . . . . . . . 31
19.1.12. Pension Benefit Plan Termination, Etc. . . . . . . . . . . . . 31
19.1.13. Liquidation or Dissolution . . . . . . . . . . . . . . . . . . 31
19.1.14. Key Executives.. . . . . . . . . . . . . . . . . . . . . . . . 31
19.1.15. Change of Control. . . . . . . . . . . . . . . . . . . . . . . 32
19.1.16. ITI Lawsuit. . . . . . . . . . . . . . . . . . . . . . . . . . 32
19.1.17. Loan Documents; Security Interests.. . . . . . . . . . . . . . 32
19.1.18. Loss to Collateral.. . . . . . . . . . . . . . . . . . . . . . 32
19.1.19. Material Adverse Event . . . . . . . . . . . . . . . . . . . . 32
19.2. Cross-Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
19.3. Rights and Remedies in the Event of Default. . . . . . . . . . . . . 32
19.3.1. Acceleration.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
19.3.2. Right of Set-Off . . . . . . . . . . . . . . . . . . . . . . . . . . 32
19.3.3. Entry Upon Premises and Access to Information. . . . . . . . . . . . 33
ix
<PAGE> 11
19.3.4. Borrower's Obligations . . . . . . . . . . . . . . . . . . . . . . . 33
19.3.5. Secured Party Rights.. . . . . . . . . . . . . . . . . . . . . . . . 33
19.3.6. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
19.3.7. Application of Funds.. . . . . . . . . . . . . . . . . . . . . . . . 34
19.4. Limitation of Liability; Waiver. . . . . . . . . . . . . . . . . . . 34
19.5. Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
20. The Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
20.1. Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
20.2. Powers.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
20.3. General Immunity of Agent. . . . . . . . . . . . . . . . . . . . . . 34
20.4. No Responsibility for Loans, Recitals, etc.. . . . . . . . . . . . . 35
20.5. Action on Instructions of Lenders. . . . . . . . . . . . . . . . . . 35
20.6. Employment of Agents and Counsel.. . . . . . . . . . . . . . . . . . 35
20.7. Reliance on Documents; Counsel.. . . . . . . . . . . . . . . . . . . 35
20.8. Agent's Reimbursement and Indemnification. . . . . . . . . . . . . . 35
20.9. Rights as a Lender.. . . . . . . . . . . . . . . . . . . . . . . . . 35
20.10. INDEPENDENT CREDIT DECISIONS.. . . . . . . . . . . . . . . . . . . . 35
20.11. Successor Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . 36
20.12. Notification of Lenders. . . . . . . . . . . . . . . . . . . . . . . 36
20.13. No Knowledge of Default. . . . . . . . . . . . . . . . . . . . . . 36
20.14. Collections and Distributions to Lenders by
Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
21. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
21.1. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
21.2. Amendments, Waivers and Consents . . . . . . . . . . . . . . . . . . 37
21.3. Rights Not Exclusive.. . . . . . . . . . . . . . . . . . . . . . . . 37
x
<PAGE> 12
21.4. Survival of Agreements . . . . . . . . . . . . . . . . . . . . . . . 37
21.5. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . 37
21.6. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
21.7. Payment of Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 38
21.8. Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
21.9. Change in Accounting Principles. . . . . . . . . . . . . . . . . . . 38
21.10. Loan Records.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
21.11. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
21.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
21.13. Governing Law; No Third Party Rights . . . . . . . . . . . . . . . . 39
21.14. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
21.15. Incorporation By Reference . . . . . . . . . . . . . . . . . . . . . 39
21.16. Statutory Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 39
xi
<PAGE> 13
LOAN AGREEMENT
This LOAN AGREEMENT (this "Agreement"), made and entered into
as of April 18, 1995 by and among INSITUFORM MID-AMERICA, INC., a
Delaware corporation ("Borrower"), THE BOATMEN'S NATIONAL BANK OF
ST. LOUIS, a national banking association, as agent ("Agent") and
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS and MARK TWAIN BANK, a
Missouri banking corporation, as lenders (individually a "Lender"
and collectively, "Lenders").
WHEREAS, Borrower desires to borrow from Lenders, the
principal amount of Fifteen Million Two Hundred Fifty Thousand
Dollars ($15,250,000); and
WHEREAS, Lenders are willing to lend such sum subject to the
terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual agreements
herein and other sufficient consideration, the receipt and
sufficiency of which is hereby acknowledged, Borrower and Lenders
hereby agree as follows:
1. GENERAL.
1.1. EFFECTIVE DATE. This Agreement shall become effective on
April 18, 1995 (the "Effective Date").
1.2. DEFINED TERMS. Each capitalized term in this Agreement
shall have the meaning defined in the Glossary which is attached
hereto as Appendix 1.2. If a capitalized term is not defined in
the Glossary, it shall have the meaning defined elsewhere in this
Agreement. If a capitalized term is not defined in either the
Glossary or elsewhere in this Agreement, it shall have the meaning
defined in the UCC.
1.3. SINGULAR AND PLURAL FORMS. All definitions shall be
equally applicable to both the singular and the plural forms of the
terms defined.
1.4. REFERENCES. The words "hereof", "herein", "hereby",
"hereunder", and words of similar import refer to this Agreement as
a whole and not to any particular provision of this Agreement. The
word "Section" or "section" and "Page" or "page" refer to a section
or page, respectively, of this Agreement unless it expressly refers
to something else.
1.5. REFERENCES TO APPLICABLE LENDING OFFICE. The term
"Applicable Lending Office" means the office of Agent at The
Boatmen's National Bank of St. Louis, One Boatmen's Plaza, 800
Market Street, St. Louis, MO 63101.
1.6. REFERENCES TO COVERED PERSON. The term "Covered Person"
means Borrower, and if it now has or at any time acquires any
Subsidiaries, each of such Subsidiaries, and if it at any time
merges with or into or effects any other type of business
combination with another Person, the surviving Person of such
transaction. The words "a Covered Person", "any Covered Person",
"each Covered Person" and "every Covered Person" refer to Borrower
and each of its Subsidiaries separately.
1.7. ACCOUNTING TERMS WITH GAAP MEANINGS; CONSOLIDATED BASIS.
Unless the context otherwise requires, accounting terms herein that
are not defined herein shall have their meanings and shall be
calculated under GAAP. Unless the context otherwise requires, all
financial measurements herein respecting "Borrower" shall be made
and calculated for Borrower and all of its Subsidiaries, if any, on
a consolidated basis in accordance with
<PAGE> 14
GAAP and after any Permitted Merger, on a consolidating and
consolidated basis, excluding assets and liabilities which represent
obligations between Affiliates except those incurred in the ordinary
course of business.
1.8. "SATISFACTORY TO AGENT", "SATISFACTORY TO LENDERS".
Whenever herein a document is required to be "satisfactory to
Agent" or "satisfactory to Lenders", such document must be
acceptable to Agent or Lenders (as applicable) in both form and
substance, unless expressly stated otherwise. If a document or
matter is required herein to be "satisfactory to Agent" or
"satisfactory to Lenders", unless expressly stated otherwise, Agent
or Lenders (as applicable) shall have the absolute discretion to
determine whether the document or matter is acceptable.
1.9. COMPUTATION OF TIME PERIODS. In this Agreement, 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. TERM COMMITMENT. Subject to the terms and conditions hereof,
and in reliance upon the representations and warranties of Borrower
herein, each Lender hereby commits (the "Term Commitment") to make
a term loan to Borrower in the amount of such Lender's ratable
share, as listed on Exhibit 2 hereto of the Term Commitment. The
Term Loan will be made in a single advance on the Effective Date
(the "Term Advance"). (The from time to time outstanding principal
amount of the Term Advance is referred to herein as the "Term
Loan".) The obligation of Borrower to repay the Term Loan shall be
evidenced by a promissory note payable to the order of each Lender
satisfactory to such Lender (each a "Term Note" and collectively,
the "Notes"). Amounts applied to reduce the Term Loan may not be
reborrowed.
3. INTEREST.
3.1. INTEREST RATE ON TERM LOAN. The Term Loan shall bear
interest at a rate per annum that is equal to the Adjusted LIBO
Rate .
3.1.1. DEFINITION OF ADJUSTED LIBO RATE. "Adjusted
LIBO Rate" for an Interest Period, shall mean a rate equal to
(a) the LIBO Rate for such Interest Period plus (b) the
applicable LIBOR Increment set forth in Section 3.1.1.2.
3.1.1.1. "LIBO Rate" shall mean, for any Interest
Period, an interest rate per annum equal to the quotient
(rounded to the nearest 0.001%) of
(i) the rate at which Dollar deposits in
immediately available funds 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 applicable advance date,
as reported on Telerate Screen LIBO page 3570,
divided by
(ii) a number equal to one (1) minus the decimal
equivalent of the aggregate of the maximum rates
during the applicable Interest Period of all
reserve requirements (including, without
limitation, marginal, emergency, supplemental and
special reserves), established by the FRB or any
other Governmental Authority to which Agent or any
Lender is subject, in respect of "Eurocurrency
liabilities" as referred to in Regulation D,
including but not limited to those imposed under
Regulation D. (The amount of the Term Loan shall
be deemed to constitute a Eurocurrency liability
and as such shall be deemed
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<PAGE> 15
to be subject to such reserve requirements without
benefit of credits for proration, exceptions or
offsets which may be available from time to time to
any Lender under Regulation D.) The LIBO Rate shall
be adjusted automatically on and as of the effective
date of any change in any such reserve requirements.
</TABLE>
<TABLE>
3.1.1.2. The "LIBOR Increment" shall be the
percentage set forth opposite the ratio of Total
Liabilities to Tangible Net Worth in the following table:
====================================================================================================
<CAPTION>
Total Liabilities to Tangible Net Worth LIBOR Increment
- ----------------------------------------------------------------------------------------------------
<S> <C>
Less than or equal to 1.0 to 1.0 1.50%
- ----------------------------------------------------------------------------------------------------
Greater than 1.0 to 1.0 but less than or equal to 1.25 to 1.0 1.75%
- ----------------------------------------------------------------------------------------------------
Greater than 1.25 to 1.0 but less than or equal to 1.50 to 1.0 2.0%
- ----------------------------------------------------------------------------------------------------
Greater than 1.50 to 1.0 but less than or equal to 1.75 to 1.0 2.25%
====================================================================================================
</TABLE>
The ratio of Borrower's Total Liabilities to Tangible Net Worth
shall be calculated at the end of each fiscal quarter of Borrower.
The LIBOR Increment shall be adjusted, if necessary, effective on
each date on which Agent receives quarterly financial statements
from Borrower.
3.2. INTEREST PERIODS. Borrower shall elect an interest
period (each, an "Interest Period") at least two Business Days
prior to the expiration of the then current Interest Period.
Interest Periods shall be either a 30, 60, 90 or 180 day period;
provided that:
(i) if any installment of principal under Section 5.1.2 hereof
shall be due and payable on any day other than the last day of
an Interest Period, the Interest Period for a portion of the
Term Loan equal to the amount of such principal installment
shall be deemed to expire on the date such principal
installment is due and such principal installment shall not be
subject to the terms of Section 11.2 hereof;
(ii) 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; provided, however, that if the
next succeeding Business Day would be in the following
calendar month, it shall expire on the first preceding
Business Day; and
(iii) no Interest Period shall extend beyond the Ultimate
Term Maturity Date.
3.2.1. FAILURE TO SELECT INTEREST PERIOD. If Borrower
has not notified Agent by 11:00 a.m. St. Louis time on the
second Business Day prior to the last day of an Interest
Period, then Borrower shall be deemed to have timely given
notice to Agent requesting a 30 day Interest Period.
3.3. RATE AFTER MATURITY. Borrower shall pay interest on the
Term Loan after its Maturity, and (at the option of Lenders) upon
the Term Loan and other amounts that are owing with respect thereto
after the occurrence of an Event of Default, at a per annum rate
equal to the rate that would otherwise apply hereunder plus 3%.
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<PAGE> 16
3.4. TIME OF ACCRUAL. Interest shall accrue on all principal
amounts outstanding from and including the date when first
outstanding to but excluding the date when no longer outstanding.
Amounts shall be deemed outstanding until payments are applied
thereto as provided herein.
3.5. COMPUTATION. Interest shall be computed for the actual
days elapsed over a year deemed to consist of 360 days. Interest
rates that are based on the Adjusted LIBO Rate shall change
simultaneously with any change in the Adjusted LIBO Rate only at
the end of an Interest Period.
3.6. USURY. Notwithstanding any provisions to the contrary in
Section 3 or elsewhere in any of the Loan Documents, Borrower shall
not be obligated to pay interest at a rate which exceeds the
maximum rate permitted by Law. If, but for this Section 3.6,
Borrower would be deemed obligated to pay interest at a rate which
exceeds the maximum rate permitted by Law, or if any of the Loan
Obligations is paid or becomes payable before its originally
scheduled Maturity and as a result Borrower has paid or would be
obligated to pay interest at such an excessive rate, then (i)
Borrower shall not be obligated to pay interest to the extent it
exceeds the interest that would be payable at the maximum rate
permitted by Law; (ii) any such excess interest that has been paid
by Borrower shall be refunded; and (iii) the effective rate of
interest shall be deemed automatically reduced to the maximum rate
permitted by Law.
4. FEES.
4.1. TERM COMMITMENT FEE. Borrower shall pay to Agent for its
own account on the Effective Date a one-time term loan commitment
fee (the "Term Loan Commitment Fee") of $7,200.
5. PAYMENTS.
5.1. SCHEDULED PAYMENTS ON TERM LOAN.
5.1.1. INTEREST. Borrower shall pay interest accrued
on the Term Loan monthly in arrears, beginning on the first
day of the first calendar month following the Effective Date,
and continuing on the first day of each calendar month
thereafter, and on April 18, 2002 (the "Ultimate Term Maturity
Date"). Borrower shall pay interest accrued on the Term Loan
after the Ultimate Term Maturity Date on demand.
5.1.2. Principal. Borrower shall repay the Term Loan
in consecutive equal monthly installments of $128,000
beginning on the first day of the first calendar month
following the Effective Date, and continuing on the first day
of each calendar month thereafter, with a final installment of
the remaining outstanding principal balance on the Ultimate
Term Maturity Date.
5.2. PREPAYMENTS AND REDUCTION OF TERM LOAN.
5.2.1. VOLUNTARY.
5.2.1.1. TERM LOAN. Subject to Section 11.2
hereof, Borrower may wholly prepay the Term Loan at any
time, and may make partial prepayments on the Term Loan
in whole multiples of $100,000 from time to time, but
only if (i) Borrower gives Agent written notice of
Borrower's intention to make such prepayment at least one
Business Day prior to tendering the prepayment, and (ii)
Borrower pays any accrued interest on the amount prepaid
at the time of such prepayment. Each partial prepayment
on the Term Loan shall be applied to the remaining
principal installments in the inverse order of their due
dates.
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<PAGE> 17
5.2.1.2. PREMIUMS. Except as provided in Section
11.2 hereof, no penalty or premium shall be payable upon
any prepayment of the Term Loan.
5.2.2. MANDATORY.
5.2.2.1. PROCEEDS FROM SALES OF ASSETS. If
Borrower sells any of its assets in a single transaction
or related series of transactions that are not in the
ordinary course of business, Borrower shall make a
prepayment on the Term Loan in the amount of the gross
proceeds therefrom less reasonable selling expenses and
the increment in federal, state and local income taxes,
if any, payable as a consequence of any taxable gain from
such sale. Borrower need not make such prepayment,
however, (i) unless the net proceeds from such sale or
sales exceed $250,000, or (ii) from the net proceeds of
any such sale of a capital asset to the extent such net
proceeds are expended by Borrower within 90 days of
completion of the sale for replacement of such asset by
another asset of comparable type and utility.
5.2.2.2. APPLICATION OF INSURANCE/CONDEMNATION
PROCEEDS. On the 90th day after receipt by Borrower of
any Insurance/Condemnation Proceeds, Borrower shall make
a prepayment on the Term Loan in the amount of such
Insurance/Condemnation Proceeds that have not, within the
90-day period following Borrower's receipt of such
Insurance/Condemnation Proceeds, been either expended, or
committed to be expended, by Borrower for the purpose of
rebuilding, repairing or replacing the property for which
such Insurance/Condemnation Proceeds were paid. All
amounts so committed to be expended, but not yet
expended, by Borrower for the purpose of rebuilding,
repairing or replacing such property shall be deposited
in an interest-bearing account with Agent in the name of
Borrower (the "Proceeds Account"). Borrower hereby
assigns and grants to Agent, for the ratable benefit of
Lenders, a Security Interest in any such Proceeds Account
as security for payment and performance of the Loan
Obligations. To the extent that Borrower provides
evidence satisfactory to Agent that Borrower has
committed to expend funds in the Proceeds Account for
rebuilding, repairing or replacing such property,
Borrower may expend such funds. Any funds remaining in
the Proceeds Account upon completion of the rebuilding,
repairing or replacing of such property shall be applied
to reduce the Term Loan.
Each prepayment under this Section 5.2.2 that is required to
be applied to reduce the Term Loan shall be applied to the
scheduled principal installments in the inverse order of their
due dates.
5.3. MANNER OF PAYMENTS AND TIMING OF APPLICATION OF PAYMENTS.
5.3.1. PAYMENT REQUIREMENT. Unless expressly provided
to the contrary elsewhere herein, Borrower shall make each
payment on the Loan Obligations to Agent for the account of
Lenders as required under the Loan Documents in Dollars at the
Applicable Lending Office on the date when due, without
deduction, set-off or counterclaim.
5.3.2. APPLICATION OF PAYMENTS AND PROCEEDS. All
payments received by Agent in immediately available funds at
or before 2:00 p.m., St. Louis time, on a Business Day will be
applied to the Loan Obligations on the same day. Such
payments received on a day that is not a Business Day or after
2:00 p.m. on a Business Day will be applied to the Loan
Obligations on the next Business Day.
5.3.3. INTEREST CALCULATION. Section 5.3.2
notwithstanding, for purposes of interest calculation only,
(i) a payment by check, draft or other instrument received at
or before 2:00 p.m., St. Louis time, on a Business Day shall
be deemed to have been applied to the Loan Obligations on the
next following
5
<PAGE> 18
Business Day, (ii) a payment by check, draft or other instrument
received on a day that is not a Business Day or after 2:00 p.m.
on a Business Day shall be deemed to have been applied by Agent
to the Loan Obligations on the second following Business Day,
(iii) a payment in cash or by wire transfer received at or
before 2:00 p.m., St. Louis time, on a Business Day shall be
deemed to have been applied to the Loan Obligations on the
Business Day when it is received, and (iv) a payment in cash or
by wire transfer received on a day that is not a Business Day or
after 2:00 p.m., St. Louis time, on a Business Day shall be
deemed to have been applied to the Loan Obligations on the next
Business Day.
5.3.4. RETURNED INSTRUMENTS. If a payment is made by
check, draft or other instrument and the check, draft or other
instrument is returned to a Lender unpaid, the application of
the payment to the Loan Obligations will be reversed and will
be treated as never having been made.
5.3.5. COMPELLED RETURN OF PAYMENTS OR PROCEEDS. If
a Lender is for any reason compelled to surrender any payment
or any proceeds of the Collateral because such payment or the
application of such proceeds 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 and the Loan
Obligations to which such payment or proceeds was applied or
intended to be applied shall be revived as if such application
was never made; and Borrower shall be liable to pay to such
Lender, and shall indemnify such Lender for and hold such
Lender harmless from any loss with respect to, the amount of
such payment or proceeds surrendered. The provisions of this
Section shall survive the payment and satisfaction of all of
the Loan Obligations.
5.4. 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.
6. BORROWING PROCEDURE AND LIMITS. Lenders will make the Term
Advance on the Effective Date as directed by Borrower in a written
direction delivered to Lenders. The manner of disbursement shall
be subject to Lenders' approval.
7. CAPITAL ADEQUACY REIMBURSEMENT. If there is any change of Law
after the Execution Date regarding the capital that financial
institutions in a class that includes a Lender are required to
maintain and which has the effect of reducing the rate of return
on, or increasing the cost of maintaining, such Lender's capital as
a consequence of its obligations hereunder, then such Lender may
from time to time demand, and Borrower shall pay to such Lender
within fifteen days after each demand, such additional amount as
will compensate such Lender for such reduction or increase. If a
Lender claims compensation under this Section, such Lender shall
furnish a certificate to Borrower that states the additional amount
to be paid to it hereunder and includes a description in reasonable
detail of the method used by such Lender in calculating such
amount. Borrower shall have the burden of proving that any such
certificate is not correct.
8. LIBO RATE NOT ASCERTAINABLE, ETC. If (i) on any date for
determining the LIBO Rate for any Interest Period, by reason of any
changes arising after the Execution Date affecting the London
Interbank Market, or any Lender's position in such market, adequate
and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition herein of
LIBO Rate, or (ii) the making or continuance of any LIBOR Loan by
a Lender has become unlawful by compliance by such Lender in good
faith with any Law or any pronouncement of a Governmental Authority
(whether or not having the force of law and whether or not failure
to comply therewith would be unlawful), then such Lender shall
promptly give notice to Borrower of such determination. Until such
Lender notifies Borrower that the circumstances giving rise to the
suspension described herein no longer exist, the rate of interest
on such Lender's pro rata share of the Term Loan shall be
automatically converted from the Adjusted LIBO Rate to the Adjusted
CBR on the earlier of the last day of the Interest Period or the
last date permitted by applicable law. Notwithstanding anything to
the contrary contained herein, if the rate
6
<PAGE> 19
of interest on the Term Loan is converted from the Adjusted LIBO Rate
to the Adjusted CBR pursuant to this Section 8, Borrower shall not be
required to compensate such Lender under Section 11.2 for any loss or
expense suffered by such Lender as a result of such conversion.
9. SECURITY. As security for payment and performance of the Loan
Obligations, Borrower shall on the Execution Date execute and
deliver, or cause to be executed and delivered, to Agent the
following documents:
9.1. SECURITY AGREEMENTS. Security agreements from Borrower
and Guarantors granting to Agent, for the ratable benefit of
Lenders, a Security Interest in all of the Goods, Equipment,
Accounts, Inventory, Instruments, Documents, Chattel Paper, General
Intangibles and other personal property of Borrower and each
Guarantor (except motor vehicles), whether now owned or hereafter
acquired, and all proceeds thereof (the "Personal Property
Collateral"), subject only to Permitted Security Interests (each
such security agreement that Borrower and any Guarantor executes
and delivers to Agent, for the ratable benefit of Lenders, either
on or after the Execution Date, and as it may be amended, restated
or replaced from time to time, a "Security Agreement").
9.1.1. ENVIROQ SECURITY AGREEMENT. Immediately after
the ENVIROQ Acquisition, Borrower will cause ENVIROQ
Corporation and any acquired Subsidiaries to become a party to
a Security Agreement and execute financing statements to be
filed in the appropriate governmental offices in North
Carolina, South Carolina, Florida, Alabama and Georgia, as
Agent may require.
9.2. DEEDS OF TRUST. Deeds of trust or mortgages granting to
Agent, for the ratable benefit of Lenders, Security Interests in
the real property described in Exhibit 9.2 and all proceeds thereof
(the "Real Property Collateral"), subject only to Permitted
Security Interests (each such deed of trust or mortgage that
Borrower or any Covered Person executes and delivers to Agent, for
the ratable benefit of Lenders, either on or after the Execution
Date, and as it may be amended, restated or replaced from time to
time, a "Deed of Trust").
9.3. GUARANTIES. By their execution hereof, Affholder, Inc.,
Insituform Central, Inc., Insituform Missouri, Inc., Insituform
North, Inc., Insituform Plains, Inc., Insituform de Puerto Rico,
Inc., Insituform Rockies, Inc., Insituform Texark, Inc., PALTEM
Systems, Inc., and United Pipeline Systems USA, Inc. (each a
"Guarantor"), each expressly agrees that its respective Unlimited
Guaranty previously provided to Lenders (each, as the same may be
amended, restated or replaced from time to time, a "Guaranty")
shall guaranty the Loan Obligations.
9.4. STOCK PLEDGE AGREEMENTS. Stock pledge agreement from
Borrower granting to Agent, for the ratable benefit of Lenders, a
Security Interest in all of the capital stock and other Securities
of each Guarantor and in sixty-five percent (65%) of the voting
stock and other Securities of United Pipeline Systems, Inc. and
Tite Liner NRO Corp., now or hereafter issued and outstanding, and
all proceeds thereof (each such stock pledge agreement that
Borrower executes and delivers to Agent, either on or after the
Execution Date, and as it may be amended, restated, or replaced
from time to time, a "Stock Pledge Agreement").
9.5. ACQUISITION AGREEMENT ASSIGNMENT. An assignment
assigning to Agent, for the ratable benefit of Lenders, all of
Borrower's rights and interest under the Acquisition Agreement (as
the same may be amended, restated, or replaced from time to time,
the "Acquisition Agreement Assignment").
All of the foregoing documents and any similar documents that
Borrower executes and delivers to Agent, for the ratable benefit of
Lenders, after the Execution Date to secure the Loan Obligations,
as they may be amended, restated or replaced from time to time, are
referred to herein collectively as the "Security Documents".
Lenders may, in their absolute discretion, (i) exchange, waive or
release any of the Collateral, (ii) apply Collateral and direct the
order or manner of sale thereof as Lenders may determine, and (iii)
settle, compromise, collect or
7
<PAGE> 20
otherwise liquidate any Collateral in any manner, all without
affecting the Loan Obligations or Lenders' right to take any other
action with respect to any other Collateral.
The Loan Obligations of Borrower to Lenders hereunder shall be
cross-collateralized so that all of the Collateral shall not only
secure the Loan Obligations respecting the Term Loan, but also all
Obligations under the Credit Agreement and the Obligations under
the Reimbursement Agreement and any and all renewals, extensions,
modifications, amendments, restructures, restatements or
replacements of any of the foregoing.
10. POWER OF ATTORNEY. Borrower hereby authorizes Agent and
irrevocably appoints Agent (acting by any of its officers) as
Borrower's agent and attorney-in-fact (which appointment is coupled
with an interest and is therefore irrevocable) to do any of the
following for the ratable benefit of Lenders until all of the Loan
Obligations are fully paid and satisfied:
10.1. During the continuance of a Default that is not waived
in writing by Agent and after the occurrence of an Event of Default
that is not waived in writing by Agent: (i) demand payment of any
Account; (ii) enforce payment of any Account by legal proceedings
or otherwise; (iii) exercise all of Borrower's rights and remedies
in proceedings brought to collect any Account; (iv) sell or assign
any Account upon such terms, for such amount and at such time or
times as Agent deems advisable; (v) settle, adjust, compromise,
extend or renew any Account; (vi) discharge and release any
Account; (vii) prepare, file and sign Borrower's name on any proof
of claim in bankruptcy or other similar documents against an
Account Debtor; (viii) notify the postal authorities of any change
of the address for delivery of Borrower's mail to any address
designed by Agent, and open and process all mail addressed to
Borrower; (ix) endorse Borrower's name on any verification of
Accounts and notices thereof to Account Debtors; (x) and do
anything that Agent deems necessary in its reasonable discretion to
assure that the Loan Obligations are fully paid.
The foregoing power of attorney and authorization shall be deemed
automatically revoked upon the irrevocable payment in full of all
of the Loan Obligations.
11. YIELD PROTECTION.
11.1. COMPENSATION FOR INCREASE IN LIBOR LOAN COSTS. 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 a Lender or its
parent holding company:
(i) such Lender is subject to any tax, duty or other charge
with respect to its LIBOR Loans or its obligation to make
the same, or the basis of taxation of payments to such
Lender of the principal of or interest on its LIBOR Loans
or its obligation to make the same change (except for
changes in the rate of tax on the overall net income of
such Lender or its parent company imposed by the United
States or other jurisdiction in which such Lender's
principal executive office is located); or
(ii) 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, such Lender is imposed or deemed applicable or any
other condition affecting its LIBOR Loans or its
obligation to make them is imposed on such Lender or the
London Interbank Market;
8
<PAGE> 21
and as a result thereof there is any increase in the cost to such
Lender of agreeing to make or making, funding or maintaining its
LIBOR Loans (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 such Lender, then Borrower
shall from time to time, upon written notice from and demand by
such Lender (with a copy of such notice and demand to Agent), pay
to such Lender, within five Business Days after the date specified
in such notice and demand, additional amounts sufficient to
compensate such Lender in the amount of such increased cost. If
such Lender claims compensation under this Section, such Lender
shall furnish a certificate to Borrower that states in reasonable
detail the additional amount or amounts to be paid to it hereunder.
Borrower shall have the burden of proving that any such certificate
is not correct.
11.2. FUNDING LOSSES. Except as otherwise provided in
Sections 3.2 and 8, Borrower shall pay to each Lender upon its
demand an amount sufficient to compensate such Lender for all loss
and expense suffered by such Lender, including but not limited to
loss of profit and the cost of acquiring funds to make or carry a
LIBOR Loan, if any prepayment or repayment of a LIBOR Loan, whether
or not required hereby, occurs on a date which is not the last day
of the Interest Period therefor. The minimum that Borrower shall
be obligated to pay to such Lender in any such event shall be an
amount equal to (x) the greater of zero or
[A x (B-C) x D]/360
wherein
"A" is the Affected Principal Amount;
"B" is the decimal equivalent of the LIBO Rate that is payable
by Borrower on such LIBOR Loan;
"C" is the decimal equivalent of the LIBO Rate that would
apply to a hypothetical advance in the Affected Principal
Amount whose advance date were on the last Business Day on or
before the first day of the Remaining Interest Period and
whose Interest Period were approximately equal, as determined
by Agent, to 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 reasonable out-of-pocket loss or expense
(including any internal processing charge customarily charged by
Lender) suffered by such Lender in liquidating deposits prior to
maturity in amounts which correspond to the Affected Principal
Amount.
"Affected Principal Amount" shall mean the amount of any prepayment
or repayment on a LIBOR Loan that occurs, whether or not required
hereby, on a date which is not the last day of the Interest Period
therefor.
"Remaining Interest Period" shall mean, if a prepayment or
repayment on a LIBOR Loan occurs, 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 a Lender claims compensation under this Section, such Lender
shall furnish a certificate to Borrower (with a copy to Agent if it
is not the Lender involved) that states the additional amount or
amounts to be paid to it hereunder and shows the calculation
thereof in reasonable detail. Borrower shall have the burden of
proving that any such certificate is not correct.
9
<PAGE> 22
12. CONDITIONS OF LENDING. As conditions precedent to Lenders'
obligation to make the Term Advance:
12.1. LISTED DOCUMENTS AND OTHER ITEMS. Agent shall have
received on or before the Effective Date all of the documents and
other items listed or described in Exhibit 12.1 hereto, with each
being (as applicable) duly executed and (also as applicable)
sealed, attested, acknowledged, certified, or authenticated.
12.2. SUBORDINATED INDEBTEDNESS. All of the Subordinated
Debt of Borrower shall have been subordinated to the Loan
Obligations pursuant to that certain Subordinated Promissory Note
made by Borrower in favor of New Enviroq Corporation to be dated on
or about April 18, 1995 (the "Subordinated Note") and the
outstanding principal amount of the Subordinated Debt shall at no
time be greater than $3,000,000.
12.3. FINANCIAL CONDITION. Lenders shall have determined
to their satisfaction that the financial statements of Borrower for
the periods ended September 30, 1993 and September 30, 1994 (the
"Initial Financial Statements") as furnished to Lenders and other
information furnished to Lenders by Borrower fairly and accurately
reflect the business and financial condition of Borrower, its cash
flows and the results of its operations for the periods covered by
the Initial Financial Statements and such information.
12.4. NO DEFAULT. No Default shall have occurred and be
continuing that is not waived in writing by Lenders, no Event of
Default shall have occurred that is not waived in writing by
Lenders, and neither will occur as a result of the Term Advance
being requested or made or the application of the proceeds thereof.
12.5. PERFECTION OF SECURITY INTERESTS. Every Security
Interest required to be granted by Borrower to Agent, for the
ratable benefit of Lenders, under Section 9 shall have been
perfected and shall be, except as otherwise satisfactory to
Lenders, a first priority Security Interest.
12.6. REPRESENTATIONS AND WARRANTIES. The representations
and warranties contained in the Loan Documents shall be true and
correct.
12.7. MATERIAL ADVERSE CHANGE. Since the date of the most
recent Financial Statements delivered to Lenders, there shall not
have been any change which would have a Material Adverse Effect.
12.8. PENDING MATERIAL PROCEEDINGS. There shall be no
pending Material Proceedings other than as set forth on Exhibit 13
attached hereto.
12.9. PAYMENT OF FEES. Borrower shall have paid and
reimbursed to Agent all fees, costs and expenses that are payable
or reimbursable to Lenders hereunder on or before the Effective
Date.
12.10. LEGAL OPINION. Agent shall have received an opinion
of Borrower's counsel satisfactory to Agent.
12.11. RELATED TRANSACTION DOCUMENTS. Copies of all
documents to be executed and delivered in connection with the
acquisition of ENVIROQ Corporation shall have been delivered to
Agent in substantially final form and shall be satisfactory to
Agent.
12.12. CONSUMMATION OF ENVIROQ ACQUISITION. The
consummation of the ENVIROQ Acquisition shall be subject only to
the making of the Term Advance.
12.13. OTHER ITEMS. Agent shall have received such other
consents, approvals, opinions, certificates or documents as Lenders
reasonably deem necessary.
13. REPRESENTATIONS AND WARRANTIES.
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Except as otherwise described the disclosure schedule that is
attached hereto as Exhibit 13 (the "Disclosure Schedule"), Borrower
represents and warrants to Lenders 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 corporate 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 this Agreement and the other Loan Documents
have been duly authorized by all requisite corporate 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.
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 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 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 collective bargaining
agreement or other labor contract covering employees of a Covered
Person, and no such collective bargaining agreement or other labor
contract is scheduled to expire during the term of this Agreement.
No union or other labor organization is seeking to organize, or to
be recognized as, a collective bargaining unit of employees of a
Covered Person for any similar purpose, and there is no pending or,
to the best of 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.
13.8. NO MATERIAL PROCEEDINGS. There are no Material
Proceedings pending or, to the best knowledge of Borrower,
threatened.
13.9. MATERIAL LICENSES. All Material Licenses have been
obtained or exist for each Covered Person.
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13.10. COMPLIANCE WITH LAWS. Each Covered Person is in
compliance with all Material Laws. Without limiting the generality
of the foregoing:
13.10.1. COMPLIANCE. The operations of every Covered
Person comply in all material respects with all applicable
Environmental Laws and Employment Laws.
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 or Employment
Laws.
13.10.3. INVESTIGATIONS. 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 Waste, the results of which may have a
Material Adverse Effect on such Covered Person, on the value
of the Collateral, or on the overall assets of such Covered
Person.
13.10.4. NOTICES; REPORTS. No notice or report under
any Environmental Law indicating a past or present spill or
release into the environment of any Hazardous Waste has been
filed, or is required to be filed, by any Covered Person.
13.10.5. REAL PROPERTY. Other than in the ordinary
course of business and in accordance with all applicable Laws,
no Covered Person, nor to the best of Borrower's knowledge,
any other Person, has at any time transported, stored,
disposed of, generated or released any Hazardous Waste on the
surface, below the surface, or within the boundaries of any
real property owned or operated by such Covered Person or any
improvements thereon. Borrower has no knowledge of any
Hazardous Waste on the surface, below the surface, or within
the boundaries of any real property owned or operated by such
Covered Person or any improvements thereon, except such
Hazardous Waste as may be located on such real property in the
ordinary course of business and in accordance with all
applicable Laws. 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 of release of Hazardous Waste
into the environment.
13.10.6. ENVIRONMENTAL PROPERTY TRANSFER ACTS. No
Environmental Property Transfer Acts are applicable to the
transactions contemplated by this Agreement or the Acquisition
Agreement and Borrower has provided all notices and obtained
all necessary environmental permit transfers and consents, if
any, required in order to consummate the transactions
contemplated by this Agreement or the Acquisition Agreement,
to perfect Lender's Security Interests and to operate
Borrower's business as presently or proposed to be operated.
13.11. OTHER NAMES. No Covered Person has used any name
other than the full name which identifies such Covered Person in
this Agreement.
13.12. PRIOR TRANSACTIONS. Since September 30, 1994, no
Covered Person has been a party to any merger or consolidation, or
acquired all or substantially all of the assets of any Person, or
acquired any of its property outside of the ordinary course of
business, except pursuant to the Acquisition Agreement.
13.13. CAPITALIZATION. Borrower's authorized capital stock
consists of 500,000 shares of Preferred Stock, $.01 par value, of
which no shares are outstanding; 13,000,000 shares of Class A
common stock, $.01 par value, of which 8,282,676 shares are validly
issued and outstanding, fully paid and non-assessable; and
6,000,000 shares
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of Class B common stock, $.01 par value, of which 2,472,985 shares are
validly issued and outstanding, fully paid and non-assessable.
13.14. SOLVENCY. Borrower is Solvent prior to and after
giving effect to the transactions contemplated by the Acquisition
Agreement, and the making of the Term Loan on the Effective Date.
13.15. FINANCIAL STATEMENTS. The Initial Financial
Statements are complete and correct in all material respects, have
been prepared in accordance with GAAP, and fairly reflect the
financial condition, results of operations and cash flows of the
Persons covered thereby as of the dates and for the periods stated
therein.
13.16. NO CHANGE IN CONDITION. Since the date of the
Initial Financial Statements delivered to Agent, there has been no
change in the financial condition or business prospects of any
Covered Person which would have a Material Adverse Effect on
Borrower and Covered Persons taken as a whole.
13.17. NO DEFAULTS. No Covered Person has breached or
violated or is in default under any Material Agreement, or is in
default with respect to any Material Obligation of such Covered
Person. No Default has occurred which is continuing and no Event
of Default has occurred.
13.18. INVESTMENTS. No Covered Person has any Investments
in other Persons except existing Permitted Investments.
13.19. INDEBTEDNESS. No Covered Person has any
Indebtedness except existing Permitted Indebtedness.
13.20. INDIRECT OBLIGATIONS. No Covered Person has any
Indirect Obligations except existing Permitted Indirect
Obligations.
13.21. ENCUMBRANCES. None of the Real Property Collateral
is subject to any Encumbrances except existing Permitted
Encumbrances.
13.22. OPERATING LEASES. No Covered Person has an interest
as lessee under any Operating Leases except Operating Leases
entered into in the ordinary course of business consistent with
past practice which call for payments not in excess of $1,000,000
in the aggregate during any calendar year.
13.23. CAPITAL LEASES. No Covered Person has an interest
as a lessee under any Capital Leases except Capital Leases entered
into in the ordinary course of business consistent with past
practice which call for payments not in excess of $1,000,000 in the
aggregate as of the end any calendar year.
13.24. 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, and has paid or made
adequate provision for payment of all taxes, assessments, fees and
other charges levied upon it or upon its income or properties by
any Governmental Authority which are due and payable, including
interest and penalties, except such taxes, assessments, fees and
other charges, if any, as 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 on
the books of such Covered Person. No Security Interests for any
such taxes, assessments, fees or other charges have been filed and
no claims are being asserted with respect to any such taxes,
assessments, fees or other charges which, if adversely determined,
would have a Material Adverse Effect on such Covered Person. The
federal income tax returns of every Covered Person which have been
audited by the Internal Revenue Service have been passed upon
without exception. There are no material unresolved issues
concerning any tax liability of a Covered Person which, if
adversely determined, would have a Material Adverse Effect on such
Covered Person.
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13.25. PENSION BENEFIT PLANS. All Pension Benefit Plans
maintained by each Covered Person or an ERISA Affiliate qualify
under Section 401 of the Code and are in compliance with the
provisions of ERISA. Except with respect to events or occurrences
which would not have a Material Adverse Effect:
13.25.1. 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 has committed a breach of any
of the responsibilities or obligations imposed upon
fiduciaries by Title I of ERISA.
13.25.2. CLAIMS. 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, 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.
13.25.3. 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 but not limited to ERISA and the Code.
13.25.4. 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.
13.25.5. MULTI-EMPLOYER PLAN. No Covered Person or
ERISA Affiliate has received notice that any Multi-employer
Plan to which such Covered Person or ERISA Affiliate
contributes is in reorganization or has been terminated within
the meaning of Title IV of ERISA, and no Multi-employer Plan
to which such Covered Person or ERISA Affiliate contributes is
reasonably expected to be in reorganization or to be
terminated within the meaning of Title IV of ERISA.
13.26. WELFARE BENEFIT PLANS. No Covered Person or ERISA
Affiliate 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 has complied in
all material respects with the applicable requirements of Section
4980B of the Code pertaining to continuation coverage as mandated
by COBRA.
13.27. RETIREE BENEFITS. No Covered Person or ERISA
Affiliate has an obligation to provide any Person with any medical,
life insurance, or similar benefit following such Person's
retirement or termination of employment (or to such Person's
beneficiary subsequent to such Person's death) other than (i) such
benefits provided to Persons at such Person's sole expense and (ii)
obligations under COBRA.
13.28. REAL ESTATE; LEASES. Exhibit 13.28 sets forth a
correct and complete list of (i) all real estate owned by Borrower,
(ii) each lease and sublease of real or personal property by
Borrower as lessee or sublessee which provides for payments by
Borrower in excess of $100,000 in the aggregate during any calendar
year, and (iii) each lease and sublease of real and personal
property by Borrower as lessor or sublessor which provides for
payments in excess of $100,000 in the aggregate during any calendar
year. Each of such leases and subleases is valid and enforceable
in accordance with its terms and is in full force and effect, and
no default by any Covered Person under any such lease or sublease
exists.
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13.29. STATE OF COLLATERAL AND OTHER 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 personal property
sold in the ordinary course of business after the date of the
Initial Financial Statements. There are no Security Interests on
any of the property purported to be owned by any Covered Person,
including the Collateral, except existing Permitted Security
Interests. Each tangible item of Personal Property Collateral
purported to be owned by a Covered Person is in reasonable
operating condition and repair and is suitable for the use to which
it is customarily put by its owner (ordinary wear and tear
excepted). Without limiting the generality of the foregoing:
13.29.1. ACCOUNTS. With respect to each Account
scheduled, listed or referred to in reports submitted by
Borrower to Agent pursuant to the Loan Documents, except as
disclosed therein: (i) the Account arose from a bona fide
transaction completed in accordance with the terms of any
documents pertaining to such transaction; (ii) the Account is
not evidenced by a judgment and there is no material dispute
respecting it; (iii) the amount of the Account as shown on
Borrower's books and records and all invoices and statements
which may be delivered to Agent with respect thereto are
actually and absolutely owing to Borrower and are not in any
way contingent; (iv) there are no set-offs, counterclaims or
disputes existing or asserted with respect to the Account and
Borrower has not made any agreement with any Account Debtor
for any deduction therefrom except a discount or allowance
allowed by Borrower in the ordinary course of its business for
prompt payment; (v) there are no facts, events or occurrences
which in any way impair the validity or enforcement of the
Account or tend to reduce the amount payable thereunder as
shown on Borrower's books and records and all invoices and
statements delivered to Agent with respect thereto; (vi) the
Account is assignable; (vii) the Account arose in the ordinary
course of Borrower's business; (viii) to the best of
Borrower's knowledge, the Account Debtor with respect to the
Account has the capacity to contract; (ix) the services
furnished and/or goods sold giving rise to the Account are not
subject to any Security Interest except the first priority,
perfected Security Interest of Agent, for the ratable benefit
of Lenders, and except the Permitted Security Interests; and
(x) to the best of Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against
the Account Debtor with respect to the Account.
13.29.2. INVENTORY. With respect to Inventory
scheduled, listed or referred to in any certificate, schedule,
list or report given by Borrower, except as disclosed therein:
(i) such Inventory (except for Inventory in transit) is
located at one or another of the premises listed on Exhibit
13.30; (ii) Borrower has good and merchantable title to such
Inventory subject to no Security Interest whatsoever except
for the first priority, perfected Security Interest granted to
Agent, for the ratable benefit of Lenders, in connection
herewith and except for existing Permitted Security Interests;
(iii) such Inventory is of good and merchantable quality, free
from any material defects (except for inventory found
unacceptable and being returned to the vendor or inventory as
to which a legitimate dispute exists as to its quality); (iv)
such Inventory is not subject to any licensing, patent,
royalty, trademark, trade name or copyright agreements with
any third parties; and (v) the completion of manufacture and
sale or other disposition of such Inventory by Agent following
an Event of Default shall not require the consent of any
Person and shall not constitute a breach or default under any
contract or agreement to which Borrower is a party or to which
the Inventory is subject.
13.29.3. EQUIPMENT. With respect to Borrower's
equipment: (i) Borrower has good and marketable title thereto;
(ii) none of such equipment is subject to any Security
Interests except for the Security Interest granted to Agent,
for the ratable benefit of Lenders, pursuant hereto and except
for Permitted Security Interests; and (iii) all such equipment
is in good operating condition and repair, ordinary wear and
tear excepted, and is suitable for the uses to which
customarily put in the conduct of Borrower's business.
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13.29.4. DOCUMENTS, INSTRUMENTS AND CHATTEL PAPER. All
documents, instruments and chattel paper describing,
evidencing or constituting Collateral, and all signatures and
endorsements thereon, are complete, valid, and genuine, and
all goods evidenced by such documents, instruments and chattel
paper are owned by Borrower free and clear of all Security
Interests other than Permitted Security Interests.
13.30. CHIEF PLACE OF BUSINESS; LOCATIONS OF COLLATERAL.
As of the Execution Date, the chief executive office and the
principal places of business of Borrower are located at the places
listed and so identified on Exhibit 13.30. As of the Execution
Date, the books and records of Borrower, and all of Borrower's
chattel paper and all records of Accounts, are located at the
places listed and so identified on Exhibit 13.30. As of the
Execution Date, all of the Collateral (except for Inventory which
is in transit and Borrower's Real Property Collateral) is located
at the places listed and so identified on Exhibit 13.30. There is
no office or place of business at which Borrower conducts business
except those identified as its chief executive office, its places
of business, and the places where its books and records pertaining
to Accounts and chattel paper are kept as so identified on Exhibit
13.30.
13.31. NEGATIVE PLEDGES. No Covered Person is a party to
or bound by any Contract which prohibits the creation or existence
of any Security Interest upon or assignment or conveyance of any of
the Collateral except as provided in the Subordinated Note.
13.32. SECURITY DOCUMENTS.
13.32.1. SECURITY AGREEMENTS. Each Security Agreement
is effective to grant to Agent, for the ratable benefit of
Lenders, an enforceable Security Interest in all rights, title
and interest of Borrower in the Personal Property Collateral.
Upon appropriate filing (as to all Personal Property
Collateral in which a Security Interest may be perfected under
the applicable state's UCC by filing a financing statement) or
Agent's taking possession (as to items of the Personal
Property Collateral of which a secured party must take
possession in order to perfect a Security Interest under the
applicable state's UCC), Agent, for the ratable benefit of
Lenders, will have a fully perfected first priority Security
Interest in the Personal Property Collateral described in each
Security Agreement, subject only to Permitted Security
Interests affecting such Personal Property Collateral.
13.32.2. DEEDS OF TRUST. Each Deed of Trust is
effective to grant to Agent, for the ratable benefit of
Lenders, a legal, valid and enforceable mortgage lien on the
applicable Real Property Collateral. Upon proper recording
and payment of recording fees and taxes, if any, Agent, for
the ratable benefit of Lenders, will have a fully perfected
first priority lien on all of the Real Property Collateral
subject only to Permitted Security Interests affecting the
Real Property Collateral.
13.32.3. ACQUISITION AGREEMENT ASSIGNMENT. The
Acquisition Agreement Assignment is effective to grant to
Agent, for the ratable benefit of Lenders, an enforceable
Security Interest in and lien on all of Borrower's rights,
remedies, claims and interests under the Acquisition
Agreement.
13.33. S CORPORATION. There is no election in effect under
Section 1362(a) of the Code for Borrower to be treated as an "S
Corporation" as defined in Section 1361(a) of the Code.
13.34. SUBSIDIARIES AND AFFILIATES. Exhibit 13.34 is a
correct and complete list of the name and relationship to Borrower
of each and all of Borrower's Subsidiaries and Affiliates.
13.35. BANK ACCOUNTS AND LOCKBOXES. Borrower has no
lockbox other than the lockboxes allowed or required hereunder.
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13.36. 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
no part of the proceeds of the Term Advance will be used to
purchase or carry any such margin stock (except in connection with
the ENVIROQ Acquisition) 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 the Acquisition Agreement will violate
Regulations G, T, U or X of the FRB.
13.37. 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, the
Interstate Commerce Act or any other Law limiting or regulating its
ability to incur Indebtedness for money borrowed.
13.38. NO MATERIAL MISSTATEMENTS OR OMISSIONS. Neither the
Loan Documents, any of the Financial Statements nor any statement,
list, certificate or other information furnished or to be furnished
by Borrower to Lenders or Agent in connection with the Loan
Documents or any of the transactions contemplated thereby contains
any untrue statement of a material fact, or omits to state a
material fact necessary to make the statements therein not
misleading. Borrower has disclosed to Agent and Lenders everything
regarding the business, operations, property, financial condition,
or business prospects of itself and every Covered Person that would
have a Material Adverse Effect on Borrower or any Covered Person.
13.39. 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 necessary in order to make
the statements therein not misleading.
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
the Term Loan, and may be relied upon by Agent and Lenders as being
true and correct until all of the Loan Obligations are fully and
irrevocably paid as contemplated in Section 5.3.5.
15. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as the any of the
Loan Obligations are owing to Lenders by Borrower, Borrower shall
do, or cause to be done, the following:
15.1. USE OF PROCEEDS. Subject to the terms and
conditions hereof, the proceeds of the Term Advance shall be used
solely to finance a portion of the ENVIROQ Acquisition.
15.2. CORPORATE EXISTENCE; MATERIAL LICENSES. Borrower
and each Guarantor shall, and except where the failure to do so
would not have a Material Adverse Effect on Borrower, each other
Covered Person shall maintain its existence in good standing and
its right to transact business in those states in which it is now
or hereafter doing business. Notwithstanding anything in the
immediately preceding sentence to the contrary, any Guarantor may
merge or otherwise consolidate with or into Borrower or any
Guarantor organized and existing under the laws of one of the
states of the United States of America so long as any such
transaction would not have a
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Material Adverse Effect on Borrower. Each Covered Person shall obtain
and maintain all Material Licenses for such Covered Person, except
where the failure to do so would not have a Material Adverse Effect on
Borrower.
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. Each
Covered Person shall maintain in good 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. Borrower shall not permit any of
its equipment or other property to become a fixture to real
property or an accession to other personal property unless Agent,
for the ratable benefit of Lenders, has a valid, perfected and
first priority Security Interest in such real or personal property.
Borrower will not, without Agent's prior written consent, alter or
remove any identifying symbol or number on its equipment other than
in the ordinary course of business, consistent with past practice.
15.4. INVENTORY. Except for Inventory found to be
unacceptable and being returned to the vendor or Inventory as to
which a legitimate dispute exists as to quality, Borrower shall
keep its Inventory in good and merchantable condition at its own
expense and shall hold such Inventory for sale or lease, or to be
furnished in connection with the rendition of services, in the
ordinary course of Borrower's business, on terms which do not
include bill-and-hold, guaranteed sale, sale and return, sale on
approval, consignment or similar repurchase or return terms. All
such Inventory shall be produced in accordance with the Federal
Fair Labor Standards Act of 1938, as amended, and all rules,
regulations and orders thereunder.
15.5. INSURANCE. Each Covered Person shall maintain
insurance as required in Exhibit 15.5 and shall, in addition,
maintain a policy or policies of business interruption insurance in
an amount reasonably satisfactory to Agent, provided that any such
insurance may limit its coverage to 90 days for any one occurrence.
15.6. 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, any and all income taxes, federal
or otherwise, lawfully assessed and imposed upon it, and any and
all lawful taxes, rates, levies, and assessments whatsoever upon
its properties and every part thereof, 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; provided, however, that nothing herein contained
shall be construed as prohibiting a Covered Person from diligently
contesting in good faith by appropriate proceedings the validity of
any such taxes, rates, levies, or assessments, provided such
Covered Person 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.
15.7. COMPLIANCE WITH LAWS. Each Covered Person shall
comply with all Material Laws. Without limiting the generality of
the foregoing:
15.7.1. ENVIRONMENTAL LAWS. Each Covered Person shall
comply and shall use commercially reasonable efforts to ensure
compliance in all material respects by all tenants, subtenants
and other occupants, if any, with all Environmental Laws.
15.7.2. PENSION BENEFIT PLANS. Each Covered Person and
each ERISA Affiliate 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, and
shall
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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.
15.7.3. EMPLOYMENT LAWS. Each Covered Person shall
comply in all material respects with all requirements of all
Employment Laws applicable to such Covered Person.
15.8. DISCOVERY AND CLEAN-UP OF HAZARDOUS WASTE.
15.8.1. IN GENERAL. Upon any Covered Person receiving
notice of any violation of Environmental Laws or any similar
notice described in Section 15.10.4, or upon any Covered
Person otherwise discovering Hazardous Waste on any property
which is in violation of, or which would result in liability
under, any Environmental Law, Borrower shall: (i) promptly
take such acts as may be required to prevent danger or harm to
the property or any person therein as a result of such
Hazardous Waste; (ii) at the request of Agent, and at
Borrower's sole cost and expense, obtain and deliver to Agent
promptly, but in no event later than 90 days after such
request, a then currently dated environmental assessment of
the property certified to Agent and any future holder of the
Loan Obligations, a proposed plan for responding to any
environmental problems described in such assessment, and an
estimate of the costs thereof; and (iii) 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 Agent informed of
such actions and the results thereof.
15.8.2. ASBESTOS CLEAN-UP. In the event that the
property of any Covered Person contains asbestos or asbestos-
containing materials ("ACM"), Borrower shall develop and
implement, as soon as reasonably possible, an Operations and
Maintenance Program (as contemplated by EPA guidance document
entitled "Managing Asbestos in Place; A Building Owner's Guide
to Operations and Maintenance Programs for Asbestos-Containing
Materials") for managing in place the ACM, and deliver a true,
correct and complete copy of such Operations and Maintenance
Program to Agent. In the event that the asbestos survey done
in connection with developing the Operations and Maintenance
Program reveals ACM which, due to its condition, location or
planned building renovation, is recommended to be encapsulated
or removed, Borrower shall promptly cause the same to be
encapsulated or removed and disposed of offsite, in either
case by a licensed and experienced asbestos contractor, all in
accordance with applicable state, federal and local Laws.
Upon completion of any such encapsulation or removal, Borrower
shall deliver to Agent a certificate in such form as is then
customarily available signed by the consultant overseeing the
activity certifying to Agent that the work has been completed
in compliance with all applicable Laws regarding notification,
encapsulation, removal and disposal and that no airborne
fibers beyond permissible exposure limits remain on site. All
costs of such inspection, testing and remedial actions shall
be paid by Borrower.
15.9. TERMINATION OF PENSION BENEFIT PLAN. A Covered
Person or ERISA Affiliate shall not terminate or amend any Pension
Benefit Plan maintained by such Covered Person or ERISA Affiliate
if such termination or amendment would result in any material
liability to such Covered Person or ERISA Affiliate under ERISA or
any increase in current liability for the plan year for which such
Covered Person or ERISA Affiliate is required to provide security
to such Pension Benefit Plan under the Code.
15.10. NOTICE OF MATERIAL EVENTS. Borrower shall, promptly
upon any Responsible Officer of Borrower obtaining knowledge or
notice thereof, give notice to Agent of any (i) breach of any of
the covenants in Section 15, 16 or 17; (ii) Default or Event of
Default; (iii) the commencement of any Material Proceeding; and
(iv) any loss of or damage to any assets of a Covered Person or
institution of any proceeding for the condemnation or other taking
of any of the assets of a Covered Person, to the extent that such
loss, damage or proceeding is likely to give rise to
Insurance/Condemnation Proceeds or to result in a Material Adverse
Effect. In addition,
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15.10.1. Borrower shall furnish to Agent from time to
time all information which Agent reasonably requests with
respect to the status of any Material Proceeding.
15.10.2. Borrower shall furnish to Agent from time to
time all information which Agent reasonably requests with
respect to any Pension Benefit Plan established by a Covered
Person or ERISA Affiliate.
15.10.3. Borrower shall deliver notice to Agent of the
establishment by a Covered Person or an ERISA Affiliate of any
Pension Benefit Plan.
15.10.4. To the extent any of the following might
reasonably involve a liability or an expense in excess of
$50,000, Borrower shall within five days inform Agent of its
receipt of, and deliver to Agent a copy of, any (a) notice
that any violation of any Environmental Law or Employment Law
may have been committed or is about to be committed by any
Covered Person, (b) 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 Employment Law or requiring such Covered
Person to take any action in connection with the release of
any Hazardous Waste into the environment, (c) notice from a
federal, state, or local governmental agency or private party
alleging that a Covered Person may be liable or responsible
for costs associated with a response to or cleanup of a
release of Hazardous Waste into the environment or any damages
caused thereby, (d) 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 Waste, or (e) 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 entity in response
to a release of Hazardous Waste into the environment.
15.10.5. Borrower shall within 30 days after they occur
deliver to Agent notice of the following events: (i) the
failure of any Covered Person or ERISA Affiliate 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 or
payment; (ii) the occurrence of any Reportable Event,
"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; (iii) receipt by a Covered Person
or ERISA Affiliate of any notice from a Multi-employer Plan
regarding the imposition of withdrawal liability; and
(iv) receipt by a Covered Person or ERISA Affiliate 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 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, or the withdrawal or partial withdrawal by a
Covered Person or ERISA Affiliate from any Pension Benefit
Plan, and the filing or receipt by a Covered Person or ERISA
Affiliate of any such notice and filing or receipt of all
subsequent reports or notices under ERISA with or from the
Internal Revenue Service, the PBGC, or the DOL relating to the
same; and, in addition to such notice, deliver to Agent a
certificate of the President or Chief Financial Officer of
Borrower, setting forth details as to such events and the
action that the affected Covered Person or ERISA Affiliate
proposes to take with respect thereto.
15.10.6. Borrower shall, within ten days after it
occurs, deliver to Agent 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.
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15.10.7. Borrower shall, immediately after becoming
aware thereof, deliver notice to Agent of the assertion by the
holder of any capital stock of Borrower or any Indebtedness in
the outstanding principal amount in excess of $200,000 that a
default exists with respect thereto or that Borrower is not in
compliance with the terms thereof, or of the threat or
commencement by such holder of any enforcement action because
of such asserted default or noncompliance.
15.10.8. Borrower shall, immediately after becoming
aware thereof, deliver notice to Agent of any pending or
threatened strike, work stoppage, material unfair labor
practice claim or other material labor dispute affecting
Borrower.
15.10.9. Borrower shall deliver notice to Agent of any
change in Borrower's name, state of incorporation, form of
organization, trade names or styles under which Borrower will
sell Inventory or create Accounts, or to which instruments in
payment of Accounts may be made payable, at least 30 days
prior to such change.
15.10.10. Borrower shall, immediately after becoming
aware thereof, deliver notice to Agent of any change in
Borrower's property, business, operations or condition
(financial or otherwise) which could have a Material Adverse
Effect.
15.10.11. Borrower shall, immediately after becoming
aware thereof, deliver notice to Agent of any violation of any
Law applicable to Borrower or its properties which may have a
Material Adverse Effect.
15.11. MAINTENANCE OF SECURITY INTERESTS OF SECURITY
DOCUMENTS.
15.11.1. PRESERVATION AND PERFECTION OF SECURITY
INTERESTS. Borrower shall promptly, upon the reasonable
request of Agent and at Borrower's expense, execute,
acknowledge and deliver, or cause the execution,
acknowledgment and delivery of, and thereafter file or record
in the appropriate governmental office, any document or
instrument supplementing or confirming the Security Documents
or otherwise deemed necessary by Agent to create, preserve or
perfect any Security Interest purported to be created by the
Security Documents or to fully consummate the transactions
contemplated by the Loan Documents.
15.11.2. COLLATERAL HELD BY WAREHOUSEMAN, BAILEE, ETC.
If any Collateral is at any time in the possession or control
of a warehouseman, bailee or any of Borrower's agents or
processors, then Borrower shall notify Agent thereof and shall
notify such Person of Agent's Security Interest in such
Collateral and, upon Agent's request, instruct such Person to
hold all such Collateral for Agent's account subject to
Agent's instructions. If at any time any Collateral is
located on any premises that are not owned by Borrower, then
Borrower shall obtain written waivers, in form and substance
satisfactory to Agent, of all present and future Security
Interests to which the owner or lessor or any mortgagee of
such premises may be entitled to assert against the
Collateral. Notwithstanding the two preceding sentences,
Borrower shall be required to provide such notices and waivers
only if the failure to do so could have a Material Adverse
Effect on a Covered Person.
15.11.3. COMPLIANCE WITH TERMS OF SECURITY DOCUMENTS.
Borrower shall comply with all of the terms, conditions and
covenants in the Security Documents to which Borrower is a
party.
15.12. ACCOUNTING SYSTEM. Each Covered Person shall
maintain a system of accounting established and administered in
accordance with GAAP. Without limiting the generality of the
foregoing:
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15.12.1. ACCOUNT RECORDS. Each Covered Person shall
maintain a record of Accounts at its principal place of
business that itemize each Account of such Covered Person and
describe the names and addresses of the Account Debtors on
such Accounts, relevant invoice numbers, shipping dates and
due dates, collection histories, and agings of such Accounts.
15.12.2. INVENTORY RECORDS. Each Covered Person shall
maintain a record of Inventory that records, by type, quality
and quantity, and its cost therefor, withdrawals therefrom and
additions thereto, and listing any returns, rejections,
repossessions, stoppages in transit, losses, damages or
destruction of or to such Inventory and shall perform a
physical inventory at least once each calendar year.
15.13. FINANCIAL STATEMENTS. Borrower shall deliver to
Agent:
15.13.1. ANNUAL FINANCIAL STATEMENTS. Within 120 days
after the close of each Fiscal Year, year-end consolidated
Financial Statements of Borrower and its Subsidiaries which
under GAAP are required to be reported on a consolidated basis
which disclose separately all transactions between Affiliates,
containing an audit report without qualification by an
independent certified public accounting firm selected by
Borrower and satisfactory to Agent, and accompanied by a
Compliance Certificate of the Chief Financial Officer of
Borrower.
15.13.2. QUARTERLY FINANCIAL STATEMENTS. Within 45 days
after the end of each of the first three (3) fiscal quarters
of Borrower, unaudited consolidated Financial Statements of
Borrower and its Subsidiaries which under GAAP are required to
be reported on a consolidated basis which disclose separately
all transactions between Affiliates, 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 15.13,
shall contain detailed calculations of the financial measurements
referred to in Section 18 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 true,
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) all of the
representations and warranties of Borrower contained in this
Agreement and the other Loan Documents are true and correct in all
material respects (except as disclosed therein) as of the date such
certification is given as if made on such date, except where the
failure to comply would not have a Material Adverse Effect, (iii)
all of the covenants of Borrower contained in this Agreement have
been complied with in all material respects (except as disclosed
therein) as of the date such certification is given as if made on
such date, except where the failure to comply would not have a
Material Adverse Effect, (iv) no transactions with Affiliates have
occurred except as permitted under Section 17, and such
transactions were in the ordinary course of business consistent, in
nature and scope, with past practice and (v) there exists no
Default which is continuing that has not been waived in writing by
Lenders and no Event of Default has occurred that has not been
waived in writing by Lenders. If any Compliance Certificate
delivered to Lenders discloses that a representation or warranty is
not true and correct, or that a Default or Event of Default has
occurred that has not been waived in writing by Lenders, such
Compliance Certificate shall set forth what action Borrower has
taken or proposes to take with respect thereto.
15.14. OTHER FINANCIAL INFORMATION. Borrower shall
deliver to Agent:
15.14.1. AGINGS REPORT. Within 30 days after the end of
each fiscal quarter, a report of the aging of all Accounts of
Borrower in such reasonable detail as Agent may require.
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15.14.2. OTHER REPORTS OR INFORMATION CONCERNING
ACCOUNTS. Such other reports or information as Agent may
reasonably request from time to time, in a form and with such
specificity as is reasonably satisfactory to Agent, concerning
Accounts reflected in the Periodic Reports, Periodic Summaries
or any other documents provided to Agent. Such copies shall
include, if specifically requested by Agent, copies of all
invoices prepared in connection with such Accounts.
15.14.3. STOCKHOLDER AND SEC REPORTS. Promptly after
their filing, copies of any and all (i) proxy statements,
financial statements and reports which Borrower makes
available to its stockholders, 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.
15.14.4. PENSION BENEFIT PLAN REPORTS. Promptly after
filing with the PBGC, DOL or IRS, 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.
15.14.5. FEDERAL TAX RETURNS. Promptly after filing
with the IRS, a copy of the Form 1120 filed by Borrower,
without schedules or exhibits.
15.15. OTHER INFORMATION. Upon the written request of
Agent, Borrower shall promptly deliver to Agent such other
information about the business, operations, revenues, financial
condition, property, or business prospects of Borrower as Agent
may, from time to time, reasonably request.
15.16. AUDITS BY AGENT. Agent or Persons authorized by
and acting on behalf of Agent may at any time during normal
business hours audit the books and records of each Covered Person
from time to time upon reasonable 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 and officers.
Each Covered Person shall cooperate with Agent and such Persons in
the conduct of such audits and shall deliver to Agent any
instrument necessary for Agent to obtain records from any service
bureau maintaining records for such Covered Person. Borrower shall
reimburse Agent for all costs and expenses incurred by it in
conducting each audit; provided, however, that if a Default has not
occurred which is continuing or an Event of Default has not
occurred, Borrower shall bear the reasonable cost of up to two such
audits in any twelve month period and Lenders shall bear the costs
and expenses for each such audit thereafter.
15.17. VERIFICATION OF ACCOUNTS. Agent shall have the
right, after the occurrence of a Default which is continuing or
after an Event of Default hereunder which has not been cured or
waived, after first giving either oral or written notice to
Borrower, to verify the validity and amount of any Account and any
other matter relating to an Account, by communicating in writing or
orally directly with the Account Debtor or any Person who
represents or Agent believes represents the Account Debtor.
15.18. INVENTORY APPRAISALS. Borrower shall, upon Agent's
request at any time and from time to time, obtain a full appraisal
of its Inventory by an independent third party designated by Agent.
All such appraisals shall be at the expense of Borrower; provided,
however, that if a Default has not occurred which is continuing or
an Event of Default has not occurred, Lenders shall bear the costs
and expenses for each such appraisal.
15.19. APPRAISALS OF COLLATERAL. Whenever a Default or
Event of Default exists, Borrower shall at its expense and upon
Agent's request, provide Agent with appraisals or updates thereof
of any or all of the Collateral from an appraiser acceptable to
Agent, and prepared on a basis satisfactory to Agent.
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15.20. ACCESS TO OFFICERS AND AUDITORS. Each Covered
Person shall permit Persons authorized by Agent to discuss the
affairs, finances and accounts of such Covered Person with its
officers and independent auditors as often as Agent may reasonably
request, and such Covered Person shall direct such officers and
independent auditors to cooperate with Agent and make full
disclosure to Agent of those matters that it may deem relevant to
the continuing ability of Borrower timely to pay and perform the
Loan Obligations.
15.21. PROFORMAS FOR PERMITTED ACQUISITION; PERMITTED
MERGER. Borrower shall, prior to making the ENVIROQ Acquisition
and no later than 14 days after entering into a definitive merger
agreement with any Person other than a wholly-owned Subsidiary of
Borrower, prepare and furnish to Agent proforma financial
statements for the Person to be acquired, or the surviving legal
entity if the transaction is to be by merger, demonstrating to the
satisfaction of Agent that none of the covenants in Section 18 will
be violated as a consequence of such acquisition or other
transaction or is expected to be violated with the passage of time
thereafter. Such proforma financial statements shall contain
forecasted balance sheets, income statements, statements of cash
flows and such other reports and disclosures, and shall cover such
forecast periods, as Agent may in its reasonable discretion
require, and in the case of any proposed merger, such information
regarding the proposed Permitted Merger Party as Agent may
reasonably require.
15.22. RATE PROTECTION AGREEMENT. Within 90 days after the
Execution Date Borrower shall enter into a Rate Agreement with
Boatmen's with respect to a notional amount equal to at least fifty
percent (50%) of the Aggregate Term Commitment. Until the Loan
Obligations are irrevocably paid in full, Borrower shall enter into
such additional Rate Agreements with Boatmen's or another qualified
bank as reasonably necessary to provide interest rate protection on
a notional amount equal to the Term Loan; provided that, prior to
Borrower's entering into a Rate Agreement with another bank,
Boatmen's shall have the opportunity to review the terms of such
agreement and offer a Rate Agreement with substantially equal or
better terms within seven (7) Business Days after being furnished
with such terms.
15.23. ACQUISITION AGREEMENT.
15.23.1. CONSUMMATION OF ACQUISITION. Borrower shall
deliver to Agent complete and correct executed copies of the
Acquisition Agreement, all amendments, schedules and exhibits
thereto, and all other agreements, documents and certificates
which are executed and delivered in connection with the
transactions contemplated thereby. The Acquisition Agreement
shall have been duly authorized and executed and shall be the
valid and binding obligation of Borrower and the other parties
thereto and shall be enforceable in accordance with its terms
except to the extent that the enforceability thereof against
the parties thereto may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally or by equitable principles of
general application or due to public policy considerations
with respect to rights of indemnification under federal and
state securities laws. Each of the parties to the Acquisition
Agreement shall have performed all obligations, covenants and
conditions required of it prior to or as a condition to the
consummation of the transactions contemplated by the
Acquisition Agreement, and no such obligation, covenant or
condition shall been waived by any party.
15.23.2. PERFORMANCE OF ACQUISITION AGREEMENT; ETC.
Borrower shall fully perform all of its obligations under the
Acquisition Agreement, and shall enforce all of its rights and
remedies thereunder as it deems appropriate in its reasonable
business judgment; provided, however, that Borrower shall not
take any action or fail to take any action which would result
in a waiver or other loss of any material right or remedy of
Borrower thereunder. Without limiting the generality of the
foregoing, Borrower shall take all action necessary or
appropriate to permit, and shall not take any action which
would have a Material Adverse Effect upon, the full
enforcement of all indemnification rights under the
Acquisition Agreement. Borrower shall not, without Agent's
prior written consent, modify, amend, supplement, compromise,
satisfy, release or discharge the Acquisition Agreement, any
collateral securing
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the same, any right of set-off, any Person liable directly or
indirectly with respect thereto, or any agreement relating to
the Acquisition Agreement or the collateral therefor. Borrower
shall notify Agent in writing promptly after Borrower becomes
aware thereof, of any event or fact which could give rise to a
claim by it for indemnification under the Acquisition Agreement,
and shall diligently pursue such right and report to Agent on
all further developments with respect thereto. Borrower shall
remit directly to Agent, for application to the Loan
Obligations in such order as Agent determines, all amounts
received by Borrower as indemnification or otherwise pursuant
to the Acquisition Agreement; provided, however, that Borrower
shall not be obligated to remit to Agent any amounts realized
by Borrower pursuant to its rights of set-off under Sections
2.13 and 9.3 of the Acquisition Agreement. If Borrower fails
after Agent's demand to pursue diligently any right under the
Acquisition Agreement, or if an Event of Default exists, then
Agent may directly enforce such right in its own or Borrower's
name and may enter into such settlements or other agreements
with respect thereto as Agent determines. Notwithstanding the
foregoing, Borrower shall at all times remain liable to
observe and perform all of its duties and obligations under
the Acquisition Agreement, and Agent's exercise of any of its
rights with respect to the Collateral shall not release
Borrower from any of such duties or obligations. Agent shall
not be obligated to perform or fulfill any of Borrower's
duties or obligations under the Acquisition Agreement or to
make any payment thereunder, or to make any inquiry as to the
sufficiency of any payment or property received by it
thereunder or the sufficiency of performance by any party
thereunder, or to present or file any claim, or to take any
action to collect or enforce any performance or payment of any
amounts, or any delivery of any property.
15.24. SURVEYS; TITLE INSURANCE. Within sixty (60) days
after the date of this Agreement, Borrower shall have obtained
completed ALTA surveys of each parcel of the Missouri Real Property
Collateral that are sufficient for title insurance policies to
contain no material exceptions related to the methodology of the
survey. Subsequent to receipt of such surveys, Agent will obtain
any necessary or reasonably desirable amendments or endorsements to
the title insurance policy on the Missouri Real Property Collateral
required by this Agreement.
15.25. FURTHER ASSURANCES. Borrower shall execute and
deliver, or cause to be executed and delivered, to Agent such
documents and agreements, and shall take or cause to be taken such
actions, as Agent may from time to time request to carry out the
terms and conditions of this Agreement and the other Loan
Documents.
16. NEGATIVE COVENANTS.
Borrower covenants and agrees that, while any of the Loan
Obligations are owing to any Lender by Borrower, Borrower shall
not, directly or indirectly, do any of the following, or permit any
Covered Person to do any of the following, without the prior
written permission of Agent, which, in the case of Section 16.8,
will not be unreasonably withheld after adequate time for
appropriate due diligence and review:
16.1. INVESTMENTS. Make any Investments in any other
Person except the following ("Permitted Investments"):
16.1.1. investments in (A) obligations issued or
guaranteed, directly or indirectly, by the United States
Government, (B) commercial paper or certificates of deposit
issued by any commercial bank located in the United States
having a combined capital and surplus of not less than
$50,000,000;
16.1.2. direct and indirect investments in Borrower's
operating subsidiaries or joint ventures in the ordinary
course of Borrower's business consistent with past practice;
16.1.3. loans or advances to any Affiliate except as
expressly permitted under Section 17.1; and
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16.1.4. foreign currency risk hedging transactions in the
ordinary course of business.
16.2. INDEBTEDNESS. Create, incur, assume or allow to
exist any Indebtedness of any kind or description, except the
following (the "Permitted Indebtedness"):
16.2.1. Indebtedness to Lenders;
16.2.2. Indebtedness to vendors and suppliers in the
ordinary course of business consistent with past practice;
16.2.3. Indebtedness under Operating Leases with
payments not to exceed $1,000,000 in the aggregate during any
calendar year;
16.2.4. Indebtedness under Capital Leases with payments
not to exceed $1,000,000 in the aggregate as of the end of any
calendar year;
16.2.5. purchase money Security Interests and leases
entered into in connection with the acquisition of capital
assets in the ordinary course of Borrower's business
consistent with past practice;
16.2.6. Indebtedness with respect to the Chesterfield
IRB;
16.2.7. existing Indebtedness with respect to $1,000,000
City of Jacksonville, Florida Industrial Development Revenue
Bonds, Series A (Insituform Southeast, Inc., Project); and
16.2.8. loans or advances to any Affiliate except as
expressly permitted under Section 17.1.
16.2.9. the Subordinated Debt.
16.3. CAPITAL EXPENDITURES. Borrower shall not make
Capital Expenditures (exclusive of the Permitted Acquisition and
the Chesterfield IRB) that in the aggregate exceed $7,500,000
during any calendar year.
16.4. PAYMENTS ON SUBORDINATED DEBT. Make any payment of
principal, interest, fees or otherwise on the Subordinated Debt
except as the holder of the Subordinated Debt is expressly
permitted to receive free of trust for Lenders under the terms of
the Subordination Agreement; and in the event a Default has
occurred hereunder which is continuing and has not been waived in
writing by Lenders or an Event of Default has occurred hereunder
that has not been waived in writing by Lenders, Borrower shall make
no payment of principal, interest, fees or otherwise on the
Subordinated Debt prior to the earlier to occur of (i) payment in
full of the Loan Obligations; (ii) the expiration of one hundred
eighty (180) days following written notice of such Default or Event
of Default to the holder of the Subordinated Note; or (iii) the
waiver by Lenders, cure or remediation of the Default or Event of
Default specified in the notice of Default or Event of Default
provided to the holder of the Subordinated Note.
16.5. PREPAYMENTS. Voluntarily prepay any Indebtedness
other than (a) the Loan Obligations in accordance with their terms
or Indebtedness of Borrower under the Reimbursement Agreement or
Credit Agreement in accordance with their respective terms, and (b)
trade payables in the ordinary course of business.
16.6. INDIRECT OBLIGATIONS. Create, incur, assume or
allow to exist any Indirect Obligations except (i) Indirect
Obligations existing on the Execution Date and disclosed on Exhibit
13 (including any refinancing of such Indirect Obligations) and
(ii) performance bonding for the benefit of its Subsidiaries in the
ordinary course of Borrower's business, consistent with past
practice ("Permitted Indirect Obligations").
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16.7. 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 (the "Permitted Security Interests"):
16.7.1. 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;
16.7.2. Security Interests arising out of deposits in
connection with workmen's compensation, unemployment
insurance, old age pensions, or other social security or
retirement benefits legislation;
16.7.3. 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
reserves in accordance with GAAP are maintained on Borrower's
books;
16.7.4. Security Interests existing on the Execution
Date that are disclosed on Exhibit 13 and are satisfactory to
Lenders;
16.7.5. Security Interests for the benefit of Lenders;
and
16.7.6. Security Interests granted pursuant to
Indebtedness which Borrower may incur without Lenders' consent
pursuant to Sections 16.2.1, 16.2.3, 16.2.4, 16.2.5, 16.2.6,
16.2.7 and 16.2.9.
16.8. CHANGE OF CONTROL. Merge or consolidate with or
into, or enter into any definitive merger agreement with, any other
entity other than a wholly-owned subsidiary, or sell, lease or
otherwise dispose of all or substantially all of its properties and
assets, or permit any Person or Group to become the record or
beneficial owner, directly or indirectly, of securities
representing thirty percent (30%) or more of the voting power of
Borrower's then outstanding securities having the power to vote, or
acquiring the power to elect a majority of the Board of Directors
of Borrower.
16.9. ACQUISITIONS. Acquire stock or other equity
interest in a Person, or acquire any asset of a Person except in
connection with a Permitted Acquisition or a Permitted Merger.
16.10. BAILMENTS; CONSIGNMENTS; WAREHOUSING. Store any
Inventory with a bailee, warehouseman, consignee or pursuant to an
express or implied agreement establishing a bailment or consignment
of Inventory or similar arrangement, unless Agent has received a
written acknowledgment satisfactory to Agent from the third party
involved which acknowledges the prior perfected Security Interest
of Agent in such Inventory. Notwithstanding the preceding
sentence, Borrower shall be required to provide such
acknowledgments only if the failure to do so could have a Material
Adverse Effect on a Covered Person.
16.11. DISPOSAL OF PROPERTY. Sell, transfer, exchange,
lease or otherwise dispose of its assets, except (i) sales of
Inventory in the ordinary course of business and (ii) sales of
capital assets approved by Lenders if the net proceeds thereof are
used for prepayment of the Term Loan as required by Section
5.2.2.1. Notwithstanding the foregoing, Borrower may sell,
transfer or otherwise dispose of obsolete or unusable equipment
having an orderly liquidation value no greater than $200,000
individually, and $500,000 in the aggregate in any Fiscal Year
provided that (a) if such sale, transfer or disposition is effected
without replacement of such equipment, or if such equipment is
replaced by equipment leased by Borrower or by equipment purchased
by Borrower subject to a Security Interest, then Borrower shall
deliver all of the cash proceeds of any such sale, transfer or
other disposition to Agent, which
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proceeds shall be applied as a prepayment of the Term Loan as required
by Section 5.2.2.1 or (b) if such sale, transfer or other disposition
is made in connection with the purchase by Borrower of replacement
equipment (other than equipment subject to a Security Interest), then
Borrower shall use the proceeds of any such sale, transfer or other
disposition to finance the purchase by Borrower of such replacement
equipment and shall deliver to Agent written evidence of the use of
the proceeds for such purchase. All replacement equipment purchased
by Borrower shall be free and clear of all Security Interests and
Encumbrances, except for Permitted Security Interests.
16.12. CHANGE OF BUSINESS. Engage in any business other
than substantially as conducted on the Effective Date.
16.13. DEBT PAYMENTS AND MATERIAL AGREEMENTS. Default upon
or fail to pay any Indebtedness for money borrowed as the same
matures, or breach, violate or be in default under any Material
Agreement.
16.14. CONFLICTING AGREEMENTS. Enter into any agreement,
that would, if fully complied with by it, result in a Default or
Event of Default either immediately or upon the elapsing of time.
16.15. SALE AND LEASEBACK TRANSACTIONS. Enter into any
arrangement with any Person providing for Borrower to lease or rent
property that Borrower has or will sell or otherwise transfer to
such Person.
16.16. NEW SUBSIDIARIES. Organize, create or acquire any
Subsidiary except in the ordinary course of business, consistent
with past practice.
16.17. FISCAL YEAR. Change its Fiscal Year from a Fiscal
Year ending on the last day of September other than pursuant to a
Permitted Merger.
16.18. TRANSACTIONS HAVING MATERIAL ADVERSE EFFECT. Enter
into any transaction which has a Material Adverse Effect.
17. COVENANTS REGARDING TRANSACTIONS WITH AFFILIATES. Borrower
covenants and agrees that, while any of the Loan Obligations are
owing to any Lender by Borrower, Borrower shall not, directly or
indirectly, do any of the following, or permit any Covered Person
to do any of the following, without the prior written permission of
Agent:
17.1. TRANSACTIONS WITH AFFILIATES. Enter into or be a
party to any transaction or arrangement, including without
limitation, the purchase, sale or exchange of property of any kind
or the rendering of any service, with any Affiliate, or make any
loans or advances to any Affiliate, unless (i) no Event of Default
has occurred and is continuing or would occur as a result of such
transaction, (ii) it will not have a Material Adverse Effect, (iii)
it is in the ordinary course of business, (iv) it is consistent
with past practice and pursuant to the reasonable requirements of
its business and (v) it is 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.
17.1.1. SUBORDINATION. Borrower's payment obligations
in connection with any transaction permitted under Section
17.1 shall be subordinated to the Loan Obligations pursuant to
a subordination agreement satisfactory to Agent in its sole
and absolute discretion.
17.2. MANAGEMENT CONTRACTS, ETC. Enter into with any
Affiliate, any management agreement, consulting agreement or any
similar type of agreement for services which provides for the
payment of fees.
17.3. PROHIBITED DISTRIBUTIONS. Directly or indirectly
declare or make, or incur any liability to make, any Prohibited
Distribution. For purposes of this Section, a "Prohibited
Distribution" means and includes (i) prior
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to the entering into of a definitive merger agreement with any Person,
any dividend to the extent that it is a dividend in kind, and any
dividend paid with respect to any share of its capital stock to the
extent it exceeds the regular cash dividend per share in effect as of
February 15, 1995; (ii) after a definitive merger agreement with any
Person is entered into, any cash dividend or dividend in kind; (iii)
any acquisition, redemption, or retirement of any outstanding stock;
(iv) any retirement or prepayment of debt securities before their
regularly scheduled maturity dates; (v) any loan or advance to a
shareholder; and (vi) any compensation payment, including any
payment based upon Net Income or other measures of economic
performance, whether or not designated as a bonus, to a shareholder
employee that is in excess of such employee's regular compensation.
18. FINANCIAL COVENANTS.
18.1. SPECIAL DEFINITIONS. As used in this Section 18,
the following capitalized terms have the following meanings:
"Current Assets" means current assets as determined in
accordance with GAAP.
"Current Liabilities" means current liabilities as determined
in accordance with GAAP.
"EBITDA" means, with respect to any fiscal period of Borrower,
the net income of Borrower for such fiscal period, as
determined in accordance with GAAP and reported on the
Financial Statements for such period, minus any extraordinary
gains, plus any extraordinary losses, plus all of the
following that were deducted in calculating such net income:
(a) interest expense; (b) provisions for taxes; and (c)
depreciation, amortization and other non-cash charges.
"Fixed Charges" means, with respect to any fiscal period of
Borrower, the sum of (a) interest paid, (b) federal, state and
local taxes paid, (c) dividends paid and (d) current
maturities of long-term debt.
"Net Income" means, for any period of calculation, "net
income" as determined in accordance with GAAP.
"Tangible Assets" means all of the assets of Borrower as
determined in accordance with GAAP and reported on the
Financial Statements except: (a) patents, copyrights,
trademarks, trade names, franchises, license agreements,
goodwill, and other similar intangibles; (b) unamortized debt
discount and expense; and (c) fixed assets to the extent of
any write-up in the book value thereof resulting from a
revaluation effective after the date of the Loan Agreement.
"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 of
Borrower at such date prepared in accordance with GAAP
(excluding assets and liabilities which represent obligations
due to or from any Affiliate except those obtained or incurred
in the ordinary course of business); less (b) the amount at
which Total Liabilities would be shown on such balance sheet.
"Total Assets" means the sum of all assets of Borrower as
presented in the balance sheet in Borrower's most recent
Financial Statements.
"Total Liabilities" means all liabilities of Borrower as
presented in the balance sheet in Borrower's most recent
Financial Statements.
All other capitalized terms used in this Section 18 shall have
their meanings and shall be calculated under GAAP.
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18.1.1. MINIMUM TANGIBLE NET WORTH. Borrower's
--------------------------
Tangible Net Worth shall at no time be less than the sum of (i)
$27,000,000, plus (ii) fifty percent (50%) of Borrower's cumulative
Net Income (exclusive of losses) after September 30, 1994.
18.1.2. EBITDA TO FIXED CHARGES. The ratio of
-----------------------
Borrower's EBITDA to Fixed Charges shall at no time be less than
1.0 to 1.0.
18.1.3. MINIMUM CURRENT RATIO. The ratio of Borrower's
---------------------
Current Assets to Current Liabilities shall at no time be less than
1.0 to 1.0.
18.1.4. TOTAL LIABILITIES TO TANGIBLE NET WORTH. The
---------------------------------------
ratio of Borrower's Total Liabilities to Tangible Net Worth shall
at no time be greater than 1.75 to 1.0.
19. DEFAULT.
19.1. EVENTS OF DEFAULT. Any one or more of the following
shall constitute an event of default (an "Event of Default") under
this Agreement:
19.1.1. FAILURE TO PAY PRINCIPAL OR INTEREST. Failure
of Borrower to pay any principal of the Term Loan or interest
accrued thereon when due.
19.1.2. FAILURE TO PAY OTHER AMOUNTS OWED TO LENDERS.
Failure of Borrower to pay any of the Loan Obligations (other
than principal of the Term Loan or interest accrued thereon)
within 5 days after the date when due.
19.1.3. FAILURE TO PAY AMOUNTS OWED TO OTHER PERSONS.
Failure of any Covered Person to pay any Indebtedness in
excess of $200,000 of such Covered Person to Persons other
than a Lender which continues unwaived beyond any applicable
grace period specified in the documents evidencing such
Indebtedness.
19.1.4. REPRESENTATIONS OR WARRANTIES. Any
representation or warranty made by Borrower in this Agreement,
or any statement or representation made in any certificate,
report, opinion or other document delivered pursuant to this
Agreement, is discovered to have been false in any material
respect when made.
19.1.5. CERTAIN COVENANTS. Failure of any Covered
Person to comply with the covenants in Sections 15.13, 15.16,
15.20, 16.1 through 16.11, 17 and 18.
19.1.6. OTHER COVENANTS. Failure of any Covered Person
to comply with of any of the terms or provisions of any of the
Loan Documents applicable to it (other than a failure which
constitutes an Event of Default under any of Sections 19.1.1
through 19.1.5) which is not remedied or waived in writing by
Lenders within 20 days after the initial occurrence of such
failure.
19.1.7. SUBORDINATED DEBT. The occurrence of any
default or event of default with respect to the Subordinated
Debt which is not cured or waived within any applicable grace
period.
19.1.8. ACCELERATION OF OTHER INDEBTEDNESS. Any
Obligation of a Covered Person in excess of $200,000 (other
than the Loan Obligations) for the payment of borrowed money
becomes or is declared to be due and payable or required to be
prepaid (other than by a regularly scheduled prepayment) prior
to the original maturity thereof.
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19.1.9. DEFAULT UNDER OTHER AGREEMENTS. The occurrence
of any default or event of default under any agreement to
which a Covered Person is a party (other than the Loan
Documents), including, without limitation, the Credit
Agreement and the Reimbursement Agreement, which default or
breach continues unwaived beyond any applicable grace period
provided therein and likely would have a Material Adverse
Effect.
19.1.10. BANKRUPTCY; INSOLVENCY; ETC. A Covered Person
(i) fails to pay, or admits in writing its inability to pay,
its debts as they become due, or otherwise becomes insolvent
(however evidenced); (ii) makes an 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 such Covered
Person or any substantial part of its property; (iv) commences
any proceeding relating to such Covered Person under any
reorganization, arrangement, readjustment of debt, dissolution
or liquidation law 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 forty-
five (45) 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 of any
substantial part of its property, or allows any such
receivership or trusteeship to continue undischarged for a
period of forty-five (45) days; or (vi) takes any corporate
action to authorize any of the foregoing.
19.1.11. 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 reasonable deductibles in effect
on the Execution Date) in excess of $35,000, becomes final and
non-appealable or if timely appealed is not fully bonded and
collection thereof stayed pending the appeal.
19.1.12. PENSION BENEFIT PLAN TERMINATION, ETC. Any
Pension Benefit Plan termination by the PBGC or the
appointment by the appropriate United States District Court of
a trustee to administer any Pension Benefit Plan or to
liquidate any Pension Benefit Plan; or any event which
constitutes grounds either for the termination of any Pension
Benefit Plan by PBGC or for the appointment by the appropriate
United States District Court of a trustee to administer or
liquidate any Pension Benefit Plan shall have occurred and be
continuing for thirty (30) days after Borrower has notice of
any such event; or any voluntary termination of any Pension
Benefit Plan 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
Agent has been notified of such intent to voluntarily
terminate such plan and has given its consent and agreed that
such event shall not constitute a Default.
19.1.13. LIQUIDATION OR DISSOLUTION. (i) Borrower or
any Guarantor files a certificate of dissolution under
applicable state law or is liquidated or dissolved or suspends
or terminates the operation of its business, or has commenced
against it any action or proceeding for its liquidation or
dissolution or the winding up of its business, or takes any
corporate action in furtherance thereof, or (ii) except in any
case where such action or event would not have a Material
Adverse Effect, any other Covered Person files a certificate
of dissolution under applicable state law or is liquidated or
dissolved or suspends or terminates the operation of its
business, or has commenced against it any action or proceeding
for its liquidation or dissolution or the winding up of its
business, or takes any corporate action in furtherance
thereof.
19.1.14. KEY EXECUTIVES. If at any time prior to the
termination of this Agreement, both Jerome Kalishman and
Robert Affholder cease to serve as executive officers of
Borrower.
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19.1.15. CHANGE OF CONTROL. If (i) at any time Jerome
Kalishman shall personally own less than six percent (6%) of
the then outstanding voting stock of Borrower, (ii) at any
time Jerome Kalishman, his wife and their estates shall
collectively own less than twenty percent (20%) of the then
outstanding voting stock of Borrower or (iii) at any time
Jerome Kalishman shall die and the transferee or transferees
of his then outstanding voting stock are not acceptable to
Agent in its sole and absolute discretion (whether or not such
transferee or transferees are his wife or any of the
aforementioned estates); provided, however, that the event set
forth in clause (iii) shall only be an Event of Default if,
within sixty (60) days after such event Agent gives written
notice that such event shall be deemed to be an Event of
Default; and provided further, that Borrower shall have 120
days from the date of such notice to cure such Event of
Default.
19.1.16. ITI LAWSUIT. If at any time, a final and non-
appealable judgment is rendered in the lawsuit filed initially
in the Chancery Court for the Thirteenth Judicial District of
Memphis, Shelby County, Tennessee, (Insituform North America
Corp. and NuPipe, Inc. v. Insituform Southeast, Inc., Nupipe
Southeast, Inc., ENVIROQ Corporation and Insituform Mid-
America, Inc.) (the "ITI Lawsuit"), or in any similar or
related case, which upholds or supports the refusal by
Insituform North America Corp. and Nupipe to give their
consents to an actual or constructive assignment or other
transfer of certain sub-license agreements and license
agreements, as more fully set forth in the ITI Lawsuit.
19.1.17. LOAN DOCUMENTS; SECURITY INTERESTS. For any
reason other than the failure of Agent to take any action
available to it to maintain perfection of the Security
Interests created in favor of Agent, for the ratable benefit
of Lenders, pursuant to the Loan Documents, any Loan Document
ceases to be in full force and effect or any Security Interest
with respect to any portion of the Collateral intended to be
secured thereby ceases to be, or is not, valid, perfected and
prior to all other Security Interests (other than the
Permitted Security Interests) or is terminated, revoked or
declared void or invalid.
19.1.18. LOSS TO COLLATERAL. Any loss, theft, damage or
destruction of any item or items of Collateral occurs which
(i) materially and adversely affects the operation of
Borrower's business; or (ii) is material in amount and is not
adequately covered by insurance.
19.1.19. MATERIAL ADVERSE EVENT. There occurs any
material adverse change in Borrower's property, business,
operation, or condition (financial or otherwise), or there
occurs any event which has or will have a Material Adverse
Effect.
19.2. CROSS-DEFAULT. Any Event of Default under this
Agreement will constitute an event of default under any other
agreement of Borrower with a Lender and under any evidence of
Indebtedness of Borrower held by a Lender, whether or not such is
an event of default specified therein.
19.3. RIGHTS AND REMEDIES IN THE EVENT OF DEFAULT.
19.3.1. ACCELERATION. Upon an Event of Default
described in Section 19.1.10, all of the outstanding Loan
Obligations shall automatically become immediately due and
payable. Upon any other Event of Default, and at any time
thereafter, Agent (at the direction of Lenders) may declare
all of the outstanding Loan Obligations immediately due and
payable. Such acceleration may be without demand or notice of
any kind, which Borrower expressly waives.
19.3.2. RIGHT OF SET-OFF. Upon the occurrence and
during the continuance of any Event of Default, each Lender is
hereby authorized at any time and from time to time, 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
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other Indebtedness at any time owing by such Lender to or for
the credit or the account of Borrower, irrespective of whether
or not such Lender shall have made any demand under this
Agreement or the Notes and although such Loan Obligations may
be unmatured; provided, however, that such Lender shall
immediately pay over such amount collected to the Agent for
the Agent's prompt distribution to each Lender of its ratable
share hereunder of said amount. The rights of each Lender
under this Section are in addition to other rights and
remedies (including, without limitation, other rights of
set-off) which each Lender may otherwise have.
19.3.3. ENTRY UPON PREMISES AND ACCESS TO INFORMATION.
Upon an Event of Default and acceleration of the Loan
Obligations as provided herein, and at any time thereafter:
Agent may (i) enter upon the premises leased or owned by
Borrower where Collateral is located (or is believed to be
located) without any obligation to pay rent to Borrower, or
any other place or places where Collateral is believed to be
located, (ii) render Collateral usable or saleable, (iii)
remove Collateral therefrom to the premises of Agent or any
agent of Agent for such time as Agent may desire in order
effectively to collect or liquidate Collateral; (iv) 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 any of the Collateral and use all of the foregoing and the
information contained therein in any manner Agent deems
appropriate in connection with the exercise of Agent's rights.
19.3.4. BORROWER'S OBLIGATIONS. Upon the occurrence of
an Event of Default, Borrower shall, if Lenders so request,
assemble the Collateral and make it available to Agent at a
place or places to be designated by Agent, reasonably
convenient to Borrower.
19.3.5. SECURED PARTY RIGHTS. Upon an Event of
Default and acceleration of the Loan Obligations as provided
herein, and at any time and from time to time thereafter:
19.3.5.1. Each Lender may exercise any or all of
its rights under the Security Documents as a secured
party under the UCC and any other applicable Law; and
19.3.5.2. Agent may sell or otherwise dispose of
Collateral at public or private sale in a commercially
reasonable manner, which sale Agent may postpone from
time to time by announcement at the time and place of
sale stated in the notice of sale or by announcement at
any adjourned sale without being required to give a new
notice of sale, all as Agent deems advisable, for cash or
credit; provided, however, that any Lender may become the
purchaser at any such sale if permissible under
applicable Law and Agent may, in lieu of actual payment
of the purchase price, offset the amount thereof against
Borrower's obligations owing to such Lender; and Borrower
agrees that no Lender has any obligation to preserve
rights to Collateral against prior parties or to marshal
any Collateral for the benefit of any Person;
In connection with the advertising for sale, selling or
otherwise realizing upon any of the Collateral securing the
obligations of Borrower to Lenders, Agent may use and is
hereby granted a license to use, without charge or liability
to Agent therefor, any of Borrower's labels, trade names,
trademarks, trade secrets, service marks, patents, patent
applications, licenses, certificates of authority, advertising
materials, or any of Borrower's other properties or interests
in properties of similar nature, to the extent that such use
thereof is not prohibited by agreements under which Borrower
has rights therein, and all of Borrower's rights under
license, franchise and similar agreements shall inure to
Agent, for the ratable benefit of Lenders.
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19.3.6. MISCELLANEOUS. After the occurrence of an Event
of Default and at any time thereafter, Lenders may exercise
any other rights and remedies available to Lenders under the
Loan Documents or otherwise available to Lenders at law or in
equity.
19.3.7. APPLICATION OF FUNDS. Any funds received by
Lenders with respect to the Loan Obligations after any
acceleration, including but not limited to proceeds of
Collateral, shall be applied as follows: (i) first, to
reimburse Lenders pro rata for any amounts due to Lenders
under Sections 21.7 and 21.8; (ii) second, to the payment of
accrued and unpaid fees due hereunder and all other amounts
due hereunder (other than the Term Loan and interest accrued
thereon); (iii) third, to the payment of interest accrued on
the Term Loan; (iv) fourth, to the payment of the Term Loan,
pro rata among Lenders in such order as Agent determines in
its absolute discretion; and (v) fifth, to the payment of the
other Loan Obligations. Any remaining amounts shall be paid
to Borrower or such other Persons as shall be legally entitled
thereto.
19.4. LIMITATION OF LIABILITY; WAIVER. No Lender shall
be liable to Borrower as a result of any commercially reasonable
possession, repossession, collection or sale by such Lender of
Collateral; and Borrower hereby waives all rights of redemption
from any such sale and the benefit of all valuation, appraisal and
exemption laws. If a Lender seeks to take possession of any of the
Collateral by replevin or other court process, Borrower hereby
irrevocably waives (i) the posting of any bonds, surety and
security relating thereto required by any statute, court rule or
otherwise as an incident to such possession, (ii) any demand for
possession of the Collateral prior to the commencement of any suit
or action to recover possession thereof, (iii) any requirement that
such Lender retain possession and not dispose of any Collateral
until after trial or final judgment, and (iv) to the extent
permitted by applicable law, all rights to notice and hearing prior
to the exercise by such Lender of such Lender's right to repossess
the Collateral without judicial process or to replevy, attach or
levy upon the Collateral without notice or hearing. No Lender
shall have any obligation to preserve rights to the Collateral or
to marshall any Collateral for the benefit of any Person.
19.5. NOTICE. Any notice of intended action required to
be given by a Lender (including but not limited to notice of a
public or private sale of Collateral), if given as provided in
Section 21.1 at least 10 days prior to such proposed action, shall
be effective and constitute reasonable and fair notice to Borrower.
20. THE AGENT.
20.1. APPOINTMENT. The Boatmen's National Bank of St.
Louis is hereby appointed Agent hereunder and under each of the
other Loan Documents, and each of the Lenders irrevocably
authorizes the Agent to act as the Agent of such Lender. The Agent
agrees to act as such upon the express conditions contained in this
Section 20. The Agent shall not have any duties or
responsibilities except those expressly set forth in the Loan
Documents, nor any fiduciary relationship with any Lender, and no
implied covenants, functions, duties, responsibilities, obligations
or liabilities shall be read into the Loan Documents or otherwise
exist against the Agent by reason of this Agreement.
20.2. POWERS. The Agent shall have and may exercise such
powers hereunder as are specifically delegated to the Agent by the
terms hereof, together with such powers as are reasonably
incidental thereto. The Agent shall have no implied duties to the
Lenders, or any obligation to the Lenders to take any action
hereunder except action specifically provided by this Agreement to
be taken by the Agent.
20.3. GENERAL IMMUNITY OF AGENT. Neither the Agent nor
any of its directors, officers, agents, or employees shall be
liable to any Lender for any act or failure to act with respect to
Agent's duties hereunder that does not constitute gross negligence
or willful misconduct.
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20.4. NO RESPONSIBILITY FOR LOANS, RECITALS, ETC. The
Agent and its directors, officers, agents, and employees shall not
be responsible to the Lenders for any recitals, reports,
statements, warranties or representations herein or in any Loan
Document or be bound to ascertain or inquire as to the performance
or observance of any of the terms of this Agreement.
20.5. ACTION ON INSTRUCTIONS OF LENDERS. The Agent and
its directors, officers, agents, and employees shall in all cases
be fully protected in acting, or in refraining from acting,
hereunder in accordance with written instructions executed by the
Lenders, and such instructions and any act or failure to act
pursuant thereto shall be binding on all of the Lenders and on all
holders of Notes.
20.6. EMPLOYMENT OF AGENTS AND COUNSEL. The Agent may
execute any of its duties as Agent hereunder by or through
employees, agents, and attorneys-in-fact and shall not be
answerable to the Lenders, except as to money or securities
received by it or its authorized agents, for the default or
misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. The Agent shall be entitled to advice of
counsel concerning all matters pertaining to the agency hereby
created and its duties hereunder.
20.7. RELIANCE ON DOCUMENTS; COUNSEL. The Agent shall be
entitled to rely upon any notice, consent, certificate, affidavit,
letter, telegram, statement, paper or document believed by it to be
genuine and correct and to have been signed or sent by the proper
person or persons, and, in respect to legal matters, upon the
opinion of counsel selected by the Agent, which counsel may be
employees of the Agent.
20.8. AGENT'S REIMBURSEMENT AND INDEMNIFICATION. The
Lenders agree to reimburse and indemnify the Agent ratably in
proportion to their respective shares of the Term Commitment (i)
for any amounts not reimbursed by Borrower for which the Agent is
entitled to reimbursement by Borrower under the Loan Documents
(other than any Agent's fee payable by Borrower to the Agent and
fees incurred by Agent for its legal counsel and expenses advanced
by Agent's legal counsel in connection with the preparation and
negotiation of the Loan Documents and the closing of the
transactions contemplated hereby), (ii) for any other expenses
incurred by the Agent on behalf of the Lenders, in connection with
the enforcement of the Loan Documents, and (iii) for any
liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted
against the Agent in any way relating to or arising out of this
Agreement or any other document delivered in connection with this
Agreement or the transactions contemplated hereby or the
enforcement of any of the terms hereof or of any such other
documents; provided, however, that no Lender shall be liable for
any of the foregoing to the extent arising from any act or failure
to act of Agent that constitutes gross negligence or willful
misconduct with respect to its duties as Agent.
20.9. RIGHTS AS A LENDER. Agent shall have the same
rights and powers hereunder as any Lender and may exercise the same
as though it were not the Agent, and the term "Lender" or "Lenders"
shall, unless the context otherwise indicates, include the Agent in
its individual capacity. The Agent may accept deposits from, lend
money to, and generally engage in any kind of banking or trust
business with Borrower or any Subsidiary as if it were not the
Agent.
20.10. INDEPENDENT CREDIT DECISIONS. EACH LENDER
ACKNOWLEDGES THAT IT HAS, INDEPENDENTLY AND WITHOUT RELIANCE UPON
THE AGENT OR ANY OTHER LENDER AND BASED ON THE FINANCIAL STATEMENTS
PREPARED BY BORROWER AND SUCH OTHER DOCUMENTS AND INFORMATION AS IT
HAS DEEMED APPROPRIATE, MADE ITS OWN CREDIT ANALYSIS AND DECISION
TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS. EACH
LENDER ALSO ACKNOWLEDGES THAT IT WILL, INDEPENDENTLY AND WITHOUT
RELIANCE UPON THE AGENT OR ANY OTHER LENDER AND BASED ON SUCH
DOCUMENTS AND INFORMATION AS IT SHALL DEEM APPROPRIATE AT THE TIME,
CONTINUE TO MAKE ITS OWN
35
<PAGE> 48
CREDIT DECISIONS IN TAKING OR NOT TAKING ACTION UNDER THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
20.11. SUCCESSOR AGENT. The Agent may resign at any time
by giving written notice thereof to the Lenders and Borrower. At
the time of such resignation, Agent shall have the right to assign
its rights and delegate its associated obligations under the Loan
Documents to one or more other financial institutions. In the
event that Agent decides to make any such assignment, so long as no
Default or Event of Default has occurred and is continuing, such
assignment shall be made with the written consent of Borrower,
which consent shall not be unreasonably withheld; otherwise, Agent
will send written notification to Borrower of the assignment. If
Agent resigns without assigning its rights and delegating its
associated obligations under the Loan Documents, then the Lenders
shall have the right to appoint, on behalf of Borrower and the
Lenders, a successor Agent. If no successor Agent shall have been
so appointed by the Lenders and shall have accepted such
appointment within thirty days after the retiring Agent's giving
notice of resignation, then the retiring Agent may appoint, on
behalf of Borrower and the Lenders, a successor Agent. Such
successor Agent shall be a commercial bank having capital and
retained earnings of at least $250,000,000. The Agent's
resignation shall not be effective until a successor Agent has been
appointed and accepts such appointment. Upon a successor Agent's
acceptance of its appointment, such successor Agent shall succeed
to and become vested with all the rights, powers, privileges and
duties of the resigning Agent, and the resigning Agent shall be
discharged from its duties and obligations as Agent hereunder.
After the resignation of the Agent, the provisions of this Section
20 shall continue in effect for the resigning Agent's benefit in
respect of any act or failure to act while it was Agent hereunder.
20.12. NOTIFICATION OF LENDERS. Each Lender agrees to use
its good faith efforts, upon becoming aware of anything which would
likely have a Material Adverse Effect, to promptly notify the other
Lenders thereof. The Agent shall promptly deliver to each Lender
copies of every written notice, demand, report (including any
financial report), or other writing which the Agent gives to or
receives from Borrower and which itself constitutes, or which
contains information about, something that would likely have a
Material Adverse Effect with respect to Borrower's indebtedness to
such Lender hereunder. The Agent and its directors, officers,
agents, and employees shall have no liability to any Lender for
failure to deliver any such item to such Lender unless the failure
constitutes gross negligence or willful misconduct.
20.13. NO KNOWLEDGE OF DEFAULT. The Agent shall not be
deemed to have knowledge of any Default or Event of Default unless
the Agent has received written notice thereof from a Lender or
Borrower referring to this Agreement and describing such Default or
Event of Default, or the Agent otherwise has actual knowledge
thereof. If the Agent receives such notice or otherwise acquires
such actual knowledge, the Agent shall notify the Lenders of the
same, solicit advice from the Lenders as to the appropriate course
of action, and take such action (including but not limited to
actions contemplated by Section 19.3) as is directed by the
Lenders; provided, however, that unless and until the Agent has
received such directions, the Agent may at its option take such
actions as it deems appropriate without the direction of the
Lenders in circumstances where the ability of the Lenders to
recover the Loan Obligations may otherwise be materially impaired.
20.14. COLLECTIONS AND DISTRIBUTIONS TO LENDERS BY AGENT.
All interest, fees, and payments of principal received by Agent for
the account of Lenders shall be distributed by Agent to Lenders in
accordance with their ratable shares of the Term Commitment. All
amounts received by any Lender on account of the Loan Obligations
shall be paid promptly to Agent for distribution to Lenders in
accordance with their ratable shares. On the same Business Day
when amounts received by Agent must be applied to the Loan
Obligations as provided in Section 5.3.2, Agent shall distribute to
each Lender its ratable share thereof. Such distributions shall be
made to the offices of the Lenders as listed in Exhibit 2.
21. MISCELLANEOUS.
36
<PAGE> 49
21.1. 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 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 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 in any instance shall entitle Borrower to notice
or demand in any other instance.
21.2. AMENDMENTS, WAIVERS AND CONSENTS. No amendment to,
waiver of, or departure from full compliance with any provision of
this Agreement, or of any of the other Loan Documents, or 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 all Lenders; provided, however, that any such
waiver or consent shall be effective only in the specific instance
and for the purpose for which given. No failure by Lenders to
exercise, and no delay by Agent or Lenders in exercising, any
right, remedy, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise by Lenders
or Agent of any right, remedy, power or privilege hereunder
preclude any other exercise thereof, or the exercise of any other
right, remedy, power or privilege.
21.3. RIGHTS NOT EXCLUSIVE. Every right granted to
Lenders hereunder or under any other Loan Document or allowed to it
at law or in equity shall be deemed cumulative and may be exercised
from time to time.
21.4. 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 Notes and
other Loan Documents and the making of the Term Advance. All
agreements, obligations and liabilities of Borrower under this
Agreement concerning the payment of money to Lenders or to Agent
for the ratable benefit of Lenders, including but not limited to
Borrower's obligations under Sections 21.7 and 21.8, but excluding
the obligation to repay the Term Loan and interest accrued thereon,
shall survive the repayment in full of the Term Loan and interest
accrued thereon and the return of the Notes to Borrower.
21.5. SUCCESSORS AND ASSIGNS. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and all
future holders of the Notes 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 the Lenders. Each Lender shall have the
right to assign its rights under the Loan Documents to any Federal
Reserve Bank, but without delegation of such Lender's obligations
thereunder. Each Lender shall have the right to assign its rights
and to delegate its obligations under the Loan Documents, but such
assignment and delegation should not relieve the assigning and
delegating Lender from its obligations hereunder.
21.6. PARTICIPATIONS. Each Lender may in the ordinary
course of its commercial banking business and in accordance with
applicable law grant participations to one or more banks or other
financial institutions in the Term Loan, but if the nature of any
such participation is such that such Lender will not retain the
sole authority to amend the Loan Agreement and other Loan Documents
and to declare or waive defaults and pursue or not pursue
collection after a default, then the prior consent of Borrower to
such participation shall be required. For this purpose, such
Lender may disclose to a potential or actual participant any
information supplied to such Lender by or on behalf of Borrower or
Agent. In the event of the granting of any such participation by
a Lender, (i) such Lender's obligations hereunder shall remain
unchanged, (ii) such Lender shall remain solely responsible to
Borrower for the performance of such obligations, (iii) such Lender
shall remain the holder of its Note for all purposes under the Loan
Documents, (iv) Borrower may continue to deal solely and directly
with such Lender in connection with such Lender's rights and
obligations under the Loan Documents. Borrower hereby acknowledges
and agrees that every such participant has the same right of set-
off as does such Lender under Section 19.3.2; provided, however,
that all amounts received by any such participant through the
exercise of the right of set-off in excess of its share
37
<PAGE> 50
of the Term Loan as a participant shall be remitted to Agent for
ratable distribution to all Lenders. Every such participation shall
be evidenced by a written assignment or participation agreement that
contains provisions binding on the participant that will fully
effectuate all of the foregoing.
21.7. PAYMENT OF EXPENSES. Borrower agrees to pay or
reimburse each Lender for its reasonable costs and expenses
incurred in connection with the negotiation and preparation of the
Loan Documents, including but not limited to all fees incurred by
such Lender for its legal counsel and expenses advanced by such
Lender's legal counsel; provided, however, that Borrower's
obligations to pay such legal fees and advances shall not exceed
$35,000. Further, if at any time or times hereafter a Lender
engages legal counsel for advice or other representation to enforce
the rights of Agent or such Lender against Borrower under the Loan
Documents upon the occurrence of an Event of Default, or in
connection with amendment of any of the Loan Documents at the
request of Borrower or as a consequence of a Default or Event or
Default, then all reasonable fees and all expenses advanced of such
legal counsel and all litigation costs, including costs incurred as
a consequence of any proceedings involving Borrower under the
federal bankruptcy Code (if any) shall constitute a part of the
Loan Obligations and be payable on demand.
21.8. INDEMNITY. Borrower shall pay, indemnify and hold
harmless each 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, without limitation, reasonable attorneys' fees
and disbursements and amounts paid in settlement) (the "Indemnified
Liabilities") 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 and 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 (each a "Triggering Event"); provided, however, that
Borrower shall have no obligation to indemnify the Indemnified
Parties hereunder with respect to any Indemnified Liabilities
arising from the gross negligence, bad faith or willful misconduct
of any of the Indemnified Parties or with respect to any
controversy solely between Lenders. Borrower shall pay, 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
(including, without limitations, reasonable attorneys' fees and
disbursements and amounts paid in settlement) incurred, paid or
sustained by the Indemnified Parties as a result of the release of
any Hazardous Waste on or affecting any of the Collateral, directly
or indirectly.
21.9. CHANGE IN ACCOUNTING PRINCIPLES. If Borrower, at
the end of its fiscal year and with the concurrence of its
independent certified public accountants, changes the method of
valuing the Inventory of Borrower, or if any other changes in
accounting principles from those used in the preparation of any of
the Financial Statements are required by or result from the
promulgation of principles, rules, regulations, guidelines,
pronouncements or opinions by the Financial Accounting Standards
Board, the American Institute of Certified Public Accountants or
the Securities and Exchange Commission (or successors thereto or
bodies with similar functions), and any of such changes result in
a change in the method of calculation of, or affect the results of
such calculation of, any of the financial covenants, standards or
terms found herein, then the parties hereto agree to enter into and
diligently pursue negotiations in order to amend such financial
covenants, standards or terms so as to equitably reflect such
changes, with the desired result that the criteria for evaluating
the financial condition and results of operations of Borrower shall
be the same after such changes as if such changes had not been
made; provided, however, that until such changes are made, all
financial covenants herein and all the provisions hereof which
contemplate financial calculation hereunder shall remain in full
force and effect.
21.10. LOAN RECORDS. The date and amount of all advances
to Borrower and payments of amounts due from Borrower under the
Loan Documents will be recorded in the records that each Lender
normally maintains for such types of transactions. The failure to
record, or any error in recording, any of the foregoing shall not,
38
<PAGE> 51
however, affect the obligation of Borrower to repay the Term Loan
and other amounts payable under the Loan Documents. Borrower shall
have the burden of proving that each Lender's records are not
correct.
21.11. 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.
21.12. 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.
21.13. GOVERNING LAW; NO THIRD PARTY RIGHTS. This
Agreement, the other Loan Documents and the Notes 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. 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.
21.14. CAPTIONS. 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.
21.15. 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.
21.16. 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.
39
<PAGE> 52
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 MID-AMERICA, INC. THE BOATMEN'S NATIONAL BANK OF ST.
LOUIS
By: ----------------------------- By: -------------------------------
Name: --------------------------- Name: -----------------------------
Title: -------------------------- Title: ----------------------------
Notice Address: Notice Address:
17988 Edison Avenue One Boatmen's Plaza
Chesterfield, Missouri 63005-3700 800 Market Street
FAX: (314-537-1214) St. Louis, MO 63101
TEL: (314-532-6137) FAX: (314-466-7783)
Attention: Joseph F. Olson TEL: (314-466-7630)
Vice President-Finance and Attention: Christy B. Goudy
Administration
MARK TWAIN BANK
By: -----------------------------
Name: ---------------------------
Title: --------------------------
Notice Address:
1795 Clarkson Road
Chesterfield, Missouri 63017-4975
FAX: (314-532-0140)
TEL: (314-532-5800)
Attention: Dan Narzinski
40
<PAGE> 53
"GUARANTORS"
AFFHOLDER, INC. INSITUFORM ROCKIES, INC.
By: ----------------------------- By: -------------------------------
Name: --------------------------- Name: -----------------------------
Title: -------------------------- Title: ----------------------------
INSITUFORM CENTRAL, INC. INSITUFORM TEXARK, INC.
By: ----------------------------- By: -------------------------------
Name: --------------------------- Name: -----------------------------
Title: -------------------------- Title: ----------------------------
INSITUFORM MISSOURI, INC. PALTEM SYSTEMS, INC.
By: ----------------------------- By: -------------------------------
Name: --------------------------- Name: -----------------------------
Title: -------------------------- Title: ----------------------------
INSITUFORM NORTH, INC. UNITED PIPELINE SYSTEMS USA, INC.
By: ----------------------------- By: -------------------------------
Name: --------------------------- Name: -----------------------------
Title: -------------------------- Title: ----------------------------
INSITUFORM PLAINS, INC. INSITUFORM DE PUERTO RICO, INC.
By: ----------------------------- By: -------------------------------
Name: --------------------------- Name: -----------------------------
Title: -------------------------- Title: ----------------------------
<PAGE> 54
<TABLE>
EXHIBIT 2
---------
<CAPTION>
Lender Term Commitment Pro Rata Share
- ------ --------------- --------------
<S> <C> <C>
The Boatmen's National
Bank of St. Louis $10,250,000.00 67.2131%
Mark Twain Bank $5,000,000.00 32.7869%
</TABLE>
<PAGE> 55
EXHIBIT 9.2
-----------
REAL PROPERTY COLLATERAL
MISSOURI REAL PROPERTY COLLATERAL:
- ---------------------------------
Parcel 1 - From Insituform Mid-America, Inc.:
- --------------------------------------------
Lot A of the Subdivision of Lot 3 of SPIRIT WEST INDUSTRIAL AIR
PARK SUBDIVISION PLAT, as per plat thereof recorded in Plat Book
222 page 39 of the St. Louis County Records. Less and Excepting
that portion conveyed to St. Louis County, Missouri by deed
recorded in Book 8189, page 203.
commonly known as 17988 Edison
Parcel 2 - From Affholder, Inc.:
- -------------------------------
A tract of land in St. Louis Air Park, a Subdivision in St. Louis
County, Missouri, according to the plat thereof recorded in Plat
Book 107 page 42 of the St. Louis County Recorder's Office, and
described as follows: Beginning at the intersection of the West
line of Goddard Avenue, a 60 foot wide easement, with the South
line of Edison Avenue, a 60 foot wide easement; thence South 11
degrees 39 minutes East along the West line of Goddard Avenue 366
feet to a point; thence South 78 degrees 21 minutes West 275 feet
to a point; thence North 11 degrees 39 minutes West 366 feet to the
South line of Edison Avenue and thence North 78 degrees 21 minutes
East along said South line 275 feet to the point of beginning.
18022 Edison Ave.
COLORADO REAL PROPERTY COLLATERAL:
- ---------------------------------
Lot 7B1 of BODO BUSINESS RANCHES, UNIT III, LOT 7B, MINOR EXEMPTION
SUBDIVISION PROJECT NO. 92-226, according to the plat thereof filed
for record March 3, 1993 as Reception No. 642804, also being
described as:
A tract of land lying and being within Lot 7B of BODO BUSINESS
RANCHES, UNIT III, according to the plat thereof filed for record
October 14, 1977 as Reception No. 413846 and being more
particularly described as follows:
BEGINNING at the Northwesterly corner of said Lot 7B and the
Southerly right of way of Turner Drive:
Thence: along the arch of a non-tangent curve to the left with a
delta angle of 46 degrees 38' 30" and a radius of 754.20 feet
for a distance of 504.23 feet the long chord bears South
81 degrees 01' 38" East, 494.89 feet along the southerly right
of way of Turner Drive;
Thence South 15 degrees 44' 15" East, 235.55 feet;
Thence South 57 degrees 02' 00" West, 244.40 feet;
Thence North 73 degrees 20' 00" West, 233.40 feet;
Thence North 50 degrees 40' 00" West, 289.50 feet;
Thence North 28 degrees 10' 00" East, 211.51 feet to the point of
beginning.
TEXAS REAL PROPERTY COLLATERAL:
- ------------------------------
Being Lot 2, in Block 1, of "DURABLE, INC.", an Addition to the
City of Grand Prairie, Dallas County, Texas, according to the Map
thereof recorded in Volume 85082, Page 2866, of the Deed Records of
Dallas County, Texas.
<PAGE> 56
EXHIBIT 12.1
------------
DOCUMENT AND REQUIREMENTS LIST
1. Acquisition Documents between Borrower and ENVIROQ and all
schedules and exhibits thereto.
2. Loan Agreement with all exhibits, including form of Compliance
Certificate.
3. Term Note to Boatmen's.
4. Term Note to Mark Twain.
5. Deed of Trust from Insituform Mid-America, Inc. on Missouri
Real Property Collateral located at 17988 Edison Avenue,
Chesterfield, Missouri.
6. Deed of Trust from Affholder, Inc. on Missouri Real Property
Collateral located at 18022 Edison Avenue, Chesterfield,
Missouri.
7. Deed of Trust on Colorado Real Property Collateral.
8. Deed of Trust on Texas Real Property Collateral.
9. Stock Pledge Agreement.
10. Stock Certificates.
11. Stock powers, executed in blank.
12. Copies of the Guaranties of the Guarantors.
13. Rights Assignment.
14. Consent to Rights Assignment.
15. Security Agreement signed by Borrower and each Guarantor,
covering all UCC personal property of Borrower (other than
rolling stock).
16. UCC Financing Statements:
16.1. Missouri Secretary of State against Insituform Mid-
America, Inc.;
16.2. St. Louis County, Missouri against Insituform Mid-
America, Inc.;
16.3. Missouri Secretary of State against Affholder,
Inc.;
16.4. St. Louis County, Missouri against Affholder, Inc.;
16.5. Colorado Secretary of State against United Pipeline
Systems USA, Inc.;
16.6. La Plata County, Colorado against United Pipeline
Systems USA, Inc.;
16.7. Texas Secretary of State against Insituform Texark,
Inc.; and
16.8. Dallas County, Texas against Insituform Texark,
Inc.
17. UCC Termination Statements of the following UCC financing
statements with respect to Borrower:
i
<PAGE> 57
None
18. UCC Termination Statements of the following UCC financing
statements with respect to Affholder, Inc. (if applicable):
18.1. UCC Financing Statement No. 781230, filed with the
Secretary of State of Missouri, in favor of Mark
Twain Bank
19. UCC Termination Statements of the following UCC financing
statements with respect to United Pipeline Systems, USA, Inc.
(if applicable):
19.1. UCC Financing Statement No. 902080416, filed with
the Secretary of State of Colorado, in favor of
Redburn Tire Company.
20. UCC Termination Statements of the following UCC financing
statements with respect to Insituform Texark, Inc. (if
applicable):
None
21. Releases of the following documents relating to the Missouri
Real Property Collateral (if applicable):
None
22. Releases of the following documents relating to the Colorado
Real Property Collateral (if applicable):
None
23. Releases of the following documents relating to the Texas Real
Property Collateral (if applicable):
23.1. Lis Pendens filed 9/22/92, recorded in Volume
92185, Page 3838, Miscellaneous Records of Dallas
County, Texas;
23.2. Abstract of Judgment in favor of Eugene Hasten
Commercial Real Estate against Theodore M. Walters
in the amount of $31,691.14, plus interest, court
costs and attorney's fees, if any, filed 7/26/93,
recorded in Volume 93143, Page 2712, Abstract of
Judgment Records of Dallas County, Texas.
23.3. Deed of Trust from Theodore M. Walters and wife,
Mildred R. Walters to Neil J. Orleans, Trustee,
dated effective 6/3/88, filed 11/16/92, recorded in
Volume 92224, Page 1629, Deed of Trust Records of
Dallas County, Texas, securing a note in the sum of
$300,000, payable to First City, Texas - Dallas,
successor-in-interest by merger to First City
National Bank in Grand Prairie, and securing other
indebtedness as described therein, if any. Being a
refile and correction of Deed of Trust recorded in
Volume 88111, Page 4087 and Volume 88160, Page
2187, Deed of Trust Records of Dallas County,
Texas. As affected by a release recorded in Volume
93184, Page 1341, Deed Records of Dallas County,
Texas.
24. Warehousemen/bailee letters with respect to Personal Property
Collateral.
25. Closing Certificate of Borrower, signed by the Chairman,
President or Vice President-Finance and Administration of
Borrower, addressed to Lenders and dated as of the Closing
Date, to the effect that: (i)
ii
<PAGE> 58
all representations and warranties of Borrower contained in the
Loan Documents or otherwise made in writing to Lenders in
connection therewith by or on behalf of Borrower are true and
correct in all material respects; (ii) all of the conditions to
the making of the Term Loan that have not been waived by Lenders
have been satisfied; (iii) the Loan Agreement has been duly
authorized by Borrower's Board of Directors; (iv) there has been
no Material Adverse Change since the date of the Initial
Financial Statements; (v) no consents are necessary from any
third parties for Borrower's execution, delivery or
performance of the Loan Agreement; (vi) the Loan Documents
constitute the legal, valid and binding obligations of
Borrower enforceable against Borrower in accordance with their
terms except as the enforcement thereof may be limited by
bankruptcy, insolvency or other laws related to creditors
rights generally or by the application of equity principles;
(vii) after giving effect to the execution and delivery of the
Loan Documents and the making of the Term Loan, no covenant of
Borrower in the Loan Documents will have been breached; and
(viii) there are no pending Material Proceedings.
26. Opinion of Borrower's Counsel covering such matters as Agent
may reasonably require.
27. Certificates of Insurance for Borrower containing summaries of
the types of coverage, names of the respective insurers,
limits of coverage, and expiration dates, and reflecting that
Agent is an additional insured on public liability policies
and that proceeds on casualty policies for the Missouri Real
Property Collateral, the Colorado Real Property Collateral and
the Texas Real Property Collateral are payable to Borrower and
Agent, as their interests appear.
28. Copies of all insurance policies; and Loss Payable
Endorsements on casualty policies in favor of Agent that
contain required lender loss payee and mortgagee provisions.
29. The Initial Financial Statements.
30. Title search regarding the Missouri Real Property Collateral.
31. Title search regarding the Colorado Real Property Collateral.
32. Title search regarding the Texas Real Property Collateral.
33. Commitment for issuance to Boatmen's, as Agent by a title
insurer acceptable to Lenders of a Policy of Mortgagee's Title
Insurance that (i) will insure that title to the Missouri Real
Property Collateral is vested in Borrower as owner and that
Agent has a valid first mortgage lien thereon subject only to
Permitted Security Interests applicable to the Missouri Real
Property Collateral that exist on the effective date of the
Loan Agreement and without exceptions other than taxes for the
current year which are not delinquent and such other
exceptions as are approved by Lenders in their sole
discretion; and (ii) will be in current standard ALTA loan
policy form with the following endorsements: (a) lender's
comprehensive, (b) variable rate, (c) future advances, (d)
zoning (land and improvements), (e) survey, (f) contiguity,
and others as Lenders deem necessary.
34. Commitment for issuance to Boatmen's, as Agent by a title
insurer acceptable to Lenders of a Policy of Mortgagee's Title
Insurance that (i) will insure that title to the Colorado Real
Property Collateral is vested in United Pipeline Systems, USA,
Inc., as owner and that Agent has a valid first mortgage lien
thereon subject only to Permitted Security Interests
applicable to the Colorado Real Property Collateral, as
appropriate, that exist on the effective date of the Loan
Agreement and without exceptions other than taxes for the
current year which are not delinquent and such other
exceptions as are approved by Lenders in their sole
discretion; and (ii) will be in current standard ALTA loan
policy form with the following
iii
<PAGE> 59
endorsements: (a) lender's comprehensive, (b) variable rate, (c)
future advances, (d) zoning (land and improvements), (e)
contiguity, and others as Lenders deem necessary.
35. Commitment for issuance to Boatmen's, as Agent by a title
insurer acceptable to Lenders of a Policy of Mortgagee's Title
Insurance that (i) will insure that title to the Texas Real
Property Collateral is vested in Insituform Texark, Inc., as
owner and that Agent has a valid first mortgage lien thereon
subject only to Permitted Security Interests applicable to the
Texas Real Property Collateral, as appropriate, that exist on
the effective date of the Loan Agreement and without
exceptions other than taxes for the current year which are not
delinquent and such other exceptions as are approved by
Lenders in their sole discretion; and (ii) will be in current
standard ALTA loan policy form with the following
endorsements: (a) lender's comprehensive, (b) variable rate,
(c) future advances, (d) zoning (land and improvements), (e)
contiguity, and others as Lenders deem necessary.
36. Copies of documentation supporting title commitment exceptions
with respect to each parcel of Real Property Collateral.
37. ALTA Survey of Missouri Real Property Collateral that is
sufficient for title insurance commitments to contain no
exceptions related to the survey.
38. ALTA Surveys of Colorado Real Property Collateral and Texas
Real Property Collateral that are sufficient for title
insurance commitments to contain no exceptions related to the
survey. (waived)
39. Flood letter on the Missouri Real Property Collateral (or
certification on survey).
40. Written appraisal of the Missouri Real Property Collateral, in
form and substance and performed by an independent MAI
appraiser satisfactory to Lenders in their sole discretion.
41. Written appraisals of the Colorado Real Property Collateral
and the Texas Real Property Collateral, in form and substance
and performed by an independent MAI appraiser satisfactory to
Lenders in their sole discretion. (waived)
42. Instruction Letter to issuer of title insurance commitments
regarding the Real Property Collateral (regarding the
recording of the Deeds of Trust, recording of UCC-1s and the
issuance of the Mortgagee's title insurance policies with
respect to each parcel of the Real Property Collateral).
43. Additional documents required by title insurer for issuance of
mortgagee's title insurance policies covering the Real
Property Collateral:
43.1. 17988 Edison Avenue:
-------------------
43.1.1. Mortgagor's Affidavit.
43.2. 18022 Edison Avenue:
-------------------
43.2.1. Mortgagor's Affidavit.
43.3. Colorado Real Property Collateral:
---------------------------------
43.3.1. Indemnity Agreement;
43.3.2. Builder's or Contractor's Affidavit; and
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<PAGE> 60
43.3.3. Construction Lender's Affidavit.
43.4. Texas Real Property Collateral:
------------------------------
43.4.1. Grantor's Affidavit.
44. Phase I Environmental Reports on the Real Property Collateral.
(waived)
45. Copies of the following which pertain to any facility leased
or otherwise occupied by any Covered Person and which are
dated within four years before the Closing Date and which
might reasonably involve a liability or an expense in excess
of $50,000:
(i) notices from any Governmental Authority of spills or
releases of Hazardous Waste;
(ii) reports from any Governmental authority regarding claims,
lawsuits, findings of liability, notices of violations,
assessments of damages or responsibility or other similar
reports pertaining to Hazardous Wastes or any other
environmental matters; and
(iii) remediation plans regarding any of the foregoing and the
responses of Governmental Authorities thereto.
46. Secretary's Certificate for Borrower with certified
Certificate of Incorporation, Bylaws, Resolutions, and
Incumbency Statement.
47. Secretary's Certificate for each of the following with
certified Certificate or Articles of Incorporation, Bylaws,
Resolutions, and Incumbency Statement:
47.1. Affholder, Inc.;
47.2. Insituform Central, Inc.;
47.3. Insituform Missouri, Inc.;
47.4. Insituform North, Inc.;
47.5. Insituform Plains, Inc.;
47.6. Insituform de Puerto Rico, Inc.;
47.7. Insituform Rockies, Inc.;
47.8. Insituform Texark, Inc.;
47.9. PALTEM Systems, Inc.;
47.10. United Pipeline Systems USA, Inc.; and
47.11. United Pipeline Systems, Inc.
48. Good Standing Certificate for Borrower from the Secretary of
State of the States of Delaware and Missouri.
49. Good Standing Certificate for Affholder, Inc. from the
Secretary of State of Missouri.
50. Good Standing Certificate for each of the following from their
respective jurisdiction of incorporation:
50.1. Affholder, Inc.;
50.2. Insituform Central, Inc.;
50.3. Insituform Missouri, Inc.;
50.4. Insituform North, Inc.;
50.5. Insituform Plains, Inc.;
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<PAGE> 61
50.6. Insituform de Puerto Rico, Inc.;
50.7. Insituform Rockies, Inc.;
50.8. Insituform Texark, Inc.;
50.9. PALTEM Systems, Inc.;
50.10. United Pipeline Systems USA, Inc.; and
50.11. United Pipeline Systems, Inc.
51. Copies of all consents, licenses and approvals, if any,
obtained by Borrower in connection with the execution,
performance, and enforceability of the Loan Documents.
52. Tax and Judgment Lien Search Reports of filings against
Borrower.
53. UCC Search Reports of filings against Borrower with the
Missouri Secretary of State and in St. Louis County, Missouri;
54. UCC Search Reports of filings against United Pipeline Systems,
USA, Inc. with the Colorado Secretary of State and in La Plata
County, Colorado;
55. UCC Search Reports of filings against Insituform Texark, Inc.
with the Texas Secretary of State and in Dallas County, Texas;
56. Such other documents, reports and information as Lender's
counsel deems reasonable and necessary.
57. Payment of all commitment fees and other amounts due on the
Execution Date.
58. Payment of Lewis, Rice & Fingersh invoice.
59. Such other documents, instruments or certificates as Lenders
may require.
vi
<PAGE> 62
EXHIBIT 13
----------
DISCLOSURE SCHEDULE OF BORROWER
<PAGE> 63
EXHIBIT 13.28
-------------
REAL ESTATE; LEASES
<PAGE> 64
EXHIBIT 13.30
-------------
PLACES OF BUSINESS; LOCATIONS OF COLLATERAL
<PAGE> 65
EXHIBIT 13.34
-------------
SUBSIDIARIES AND AFFILIATES
<PAGE> 66
EXHIBIT 15.5
------------
INSURANCE REQUIREMENTS
Each Covered Person shall at all times carry insurance, in
insurance companies having a rating of at least "A" by Best's
Rating Service, 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. All policies of liability insurance
maintained hereunder shall name Lenders as additional insureds; all
fire and casualty policies of insurance maintained hereunder shall
reflect Lenders' interest therein as mortgagee under a standard New
York or Union mortgagee clause. Agent is authorized, but not
obligated, as the attorney-in-fact for Borrower, (i) prior to the
occurrence of an Event of Default with Borrower's consent (which
consent shall not be unreasonably withheld), and, upon the
occurrence of an Event of Default, without Borrower's consent, to
adjust and compromise proceeds payable under such policies of
insurance, (ii) to collect, receive and give receipts for such
proceeds in the name of Borrower and Lender, and (iii) to endorse
Borrower's name upon any instrument in payment thereof. Such power
granted to Agent shall be deemed coupled with an interest and shall
be irrevocable. All policies of insurance maintained hereunder
shall contain a clause providing that such policies may not be
canceled, reduced in coverage or otherwise modified without 30
days' prior written notice to Agent. Borrower shall upon request
of Agent at any time furnish updated Evidence of Insurance (in the
form required as a condition to Lenders lending hereunder) for such
insurance to Agent.
<PAGE> 67
EXHIBIT 15.13
-------------
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 -------------, 1995 (as the same
may be amended, restated or otherwise modified from time to time,
the "Loan Agreement"), among Insituform Mid-America, Inc.
("Borrower"), The Boatmen's National Bank of St. Louis, as agent
("Agent") and The Boatmen's National Bank of St. Louis and Mark
Twain Bank, as lenders (individually a "Lender" and collectively
"Lenders"). 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
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 an Default or
Event of Default as of the date of this Compliance
Certificate; and to my knowledge all of the
representations and warranties of Borrower contained in
the Loan Agreement and other Loan Documents are true and
correct in all material respects.
4. [Use for annual financial statements: Schedule I attached
hereto contains the Financial Statements for Borrower for
the fiscal year ended September 30, ----------, 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 financial statements: 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).]
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 18, 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> 68
SCHEDULE 1
FINANCIAL STATEMENTS
<PAGE> 69
SCHEDULE I TO COMPLIANCE CERTIFICATE
------------------------------------
See current Financial Statements.
<PAGE> 70
SCHEDULE II TO COMPLIANCE CERTIFICATE
-------------------------------------
The following calculations are made in accordance with the
provisions of the Agreement and are based on the fiscal quarter
ended ---------------:
<TABLE>
SECTION 18 FINANCIAL MEASUREMENTS
<S> <C>
I. MINIMUM TANGIBLE NET WORTH (SECTION 18.1.1)
-------------------------------------------
A. Total Assets $--------------
B. 1. Patents $--------------
2. Copyrights $--------------
3. Trademarks and tradenames $--------------
4. Franchises $--------------
5. License Agreements $--------------
6. Goodwill $--------------
7. Other intangible assets (specify) $--------------
8. Unamortized debt discount and expense $--------------
9. Write-up in value of fixed assets $--------------
10. Sum of I.B.1 through I.B.9 $--------------
C. Tangible Assets (Item I.A minus item I.B.10) $--------------
D. Depreciation, obsolescence, amortization
and similar reserves with respect to item I.B.10 $--------------
E. Total Liabilities $--------------
F. Tangible Net Worth (Item I.C minus Items I.D and I.E) $--------------
G. Cumulative Net Income (exclusive of losses)
since September 30, 1994 $--------------
H. Item I.G multiplied by 50% $--------------
I. Tangible Net Worth: $27,000,000 plus
50% of Net Income since September 30 1994
($27,000,000 plus Item I.H) $--------------
J. Minimum Tangible Net Worth permitted by
Section 18.1.1 $27,000,000, plus 50% of
cumulative Net Income
since September 30, 1994
<PAGE> 71
II. RATIO OF EBITDA TO FIXED CHARGES (SECTION 18.1.2)
-------------------------------------------------
A. 1. Earnings from continuing
operations $-------------
2. Interest Expense $-------------
3. Income and franchise taxes $-------------
4. Depreciation $-------------
5. Amortization $-------------
6. Sum of items II.A.1 through II.A.5 $-------------
7. Extraordinary gains included in item II.A.1 $-------------
8. Extraordinary losses included in item II.A.1 $-------------
9. EBITDA (item II.A.6 minus item II.A.7 plus item
II.A.8) $-------------
B. 1. Interest paid $-------------
2. Federal, State and local Taxes paid $-------------
3. Dividends paid $-------------
4. Current maturities of long term debt $-------------
5. Fixed Charges (Sum of Items II.B.1 through II.B.4) $-------------
C. Ratio of EBITDA to Fixed Charges
(ratio of II.A.9 to II.B.4) --------------
D. Minimum ratio permitted by Section 18.1.2 1.0 to 1.0
III. CURRENT RATIO (SECTION 18.1.3)
------------------------------
A. 1. Current Assets $-------------
2. Current Liabilities $-------------
B. Current Ratio (ratio of III.A.1
to III.A.2) --------------
C. Minimum ratio permitted by
Section 18.1.3 1.0 to 1.0
IV. TOTAL LIABILITIES TO TANGIBLE NET WORTH (SECTION 18.1.4)
--------------------------------------------------------
A. Total Liabilities $------------
B. Tangible Net Worth (Item I.F) $------------
C. Ratio of Total Liabilities to
Tangible Net Worth (Item IV.A to Item IV.B) -------------
D. Ratio permitted by Section 18.1.4 1.75 to 1.0
</TABLE>
<PAGE> 72
APPENDIX 1.2
GLOSSARY AND INDEX OF DEFINED TERMS
"Account Debtor": the obligor on any Account.
"Account": as to any Person, the right of such Person to payment
for goods sold or leased or for services rendered by such Person.
"Acquisition Agreement": the Merger Agreement dated as of November
2, 1994, among Borrower, New Enviroq Corporation, ENVIROQ
Corporation and IMA Merger Sub, Inc., and all amendments,
supplements, extensions and renewals thereof.
"Acquisition Agreement Assignment": as defined in Section 9.5
"Adjusted CBR": the CBR plus one quarter of one percent (0.25%).
"Adjusted LIBO Rate": as defined in Section 3.1.1.
"Affected Principal Amount": as defined in Section 11.2.
"Affiliate": with respect to any Person, (a) any other Person who
is a partner, director, officer or stockholder of such Person; and
(b) any other Person, including, without limitation, a parent
corporation, which, directly or indirectly, is in control of, is
controlled by or is under common control with such Person, and any
partner, director, officer or stockholder of such other Person
described. 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. For purposes of this
Agreement, subsequent to the consummation of any Permitted Merger,
"Affiliate" shall include the Permitted Merger Party.
"Agent": The Boatmen's National Bank of St. Louis, in its capacity
as such.
"Anniversary Date": each anniversary of the Execution Date.
"Applicable Lending Office": as defined in Section 1.5.
"Beneficial Owner": as defined in Rule 13-D-3 of the Securities and
Exchange Commission.
"Boatmen's": The Boatmen's National Bank of St. Louis, in its
individual capacity.
"Borrower": Insituform Mid-America, Inc., its successors, assigns
and transferees.
"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 State of Missouri.
"Capital Expenditure": all expenditures which must be capitalized
under GAAP.
"Capital Lease": any lease that has been or should be capitalized
under GAAP.
i
<PAGE> 73
"Chesterfield IRB": the $7,000,000 principal amount of The
Industrial Development Authority of the City of Chesterfield,
Missouri Variable Rate Demand Private Activity Revenue Bonds,
Series 1995 (Insituform Mid-America, Inc. Project).
"CBR": the per annum interest rate so designated from time to time
as the Corporate Base Rate by Agent. The CBR is a reference rate
and does not necessarily represent the lowest or best rate charged
to any customer of Agent.
"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; or the indenture of a trust.
"Claims Act": the Assignment of Claims Act of 1940, as amended from
time to time.
"Code": the Internal Revenue Code of 1986, as amended from time to
time, and all regulations thereunder of the IRS.
"Collateral": all of the Real Property Collateral and the Personal
Property Collateral and all proceeds thereof.
"Colorado Real Property Collateral: as set forth on Exhibit 9.2
under the caption "Colorado Real Property Collateral".
"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.
"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.
"Covered Person": as defined in Section 1.6.
"Credit Agreement": that certain Credit Agreement dated as of
February 15, 1995 among Borrower and Lenders.
"Deed of Trust": as defined in Section 9.2.
"Default": any of the events listed in Section 19.1 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": as defined in Section 13.
"DOL": the United States Department of Labor.
"Dollars" and the sign "$": lawful money of the United States.
"Effective Date": as defined in Section 1.1.
"Employment Law": ERISA, the Occupational Safety and Health Act,
the Fair Labor Standards Act, or any other Law pertaining to the
terms or conditions of labor or safety in the workplace.
"Encumbrance": as to any item of real or personal property, any
easement, right-of-way, license, condition, or restrictive
covenant, or zoning or similar restriction, that is not a Security
Interest but is enforceable by any Person other than the record
owner of such property.
ii
<PAGE> 74
"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.
"Environmental Property Transfer Act": any Law that conditions,
restricts, prohibits or requires any notification or disclosure
triggered by the closure of any property or the transfer, sale or
lease of any property or deed of title for any property for
environmental reasons, including any so-called "Environmental
Cleanup Responsibility Acts" or "Responsible Property Transfer
Acts".
"ENVIROQ Acquisition": the proposed acquisition by Borrower of all
of the stock of ENVIROQ Corporation pursuant to the Acquisition
Agreement.
"EPA": the United States Environmental Protection Agency.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default": any of the events listed in Section 19.1 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.
"Financial Statements": financial statements of Borrower that are
furnished to Lenders as required in Section 15.13 of this
Agreement.
"FRB": the Board of Governors of the Federal Reserve System and any
successor thereto or to the functions thereof.
"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 and pronouncements of the
Securities and Exchange Commission 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 whose orders or judgements are enforceable
by or within the territory of any of the foregoing.
"Group": as used in Regulation 13-D issued by the Securities and
Exchange Commission.
"Guarantors": as defined in Section 9.3.
"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).
"Indebtedness": as to any Person at any particular date, shall mean
such Person's (i) obligations for borrowed money, (ii) obligations
issued or assumed as the deferred purchase price of property or
services, including, without limitation, bank acceptances payable
and loans and/or advances from a factor, but excluding trade and
other accounts payable arising in the ordinary course of business
in accordance with customary trade terms or which are being
disputed in good faith by such Person and for which adequate
reserves are being provided on the books of such
iii
<PAGE> 75
Person in accordance with GAAP; (iii) the face amount of all letters
of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder; (iv) all obligations
secured by any lien on any property or asset owned by such Person,
even though such Person has not assumed or become liable for the
payment thereof; (v) any material lease obligation which has been,
or which should be, in accordance with GAAP, capitalized, and (vi)
obligations, or obligations of a commonly controlled entity, to a
Multiemployer Plan.
"Indemnified Liabilities": as defined in Section 21.8.
"Indemnified Parties": as defined in Section 21.8.
"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
(c) 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.
"Initial Financial Statements": as defined in Section 12.3.
"Insurance/Condemnation Proceeds": insurance proceeds payable as a
consequence of damage to or destruction of any of the Collateral
and proceeds payable as a consequence of condemnation or sale in
lieu of condemnation of any of the Collateral.
"Inventory": goods owned and held by a Person for sale, lease or
resale or furnished or to be furnished under contracts for
services, and raw materials, goods in process, materials, component
parts and supplies used or consumed, or held for use or consumption
in such Person's business.
"Investment": (a) a loan or advance of money or property to a
Person, (b) stock or other equity interest in a Person, (c) a debt
instrument issued by a Person, whether or not convertible to stock
or other equity interest in such Person, or (d) any other interest
in or rights with respect to a Person which include, in whole or in
part, a right to share, with or without conditions or restrictions,
some or all of the revenues or net income of such Person.
"IRS": the Internal Revenue Service.
"ITI Lawsuit": as defined in Section 19.1.16.
"Law": any statute, rule, regulation, order, judgment, award or
decree of any Governmental Authority.
"Lender" or "Lenders": as defined in the first paragraph of this
Agreement.
iv
<PAGE> 76
"Letter of Credit Exposure": the undrawn amount of all outstanding
letters of credit issued by a Lender for the account of Borrower
plus all amounts drawn on such letters of credit and not yet
reimbursed to such Lender by Borrower.
"LIBO Rate": as defined in Section 3.1.1.1.
"LIBOR Increment": as defined in Section 3.1.1.2.
"LIBOR Loan": the Term Loan at any time it bears interest at the
Adjusted LIBO Rate.
"Loan Documents": this Agreement, the Notes, the Security Documents
and all other agreements, certificates, documents, instruments and
other writings executed in connection herewith.
"Loan Obligations": all of Borrower's Indebtedness owing to any
Lender, whether as principal, interest, fees or otherwise, all
reimbursement obligations of Borrower to any Lender with respect to
such Lender's Letter of Credit Exposure, and all other obligations
(including but not limited to obligations for the payment of money)
and liabilities of Borrower to any Lender (including but not
limited to all extensions, renewals, modifications, rearrangements,
restructures, replacements and refinancings of the foregoing,
whether or not the same involve modifications to interest rates or
other payment terms), whether arising under any of the Loan
Documents or otherwise, and 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, or acquired by a Lender outright, conditionally or as
collateral security from another, including but not limited to the
obligation of Borrower to repay future advances by a Lender,
whether or not made pursuant to commitment and whether or not
presently contemplated by Borrower and any Lender in the Loan
Documents.
"Material Law": any Law whose violation by a Person would have a
Material Adverse Effect with respect to such Person.
"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 on such Person.
"Material License": (i) as to any Covered 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 by such Covered Person
would have a Material Adverse Effect with respect to such Covered
Person or any other Covered Person, 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 Adverse Effect": as to any Covered Person and 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, property, or
business prospects of such Covered Person or the ability of such
Covered Person to timely pay or perform such Covered Person's
Obligations generally, or in the case of Borrower, specifically 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 on such
Person or any Covered Person.
"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
contemplated thereby, or involves a
v
<PAGE> 77
Covered Person as a party or any property of a Covered Person, and
would have a Material Adverse Effect with respect to any Covered
Person if adversely determined, (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 consummation of
any transaction contemplated by the Loan Documents, or the
enforceability of any provision of any of the Loan Documents, (iii)
which involves the actual or alleged breach or violation by a Covered
Person of, or default by a Covered Person under, any Material
Agreement, or (iv) which involves the actual or alleged violation by a
Covered Person of any Material Law.
"Maturity": as to any Indebtedness, the time when it becomes
payable in full, whether at a regularly scheduled time, because of
acceleration or otherwise.
"Missouri Real Property Collateral: as set forth on Exhibit 9.2
under the caption "Missouri Real Property Collateral".
"Multi-employer Plan": a Pension Benefit Plan which is a multi-
employer plan as defined in Section 4001(a)(3) of ERISA.
"Notes": the Term Notes.
"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.
"Operating Lease": any lease that is not a Capital Lease.
"PBGC": the Pension Benefit Guaranty Association.
"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 Covered Person or a Commonly Controlled Entity
of such Covered Person is an "employer" as defined in Section 3(5)
of ERISA.
"Permitted Acquisition": the ENVIROQ Acquisition.
"Permitted Encumbrances": (a) taxes and assessments, general and
specific, not now due and payable, (b) Encumbrances arising out of
deposits in connection with workmen's compensation, unemployment
insurance, old age pensions or other social security or retirement
benefits legislation, (c) deposits or pledges to secure bids,
tenders, contracts (other than contracts for the payment of money),
leases, statutory obligations, surety and appeal bonds or other
obligations of a like nature arising in the ordinary course of
business, (d) Encumbrances imposed by law, such as mechanic's,
workmen's, materialmen's, landlord's, carriers' or other like
Encumbrances arising in the ordinary course of business which
secure payment of obligations which are not past due, and
(e) matters waived in writing by Agent or appearing in the title
commitments delivered to Agent in connection with the Real Property
Collateral and not objected to in writing by Agent.
"Permitted Indebtedness": as defined in Section 16.2.
"Permitted Indirect Obligations": as defined in Section 16.6.
"Permitted Investments": as defined in Section 16.1.
vi
<PAGE> 78
"Permitted Merger": any merger permitted by Lenders pursuant to
Section 16.8.
"Permitted Merger Party": any party (other than Borrower or a
wholly-owned Subsidiary of Borrower) to a Permitted Merger and such
party's Affiliates.
"Permitted Security Interests": as defined in Section 16.7.
"Person": any individual, partnership, corporation, trust,
unincorporated association, joint venture, limited liability
company, Governmental Authority, or other organization in any form
that has the legal capacity to sue or be sued. If the context so
implies or requires, the term Person includes Borrower.
"Personal Property Collateral": as defined in Section 9.1.
"Rate Agreement": The proposed ISDA <Interest Rate and Currency
Exchange Agreement> <Master Agreement> to be entered into between
Borrower and Boatmen's or another bank acceptable to Borrower
(referred to in this definition as the "counterparty"), all
schedules, amendments and supplements thereto, all replacements
thereof, all documents and confirming evidence now or hereafter
exchanged between Borrower and the counterparty confirming the
transactions governed by such agreement, and all guaranties,
security and pledge agreements and other credit support documents
given by or on behalf of the counterparty to secure its obligations
thereunder.
"Real Property Collateral": the Colorado Real Property Collateral,
the Missouri Real Property Collateral and the Texas Real Property
Collateral.
"Regulation D", "Regulation G", and "Regulation U": respectively,
Regulation D issued by the FRB, Regulation G issued by the FRB, and
Regulation U issued by the FRB.
"Reimbursement Agreement": that certain Letter of Credit and
Reimbursement Agreement proposed to be entered into by and between
Borrower and Boatmen's in connection with the Chesterfield IRB.
"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.
"Security Agreement": as defined in Section 9.1.
"Security Documents": the Deed of Trust, the Security Agreement
and the Notes.
"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 but not limited to a conditional sale agreement or a
lease) that has substantially the same economic effect as any of
the foregoing.
vii
<PAGE> 79
"Solvent": as to any Person, when (a) the fair value of such
Person's assets is in excess of the total amount of its debts
(including contingent liabilities); (b) such Person is able to pay
its debts as they mature; (c) such Person does not have
unreasonably small capital for the business in which it is engaged
or for any business or transaction in which it is about to engage;
or (d) such Person is not "insolvent" as such term is defined in
Section 101(32) of the United States Bankruptcy Code.
"Subordinated Debt": the Subordinated Note in the original
principal amount of $3,000,000, which Borrower proposes to issue to
New Enviroq Corporation in connection with Borrower's proposed
acquisition of the pipeline rehabilitation business of ENVIROQ
Corporation, all other Indebtedness of Borrower to New Enviroq
Corporation or ENVIROQ Corporation, whether now existing or
hereafter incurred, and all extensions, renewals, modifications,
rearrangements, restructures, replacements and refinancings of the
foregoing.
"Subordinated Note": as defined in Section 12.2.
"Subsidiary": as to any Person, a corporation which is required to
be included in such Person's financial statements under GAAP with
respect to which more than 20% 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.
"Term Advance": as defined in Section 2.
"Term Commitment": as defined in Section 2.
"Term Loan": on any date, the outstanding principal balance of the
Term Advance.
"Term Loan Commitment Fee": as defined in Section 4.1.
"Term Note": as defined in Section 2.
"Texas Real Property Collateral: as set forth on Exhibit 9.2 under
the caption "Texas Real Property Collateral".
"this Agreement": this document (including every document that is
stated herein to be an appendix, exhibit or schedule hereto,
whether or not physically attached to this document), as amended
from time to time.
"Triggering Event": as defined in Section 21.8.
"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.
"Ultimate Term Maturity Date": April 18, 2002.
"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.
"Welfare Benefit Plan": any plan described by Section 3(1) of
ERISA.
viii
<PAGE> 1
TERM NOTE
$10,250,000.00 St. Louis, Missouri
April 18, 1995
For value received, INSITUFORM MID-AMERICA, INC., a Delaware
corporation, ("Borrower") promises to pay to the order of THE
BOATMEN'S NATIONAL BANK OF ST. LOUIS, a national banking
association ("Lender"), the principal sum of Ten Million Two
Hundred Fifty Thousand Dollars ($10,250,000), in eighty-four (84)
consecutive principal payments to be made monthly commencing on May
1, 1995, and on the first day of each month thereafter, through and
including April 1, 2002, with an eighty-fifth installment in the
amount of the remaining outstanding principal balance and all
accrued interest thereon being due on the Ultimate Term Maturity
Date. The first eighty-four (84) principal payments shall each be
in the aggregate amount of Eighty-Six Thousand Thirty-Two and
64/100 Dollars ($86,032.64) and the final, eighty-fifth payment
shall be in the amount of all remaining outstanding principal, plus
all accrued and unpaid interest thereon.
Borrower further promises to pay interest from the date hereof
on the balance of said principal from time to time outstanding at
the per annum rate set forth in the Loan Agreement (as hereinafter
defined). Such interest shall be computed on the basis of a year
deemed to consist of 360 days and paid for the actual number of
days elapsed. Interest shall be payable monthly in arrears,
commencing on the first day of the first full calendar month
following the Effective Date and on the first day of each month
thereafter, so long as there is any principal amount outstanding
under this note (this "Note").
Both principal and interest are payable in Dollars to Lender
at its office at 800 Market Street, St. Louis, Missouri 63101,
Attention: Christy B. Goudy.
If any payment of principal or interest due on this Note is
payable on a day other than a Business Day, then such payment shall
be made on the next Business Day, and the amount of such payment,
in such case, shall include all interest accrued to the date of
actual payment; provided, however, that if the next succeeding
Business Day would be in the following calendar month, such payment
shall be made on the first preceding Business Day.
This Note is issued under the terms of, and pursuant to, the
provisions of that certain Loan Agreement, of even date herewith,
among Borrower, Lender as Agent and Lender and Mark Twain Bank as
Lenders (as the same may be amended, supplemented, restated,
renewed, extended or otherwise modified from time to time, the
"Loan Agreement"). All capitalized terms used and not otherwise
defined herein shall have the same meanings as given them in the
Loan Agreement.
This Note is secured by the Collateral described in the Loan
Documents and reference to the Loan Documents and the Loan
Agreement is made for a statement of the rights of Lender with
respect to such Collateral.
Borrower shall prepay the principal amount of this Note to
the extent provided in the Loan Agreement. Borrower may
voluntarily 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 advances to Borrower and payments
of amounts due from Borrower with respect to this Note will be
recorded in 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
<PAGE> 2
the obligation of Borrower to repay the Term Loan and other amounts
payable under this Note and the other Loan Documents. Borrower
shall have the burden of proving that Lender's records are not
correct.
Upon the occurrence of any Event of Default, the principal
hereof and all accrued interest thereon, at the option of Lender,
shall become and be immediately due and payable as provided in the
Loan Agreement.
Upon the occurrence of any Default, at the option of Lender,
all outstanding principal and, to the extent permitted by law,
accrued interest in respect of this Note shall bear interest,
payable on demand, at a rate per annum of 3% in excess of the rate
which would otherwise apply hereunder, such rate to change
simultaneously with any change in the Adjusted LIBO Rate or
Adjusted CBR, as appropriate. In addition, such default rate of
interest shall apply after Maturity. Such interest shall be
computed on the basis of a year deemed to consist of 360 days, paid
for the actual number of days elapsed and shall be payable on
demand.
If this Note shall not be paid as herein provided and shall be
placed in the hands of one or more attorneys for collection, or in
the hands of one or more attorneys for representation of Lender in
connection with any bankruptcy or insolvency proceeding of
Borrower, Borrower hereby promises to pay the fees and expenses of
such attorneys in addition to the full amount due hereon, whether
or not litigation should be commenced.
Demand for payment, protest, 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 all
who are or shall 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.
No amendment, modification or waiver of any provision of this
Note, nor consent to any departure by Borrower herefrom, shall be
effective unless the same shall be in writing and signed by an
authorized officer of Lender, and then only in the specific
instance and for the purpose for which given. No failure on the
part of Lender to exercise, and no delay in exercising, any right
under this Note shall operate as a waiver thereof, nor shall any
single or partial exercise by Lender of any right under this Note
preclude 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 shall be 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 shall be given in the manner required for
notices under the Loan Agreement.
This Note is governed by and shall be interpreted in
accordance with the laws of the State of Missouri, without regard
to choice or conflict of laws rules.
INSITUFORM MID-AMERICA, INC.,
a Delaware corporation,
By:-----------------------------------------
Print Name:---------------------------------
Title:--------------------------------------
2
<PAGE> 1
TERM NOTE
$5,000,000.00 St. Louis, Missouri
April 18, 1995
For value received, INSITUFORM MID-AMERICA, INC., a Delaware
corporation, ("Borrower") promises to pay to the order of MARK
TWAIN BANK, a Missouri banking corporation ("Lender"), the
principal sum of Five Million Dollars ($5,000,000), in eighty-four
(84) consecutive principal payments to be made monthly commencing
on May 1, 1995, and on the first day of each month thereafter,
through and including April 1, 2002, with an eighty-fifth
installment in the amount of the remaining outstanding principal
balance and all accrued interest thereon being due on the Ultimate
Term Maturity Date. The first eighty-four (84) principal payments
shall each be in the aggregate amount of Forty-One Thousand Nine
Hundred Sixty-Seven and 36/100 Dollars ($41,967.36) and the final,
eighty-fifth payment shall be in the amount of all remaining
outstanding principal, plus all accrued and unpaid interest
thereon.
Borrower further promises to pay interest from the date hereof
on the balance of said principal from time to time outstanding at
the per annum rate set forth in the Loan Agreement (as hereinafter
defined). Such interest shall be computed on the basis of a year
deemed to consist of 360 days and paid for the actual number of
days elapsed. Interest shall be payable monthly in arrears,
commencing on the first day of the first full calendar month
following the Effective Date and on the first day of each month
thereafter, so long as there is any principal amount outstanding
under this note (this "Note").
Both principal and interest are payable in Dollars to The
Boatmen's National Bank of St. Louis, as Agent, at its office at
800 Market Street, St. Louis, Missouri 63101, Attention: Christy
B. Goudy.
If any payment of principal or interest due on this Note is
payable on a day other than a Business Day, then such payment shall
be made on the next Business Day, and the amount of such payment,
in such case, shall include all interest accrued to the date of
actual payment; provided, however, that if the next succeeding
Business Day would be in the following calendar month, such payment
shall be made on the first preceding Business Day.
This Note is issued under the terms of, and pursuant to, the
provisions of that certain Loan Agreement, of even date herewith,
among Borrower, The Boatmen's National Bank of St. Louis, as Agent
and The Boatmen's National Bank of St. Louis and Lender as Lenders
(as the same may be amended, supplemented, restated, renewed,
extended or otherwise modified from time to time, the "Loan
Agreement"). All capitalized terms used and not otherwise defined
herein shall have the same meanings as given them in the Loan
Agreement.
This Note is secured by the Collateral described in the Loan
Documents and reference to the Loan Documents and the Loan
Agreement is made for a statement of the rights of Lender with
respect to such Collateral.
Borrower shall prepay the principal amount of this Note to
the extent provided in the Loan Agreement. Borrower may
voluntarily 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 advances to Borrower and payments of
amounts due from Borrower with respect to this Note will be recorded
in the records that Lender normally maintains for such types of
<PAGE> 2
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 Term Loan and other amounts
payable under this Note and the other Loan Documents. Borrower
shall have the burden of proving that Lender's records are not
correct.
Upon the occurrence of any Event of Default, the principal
hereof and all accrued interest thereon, at the option of Lender,
shall become and be immediately due and payable as provided in the
Loan Agreement.
Upon the occurrence of any Default, at the option of Lender,
all outstanding principal and, to the extent permitted by law,
accrued interest in respect of this Note shall bear interest,
payable on demand, at a rate per annum of 3% in excess of the rate
which would otherwise apply hereunder, such rate to change
simultaneously with any change in the Adjusted LIBO Rate or
Adjusted CBR, as appropriate. In addition, such default rate of
interest shall apply after Maturity. Such interest shall be
computed on the basis of a year deemed to consist of 360 days, paid
for the actual number of days elapsed and shall be payable on
demand.
If this Note shall not be paid as herein provided and shall be
placed in the hands of one or more attorneys for collection, or in
the hands of one or more attorneys for representation of Lender in
connection with any bankruptcy or insolvency proceeding of
Borrower, Borrower hereby promises to pay the fees and expenses of
such attorneys in addition to the full amount due hereon, whether
or not litigation should be commenced.
Demand for payment, protest, 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 all
who are or shall 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.
No amendment, modification or waiver of any provision of this
Note, nor consent to any departure by Borrower herefrom, shall be
effective unless the same shall be in writing and signed by an
authorized officer of Lender, and then only in the specific
instance and for the purpose for which given. No failure on the
part of Lender to exercise, and no delay in exercising, any right
under this Note shall operate as a waiver thereof, nor shall any
single or partial exercise by Lender of any right under this Note
preclude 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 shall be 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 shall be given in the manner required for
notices under the Loan Agreement.
This Note is governed by and shall be interpreted in
accordance with the laws of the State of Missouri, without regard
to choice or conflict of laws rules.
INSITUFORM MID-AMERICA, INC.,
a Delaware corporation,
By:-----------------------------------------
Print Name:---------------------------------
Title:--------------------------------------
<PAGE> 1
THIS NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF
1933, AS AMENDED, AND MAY BE OFFERED OR SOLD ONLY IF REGISTERED
UNDER APPLICABLE SECURITIES LAWS OR IF AN EXEMPTION THEREFROM IS
AVAILABLE.
INSITUFORM MID-AMERICA, INC.
Subordinated Promissory Note
Due February 18, 2000
$3,000,000.00 April 18, 1995
Insituform Mid-America Inc., a Delaware corporation (the
"Company"), for value received, hereby promises to pay to New
Enviroq Corporation or registered assigns on February 15, 2000 the
principal amount of Three Million Dollars ($3,000,000.00) and to
pay interest from the date hereof on the principal amount from time
to time remaining unpaid hereon on each June 30 and December 31
beginning June 30, 1995 until maturity at a rate per annum equal to
Six Percent (6%). The Company shall be privileged to prepay all or
any portion of its obligations under this Note without premium or
penalty at any time and from time to time provided, however, that
any prepayment shall be in a minimum amount of $100,000. The
Company represents and warrants to the holder hereof that it has
executed this Note in good faith with the intention to pay all
payments of principal and interest hereunder as they become due.
The principal hereof and interest hereon are payable by check
mailed to the address of the holder on the Company's records in
coin or currency of the United States of America which at the time
of payment shall be legal tender for the payment of public and
private debts.
This Note is issued under and pursuant to the terms and
provisions of a certain Merger Agreement (the "Merger Agreement"),
dated as of November 2, 1994, entered into by and among the
Company, New Enviroq Corporation and the other parties therein
named.
This Note is subject to the offset rights provided for in
Article IX of the Merger Agreement, the provisions of which are
hereby incorporated by reference as if fully set forth herein. Any
offset exercised pursuant to the Merger Agreement shall not be a
default hereunder.
<PAGE> 2
In the event there is a default in the payment of any
principal of or interest on this Note when due (after taking into
account the provisions of Article IX of the Merger Agreement), the
holder hereof may declare the entire principal balance of this Note
immediately due and payable.
If this Note or any principal or interest hereon is not paid
when due (after taking into account the provisions of Article IX of
the Merger Agreement), whether by reason of acceleration or
otherwise, and this Note is placed in the hands of an attorney or
attorneys for collection (whether or not litigation is commenced)
or for representation of the holder hereof in connection with
bankruptcy or insolvency proceedings, the Company promises to pay,
in addition to the other amounts due hereon, the reasonable costs
and expenses of such collection and representation, including
reasonable attorneys' fees and expenses.
The Company expressly waives presentment, demand for payment,
notice of dishonor, protest and notice of protest. This Note shall
be governed by and construed in accordance with the laws of the
State of Delaware.
SUBORDINATION OF NOTE
---------------------
The following provisions are hereinafter referred to as the
"Subordination Provisions."
1. Extent of Subordination. Subject to paragraph 2 below,
-----------------------
the indebtedness and all other obligations evidenced by this Note
are subordinate and junior in right of payment to the prior payment
in full in cash of all Senior Indebtedness (as hereinafter
defined), and the subordination is for the benefit of the holders
of the Senior Indebtedness and each such holder may enforce such
subordination. As used herein, the term "Senior Indebtedness"
shall mean indebtedness for money borrowed from commercial banks or
other lending institutions (including the Company's indebtedness to
such institutions in respect of letters of credit issued for the
benefit of the Company) which is not by its terms on parity with,
or subordinated in right of payment to, the indebtedness evidenced
by this Note. Without limiting the foregoing:
(a) So long as any default or event of default under or
within the meaning of any agreement, document or instrument
evidencing, securing, guaranteeing the payment of or otherwise
relating to any of the Senior Indebtedness has occurred and is
continuing or would be created by or result from any such payment
or distribution, no direct or indirect payment or distribution
(including any payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness
being subordinated to this Note) shall be made by or on behalf of
the Company for or on account of any principal of or interest on
any of this Note or any other obligation with respect to or on
2
<PAGE> 3
account of any claim (a "Claim") with respect thereto or the
purchase thereof, and the holder of this Note shall not receive
from the Company, directly or indirectly, any payment or
distribution, including, without limitation, from or by way of
collateral, on account of any obligations with respect to this Note
or on account of any Claim;
(b) Upon the maturity of all or any part of any Senior
Indebtedness by lapse of time, acceleration (unless waived in
writing) or otherwise, all amounts then due in respect of all
Senior Indebtedness shall first be paid in full in cash before any
direct or indirect payment or distribution (including any payment
or distribution which may be payable or deliverable by reason of
the payment of any other indebtedness of the Company being
subordinated to the holder of this Note) to which the holder of
this Note would be entitled but for the Subordination Provisions
hereof, may be made by or on behalf of the Company on account of
any obligations with respect to this Note;
(c) Upon any distribution to creditors of the Company in
a total or partial liquidation or dissolution of the Company or in
a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Company or its property or in an
assignment for the benefit of creditors, or an arrangement,
adjustment, composition or relief of the Company or its debts or
any marshalling of the assets and liabilities of the Company:
(i) holders of Senior Indebtedness shall be
entitled to receive payment in full in cash of all
indebtedness and other obligations due or to become due
with respect to the Senior Indebtedness (including
interest after the commencement of any such proceeding at
the rate specified in the applicable Senior Indebtedness)
before the holder of this Note shall be entitled to
receive any payment or distribution on account of any
obligations with respect to this Note; and
(ii) until all indebtedness and other obligations
with respect to Senior Indebtedness (as provided in
subsection (i) above) are paid in full in cash, any
payment or distribution, including, without limitation,
any payment or distribution which may be payable or
deliverable by reason of the payment of any other
indebtedness of the Company being subordinated to the
payment of this Note, to which the holder of this Note
would be entitled but for the subordination provisions
hereof shall be made to holders of Senior Indebtedness,
as their respective interests may appear, for application
(in the case of cash) to, or as collateral (in the case
of non-cash property or securities) for the payment or
prepayment of, the Senior Indebtedness to the extent
necessary to pay all such Senior Indebtedness in full in
3
<PAGE> 4
cash after giving effect to any concurrent payment or
distribution to or for the holders of such Senior
Indebtedness;
(d) If, after the holder of this Note shall have
received written notice (a "Default Notice") that a default or
event of default under or within the meaning of any agreement,
document or instrument evidencing, securing, guaranteeing the
payment of or otherwise relating to any of the Senior Indebtedness
has occurred and is continuing or would be created by or result
from such distribution, a distribution is made to the holder of
this Note that because of these Subordination Provisions should not
have been made to it, such holder shall segregate such distribution
from its other funds and property and hold it in trust for the
benefit of, and, upon written request, pay it over (in the same
form as received, with any necessary endorsement) to, the holders
of Senior Indebtedness as their interests may appear, or their
agent or representative or the trustee under the indenture or other
agreement (if any) pursuant to which Senior Indebtedness may have
been issued, as their respective interests may appear, for
application (in the case of cash) to, or as collateral (in the case
of non-cash property or securities) for the payment or prepayment
of, the Senior Indebtedness to the extent necessary to pay such
obligations in full in accordance with their terms, after giving
effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness; and
(e) Notwithstanding any other provision of these
Subordination Provisions to the contrary, if the holder hereof
shall have received a Default Notice, then prior to the earlier to
occur of: (i) payment in full of all indebtedness and other
obligations with respect to Senior Indebtedness; (ii) the
expiration of one hundred eighty (180) days following the holder's
receipt of such Default Notice; or (iii) the cure, remediation or
waiver of the default or event of default specified in such Default
Notice by the holder of the Senior Indebtedness to which it
relates, the holder of this Note shall not take any action to
enforce any payment on or in respect of this Note, including
without limitation, filing of a bankruptcy or similar proceeding,
except that the holder of this Note may send the Company notice of
a default and acceleration of this Note if the Company then is in
default under this Note, provided, however, that this Section 1(e)
shall not prohibit the holder's enforcement action in respect of
the Company's failure to pay the principal amount and interest due
at maturity hereof if such failure shall continue for a period of
sixty (60) days after notice to the Company.
2. Rights Not Subordinated. The provisions of paragraph 1
-----------------------
above are for the limited purpose of defining the relative rights
of the holders of Senior Indebtedness on the one hand and the
holder of this Note on the other hand. Nothing herein shall
impair, as between the Company and the holder of this Note, the
4
<PAGE> 5
Company's obligation to the holder of this Note to pay to such
holder both principal and interest in accordance with the terms of
this Note. Except as set forth in paragraph 1(e) above, no
provision of paragraph 1 above shall be construed to prevent the
holder of this Note from exercising all remedies otherwise
available under this Note or under applicable law upon the
occurrence of a default, subject to the rights of the holders of
Senior Indebtedness set forth above to receive cash, assets, stock
or obligations and distributions and other payments otherwise
payable or deliverable to the holder of this Note. No provision of
paragraph 1 above shall be deemed to subordinate, to any extent,
any claim or right of any holder of this Note to any claim against
the Company by any creditor or any other person, except to the
extent expressly provided in such paragraph.
3. Notice by Company. The Company shall promptly notify the
-----------------
holder of this Note of any facts known to the Company that would
cause a payment of any obligations with respect to this Note or of
any Claim to violate the Subordination Provisions hereof. If
payment of this Note is accelerated because of a default, the
Company shall promptly notify holders of Senior Indebtedness of the
acceleration. The Company shall promptly furnish the holder copies
of all material instruments and agreements defining the rights of
holders of Senior Indebtedness, including any amendments or
modifications thereto or refinancing thereof. Notwithstanding any
provisions of this Agreement to the contrary, however, (a) the
Company's failure to comply with its obligations set forth in this
Section 3 shall not affect the subordination provided herein or any
claims of holders of Senior Indebtedness; and (b) the Company
acknowledges that a breach of its obligations under this Section 3
would result in irreparable harm to the holder of this Note and,
accordingly, the holder shall be entitled to obtain an injunction
to restrain the Company's violation of its obligations under this
Section 3 and to compel specific performance of the terms and
conditions of this Section 3.
4. Subrogation. After all Senior Indebtedness is paid in
-----------
full in cash and until the Note is paid in full, the holder of this
Note shall be subrogated (equally and ratably with all other
indebtedness pari passu with this Note) to the rights of holders of
---- -----
Senior Indebtedness to receive distributions applicable to Senior
Indebtedness to the extent that distributions otherwise payable to
the holder of this Note have been applied to the payment of Senior
Indebtedness. A distribution made under these Subordination
Provisions to holders of Senior Indebtedness which otherwise would
have been made to the holder of this Note is not, as between the
Company and such holder, a payment by the Company on this Note.
5. Subordination May Not Be Impaired.
---------------------------------
(a) No right of any present or future holder of any
Senior Indebtedness to enforce subordination as herein provided
5
<PAGE> 6
shall at any time in any way be prejudiced or impaired by any act
or failure to act in good faith by any such holder, or by
noncompliance by the Company, with the terms and provisions and
covenants herein, regardless of any knowledge thereof any such
holder may have or otherwise be charged with.
(b) Without in any way limiting the generality of the
foregoing paragraph, the holders and owners of Senior Indebtedness
may at any time and from time to time, without the consent of or
notice to the holder of this Note, without incurring responsibility
to the holder of this Note, and without impairing or releasing the
subordination provided in these Subordination Provisions or the
obligations hereunder of the holder of this Note to the holders of
Senior Indebtedness, do any one or more of the following: (i)
change the number, place or terms of payment or extend the time of
payment of, renew or alter, all or any of the Senior Indebtedness
(including any change in the rate of interest thereon), or
otherwise amend or supplement in any manner, or grant any waiver or
release with respect to, Senior Indebtedness or any instrument
evidencing the same or any agreement under which Senior
Indebtedness is outstanding; (ii) sell, exchange, release, not
perfect or otherwise deal with any property at any time pledged,
assigned or mortgaged to secure or otherwise securing, Senior
Indebtedness, or amend, or grant any waiver or release with respect
to, or consent to any departure from any guarantee for all or any
of the Senior Indebtedness; (ii) release any person liable in any
manner under or in respect of Senior Indebtedness; (iv) exercise or
refrain from exercising any rights against, any other person; and
(v) apply any sums from time to time received to the Senior
Indebtedness.
(c) All rights and interests under this Note of the
holders of Senior Indebtedness, and all agreements and obligations
of the holder of this Note and the Company under these
Subordination Provisions shall remain in full force and effect
irrespective of (i) any lack of validity or enforceability of the
Senior Indebtedness, any promissory notes evidencing the
indebtedness thereunder, or any other agreement or instrument
relating thereto, or (ii) any other circumstances that might
otherwise constitute a defense available to, or a discharge of, any
holder of the Note or the Company.
(d) These Subordination Provisions constitute a
continuing agreement and shall (i) be and remain in full force and
effect until payment in full of all Senior Indebtedness, (ii) be
binding upon the holder of this Note and the Company and their
respective successors, transferees and assigns, and (iii) inure to
the benefit of, and be enforceable directly by, each of the holders
of Senior Indebtedness and their respective successors, transferees
and assigns.
6
<PAGE> 7
(e) Each holder of Senior Indebtedness is hereby
authorized to demand specific performance of these Subordination
Provisions, whether or not the Company shall have complied with any
of such provisions applicable to it, at any time when the holder of
this Note shall have failed to comply with any of these provisions.
The holder of this Note hereby irrevocably waives any defense based
on the adequacy of a remedy at law that might be asserted as a bar
to such remedy of specific performance.
6. Distribution or Notice to Representative. Whenever a
----------------------------------------
distribution is to be made or a notice given to holders of Senior
Indebtedness, then distributions may be made and the notice given
to their representative, trustee or agent. Upon payment or
distribution of assets of the Company referred to in these
Subordination Provisions, the holder of this Note shall be entitled
to rely in good faith upon any order or decree made by any court of
competent jurisdiction or upon any certificate of such
representative, trustee or agent or of the liquidating trustee or
agent or other person making any distribution to the holder of this
Note for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to
these Subordination Provisions.
7. Miscellaneous. The agreements contained in these
-------------
Subordination Provisions shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any
of the Senior Indebtedness is rescinded or must otherwise be
returned by any holder of Senior Indebtedness upon the insolvency,
bankruptcy or reorganization of the Company otherwise, all as
though such payment had not been made.
8. Amendments. The Company and the holder of this Note
----------
hereby agree for the benefit of the holders of Senior Indebtedness
that (a) no amendment of, supplement of, modification to or waiver
under any provision of these Subordination Provisions will be
entered into or effected without the prior written consents of all
of the holders of Senior Indebtedness and (b) no amendment of,
supplement of, modification to or waiver under, any other provision
of this Note will be entered into or effected if the same would be
adverse to the holders of Senior Indebtedness (or any of them).
9. Restriction on Future Senior and Subordinated
---------------------------------------------
Indebtedness. (a) Notwithstanding any provision herein to the
- ------------
contrary, the Company hereby agrees that, after the date hereof, it
will not modify the terms of Senior Indebtedness (other than
modification to avoid or cure a default or an event of default) or
incur Senior Indebtedness which, absent a default or event of
default under the Senior Indebtedness not caused solely by the
payment of this Note, would prohibit timely payment of amounts due
7
<PAGE> 8
under this Note or by its terms will create an event of default by
the payment of the Note when due. No Senior Indebtedness existing
as of the date hereof contains terms or conditions which, absent a
default or event of default not caused solely by payment of this
Note when due, will prohibit payment of the principal of this Note
at maturity.
(b) Notwithstanding any provision herein to the contrary,
the Company hereby agrees that after the date hereof it will not
issue any subordinated debt obligations unless, by their terms,
such subordinated debt obligations are subordinated or pari passu
in right of payment to the prior payment in full of the
indebtedness evidenced by this Note.
* * *
INSITUFORM MID-AMERICA, INC.
By -----------------------------------
Jerome Kalishman, Chief Executive
Officer
8
<PAGE> 1
STOCK PLEDGE AGREEMENT
----------------------
This Stock Pledge Agreement, (this "Agreement") is made and
entered into as of the 18th day of April, 1995, by and between THE
BOATMEN'S NATIONAL BANK OF ST. LOUIS, a national banking
association ("Pledgee") and INSITUFORM MID-AMERICA, INC., a
Delaware corporation ("Pledgor").
RECITALS
--------
A. Pledgor, Pledgee, as Agent and Pledgee and Mark Twain
Bank, as lenders ("Lenders") have entered into that certain Loan
Agreement of even date herewith (as the same may be renewed,
extended, amended, restated, replaced or otherwise modified from
time to time, the "Loan Agreement") whereby Lenders have made a
term loan to Pledgor of $15,250,000.
B. Pledgor owns 100% of the issued and outstanding voting
stock of Affholder, Inc., Insituform Central, Inc., Insituform
Missouri, Inc., Insituform North, Inc., Insituform Plains, Inc.,
Insituform de Puerto Rico, Inc., Insituform Rockies, Inc.,
Insituform Texark, Inc., PALTEM Systems, Inc. United Pipeline
Systems USA, Inc. and United Pipeline Systems, Inc. (each a
"Subsidiary" and collectively the "Subsidiaries"), as set forth on
Schedule 1 attached hereto (the "Shares").
C. Pledgor and Pledgee desire to secure the payment of the
Loan Obligations (as defined in the Loan Agreement) as hereafter
provided.
In consideration of the foregoing, the agreements below and
other sufficient consideration, the receipt of which is hereby
acknowledged, Pledgor and Pledgee agree as follows:
1. PLEDGE AND GRANT OF SECURITY INTEREST.
1.1. To secure the due and punctual payment and performance
of all the Loan Obligations, Pledgor hereby grants to Pledgee, for
the ratable benefit of Lenders, a security interest under the
Uniform Commercial Code as currently effective in the State of
Missouri in all of the Shares. The Shares are represented by
certificates which are herewith delivered, together with a stock
power attached to each such stock certificate executed in blank by
Pledgor, to Pledgee.
1.2. In addition, Pledgor hereby grant to Pledgee, for the
ratable benefit of Lenders, a security interest in the following
(which shall be deemed included in the term "Shares"): (i) all
dividends, cash, securities, instruments and other property from
time to time paid, payable or otherwise distributed in respect of
or in exchange for any or all of such Shares, (ii) any and all
distributions made by any Subsidiary in respect of the Shares,
whether in cash or in kind, by way of dividends or stock splits, or
pursuant to a merger or consolidation or otherwise, or any
substitute security issued upon conversion, reorganization or
otherwise, (iii) any and all other property hereafter delivered to
Pledgor or Pledgee in substitution for or in addition to any of the
foregoing (including without limitation all securities issued
pursuant to any shareholder agreement, stock purchase agreement,
stock purchase rights or other agreement with respect to stock of
any Subsidiary to which Pledgor may now or hereafter be a party),
all certificates and instruments representing or evidencing such
property and all cash, securities, interest, dividends, rights, and
other property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all thereof, and (iv) any and all proceeds of any of the
foregoing. If any of the foregoing shall be received by Pledgor,
Pledgor shall immediately deliver the
<PAGE> 2
same to Pledgee or its designated nominee, accompanied, if appropriate,
by proper instruments of assignment and/or stock powers executed by
Pledgor in accordance with Pledgee's instructions, to be held subject
to the terms of this Agreement. Notwithstanding anything in this
Section to the contrary, Borrower may make Distributions (as
defined in the Loan Agreement) to the extent provided in the Loan
Agreement.
2. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
warrants that:
2.1. Pledgor owns the Shares, free of all Security Interests
(as that term is defined in the Loan Agreement).
2.2. There are no outstanding warrants, options,
subscriptions or other contractual arrangements for the purchase of
any other shares of stock or any securities convertible into shares
of stock of the Subsidiaries.
2.3. The delivery of the Shares to Pledgee pursuant to this
Agreement and the filing of the financing statement(s), which have
been, or contemporaneously with the execution of this Agreement
shall be, delivered to Pledgee, in the offices shown thereon,
create a valid and fully perfected first priority security interest
in the Shares, securing the payment of the Loan Obligations.
2.4. No consent of any other party (including, without
limitation, any stockholder or creditor of Pledgor) and no
governmental approval is required for the exercise by Pledgee of
the voting or other rights provided for in this Agreement or the
remedies in respect of the Shares pursuant to this Agreement
(except as may be required in connection with such disposition by
laws affecting the offering and sale of securities generally).
2.5. None of the Shares constitutes "margin stock" (within
the meaning of Regulation U issued by the Board of Governors of the
Federal Reserve System).
3. DILUTION OF STOCK. Pledgor agrees that (i) it will cause the
Subsidiaries not to issue any stock or other securities (including
any warrants, options, subscriptions or other contractual
arrangements for the purchase of stock or securities convertible
into stock) in addition to or in substitution for the Shares, and
(ii) deliver hereunder, immediately upon its acquisition (directly
or indirectly) thereof, any and all writings evidencing any
additional Shares together with executed stock powers duly endorsed
in blank.
4. ADDITIONAL SECURITY INTERESTS. Pledgor agrees that it will
not (i) sell or otherwise dispose of, or grant any option with
respect to, any of the Shares, (ii) create or permit to exist any
Security Interest upon or with respect to any of the Shares, except
for the security interest under this Agreement or (iii) enter into
any other contractual obligations which may restrict or inhibit
Pledgee's rights or ability to sell or otherwise dispose of the
Shares or any part thereof after the occurrence of a default
hereunder.
5. CUSTODY AND PRESERVATION OF THE COLLATERAL. Pledgee shall be
deemed to have exercised reasonable care in the custody and
preservation of any Collateral in its possession (even if it fails
to sell or convert collateral which is falling in market value).
The failure of Pledgee to preserve or protect any rights with
respect to any of the Collateral against other parties shall not be
deemed a failure to exercise reasonable care in the custody or
preservation of such Collateral.
2
<PAGE> 3
6. DEFAULT. Any one or more of the following shall constitute a
default hereunder:
6.1. An Event of Default under the Loan Agreement;
6.2. A change in the stock structure of any Subsidiary which
would cause Pledgor, upon liquidation of such Subsidiary, to be
entitled to receive less than 100% of the net assets of such
Subsidiary;
6.3. A violation by Pledgor of any of the provisions or
conditions of this Agreement, which is not cured within thirty (30)
days from the date of such violation;
7. REMEDIES. Upon the occurrence and during the continuance of
any default:
7.1. Pledgee may at any time exercise the rights and pursue
the remedies provided under the Uniform Commercial Code as
currently effective in, or as hereafter amended by, the State of
Missouri, including but not limited to selling the Shares at any
public sale or, at private sale without advertisement if in
Pledgee's reasonable judgment such private sale would result in a
greater sale price than a public sale. The parties agree that in
the event Pledgee elects to proceed with respect to the Shares,
whenever applicable provisions of the Uniform Commercial Code
require that notice be reasonable, ten (10) days' notice shall be
deemed reasonable. Pledgee shall not be obligated to make any sale
of the Shares regardless of notice of sale having been given.
Pledgee may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which
it was so adjourned. Pledgee may bid and become a purchaser at any
such sale, if public, and upon any such sale Pledgee may collect,
receive, and hold and apply, as provided herein, the proceeds
thereof to the payment of the Loan Obligations, and assign and
deliver the Shares and the certificate therefor to the purchaser at
any such sale. The proceeds from any such sale shall be applied
first to the payment of all legal and other costs and expenses
incurred in connection with the sale and next to the payment of the
Loan Obligations. The balance, if any, of such proceeds remaining
after such application shall be promptly paid to Pledgor.
7.2. Pledgee shall have the right, at any time in its
discretion and without notice to Pledgor, to transfer to or to
register in the name of Pledgee or any of its nominees any or all
of the Shares.
7.3. Upon the occurrence and continuation of a default, in
the event that Pledgee determines that it is advisable to register
under or otherwise comply in any way with the Securities Act of
1933 or any similar federal or state law, or if such registration
or compliance is required with respect to the Shares prior to the
sale thereof by Pledgee, Pledgor will use its best efforts to cause
such registration to be effectively made, at no expense to Pledgee,
and to continue such registration effective for such time as may be
reasonably necessary in the opinion of Pledgee, and will reimburse
Pledgee for any reasonable expense incurred by Pledgee including,
without limitation, reasonable attorneys' and accountants' fees and
expenses in connection therewith; and should Pledgee determine
that, prior to any public offering of any of the Shares, such
securities should be registered under the Securities Act of 1933
and/or registered or qualified under any other federal or state
law, and that such registration and/or qualification is not
practical, then Pledgor agrees that it will be commercially
reasonable to arrange a private sale so as to avoid a public
offering, even though the sales price established and/or obtained
may be substantially less than might have been obtained through a
public offering. Pledgor further acknowledges the impossibility of
ascertaining the amount of damages which would be suffered by Pledgee
by reason of the failure by Pledgor to perform any of the covenants
contained in this paragraph and, consequently, agrees that, if
3
<PAGE> 4
Pledgor shall fail to perform any of such covenants,
Pledgor shall pay, as damages and not as a penalty, an amount equal
to the value of the Shares on the date Pledgee shall demand
compliance herewith.
8. RIGHT TO VOTE SHARES. Until the Loan Obligations are fully
paid, Pledgee shall have the sole right to vote the Shares with
regard to any proposed amendment to the Articles or Certificate of
Incorporation of any Subsidiary which would result in a change in
the preferences, qualifications, limitations, restrictions, or the
special or relative rights in respect of the Shares. Otherwise,
Pledgor shall have the sole right to vote the Shares unless there
is a default hereunder.
9. PRESERVATION AND PERFECTION OF SECURITY INTERESTS. Pledgor
shall promptly, upon the request of Pledgee and at Pledgor's
expense, execute, acknowledge and deliver, or cause the execution,
acknowledgment and delivery of, and thereafter, if applicable,
register, file or record in an appropriate governmental office, any
document or instrument supplemental to or confirmatory of this
Agreement, and give such further assurances as may otherwise be
necessary or desirable for the creation, preservation and/or
perfection of the liens created by this Agreement.
10. RELEASE OF SHARES. Whenever the full amount of the Loan
Obligations have been paid to Pledgee, for the ratable benefit of
Lenders, Pledgee shall return the certificates representing the
Shares to Pledgor, with the stock powers executed by Pledgor
attached, and such Shares shall be deemed released from any
Security Interest hereunder.
11. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and on separate counterparts, each of which shall be
deemed to be an original, but all of which shall be deemed to be
one and the same instrument.
12. 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 nonauthorization 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.
13. NOTICES. All notices, consents, requests and demands to or
upon the respective parties hereto shall be given in the manner
required for notices under the Loan Agreement.
14. GOVERNING LAW. This Agreement shall be governed and construed
under the internal laws of the State of Missouri without regard to
choice or conflicts of law provisions.
[rest of page intentionally blank]
4
<PAGE> 5
IN WITNESS WHEREOF, the undersigned have executed this
Agreement as of the date first above written.
INSITUFORM MID-AMERICA, INC.
By:--------------------------------------
Name:------------------------------------
Title:-----------------------------------
THE BOATMEN'S NATIONAL BANK OF ST. LOUIS
By:--------------------------------------
Name:------------------------------------
Title:-----------------------------------
5
<PAGE> 6
<TABLE>
SCHEDULE 1
----------
<CAPTION>
Stock
Class of Certificate Par Number of
Issuer Stock Numbers Value Shares
- ------ -------- ----------- ----- ---------
<S> <C> <C> <C> <C>
Affholder, Inc. Voting Common 2 $1.00 3,521
Affholder, Inc. Non-Voting Common 2 $1.00 1,597
Insituform Central, Inc. Common 2 $1.00 1,000
Insituform Missouri, Inc. Common 2 $1.00 8,833
Insituform North, Inc. Common 2 $1.00 100
Insituform Plains, Inc. Common 2 $1.00 1,429
Insituform de Puerto
Rico, Inc. Common 2 $.01 100,000
Insituform Rockies, Inc. Common 2 $1.00 1,000
Insituform Texark, Inc. Common 2 $1.00 1,000
PALTEM Systems, Inc. Common 2 $1.00 1,000
United Pipeline Systems
USA, Inc. Common 2 $1.00 100
United Pipeline Systems, Inc. Class A Common A-1 100
United Pipeline Systems, Inc. Class "B" B-4 971,454
Preferred
Tite Liner NRO Corp. 7 3,794,769
</TABLE>
<PAGE> 1
EXHIBIT "B"
COVENANT NOT TO COMPETE
-----------------------
THIS COVENANT NOT TO COMPETE ("Agreement"), made and executed this ----
day of April, 1995, by and among New Enviroq, Inc., a Florida corporation,
(hereinafter sometimes referred to as "New Enviroq"), and Insituform
Mid-America, Inc., a Delaware corporation (hereinafter sometimes referred to
as "Mid-America").
W I T N E S S E T H:
WHEREAS, effective this date pursuant to that certain Merger Agreement,
dated as of November 2, 1994 (the "Merger Agreement"), by and among Mid-
America, New Enviroq, and the other parties thereto, Mid-America has
purchased by merger the business of Enviroq Corporation, a Delaware
corporation, except for that business transferred to New Enviroq; and
WHEREAS, New Enviroq is the successor to certain businesses and assets
of Enviroq and because of this and other factors is considered to have
extensive experience of long duration in the conduct and operation of the
business in which Enviroq is engaged; and
WHEREAS, to secure the full value of the business being purchased by
Mid-America, Mid-America desires to obtain for its benefit the restrictive
covenant of New Enviroq as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutually dependent covenants and
agreements herein contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto do hereby agree as follows:
<PAGE> 2
1. Term. This Agreement shall remain in full force and effect for a
----
period of two (2) years, commencing on the date hereof and continuing
thereafter through and until April 18, 1997.
2. Compensation. Mid-America shall issue to New Enviroq for its
------------
covenant not to compete hereinafter set forth, and New Enviroq shall accept
for such covenant, Mid-America's Subordinated Promissory Note in the
principal amount of Three Million Dollars ($3,000,000) in the form attached
to the Merger Agreement as Exhibit D.
3. Covenants of New Enviroq. In consideration of the compensation
------------------------
payable to it under this Agreement, New Enviroq covenants and agrees with
Mid-America (which term, unless the context indicates otherwise, shall
hereinafter refer to Mid-America and all its subsidiaries) as follows:
a. Noncompetition. For a period of two years from and after the
--------------
date of this Agreement, New Enviroq shall not, directly or indirectly,
enter into, engage in, be employed by or consult with any business
except Mid-America which rehabilitates, lines, relines, coats,
constructs or reconstructs pipelines, sewers, conduits or passageways
anywhere in the world ("Business"), either on its own account, or as an
independent contractor, consultant, partner or joint venturer, or as an
agent of another person (including any corporation or other entity), or
as a stockholder of a corporation or other entity, or otherwise.
- 2 -
<PAGE> 3
b. Non-Solicitation. During the term of this Agreement, New
----------------
Enviroq shall refrain from and will not, directly or indirectly, on its
own account or as an independent contractor, consultant, partner or
joint venturer, of another person, (including any corporation or other
entity except Mid-America), or as a stockholder of a corporation or
other entity, or otherwise, (i) solicit any of the employees of
Mid-America to terminate their employment or (ii) solicit accounts or
orders from any suppliers or customers of Mid-America relating to the
Business.
c. Extension. The period of time during which New Enviroq is
---------
prohibited from engaging in such business practices pursuant to the
provisions of subparagraphs (a) and (b) above shall be extended by the
length of time during which New Enviroq is in breach of such covenants.
d. Applicability of Restrictive Covenants. It is understood and
--------------------------------------
agreed by and between the parties hereto that the restrictive covenants
set forth in subparagraphs (a) and (b) above are essential elements of
this Agreement and that, but for the agreement of New Enviroq to comply
with such covenants, Mid-America would not have agreed to enter into
this Agreement.
e. Remedies. New Enviroq agrees that damages at law will be
--------
an insufficient remedy to Mid-America in the event that New Enviroq
violates the terms of this
- 3 -
<PAGE> 4
paragraph 4 and that Mid-America shall be entitled, upon application
to a court of competent jurisdiction, to obtain injunctive relief to
enforce the provisions of such paragraph, which injunctive relief
shall be in addition to any other rights or remedies available to
Mid-America.
4. Confidentiality. New Enviroq shall not divulge, communicate, use
---------------
to the detriment of Mid-America or the benefit of any other person or
persons, any trade secret or other confidential information of Mid-America
(including, without limitation, operating methods and procedures, lists of
actual and potential sources of supply, customers and employees, costs,
profits, markets, sales and plans for future developments) that is not
publicly available other than as a result of New Enviroq's violation of this
Agreement (all of the foregoing being hereinafter collectively referred to as
"Proprietary Information"), it being understood that the Proprietary
Information is a valuable property right and asset of Mid-America.
5. Notice. Whenever notice is required or allowed by the provisions
------
of this Agreement to be given either to New Enviroq or to Mid-America, or
whenever any notice or written communication shall be given among the New
Enviroq and Mid-America, such notice shall be in writing and either hand-
delivered or furnished by U.S. Certified Mail, return receipt requested,
postage prepaid, addressed to New Enviroq or Mid-America as follows:
- 4 -
<PAGE> 5
New Enviroq:
New Enviroq Corporation
c/o William J. Long, President
801 5th Avenue N.
Birmingham, Alabama 35203
Mid-America:
Insituform Mid-America, Inc.
17988 Edison Avenue
Chesterfield, Missouri 63005
Attention: Chairman of the Board
The parties hereto may from time to time designate in writing such other
addresses as may be appropriate.
6. Governing Law. The validity, interpretation and construction of
-------------
this Agreement will be governed by the internal laws of the State of Delaware
without regard to conflicts of laws principles.
7. Amendment. This Agreement may be amended only by an instrument in
---------
writing executed by both of the parties hereto.
8. Successors and Assigns. This Agreement shall be binding upon and
----------------------
inure to the benefit of, and be enforceable against, the parties hereto and
their respective successors and assigns.
9. Entire Agreement. This Agreement sets forth the entire agreement
----------------
and understanding among the parties hereto with respect to the subject matter
hereof, and supersedes any prior negotiations, agreements, understandings or
arrangements among the parties hereto with respect to the subject matter
hereof.
10. Waivers. Compliance with the provisions of this Agreement may be
-------
waived only by an instrument in writing executed by the party granting the
waiver.
- 5 -
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
------------------
day and year first above written.
INSITUFORM MID-AMERICA, INC.
By--------------------------------------------
----------------------------, Its President
"Mid-America"
NEW ENVIROQ, INC.
By--------------------------------------------
----------------------------, Its President
"New Enviroq"
- 6 -
<PAGE> 7
CONSULTING AGREEMENT
--------------------
THIS CONSULTING AGREEMENT ("Agreement") is made and executed this
- ---- day of April, 1995, by and between INSITUFORM Mid-America, Inc., a
Delaware corporation ("Mid-America"), and New Enviroq Corporation, a Delaware
corporation, ("Consultant").
W I T N E S S E T H:
WHEREAS, Mid-America is engaged in the business of rehabilitating,
lining, relining, coating, constructing and reconstructing pipelines, sewers,
conduits and passageways throughout the world; and
WHEREAS, Mid-America and Consultant desire to enter into a
Consulting Agreement on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutually dependent
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereby agree as follows:
1. Retention of Services. Mid-America hereby retains the
---------------------
consulting services of Consultant, and Consultant agrees to provide
consulting services to Mid-America, under the terms and conditions set forth
herein.
2. Term. This Agreement shall become effective on the date
----
hereof and shall remain in full force and effect for a period of five (5)
years, commencing on the date hereof.
3. Compensation. Mid-America shall pay to Consultant for its
------------
services hereunder, and Consultant shall accept for such services, the sum of
Two Hundred Thousand Dollars ($200,000.00) per annum, payable on or before
April 18 of each consecutive year beginning April 18, 1995 (for an aggregate
payment amount of $1,000,000).
4. Duties. Consultant shall, at any reasonable time, as
------
specified below, and from time to time during the term hereof, as Mid-America
may reasonably request, consult with, advise and otherwise assist the
officers and administrative employees of Mid-America and its subsidiaries
with respect to any phase of the business conducted by Mid-America. Without
limiting the foregoing, Consultant shall consult with and assist Mid-America
with respect to its cured in place or folded and formed underground pipeline
replacement business activities. The availability of Consultant to perform
the duties set forth hereunder shall at all times be subject to the health,
the health of family members, personal vacation and travel schedule,
and other business beyond the control of representatives of
Consultant and their non-availability under any of such
<PAGE> 8
situations shall not be deemed a default by Consultant under this
Agreement.
5. Reimbursement of Expenses. In the event that Mid-America
-------------------------
shall specifically request Consultant to perform services that require its
representatives to travel outside the metropolitan Jacksonville, Florida area
or incur other extraordinary expenses, Mid-America shall reimburse Consultant
for all reasonable expenses so incurred.
6. Relationship Between Parties. The parties intend that the
----------------------------
relation between them created by this Agreement is that of contractor
(Mid-America) and independent consultant (Consultant). No agent, employee,
or servant of Mid-America shall be deemed to be the employee, agent, or
servant of Consultant solely because of his or her relationship with
Consultant, and none of the benefits provided by Mid-America to its
employees, including, but not limited to, workers' compensation insurance and
unemployment insurance, are available from Mid-America to Consultant.
7. Governing Law. The validity, interpretation and construction
-------------
of this Agreement will be governed by the laws of the state of Delaware.
8. Amendment. This Agreement may be amended only by an
---------
instrument in writing executed by both of the parties hereto.
9. Assignment. This Agreement shall not be assignable by either
party. ----------
10. Entire Agreement. This Agreement sets forth the entire
----------------
agreement and understanding among the parties hereto with respect to the
subject matter hereof, and supersedes any prior negotiations, agreements,
understandings or arrangements among the parties hereto with respect to the
subject matter hereof.
11. Waivers. Compliance with the provisions of this Agreement may
-------
be waived only by an instrument in writing executed by the party granting the
waiver.
* * *
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- 2 -
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first above written.
INSITUFORM MID-AMERICA, INC.
By:--------------------------------------
--------------------------------------
Its-----------------------------------
"Mid-America"
NEW ENVIROQ CORPORATION
By:--------------------------------------
--------------------------------------
Its-----------------------------------
"Consultant"
- 3 -
<PAGE> 1
INSITUFORM MID-AMERICA, INC.
EMPLOYMENT AGREEMENT
--------------------
This agreement ("Agreement") has been entered into this ---- day of
April, 1995, by and between Insituform Mid-America, Inc., a Delaware
corporation, and James J. Baird, Jr., an individual ("Executive").
RECITALS
The Board of Directors (the "Board") of the Company (as defined
below) has determined that it is in the best interests of the Company and its
stockholders to attract and encourage the attention and dedication of the
Executive to the Company as a member of the Company's management. The Board
desires to provide for the employment of the Executive, and the Executive is
willing to commit himself to serve the Company. Therefore, in order to
accomplish these objectives, the Board has caused the Company to enter into
this Agreement with the Executive.
IT IS AGREED AS FOLLOWS:
SECTION 1: DEFINITIONS AND CONSTRUCTION.
1.1 DEFINITIONS. For purposes of this Agreement, the following
words and phrases, whether or not capitalized, shall have the meanings
specified below, unless the context plainly requires a different meaning.
1.1(a) "BOARD" means the Board of Directors of the Company.
1.1(b) "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
1.1(c) "COMPANY" means Insituform Mid-America, Inc., a Delaware
corporation, and, unless the context otherwise
indicates, its subsidiaries, collectively.
1.1(d) "EFFECTIVE DATE" shall mean the date first written above.
1.1(e) "EMPLOYMENT PERIOD" means the period beginning on the
Effective Date and ending on the Date of Termination as
defined in Section 3.7.
1.1(f) "PEER EXECUTIVES" means executive officers of the
Company other than the Chairman of the Board and the
Vice Chairman of the Board.
1.2 GENDER AND NUMBER. When appropriate, pronouns in this
Agreement used in the masculine gender include the feminine gender, words in
the singular include the plural, and words in the plural include the
singular.
1.3 HEADINGS. All headings in this Agreement are included solely
for ease of reference and do not bear on the interpretation of the text.
Accordingly, as used in this Agreement, the terms "Article" and "Section"
mean the text that accompanies the specified Article or Section of the
Agreement.
1.4 APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the state of Missouri, without
reference to its conflict of law principles.
<PAGE> 2
SECTION 2: TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. The Executive shall remain in the employ
of the Company throughout the Employment Period in accordance with the terms
and provisions of this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Employment Period, the Executive shall
serve as Chief Operating Officer of the business presently conducted
by Insituform Southeast, Inc., subject to the reasonable directions
of the Chief Executive Officer of the Company or his or her designee
and the Board.
2.2(b) Throughout the Employment Period (but excluding any
periods of vacation and leave to which he is entitled), the Executive
shall devote substantially all his attention and time during normal
business hours to the business and affairs of the Company and shall
use his reasonable best efforts to perform faithfully and efficiently
such responsibilities as are assigned to him under or in accordance
with this Agreement; provided that, it shall not be a violation of
this paragraph for the Executive to (i) serve on corporate, civic,
political or charitable boards or committees, (ii) deliver lectures
or fulfill speaking engagements, or (iii) manage personal
investments, so long as such activities do not significantly
interfere with the performance of the Executive's responsibilities
as an employee of the Company in accordance with this Agreement or
violate the Company's conflict of interest policy as in effect from
time to time.
2.3 SITUS OF EMPLOYMENT. Throughout the Employment Period, the
Executive's services shall be performed at the office of the Company in
Jacksonville, Florida or at such other location as the Executive and the
Company may otherwise mutually agree.
2.4 COMPENSATION. Except as otherwise expressly provided herein,
Executive shall be entitled to the following compensation during the
Employment Period:
2.4(a) ANNUAL BASE SALARY. The Executive shall receive an
annual base salary ("Annual Base Salary") at a rate of at least
$140,000 per year which shall be paid in equal or substantially equal
installments at the times the Company generally pays its corporate
executives. During the Employment Period, the Annual Base Salary
payable to the Executive shall be reviewed at least annually and may
be increased in the sole and absolute discretion of the Board. The
Annual Base Salary may not be reduced after any increase thereof.
2.4(b) BONUSES. In addition to Annual Base Salary, the
Executive shall be awarded discretionary bonuses at such times and
in such amounts as determined in the sole and absolute discretion of
the Board.
2.4(c) INCENTIVE AND SAVINGS PLANS. the Executive shall be
entitled to participate in all incentive and savings plans generally
available to Peer Executives of the Company.
2.4(d) WELFARE BENEFIT PLANS. The Executive and/or the
Executive's family, as the case may be, shall be eligible for
participation in and shall receive all benefits under welfare benefit
plans, practices, policies and programs provided by the Company
(including, without limitation, medical, prescription, dental,
accidental death and travel accident insurance plans and programs)
to the extent generally available to Peer Executives of the Company,
-2-
<PAGE> 3
provided, however, that Executive shall not be entitled to
participate in any severance, pension, life insurance or disability
insurance plan other than as provided in Exhibit B hereto.
2.4(e) EXPENSES. Throughout the Term of this Agreement, the
Executive shall be entitled to receive prompt reimbursement for all
reasonable expenses incurred by the Executive in accordance with the
policies, practices and procedures generally applicable to Peer
Executives of the Company.
2.4(f) FRINGE BENEFITS. Throughout the Term of this Agreement,
the Executive shall be entitled to such fringe benefits as generally
are provided to Peer Executives of the Company. Such benefits shall
include (but not be limited to) the Company's furnishing Executive,
at the Company's expense, with an office, secretarial support and the
use of a vehicle appropriate for Executive's position.
2.4(g) VACATION. Throughout the Term of this Agreement, the
Executive shall be entitled to paid vacation in accordance with the
plans, policies, programs and practices generally provided with
respect to Peer Executives of the Company.
2.4(h) STOCK OPTIONS. As of the date hereof, the Company will
execute and deliver to Executive a Non-Incentive Stock Option
Agreement substantially in the form of Exhibit A hereto, to purchase
up to 15,000 shares of Class A Common Stock at an exercise price
equal to the fair market value of such stock on the date of grant.
SECTION 3: TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period.
3.2 DISABILITY. If the Company determines in good faith that a
Disability of the Executive has occurred during the Employment Period
(pursuant to the definition of Disability set forth below), it may give to
the Executive written notice in accordance with Section 7.1 of its intention
to terminate the Executive's employment. In such event, the Executive's
employment with the Company shall terminate effective on the 30th day after
receipt of such notice by the Executive (the "Disability Effective Date"),
provided that, within the 30 days after such receipt, the Executive shall not
have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean that the Executive has
been unable, with reasonable accommodation, to perform the essential
functions required of the Executive hereunder on a full-time basis for a
period of six months by reason of a physical and/or mental condition.
"Disability" shall be deemed to exist when certified by a physician selected
by the Company or its insurers and acceptable to the Executive or the
Executive's legal representative (such agreement as to acceptability not to
be withheld unreasonably). The Executive will submit to such medical or
psychiatric examinations and tests as such physician deems necessary to make
any such Disability determination. In the event of the termination of the
Executive's employment due to his Disability, the Executive shall be entitled
to all benefits set forth in Section 4.1.
3.3 TERMINATION WITHOUT CAUSE. The Company may terminate the
Executive's employment without Cause during the Employment Period. In such
event, the Executive shall be entitled to the benefits provided in Sections
4.1 and 4.2.
-3-
<PAGE> 4
3.4 TERMINATION FOR CAUSE. The Company may terminate the
Executive's employment during the Employment Period for "Cause," which shall
mean termination based upon: (i) the Executive's willful and continued
failure to substantially perform his duties with the Company (other than as
a result of incapacity due to physical or mental condition), after a demand
for substantial performance is delivered to him by the Company, which
identifies with reasonable specificity the manner in which the Executive has
not substantially performed his duties and the Executive has been given a
reasonable opportunity to substantially cure such performance deficiencies,
(ii) the Executive's commission of an act constituting a criminal offense
involving moral turpitude, dishonesty, or breach of trust adversely affecting
the Company or its reputation, or (iii) the Executive's material breach of
any provision of this Agreement. For purposes of this Section, no act, or
failure to act on the Executive's part shall be considered "willful" unless
done, or omitted to be done, without good faith and without reasonable belief
that the act or omission was in the best interest of the Company.
Notwithstanding the foregoing, the Executive shall not be deemed to have been
terminated for Cause unless and until (i) he receives a Notice of Termination
(as defined in Section 3.6) from the Company and has been given the cure
opportunity described in clause (i) of the immediately preceding sentence,
(ii) he is given the opportunity, with counsel, to be heard before the Board,
and (iii) the Board finds, in its good faith opinion, the Executive engaged
in the conduct set forth in the Notice of Termination.
3.5 GOOD REASON. The Executive may terminate his employment with
the Company for "Good Reason," which shall mean termination based upon:
(i) the assignment to the Executive of any duties materially
inconsistent in any respect with the Executive's position (including
status, offices, titles and reporting requirements), authority,
duties or responsibilities as contemplated by Section 2.2(a) or any
other action by the Company which results in a material diminution
in such position, authority, duties or responsibilities, excluding
for this purpose any action not taken in bad faith and which is
remedied by the Company promptly after receipt of notice thereof
given by the Executive;
(ii) (a) the failure by the Company to continue in effect any
benefit or compensation plan, stock ownership plan, life insurance
plan, health and accident plan or disability plan to which the
Executive is entitled as specified in Section 2.4, or (b) the taking
of any action by the Company which would adversely affect the
Executive's participation in, or materially reduce the Executive's
benefits under, any plans described in Section 2.4, or deprive the
Executive of any material fringe benefit enjoyed by the Executive as
described in Section 2.4(f);
(iii) a material breach by the Company of any provision of this
Agreement; or
(iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement.
3.6 NOTICE OF TERMINATION. Any termination by the Company for
Cause or Disability, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party, given in accordance
with Section 7.1. For purposes of this Agreement, a "Notice of Termination"
means a written notice which (i) indicates the specific termination provision
in this Agreement relied upon, (ii) to the extent applicable, sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive's employment under the provision so indicated,
and (iii) if the Date of Termination (as defined below) is other than the
date of receipt of such notice, specifies the termination date (which date
shall be not more than 15 days after the giving of such notice). The failure
by the Executive or the Company to set forth in the Notice of Termination
any fact or circumstance which contributes to a showing of Good Reason
or Cause shall not waive any right of the Executive or the
-4-
<PAGE> 5
Company hereunder, as the case may be, or preclude the Executive or the
Company from asserting such fact or circumstance in enforcing the
Executive's or the Company's rights hereunder.
3.7 DATE OF TERMINATION. "Date of Termination" shall be determined
as follows: (i) if the Executive's employment is terminated by the Company
for Cause, or by the Executive for Good Reason, the Date of Termination shall
be the date of receipt of the Notice of Termination or any later date
specified therein, as the case may be, (ii) if the Executive's employment is
terminated by reason of death or Disability, the Date of Termination shall be
the date of death of the Executive or the Disability Effective Date, as the
case may be, or (iii) if the Executive's employment is terminated by the
Company other than for Cause, death or Disability, the Date of Termination
shall be the date of receipt of the Notice of Termination.
SECTION 4: CERTAIN BENEFITS UPON TERMINATION.
4.1 TERMINATION UPON DEATH, DISABILITY, WITHOUT CAUSE OR FOR GOOD
REASON. If, during the Employment Period: (i) Executive's employment shall
be terminated due to: (a) Executive's death, or (b) Executive's disability;
or (ii) the Company shall terminate the Executive's employment without Cause;
or (iii) the Executive shall terminate employment with the Company for Good
Reason, the Executive shall be entitled to the following benefits:
4.1(a) Accrued Compensation: Within 30 days after the Date of
Termination, the Company shall pay to the Executive the sum of (1)
the Executive's Annual Base Salary through the Date of Termination
to the extent not previously paid, and (2) any compensation
previously deferred by the Executive (together with any accrued
interest or earnings thereon).
4.1(b) Severance Benefit: The Benefit provided in Exhibit B
hereto, the terms of which are incorporated by reference into this
Agreement. Notwithstanding any other provision of the Agreement to
the contrary, Executive hereby acknowledges and agrees that the
Benefit and the Company's obligations under Section 4.2 shall be in
lieu of any other severance, pension, life insurance or disability
insurance plan maintained by the Company in which Executive otherwise
might be eligible to participate.
4.2 ANNUAL SALARY CONTINUATION BENEFIT. In the event that (i) the
Company shall terminate Executive's Employment without Cause; or (ii) the
Executive shall terminate employment with the Company for Good Reason, then
during the period beginning on the Date of Termination and ending on April
30, 1999, the Company shall continue to: (a) pay to the Executive his current
Annual Base Salary in accordance with its general payroll practices then in
effect, and (b) pay the cost of continuing Executive's health insurance
coverage.
4.3 TERMINATION FOR CAUSE. If the Executive's employment shall be
terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the
obligation to pay to the Executive his Accrued Compensation. In such case
all Accrued Compensation shall be paid to Executive in a lump sum in cash
within 30 days of the Date of Termination.
-5-
<PAGE> 6
4.4 TERMINATION BY EXECUTIVE WITHOUT GOOD REASON OR THE COMPANY'S
CONSENT. If, without the Company's written consent, the Executive terminates
employment with the Company during the Employment Period (excluding a
termination for Good Reason), the Company's obligations to Executive under
this Agreement shall thereupon terminate, other than the payment of Accrued
Compensation and the Benefit payable pursuant to paragraph 2(e) of Exhibit B
hereto. In such case, all Accrued Compensation shall be paid to the
Executive in a lump sum in cash within 30 days of the Date of Termination
and, if applicable, the Benefit payable pursuant to paragraph 2(e) of Exhibit
B shall be payable as provided therein.
4.5 NON-EXCLUSIVITY OF RIGHTS. Except as otherwise specifically
provided herein, nothing in this Agreement shall prevent or limit the
Executive's continuing or future participation in any plan, program, policy
or practice provided by the Company and for which the Executive may qualify,
nor shall anything herein limit or otherwise affect such rights as the
Executive may have under any contract or agreement with the Company. Amounts
which are vested benefits of which the Executive is otherwise entitled to
receive under any plan, policy, practice or program of, or any contract or
agreement with, the Company at or subsequent to the Date of Termination,
shall be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
SECTION 5: NON-COMPETITION.
5.1 NON-COMPETE AGREEMENT.
Acknowledging that the covenants contained in this Section 5 are part
of the consideration for, and are reasonable in light of, the employment and
compensation covenants of the Company, applicable to Executive's employment,
including (without limitation) the Company's obligations under Section 4.1,
Executive hereby covenants and agrees with the Company that during the
Employment Period, and thereafter during the Non-Compete Period (as
hereinafter defined) that:
(a) Executive will not, directly or indirectly, engage in the
business of rehabilitating, lining, relining, coating, constructing
or reconstructing pipelines, sewers, conduits, manholes or
passageways (the "Services") anywhere in the world, nor otherwise
engage in prohibited competition, as such term is defined in Section
5.1(b). The parties hereto agree that it is contemplated that the
Company will continue to seek and obtain work in the United States
and internationally and acknowledge that the Company's business
presently involves operations in the United States and
internationally. Accordingly, Executive agrees that the foregoing
geographic scope is reasonable in light of current and presently
anticipated operations of the Company.
(b) "Prohibited competition" shall include, but not be limited
to, acting as consultant, advisor, independent contractor, officer,
manager, employee, principal, agent, trustee of any corporation,
partnership, association or agent or agency, or directly or
indirectly owning more than one percent of the outstanding capital
stock of any corporation, or being a member or employee of any
partnership or any owner or employee of any other business, any of
which is engaged in providing any of the Services.
"Prohibited competition" also shall include (in addition to the
foregoing):
(i) Accepting employment with a customer of the Company or of
the Company's subsidiaries with the intent or purpose of
transferring defined business performed by the Company or the
Company's subsidiaries to a department, division or affiliate of
the customer;
-6-
<PAGE> 7
(ii) Requesting or advising any of the customers, suppliers
or other business contacts of the Company or the Company's
subsidiaries to withdraw, curtail or cancel their business with
the Company or the Company's subsidiaries; or
(iii) Causing or inducing, or attempting to cause or induce,
either directly or indirectly, any employees, sales
representatives, consultants or other personnel of the Company or
the Company's subsidiaries to terminate their relationships or
employment or breach their agreements with the Company or the
Company's subsidiaries, whether for the purpose of accepting
employment with Executive or any other person, firm, association
or corporation with which Executive is associated, or otherwise.
(c) As used herein, the term "Non-Compete Period" shall mean the
period ending upon the expiration of three years following the date
Executive's employment with the Company and/or its subsidiaries
terminates.
5.2 INJUNCTIVE RELIEF. Executive recognizes that the breach of any
of his obligations under this Section 5 hereof may give rise to irreparable
injury to the Company or its subsidiaries inadequately compensable in damages
and that, accordingly, the Company or any of its subsidiaries may seek
injunctive relief against the breach or threatened breach of the within
undertaking, in addition to other remedies at law or in equity which may be
available. Executive acknowledges that compliance with Executive's
obligations under Section 5 hereof will not impair his ability to earn a
livelihood.
5.3 SCOPE. If any restriction set forth in this Section 5 is found
by any court of competent jurisdiction to be unenforceable because it extends
for too long a period of time or over too great range of activities or in too
broad a geographic area, it shall be interpreted and amended automatically to
extend only over the maximum period of time, range of activities or
geographic area as to which it may be enforceable to protect the interests of
the Company and its subsidiaries.
5.4 CONFIDENTIAL INFORMATION. The Executive shall hold in a
fiduciary capacity for the benefit of the Company all secret or confidential
information, knowledge or data relating to the Company or any of its
subsidiaries and affiliated companies, and their respective businesses, which
shall have been obtained by the Executive during the Executive's employment
by the Company and which shall not be or become public knowledge (other than
by acts by the Executive or representatives of the Executive in violation of
this Agreement). After termination of the Executive's employment with the
Company, the Executive shall not, without the prior written consent of the
Company, or as may otherwise be required by law or legal process, communicate
or divulge any such information, knowledge or data to anyone other than the
Company and those designated by it. In addition, Executive agrees to execute
and deliver any confidentiality or non-disclosure agreements required of
Company personnel pursuant to any license agreement entered into by the
Company or any subsidiary.
SECTION 6: SUCCESSORS.
6.1 SUCCESSORS OF EXECUTIVE. This Agreement is personal to the
Executive and, without the prior written consent of the Company, the rights
(but not the obligations) shall not be assignable by the Executive otherwise
than by will or the laws of descent and distribution. This Agreement shall
inure to the benefit of and be enforceable by the Executive's legal
representatives.
6.2 SUCCESSORS OF COMPANY. As used in this Agreement, the term
"Company" shall mean the Company as hereinabove defined and any successor to
its business and/or assets which assumes and agrees to perform the Company's
obligations under this Agreement by operation of law or otherwise.
-7-
<PAGE> 8
SECTION 7: MISCELLANEOUS.
7.1 NOTICE. For purposes of this Agreement, notices and all other
communications provided for in the Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses or to such other address as one party may have furnished
to the other in writing in accordance herewith, except that notice of change
of address shall be effective only upon receipt.
Notice to Executive:
-------------------
James J. Baird, Jr.
9937 Orchid Hills Road
Jacksonville, Florida 32256
Notice to Company:
-----------------
Insituform Mid-America, Inc.
17988 Edison Avenue
Chesterfield, Missouri 63005
Attention: Chief Executive Officer
7.3 VALIDITY. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any
other provision of this Agreement.
7.4 WITHHOLDING. The Company may withhold from any amounts payable
under this Agreement such Federal, state or local taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
7.5 WAIVER. The Executive's or the Company's failure to insist
upon strict compliance with any provision hereof or any other provision of
this Agreement or the failure to assert any right the Executive or the
Company may have hereunder, including, without limitation, the right of the
Executive to terminate employment for Good Reason pursuant to Section 3.5
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
7.6 ARBITRATION. The parties have agreed that any and all
disputes arising out of the terms, application or interpretation of this
Agreement or relating to Executive's employment by the Company, or the
termination of such employment, except disputes involving the enforcement of
the restrictive covenants in Section 5.1, shall be submitted to arbitration
in St. Louis, Missouri in accordance with the rules and procedures of the
American Arbitration Association (the "AAA"). Included within the parties'
intent and desire to arbitrate under this Agreement are all claims Executive
may have or assert under any federal, state or local law. No party shall
publicly disclose the existence or nature of any arbitration proceeding
hereunder, provided, however, that the Company may disclose such information
to the extent necessary or advisable, based upon the advice of counsel, to
comply with the Company's obligations under applicable securities laws.
Either party may initiate the arbitration of a dispute under this
Agreement by submitting a written request to arbitrate to the other party,
which request shall set forth the issue the party wishes to arbitrate, the
provisions of the Agreement or law the requesting party contends govern the
resolution of the dispute, a recital of the facts and any law the requesting
party contends supports its position, and the remedy or relief requested. If
the parties cannot agree upon an arbitrator within ten days of a request
-8-
<PAGE> 9
to arbitrate a dispute, either party may request the AAA to submit a list of
seven arbitrators with experience arbitrating disputes involving executive
employment contracts. The Company and the Executive, by alternately striking
names with the Executive striking the first name, shall select one arbitrator
who shall hear and decide the issues. The selection of the arbitrator shall
be made in the manner prescribed within seven days following the receipt of
the panel from AAA.
The decision of the arbitrator shall be final and binding upon the
parties, provided, however, a limited review (appeal) may be had by an action
to set aside, vacate, or modify the arbitration award in accordance with
principles applicable to arbitration awards as established by federal law.
The parties intend this Agreement to arbitrate to be fully enforceable under
the Federal Arbitration Act and of the Revised Statute of Missouri.
The arbitrator's fees and costs and expenses shall be shared equally
by the Company and the Executive. Each party shall bear its owns costs,
expense, and attorneys' fees in connection therewith.
7.7 Termination of Prior Agreements. Executive hereby agrees that all
-------------------------------
prior employment and salary continuation agreements between Executive and
ENVIROQ Corporation or Insituform Southeast, Inc. and their respective
affiliates (including, without limitation, that certain Amended and Restated
Salary Continuation Agreement, dated as of December --, 1994, by and between
Executive and Insituform Southeast, Inc. and that certain Employment
Agreement, dated September 10, 1986, by and between Executive and Insituform
Southeast, Inc.) are hereby terminated and superseded hereby and that the
parties thereto shall have no continuing liability or obligation to Executive
thereunder from and after the date hereof.
* * *
IN WITNESS WHEREOF, the Executive and, the Company, pursuant to the
authorization from its Board, have caused this Agreement to be executed in
its name on its behalf, all as of the day and year first above written.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION
CLAUSE WHICH MAY BE ENFORCED BY THE PARTIES
INSITUFORM MID-AMERICA, INC.
By--------------------------------------------
Name:-----------------------------------------
Title-----------------------------------------
EXECUTIVE
----------------------------------------------
James J. Baird, Jr.
-9-
<PAGE> 10
EXHIBIT A
NON-INCENTIVE STOCK OPTION AGREEMENT
This Non-Incentive Stock Option Agreement (hereinafter
"Agreement"), entered into and effective as of the ---- day of April, 1995,
in the County of St. Louis, Missouri, by and between INSITUFORM MID-AMERICA,
INC., a Delaware corporation (hereinafter referred to as the "Company"), and
the Optionee whose name is set forth on the last page hereof (hereinafter
referred to as the "Optionee").
WHEREAS, Optionee intends to devote significant time and effort to
the success of the Company; and
WHEREAS, the Company has determined that it is in the best
interests of the Company to issue stock options to encourage motivation and
incentive by Optionee.
NOW, THEREFORE, in consideration of the mutual agreements contained
herein:
1. GRANT OF OPTION. Subject to the terms and conditions of this
Agreement, the Company hereby grants to Optionee the right, privilege and
option to purchase up to the number of shares of Class A Common Stock, par
value $.01, of the Company ("Common Stock") set forth below the Optionee's
name on the last page hereof, at a price of $-- per share (the fair market
value of such shares at the close of business on the date first written
above). Such Option shall become vested on a cumulative basis as to 20% of
such covered shares on the anniversary date hereof in each of 1996, 1997,
1998, 1999 and 2000, provided that the Optionee continues to be an employee
of the Company on each such anniversary date.
2. TERM OF OPTION. The term of this Option shall expire on April
- ---, 2005 (ten years from the date hereof).
3. TIME OF EXERCISE OF OPTION. The Option shall be exercisable
during its term in whole or in part from time to time beginning on the date
hereof, but may be exercised only as to the total number of shares then
vested as described in paragraph 1, less any shares previously purchased
hereunder.
4. INCORPORATION OF STOCK OPTION PLAN. This Agreement is entered
into pursuant to the Insituform Mid-America, Inc. Stock Option Plan, as
amended (hereinafter "Plan"), approved by the stockholders of the Company,
which Plan is by this reference incorporated herein and made a part hereof.
A complete copy of the Plan may be obtained from the Secretary of the
Company. The Option covered by this Agreement is not intended to be an
Incentive Stock Option as defined in Section 422 of the Internal Revenue Code
of 1986, as amended. The material provisions of the Plan applicable to this
Option are as follows:
a. METHOD OF EXERCISE OF OPTION. This Option shall be
exercised, in whole or in part to the extent then exercisable, by a written
notice delivered to the Secretary of the Company stating the number of shares
with respect to which the Option is being exercised, accompanied by payment
in cash or, in the discretion of the Company's Stock Option Committee (the
"Committee"), in previously owned Class A Common Stock or a combination of
cash and Class A Common Stock, to the Company in the amount of the exercise
price of shares to be purchased.
<PAGE> 11
b. STOCK APPRECIATION RIGHT. Instead of exercising an
Option, an Optionee may request that the Committee authorize payment of the
difference between the fair market value of part or all of the Class A Common
Stock subject to the Option and the exercise price of the Option determined
as of the date the Committee receives the request from the Optionee. The
Committee shall have the sole authority to grant or deny such request.
c. TERMINATION OF OPTION. Subject to the express terms and
conditions of the Plan, this Option shall terminate in all events on the
earlier of (i) the date set forth in paragraph 2 hereof, or (ii) upon the
expiration of three months after the termination of Optionee's employment
with the Company and its subsidiaries; except that in the event of Optionee's
death, Optionee's personal representative may exercise this Option (to the
extent exercisable at the date of death) within 18 months after Optionee's
employment terminates because of death.
d. NON-TRANSFERABILITY OF OPTION. This Option is non-
transferable by Optionee except by will or the laws of descent and
distribution and shall be exercisable during Optionee's lifetime only by
Optionee.
e. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, ETC. In the
event of the payment of a stock dividend, a split-up or consolidation of
shares, or any like capital adjustment of the Company as provided under the
Plan, then to the extent the Option hereunder remains outstanding and
unexercised, there shall be a corresponding adjustment to the number of
shares covered under this Option, and in the purchase price per share, to the
end that Optionee shall retain the Optionee's proportionate interest without
change in the total purchase price under this Option.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its Chairman of the Board or President, and Optionee has signed
the same in duplicate originals.
INSITUFORM MID-AMERICA, INC.
By-------------------------------------------
Name:
Title:
James J. Baird, Jr.
---------------------------------------------
Name of Optionee (Typed)
15,000
---------------------------------------------
Number of Shares Covered
by Option
---------------------------------------------
Signature of Optionee
---------------------------------------------
Date
-2-
<PAGE> 12
EXHIBIT B
SEVERANCE BENEFITS
1. Severance Benefit.
-----------------
The Company agrees to pay to or on behalf of Executive the supplemental
salary continuation or death benefits (collectively, the "Benefit") described
in the following paragraphs, subject to all of the contingencies, conditions,
qualifications and disclaimers stated in the Agreement (as defined below) and
this Exhibit B. The Benefit shall in addition to any other payments of
compensation for services which may be paid by the Company to Executive from
time to time pursuant to the Agreement. Except as otherwise defined,
capitalized terms used in this Exhibit B shall have the respective meanings
ascribed thereto in the Employment Agreement, dated April 18, 1995 (the
"Agreement"), by and between Insituform Mid-America, Inc. and James J. Baird,
Jr.
2. Amount of Benefit.
-----------------
(a) In General. Except as provided in subparagraphs (b), (c), (d) and
----------
(e), the Benefit shall be the amount stated below for the period in which the
Date of Termination occurs, except that if Executive has not performed at
least one thousand (1,000) hours of service for the Company in the period in
which the Date of Termination occurs, then the Benefit shall be the amount
stated below for the immediately preceding period; provided, however, that if
the Date of Termination occurs on or after the Executive's sixty-eighth
(68th) birthday, the Benefit shall be $1,000,000 regardless of the number of
hours of service performed by Employee during the period in which the Date of
Termination occurs.
<TABLE>
<CAPTION>
Last Day of Period in which
Date of Termination occurs Amount of Benefit
--------------------------- -----------------
<S> <C>
3/31/95 $ 600,000
3/31/96 680,000
3/31/97 760,000
3/31/98 840,000
3/31/99 920,000
</TABLE>
(b) Death Benefit. In the event that the Executive's death occurs while
-------------
Executive is still employed by the Company the Benefit shall be $1,000,000.00
(the "Death Benefit"); provided, however, that the Executive or his
Beneficiary shall not be entitled to any Death Benefit if the Executive makes
any fraudulent statement in any application for the key executive insurance
if the Company elects to obtain such insurance. The determination of whether
the Executive made any fraudulent statement on an insurance application shall
be made by the Company's Board of Directors based on information available to
it, and the Board's finding shall be conclusive and binding on all parties to
and Beneficiaries under this Agreement.
(c) Retirement and Disability Benefit. The Benefit payable upon
---------------------------------
Executive's attaining age sixty-eight (68) (whether Executive's entitlement
to such payment results from normal retirement or Disability while Executive
is employed by Company) shall be $1,000,000 (the "Retirement and Disability
Benefit").
(d) No Benefit Under Certain Circumstances. Unless the Company's Board
--------------------------------------
of Directors, in its sole discretion, determines otherwise, the Benefit shall
be zero (0) if the Company terminates Executive's employment for Cause.
<PAGE> 13
(e) Termination of Employment Without Company's Consent.
---------------------------------------------------
Notwithstanding any other provision of this Exhibit B or the Agreement to the
contrary, if prior to Executive's attaining age sixty-eight (68), he
voluntarily terminates his employment with the Company without the Company's
consent (excluding a termination for Good Reason), the Benefit shall be equal
to the cash surrender value of the life insurance policy maintained to fund
the Company's obligations to Executive under this Exhibit B, which Benefit
shall be payable not later than the time the Company receives the proceeds
from the surrender of such policy; provided, however, that the Executive may
-------- -------
elect, by written notice delivered to the Company within thirty (30) days
after the date of such voluntary termination, to be paid the Benefit
described in subparagraph 2(a) that would have been payable if a "Date of
Termination had occurred on the date of such voluntary termination, such
Benefit to be paid in one hundred twenty (120) equal monthly installments,
payment of which shall commence sixty (60) days after the date of such
voluntary termination, and each subsequent monthly payment of which shall be
due and payable on the same date in the succeeding months on which the first
payment shall be made. The Company covenants to continue to maintain such
life insurance policy as presently in effect, and shall not encumber or
diminish the cash surrender value thereof, and further agrees to take all
appropriate action, as soon as practicable after such voluntary termination
pursuant to this subparagraph, in order to obtain such cash surrender value.
3. Payment of Benefits.
-------------------
(a) Time of Payment. Upon the occurrence of the Date of Termination,
---------------
the Benefit shall be paid to the person described in subparagraph (b) in the
manner described in subparagraph (c).
(b) Person Entitled to Benefit. If the Date of Termination occurs prior
--------------------------
to Executive's death, the Benefit shall be paid to Executive during his life,
and then any remaining payments shall be paid to Executive's then living
Beneficiary (as hereinafter defined) during his life, and then any remaining
payments shall be paid Executive's then living Contingent Beneficiary (as
hereinafter defined) during his life, and then any remaining payments shall
be paid to the estate of the last surviving Beneficiary or Contingent
Beneficiary. If the Date of Termination occurs as the result of Executive's
death, then the Benefit shall be paid to Executive's then living Beneficiary
during his life, and then any remaining payments shall be paid Executive's
then living Contingent Beneficiary during his life, and then any remaining
payments shall be paid to the estate of the last surviving Beneficiary or
Contingent Beneficiary.
(c) Manner of Payment. At the option of the Company, the Benefit shall
-----------------
be paid either: (i) in one hundred twenty (120) equal monthly installments,
payment of which shall commence within thirty (30) days after the Date of
Termination, and each subsequent monthly payment of which shall be due and
payable as of the same date in the succeeding months on which the first
payment shall have been made; or (ii) within six (6) months after the Date of
Termination, in a lump sum.
(d) Disability. If the Date of Termination occurs because of the
----------
Executive's Disability, and Executive returns to work for the Company, the
payment of Benefit shall be suspended until the occurrence of another Date of
Termination, and the amount paid to Executive shall be deducted from the
amount payable upon the occurrence of the subsequent Date of Termination. If
Executive goes to work for anyone other than the Company, the payment of the
Benefit shall terminate, and Executive shall have no further rights under
this Exhibit B.
4. Executive's Beneficiary.
-----------------------
"Beneficiary" shall mean the person designated by Executive in writing
to the Chief Executive Officer of Company to receive payments hereunder after
Executive's death; provided that (i) if Executive has made no beneficiary
designation, then his surviving spouse shall be the Beneficiary, and (ii)
if Executive has made no beneficiary designation, and has no surviving
spouse, his estate shall be the Beneficiary. "Contingent Beneficiary"
shall mean the person designated by Executive in writing to the
-2-
<PAGE> 14
Chief Executive Officer of the Company to receive payments hereunder after
the death of the Beneficiary. The Beneficiary and Contingent Beneficiary
may be changed by Executive at any time in writing to the Chief Executive
Officer of the Company.
5. Payments Upon Incapacity.
------------------------
If Company shall find that any person to whom any payment is payable
under this Agreement is unable to care for his or her affairs because of
illness or accident, or is a minor, any payment due (unless prior claim
therefor shall have been made by a duly appointed guardian, committee, or
other legal representative) may be paid on behalf of or for the benefit of
such person to the spouse, a child, a parent, or a brother or sister, or to
any other person deemed by Company to have incurred expense for such person
otherwise entitled to payment, in such manner and proportions as Company may
determine. Any such payment shall be a complete discharge of the liabilities
of Company to make such payment to Executive.
6. Life Insurance.
--------------
With respect to amounts as are to be paid as a Benefit, Company may at
its option purchase one or more life insurance contracts on the Executive's
life, with the Company or a subsidiary as owner and beneficiary, or may
invest in such other investments, if any, which the Company desires to assist
in providing liquidity to pay the Benefit under this Agreement. The Company
may borrow such amounts of the cash value of any policies as it desires for
use in its own business and financial operations. The Company shall have the
unrestricted right to use all amounts and exercise all options and privileges
under any such life insurance policy, without knowledge or consent of the
Executive, his estate, Beneficiary or any other person, it being expressly
agreed that neither Executive, his Estate, nor his Beneficiary shall have any
right, title or interest whatsoever in or to any such policy.
Notwithstanding the option of Company to purchase life insurance contracts on
Executive's life as described above, and subject to subparagraph 2(e) above,
this Agreement shall not be construed as required or obligating Company to
purchase any life insurance contracts to provide funds to pay the Benefit or
as giving Executive the right to require Company to purchase such life
insurance contracts.
7. Company's Obligations to the Unsecured.
--------------------------------------
Any assets, including any life insurance policy purchased by Company,
acquired to provide the funds to make payments to Executive or his
Beneficiary (as defined), shall at all times be solely assets of Company. It
is further understood and agreed that Company's obligation under this
Agreement shall not be secured in any manner. Neither any policy nor any
other asset of Company shall be placed in trust or in escrow or otherwise
physically or legally segregated for the benefit of Executive, and the
eventual payment of the Benefit to Executive, his Beneficiary or any other
person shall not be secured to him or them by the issuance of any negotiable
instrument or other evidence of indebtedness of Company. Neither Executive,
his Beneficiary, nor any other person shall be deemed to have any property
interest, legal or equitable, in any policy or in any other specific asset of
Company, and, to the extent that any person acquires any right to receive
payments under the provisions of this Agreement, such right shall be no
greater than, nor shall it have any preference or priority over, the rights
of any unsecured general creditor of Company.
8. Alienation or Encumbrance.
-------------------------
No payments, benefits, or rights under this Agreement shall be subject
in any manner to anticipation, sale, transfer, assignment, mortgage, pledge,
encumbrance, charge or alienation by the Executive, his Beneficiary or
any other person who could or might possibly receive future payments or
-3-
<PAGE> 15
benefits under this Agreement. If the Company determines that any such
person entitled to any payments under this Agreement has become insolvent,
bankrupt, or has attempted to anticipate, sell, transfer, assign,
mortgage, pledge, encumber, charge or otherwise in any manner alienate any
amount payable to him under this Agreement or that there is any danger of
levy, attachment or other court process or encumbrance on the part of any
creditor of such person entitled to payments hereunder, against any
benefit or other amounts payable to such person, the Company may, in its
discretion, at any time, withhold any or all such payments or benefits and
apply the same for the benefit of such person, in such manner and in such
proportion as the Company may deem proper.
9. Nonguarantee of Employment.
--------------------------
Nothing contained in this Exhibit B shall be construed as a contract of
employment between Company and Executive, or as a right of Executive to be
continued in the employment of Company or as a limitation or the right of
Company to discharge Executive, with or without Cause, at any time, subject
to the provisions of the Agreement or any other employment agreement between
the Company and Executive.
10. Cooperation of Parties.
----------------------
Each party to this Agreement agrees to perform any and all acts and
execute any and all documents and papers which are necessary or desirable for
carrying out this Agreement or any of its provisions.
11. Termination of Agreement.
------------------------
Notwithstanding any other provision in this Agreement, Company and
successor thereof, whether or not the employment of Executive is terminated,
may terminate the Company's obligations under this Exhibit B in its entirety,
with or without reason, by giving Executive notice of such termination in
writing, specifying therein the effective date of such termination.
Termination of the Company's obligations under this Exhibit B pursuant to
this paragraph shall be considered a "Date of Termination" for the purposes
of paragraph 3 hereof, and the Executive shall be entitled to payment of the
Benefit by the Company determined as of the Date of Termination, in the
manner otherwise provided for in paragraph 3 hereof, and neither party shall
have any further obligation in respect to this Agreement except for payment
of Executive's Benefit.
12. Claims Procedure.
----------------
Any claim for benefits or payments under this Agreement by Executive or
his Beneficiary shall be made in writing and delivered to Company at its
principal office. If Executive or Beneficiary believes he has been denied
any benefits or payments under this Agreement, either in total or in an
amount less than the full benefit or payment the claimant would normally be
entitled to, Executive shall notify Company in writing of the amount or
nature of the benefit or payment and of the basis for his belief that said
benefit or payment was improperly denied. The Company shall advise the
claimant in writing of the amount of the Benefit or payment, if any, and the
specific reasons for the denial. The Company shall also furnish the claimant
at that time with a written notice containing:
(a) A specific reference to pertinent provisions of this Exhibit
B; and
(b) A description of any additional material or information
necessary for the claimant to perfect his claim, if possible, any
explanation of why such material or information is needed; provided,
however, that any description or explanation provided by Company
pursuant to this subparagraph shall not constitute a waiver by Company
of any rights under this Exhibit B or the Agreement or estop Company
from reasonably denying any benefit or payment hereunder; and
-4-
<PAGE> 16
(c) An explanation of the following claim review procedure:
(i) Within sixty (60) days of receipt of the information
described above, the claimant shall, if further review is desired,
file a written request for reconsideration with the Board. So long
as the claimant's request for review is pending (including such
sixty (60) day period), the claimant or his duly authorized
representative may review pertinent documents and may submit issues
and comments in writing to the Board.
(ii) A final and binding decision shall be made by the Board
within sixty (60) days of the filing by the claimant of the request
for reconsideration; provided, however, that if the Board, in its
discretion, feels that a hearing with the claimant or his or her
representative present is necessary or desirable, this period shall
be extended an additional sixty (60) days.
(iii) The Board shall use ordinary care and diligence in
the performance of its duties. The Board shall be entitled to rely
conclusively, and shall be fully protected in any action or
omission taken by it in good faith reliance, upon the advice or
opinions of any persons, firms or agents retained by it, including,
but not limited to, accountants, actuaries, counsel and other
specialists. Nothing contained herein shall preclude Company from
indemnifying any member if the Board for all actions under this
Agreement, or from purchasing liability insurance to protect such
persons serving thereon with respect to their duties pursuant to
this Agreement.
-5-
<PAGE> 17
SALARY CONTINUATION AGREEMENT
-----------------------------
DESIGNATION OF BENEFICIARY
--------------------------
In the event of my death while entitled to present or future benefits
under Exhibit B to the Employment Agreement entered into between Insituform
Mid-America, Inc. and me, dated April ---, 1995, I hereby designate the
following beneficiary (or beneficiaries in the percentages set forth
following their names) in accordance with paragraph 4 of Exhibit B of the
above said Agreement:
(give name(s), address(es), relationship(s), social security number(s),
and, if applicable, percentage of interest).
Primary Beneficiary:
---------------------------------------------------------
---------------------------------------------------------
Contingent Beneficiary:
---------------------------------------------------------
---------------------------------------------------------
WITNESS: EXECUTIVE:
- ------------------------------ ------------------------------
James J. Baird, Jr.
Date:-------------------------
ACCEPTED: INSITUFORM MID-AMERICA, INC.
ATTEST:
- ------------------------------ BY:---------------------------
Secretary
Date:-------------------------
-6-
<PAGE> 1
AMENDED AND RESTATED
COOPERATION AGREEMENT
Agreement dated as of April 28, 1995 among Insituform Technologies,
Inc., for itself and on behalf of Insituform North America Corp., NuPipe,
Inc. and Insituform California, Inc. (collectively, "ITI"), Insituform
Mid-America, Inc. ("IMA"), and Enviroq Corporation, for itself and on
behalf of Insituform Southeast, Inc., NuPipe Southeast, Inc. and E-MidSouth,
Inc. (collectively, "Enviroq").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, IMA and Enviroq entered into an agreement dated November 2,
1994 (the "Merger Agreement") whereunder IMA proposed to acquire the
pipeline rehabilitation business of Enviroq; and
WHEREAS, ITI and Enviroq, through their respective wholly-owned
subsidiaries, are parties to various license agreements (collectively,
the "Licenses") relating to the Insituform(R) process and the NuPipe(R)
process; and
WHEREAS, prior to Closing (as hereinafter defined) under the Merger
Agreement, Enviroq requested that ITI grant its consent (the "Consent")
under the Licenses in connection with the transactions contemplated by
the Merger Agreement; and
WHEREAS, by letters, each dated April 4, 1995, ITI declined to grant
the Consent; and
WHEREAS, ITI has filed suit (the "Declaratory Action") in the
Chancery Court (the "Court") for the Thirtieth Judicial District of
Memphis, Shelby County, Tennessee (Insituform North America Corp.
------------------------------
and NuPipe, Inc. v. Insituform Southeast, Inc., et al., No. 105506-2)
- ---------------------------------------------- -- --
seeking, among other things, a declaratory judgment confirming ITI's
actions under the Licenses; and
WHEREAS, the parties entered into a cooperation agreement dated
April 4, 1995 (the "Cooperation Agreement") whereunder the parties agreed,
among other things, through and including April 30, 1995, not to commence
any proceeding, or take any action in any proceeding in furtherance of the
Declaratory Action or any other petition or action against any party in
any court relating directly or indirectly to the Consent or the denial
thereof; and
WHEREAS, by letters each dated April 17, 1995, the parties agreed
that ITI would forbear from asserting any rights under the Licenses, and/or
the partnership agreement dated December 23, 1985 (the "Partnership
Agreement") of Midsouth Partners, as a consequence of the consummation
of the Closing and that no failure or delay by ITI in exercising any
right or privilege under the
<PAGE> 2
Licenses, and each of them, and/or the Partnership Agreement, would operate
as a waiver thereof, and
WHEREAS, the transactions contemplated pursuant to the Merger
Agreement were consummated on April 18, 1995 (the "Closing"); and
WHEREAS, the parties desire to continue discussions relating
to the Licenses and the Partnership Agreement while preserving the
respective rights of the parties;
NOW, THEREFORE, in consideration of the following mutual premises
and covenants, the sufficiency of which is hereby acknowledged, the
parties agree as follows:
(a) PRESS RELEASES. ITI agrees to issue the release attached
hereto as Exhibit A, and IMA agrees to issue the press release attached
hereto as Exhibit B, in each case promptly after the execution and delivery
hereof by all parties.
(b) NO COURT ACTION. For the period from the date hereof
through and including May 31, 1995, each party hereto agrees not to
commence any proceeding, or take any action in any proceeding in
furtherance of the Declaratory Action or any other petition or action
against any party in any court, relating directly or indirectly to the
Consent or the denial thereof, or, to the extent arising from the
consummation of the Closing, the exercise of any right or privilege under
the Licenses, and each of them, and/or the Partnership Agreement; provided,
however, that:
(i) IMA, Enviroq, and their respective subsidiaries may file
on a timely basis in the United States District Court of the Western
District of Tennessee a notice of removal of the Declaratory Action
and any other pleadings necessary to effect removal and ITI may file
on a timely basis in the United States District Court for the Western
District of Tennessee documents seeking to remand the Declaratory
Action to the Chancery Court for the Thirteenth Judicial District at
Memphis, Shelby County, Tennessee (collectively referred to herein as
"Removal Pleadings"), and the filing of such Removal Pleadings will
not be deemed to be a breach of this Agreement; and
(ii) any party (or its respective subsidiaries) required to
file a responsive pleading shall (x) prepare such stipulations for
extension of time to file initial responsive pleadings or motions
(including without limitation motions to dismiss for lack of
jurisdiction or for improper venue) (collectively, referred to
herein as "IMA Motions") as are permitted by the rules of the
court where the Declaratory Action is pending, the other parties
shall sign such stipulations and the party seeking such extension
shall file such stipulations with the court or (y) prepare and file a
motion seeking an extension of time to file initial responsive
pleadings or IMA Motions as may be required to effectuate the
<PAGE> 3
initial responsive pleadings or IMA Motions until May 31, 1995 which
the other parties shall not oppose (and if required by the court to
effectuate such an extension each other party shall join in such
motion).
Except for Removal Pleadings, all time periods for filing responsive pleadings
or motions with respect to the complaint filed in the Declaratory Action
(including motions to dismiss on the basis of lack of jurisdiction, improper
venue, or failure to state a claim) shall be tolled during the term of this
Agreement and all time periods to file such responsive pleadings or such
motions shall commence as of May 31, 1995.
(c) INTERPRETATION. The parties acknowledge and agree that neither
this Agreement, nor any act or omission, of any party contemplated hereby
shall prejudice the rights of any party hereto in any proceeding before
the Court or otherwise.
(d) WAIVER. IMA and Enviroq each acknowledge receipt of the
summons and complaint in the Declaratory Action and waive any defense with
respect to the manner of service thereof. Subject to the preceding sentence,
no failure or delay by any party in exercising any right, power or privilege
under this Agreement, nor, as a result of the consummation of the Closing,
the Licenses or the Partnership Agreement, shall operate as a waiver thereof
nor shall any single or partial exercise thereof preclude any other or
further exercise of any right, power or privilege with respect to this
Agreement, the Licenses, the Partnership Agreement or otherwise.
(e) SPECIFIC PERFORMANCE. If any of the provisions of this
Agreement are not performed by any party in accordance with their respective
terms or are otherwise breached, each other party hereby acknowledges that
money damages would be an inadequate remedy for such breach and the
business and assets of the other parties would be irreparably harmed.
Accordingly, each party hereby agrees that the other parties, respectively,
shall be entitled to specific performance and injunction or other equitable
relief as a remedy for any such breach. Such remedy shall not be deemed to be
the exclusive remedy for the breach of this Agreement, but shall be in
addition to all of the remedies available to each party, at law or in
equity.
(f) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware,
without giving effect to the principles of conflict of laws thereof.
(g) ENTIRE AGREEMENT. This Agreement contains the entire
understanding among the parties with respect to the matters contemplated
by this Agreement and supersedes all prior written or oral communications,
negotiations, understandings or agreements of any kind with respect to such
matters; provided that this provision
<PAGE> 4
shall not supersede any currently existing confidentiality agreements among
the parties.
(h) AMENDMENTS. No amendment or modification of this Agreement
shall be effective unless made or agreed to in writing by the parties hereto.
(i) PARTIES IN INTEREST. This Agreement shall be binding upon
the parties and their respective successors and assigns and shall inure to
the benefit of the parties and their respective successors and assigns.
(j) HEADINGS. Paragraph headings in the Agreement are for
convenience only and shall not be deemed to be part of this Agreement.
(k) COUNTERPARTS. This Agreement may be executed in counterparts
and all of such counterparts taken together shall be deemed to constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above-written.
INSITUFORM TECHNOLOGIES, INC.
By:-----------------------------------
Jean-Paul Richard
President and
Chief Executive Officer
INSITUFORM MID-AMERICA, INC.
By:-----------------------------------
Jerome Kalishman
Chairman
ENVIROQ CORPORATION
By:-----------------------------------
James Baird
President
<PAGE> 5
EXHIBIT A
[Press Release of Insituform Technologies, Inc.]
CONTACT: -or- ITI'S INVESTOR RELATIONS COUNSEL:
Insituform Technologies, Inc. The Equity Group Inc.
Jean-Paul Richard Linda Latman (212) 836-9609
President & CEO (901) 759-7473
FOR IMMEDIATE RELEASE
---------------------
Memphis, TN -- April 28, 1995 -- Insituform Technologies, Inc.
("ITI") (NASDAQ National Market: INSUA) today announced that it has agreed
with Insituform Mid-America, Inc. ("IMA") and Enviroq Corporation ("Enviroq")
to extend through May 31, 1995 the period during which ITI will postpone
assertion of any rights under the various Insituform(R) and NuPipe(R) license
agreements, and the partnership agreement of Midsouth Partners, arising as a
result of the acquisition of Enviroq by IMA without consent of ITI. During
such period, the parties would not take further action in litigation initiated
by ITI in Tennessee Chancery Court regarding such matters, except for certain
proceedings regarding venue.
Insituform Technologies, Inc. provides state-of-the-art techniques
for the reconstruction of deteriorated pipelines utilizing trenchless
processes, and owns the worldwide rights to the Insituform Process. By
eliminating the need for disruptive excavation, ITI believes the Insituform
Process provides a cost-effective solution to the problem of deteriorated
pipe systems. Insituform Technologies, Inc. also offers the NuPipe Process in
the United States and overseas and is engaged in the rehabilitation of
pipeline for the mining and oil and gas industry under the UltraPipe
(registered trademark) name.
#### #### #### ####
<PAGE> 1
T H E A M E R I C A N I N S T I T U T E O F A R C H I T E C T S
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AIA DOCUMENT A111
STANDARD FORM OF AGREEMENT
BETWEEN OWNER AND CONTRACTOR
where the basis of payment is the
COST OF THE WORK PLUS A FEE
without a Guaranteed Maximum Price
1987 EDITION
THIS DOCUMENT HAS IMPORTANT LEGAL CONSEQUENCES: CONSULTATION WITH
AN ATTORNEY IS ENCOURAGED WITH RESPECT TO ITS COMPLETION OR MODIFICATION.
The 1987 Edition of AIA Document A201. General Conditions of the Contract for
Construction, is adopted
in this document by reference. Do not use with other general conditions
unless this document is modified.
This document has been approved and endorsed by The Associated General
Contractors of America.
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AGREEMENT
made as of the day of March in the year of
Nineteen Hundred and Ninety-Five
BETWEEN the Owner:
(Name and address)
Insituform Mid-America, Inc., a Delaware Corporation
qualified to do business in Missouri
and the Contractor:
(Name and address)
Turner Construction Company, a New York Corporation
qualified to do business in Missouri
the Project is:
(Name and address)
A one-story 54,036 square foot manufacturing building,
site improvements and installation of process equipment,
upon Owner's site on Edison Avenue in Chesterfield,
Missouri
the Architect is:
(Name and address)
David Mason & Associates Marathon Engineers
800 South Vandeventer Avenue and 2323 East Capitol Drive
St. Louis, Missouri 63110 Appleton, Wisconsin 54913
The Owner and Contractor agree as set forth below.
- -------------------------------------------------------------------------------
Copyright 1920, 1925, 1951, 1958, 1961, 1963, 1967, 1974, 1978, (C) 1987
by The American Institute of Architects, 1735 New York Avenue, N.W.,
Washington, D.C. 20006. Reproduction of the material herein or
substantial quotation of its provisions without written permission of
the AIA violates the copyright laws of the United States and will be
subject to legal prosecution.
- -------------------------------------------------------------------------------
AIA DOCUMENT A111 * OWNER-CONTRACTOR AGREEMENT * TENTH EDITION * AIA(R) * (C)
1987 * THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 1
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND IS SUBJECT
TO LEGAL PROSECUTION.
<PAGE> 2
ARTICLE 1
---------
THE CONTRACT DOCUMENTS
1.1 The Contract Documents consist of this Agreement. Conditions of
the Contract (General, Supplementary and other Conditions), Drawings,
Specifications, addenda issued prior to execution of this Agreement, other
documents listed in this Agreement and Modifications issued after execution
of this Agreement; these form the Contract, and are as fully a part of the
Contract as if attached to this Agreement or repeated herein. The Contract
represents the entire and integrated agreement between the parties hereto and
supersedes prior negotiations, representations or agreements, either written
or oral. An enumeration of the Contract Documents, other than Modifications,
appears in Article 16. If anything in the other Contract Documents is
inconsistent with this Agreement, this Agreement shall govern.
ARTICLE 2
---------
THE WORK OF THIS CONTRACT
2.1 The Contractor shall execute the entire Work described in the
Contract Documents, except to the extent specifically indicated in the Contract
Documents to be the responsibility of others, or as follows:
Owner will specify, purchase and pay for all process equipment.
The delivery date for process equipment will be communicated to
Contractor on or before April 1, 1995. Upon delivery to the site
of work, Contractor shall be responsible to receive, handle,
store, protect and install such process equipment in accordance
with the Contract Documents and the recommendations of the manu-
facturer of the equipment.
ARTICLE 3
---------
RELATIONSHIP OF THE PARTIES
3.1 The Contractor accepts the relationship of trust and confidence
established by this Agreement and covenants with the Owner to cooperate
with the Architect and utilize the Contractor's best skill, efforts and
judgment in furthering the interests of the Owner; to furnish efficient
business administration and supervision; to make best efforts to furnish at
all times an adequate supply of workers and materials; and to perform the
Work in the best way and most expeditious and economical manner consistent
with the interests of the Owner. The Owner agrees to exercise best efforts to
enable the Contractor to perform the Work in the best way and most expeditious
manner by furnishing and approving in a timely way information required by the
Contractor and making payments to the Contractor in accordance with require-
ments of the Contract Documents.
ARTICLE 4
---------
DATE OF COMMENCEMENT AND SUBSTANTIAL COMPLETION
4.1 The date of commencement is the date from which the Contract Time
of Subparagraph 4.2 is measured; it shall be the date of this Agreement, as
first written above, unless a different date is stated below or provision is
made for the date to be fixed in a notice to proceed issued by the Owner.
(Insert the date of commencement if it differs from the date of this Agreement
or, if applicable, state that the date will be fixed in a notice to proceed.)
Unless the date of commencement is established by a notice to proceed issued
by the Owner, the Contractor shall notify the Owner in writing not less than
five days before commencing the Work to permit the timely filing of mortgages,
mechanic's liens and other security interests.
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AIA DOCUMENT A111 * OWNER-CONTRACTOR AGREEMENT * TENTH EDITION * AIA(R) * (C)
1987 * THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 2
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND IS SUBJECT
TO LEGAL PROSECUTION.
<PAGE> 3
4.2 The Contractor shall achieve Substantial Completion of the entire
Work not later than
(Insert the calendar date or number of calendar days after the date of
commencement. Also insert any requirements for earlier Substantial
Completion of certain portions of the Work, if not stated elsewhere in
the Contract Documents.)
Building and Process Equipment Installation - September 30, 1995.
, subject to adjustments of this Contract Time as provided in the Contract
Documents.
(Insert provisions, if any, for liquidated damages relating to failure to
complete on time.)
ARTICLE 5
---------
CONTRACT SUM
5.1 The Owner shall pay the Contractor in current funds for the Con-
tractor's performance of the Contract the Contract Sum consisting of the Cost
of the Work as defined in Article 7 and the Contractor's Fee determined as
follows:
(State a lump sum, percentage of Cost of the Work or other provision for
determining the Contractor's Fee, and explain how the Contractor's Fee is
to be adjusted for changes in the Work.)
Contractor shall be paid a fixed fee of $145,000.00
Contractor shall be paid an additional fee for services in con-
nection with the process equipment in an amount equal to two
percent (2%) of: (1) the total cost of the process equipment
purchased and paid for by Owner, and (2) the actual cost of
installation of the process equipment.
In addition, if Contractor is able to achieve substantial com-
pletion of the building and installation of the process
equipment on or before September 30, 1995, contractor shall be
paid an incentive bonus of $2,000.00 per day for each working
day after the date of such actual substantial completion and
prior to September 30, 1995.
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AIA DOCUMENT A111 * OWNER-CONTRACTOR AGREEMENT * TENTH EDITION * AIA(R) * (C)
1987 * THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 3
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND IS SUBJECT
TO LEGAL PROSECUTION.
<PAGE> 4
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AIA DOCUMENT A111 * OWNER-CONTRACTOR AGREEMENT * TENTH EDITION * AIA(R) * (C)
1987 * THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 4
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND IS SUBJECT
TO LEGAL PROSECUTION.
<PAGE> 5
6.2 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE
6.2.1 Increased costs for the items set forth in Article 7 which result
from changes in the Work shall become part of the Cost of the Work, and the
Contractor's Fee shall be adjusted as provided in Paragraph 5.1.
6.3 ALL CONTRACTS
6.3.1 If no specific provision is made in Paragraph 5.1 for adjustment
of the Contractor's Fee in the case of changes in the Work, or if the extent
of such changes is such, in the aggregate, that application of the adjustment
provisions of Paragraph 5.1 will cause substantial inequity to the Owner or
Contractor, the Contractor's Fee shall be equitably adjusted on the basis of
the Fee established for the original Work.
ARTICLE 7
---------
COSTS TO BE REIMBURSED
7.1 The term Cost of the Work shall mean costs necessarily incurred
by the Contractor in the proper performance of the Work. Such costs shall be
at rates not higher than the standard paid at the place of the Project except
with prior consent of the Owner. The Cost of the Work shall include only the
items set forth in this Article 7.
7.1.1 LABOR COSTS
7.1.1.1 Wages of construction workers directly employed by the Contractor
to perform the construction of the Work at the site or, with the Owner's
agreement, at off-site workshops.
7.1.1.2 Wages or salaries of the Contractor's supervisory and
administrative personnel when stationed at the site with the Owner's
agreement.
(If it is intended that the wages or salaries of certain personnel stationed
at the Contractor's principal or other offices shall be included in the Cost
of the Work, identify in Article 14 the personnel to be included and whether
for all or only part of their time.)
7.1.1.3 Wages and salaries of the Contractor's supervisory or admin-
istrative personnel engaged, at factories, workshops or on the road, in
expediting the production or transportation of materials or equipment
required for the Work, but only for that portion of their time required
for the Work.
7.1.1.4 Costs paid or incurred by the Contractor for taxes, insurance,
contributions, assessments and benefits required by law or collective
bargaining agreements and, for personnel not covered by such agreements,
customary benefits such as sick leave, medical and health benefits, holidays,
vacations and pensions, provided such costs are based on wages and salaries
included in the Cost of the Work under Clauses 7.1.1.1 through 7.1.1.3.
7.1.2 SUBCONTRACT COSTS
Payments made by the Contractor to Subcontractors in accordance with the
requirements of the subcontracts.
7.1.3 COSTS OF MATERIALS AND EQUIPMENT INCORPORATED IN THE COMPLETED
CONSTRUCTION
7.1.3.1 Costs, including transportation, of materials and equipment
incorporated or to be incorporated in the completed construction.
7.1.3.2 Costs of materials described in the preceding Clause 7.1.3.1 in
excess of those actually installed but required to provide reasonable allowance
for waste and for spoilage. Unused excess materials, if any, shall be handed
over to the Owner at the completion of the Work or, at the Owner's option,
shall be sold by the Contractor; amounts realized, if any, from such sales
shall be credited to the Owner as a deduction from the Cost of the Work.
7.1.4 COSTS OF OTHER MATERIALS AND EQUIPMENT, TEMPORARY FACILITIES
AND RELATED ITEMS
7.1.4.1 Costs, including transportation, installation, maintenance,
dismantling and removal of materials, supplies, temporary facilities,
machinery, equipment, and hand tools not customarily owned by the
construction workers, which are provided by the Contractor at the site and
fully consumed in the performance of the Work; and cost less salvage value
on such items if not fully consumed, whether sold to others or retained by the
Contractor. Cost for items previously used by the Contractor shall mean fair
market value.
7.1.4.2 Rental charges for temporary facilities, machinery, equipment,
and hand tools not customarily owned by the construction workers, which are
provided by the Contractor at the site, whether rented from the Contractor or
others, and costs of transportation, installation, minor repairs and replace-
ments, dismantling and removal thereof. Rates and quantities of equipment
rented shall be subject to the Owner's prior approval.
7.1.4.3 Costs of removal of debris from the site.
7.1.4.4 Costs of telegrams and long-distance telephone calls, postage
and parcel delivery charges, telephone service at the site and reasonable
petty cash expenses of the site office.
7.1.4.5 That portion of the reasonable travel and subsistence
expenses of the Contractor's personnel incurred while traveling in discharge
of duties connected with the Work.
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AIA DOCUMENT A111 * OWNER-CONTRACTOR AGREEMENT * TENTH EDITION * AIA(R) * (C)
1987 * THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 5
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND IS SUBJECT
TO LEGAL PROSECUTION.
<PAGE> 6
7.1.5 MISCELLANEOUS COSTS
7.1.5.1 That portion directly attributable to this Contract of premiums
for insurance and bonds.
7.1.5.2 Sales, use or similar taxes imposed by a governmental authority
which are related to the Work and for which the Contractor is liable.
7.1.5.3 Fees and assessments for the building permit and for other
permits, licenses and inspections for which the Contractor is required by
the Contract Documents to pay.
7.1.5.4 Fees of testing laboratories for tests required by the Contract
Documents, except those related to defective or nonconforming Work for which
reimbursement is excluded by Subparagraph 13.5.3 of the General Conditions or
other provisions of the Contract Documents and which do not fall within the
scope of Subparagraphs 7.2.2 through 7.2.4 below.
7.1.5.5 Royalties and license fees paid for the use of a particular
design, process or product required by the Contract Documents; the cost of
defending suits or claims for infringement of patent rights arising from
such requirement by the Contract Documents; payments made in accordance with
legal judgments against the Contractor resulting from such suits or claims and
payments of settlements made with the Owner's consent; provided, however, that
such costs of legal defenses, judgment and settlements shall not be included
in the calculation of the Contractor's Fee or of a Guaranteed Maximum Price,
if any, and provided that such royalties, fees and costs are not excluded by
the last sentence of Subparagraph 3.17.1 of the General Conditions or other
provisions of the Contract Documents.
7.1.5.6 Deposits lost for causes other than the Contractor's fault or
negligence.
7.1.6 OTHER COSTS
7.1.6.1 Other costs incurred in the performance of the Work if and to
the extent approved in advance in writing by the Owner.
7.2 EMERGENCIES: REPAIRS TO DAMAGED, DEFECTIVE OR NONCONFORMING WORK
The Cost of the Work shall also include costs described in Paragraph 7.1 which
are incurred by the Contractor:
7.2.1 In taking action to prevent threatened damage, injury or loss in
case of an emergency affecting the safety of persons and property, as provided
in Paragraph 10.3 of the General Conditions.
7.2.2 In repairing or correcting Work damaged or improperly executed
by construction workers in the employ of the Contractor, provided such damage
or improper execution did not result from the fault or negligence of the
Contractor or the Contractor's foremen, engineers or superintendents, or other
supervisory, administrative or managerial personnel of the Contractor.
7.2.3 In repairing damaged Work other than that described in
Subparagraph 7.2.2, provided such damage did not result from the fault or
negligence of the Contractor or the Contractor's personnel, and only to the
extent that the cost of such repairs is not recoverable by the Contractor from
others and the Contractor is not compensated therefor by insurance or
otherwise.
7.2.4 In correcting defective or nonconforming Work performed or
supplied by a Subcontractor or material supplier and not corrected by them,
provided such defective or nonconforming Work did not result from the fault
or neglect of the Contractor or the Contractor's personnel adequately to
supervise and direct the Work of the Subcontractor or material supplier,
and only to the extent that the cost of correcting the defective or
nonconforming Work is not recoverable by the Contractor from the Subcontractor
or material supplier.
ARTICLE 8
---------
COSTS NOT TO BE REIMBURSED
8.1 The Cost of the Work shall not include:
8.1.1 Salaries and other compensation of the Contractor's personnel
stationed at the Contractor's principal office or offices other than the site
office, except as specifically provided in Clauses 7.1.1.2 and 7.1.1.3 or as
may be provided in Article 14.
8.1.2 Expenses of the Contractor's principal office and offices other
than the site office.
8.1.3 Overhead and general expenses, except as may be expressly
included in Article 7.
8.1.4 The Contractor's capital expenses, including interest on the
Contractor's capital employed for the Work.
8.1.5 Rental costs of machinery and equipment, except as specifically
provided in Clause 7.1.4.2.
8.1.6 Except as provided in Subparagraphs 7.2.2 through 7.2.4 and
Paragraph 13.5 of this Agreement, costs due to the fault or negligence of the
Contractor, Subcontractors, anyone directly or indirectly employed by any of
them, or for whose acts any of them may be liable, including but not limited
to costs for the correction of damaged, defective or nonconforming Work,
disposal and replacement of materials and equipment incorrectly ordered or
supplied, and making good damage to property not forming part of the Work.
8.1.7 Any cost not specifically and expressly described in Article 7.
8.1.8 Costs which would cause the Guaranteed Maximum Price, if any,
to be exceeded.
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AIA DOCUMENT A111 * OWNER-CONTRACTOR AGREEMENT * TENTH EDITION * AIA(R) * (C)
1987 * THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 6
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND IS SUBJECT
TO LEGAL PROSECUTION.
<PAGE> 7
ARTICLE 9
---------
DISCOUNTS, REBATES AND REFUNDS
9.1 Cash discounts obtained on payments made by the Contractor shall
accrue to the Owner if (1) before making the payment, the Contractor included
them in an Application for Payment and received payment therefor from the
Owner, or (2) the Owner has deposited funds with the Contractor with which
to make payments; otherwise, cash discounts shall accrue to the Contractor.
Trade discounts, rebates, refunds and amounts received from sales of surplus
materials and equipment shall accrue to the Owner, and the Contractor shall
make provisions so that they can be secured.
9.2 Amounts which accrue to the Owner in accordance with the
provisions of Paragraph 9.1 shall be credited to the Owner as a deduction
from the Cost of the Work.
ARTICLE 10
----------
SUBCONTRACTS AND OTHER AGREEMENTS
10.1 Those portions of the Work that the Contractor does not
customarily perform with the Contractor's own personnel shall be performed
under subcontracts or by other appropriate agreements with the Contractor.
The Contractor shall obtain bids from Subcontractors and from suppliers of
materials or equipment fabricated especially for the Work and shall deliver
such bids to the Architect. The Owner will then determine, with the advice of
the Contractor and subject to the reasonable objection of the Architect, which
bids will be accepted. The Owner may designate specific persons or entities
from whom the Contractor shall obtain bids; however, if a Guaranteed Maximum
Price has been established, the Owner may not prohibit the Contractor from
obtaining bids from others. The Contractor shall not be required to contract
with anyone to whom the Contractor has reasonable objection.
10.2 If a Guaranteed Maximum Price has been established and a
specific bidder among those whose bids are delivered by the Contractor to the
Architect (1) is recommended to the Owner by the Contractor; (2) is qualified
to perform that portion of the Work; and (3) has submitted a bid which
conforms to the requirements of the Contract Documents without reservations
or exceptions, but the Owner requires that another bid be accepted; then the
Contractor may require that a Change Order be issued to adjust the Guaranteed
Maximum Price by the difference between the bid of the person or entity
recommended to the Owner by the Contractor and the amount of the subcontract
or other agreement actually signed with the person or entity designated by the
Owner.
10.3 Subcontracts or other agreements shall conform to the payment
provisions of Paragraphs 12.7 and 12.8, and shall not be awarded on the basis
of cost plus a fee without the prior consent of the Owner.
ARTICLE 11
----------
ACCOUNTING RECORDS
11.1 The Contractor shall keep full and detailed accounts and
exercise such controls as may be necessary for proper financial management
under this Contract; the accounting and control systems shall be satisfactory
to the Owner. The Owner and the Owner's accountants shall be afforded access
to the Contractor's records, books, correspondence, instructions, drawings,
receipts, subcontracts, purchase orders, vouchers, memoranda and other data
relating to this Contract, and the Contractor shall preserve these for a
period of three years after final payment, or for such longer period as may
be required by law.
ARTICLE 12
----------
PROGRESS PAYMENTS
12.1 Based upon Applications for Payment submitted to the Architect
by the Contractor and Certificates for Payment issued by the Architect, the
Owner shall make progress payments on account of the Contract Sum to the
Contractor as provided below and elsewhere in the Contract Documents.
12.2 The period covered by each Application for Payment shall be
one calendar month ending on the last day of the month, or as follows:
12.3 Provided an Application for Payment is received by the Architect
not later than the first day of a month, the Owner shall make payment to the
Contractor not later than the fifteenth day of the month. If an Application
for Payment is received by the Architect after the application date fixed
above, payment shall be made by the Owner not later than fifteen days after
the Architect receives the Application for Payment.
12.4 With each Application for Payment the Contractor shall submit
payrolls, petty cash accounts, receipted invoices or invoices with check
vouchers attached, and any other evidence required by the Owner or Architect
to demonstrate that cash disbursements already made by the Contractor on
account of the Cost of the Work equal or exceed (1) progress payments already
received by the Contractor; less (2) that portion of those payments attribut-
able to the Contractor's Fee; plus (3) payrolls for the period covered by the
present Application for Payment; plus (4) retainage provided in Subparagraph
12.5.4, if any, applicable to prior progress payments.
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AIA DOCUMENT A111 * OWNER-CONTRACTOR AGREEMENT * TENTH EDITION * AIA(R) * (C)
1987 * THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 7
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND IS SUBJECT
TO LEGAL PROSECUTION.
<PAGE> 8
12.6 CONTRACTS WITHOUT A GUARANTEED MAXIMUM PRICE
12.6.1 Applications for Payment shall show the Cost of the Work
actually incurred by the Contractor through the end of the period covered
by the Application for Payment and for which the Contractor has made or
intends to make actual payment prior to the next Application for Payment.
12.6.2 Subject to other provisions of the Contract Documents, the
amount of each progress payment shall be computed as follows:
12.6.2.1 Take the Cost of the Work as described in Subparagraph 12.6.1.
12.6.2.2 Add the Contractor's Fee, less retainage of the final fifteen
percent (15%). The Contractor's Fee shall be computed upon the Cost of the
Work described in the preceding Clause 12.6.2.1 at the rate stated in
Paragraph 5.1 or, if the Contractor's Fee is stated as a fixed sum in that
Paragraph, an amount which bears the same ratio to that fixed-sum Fee as
the Cost of the Work in the preceding Clause bears to a reasonable estimate
of the probable Cost of the Work upon its completion.
12.6.2.3 Subtract the aggregate of previous payments made by the Owner.
12.6.2.4 Subtract the shortfall, if any, indicated by the Contractor in
the documentation required by Paragraph 12.4 or to substantiate prior Applica-
tions for Payment or resulting from errors subsequently discovered by the
Owner's accountants in such documentation.
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AIA DOCUMENT A111 * OWNER-CONTRACTOR AGREEMENT * TENTH EDITION * AIA(R) * (C)
1987 * THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 8
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND IS SUBJECT
TO LEGAL PROSECUTION.
<PAGE> 9
12.6.2.5 Subtract amounts, if any, for which the Architect has withheld
or withdrawn a Certificate for Payment as provided in the Contract Documents.
12.6.3 Additional retainage, if any, shall be as follows:
12.7 Except with the Owner's prior approval, payments to Subcon-
tractors included in the Contractor's Applications for Payment shall not
exceed an amount for each Subcontractor calculated as follows:
12.7.1 Take that portion of the Subcontract Sum properly allocable
to completed Work as determined by multiplying the percentage completion
of each portion of the Subcontractor's Work by the share of the total
Subcontract Sum allocated to that portion in the Subcontractor's schedule
of values, less retainage of ten percent (10%). Pending final determination
of amounts to be paid to the Subcontractor for changes in the Work, amounts
not in dispute may be included as provided in Subparagraph 7.3.7 of the
General Conditions even though the Subcontract Sum has not yet been adjusted
by Change Order.
12.7.2 Add that portion of the Subcontract Sum properly allocable to
materials and equipment delivered and suitably stored at the site for
subsequent incorporation in the Work or, if approved in advance by the Owner,
suitably stored off the site at a location agreed upon in writing, less
retainage of ten percent (10%).
12.7.3 Subtract the aggregate of previous payments made by the
Contractor to the Subcontractor.
12.7.4 Subtract amounts, if any, for which the Architect has withheld
or nullified a Certificate for Payment by the Owner to the Contractor for
reasons which are the fault of the Subcontractor.
12.7.5 Add, upon Substantial Completion of the entire Work of the
Contractor, a sum sufficient to increase the total payments to the Subcon-
tractor to Ninety-Five percent (95%) of the Subcontract Sum, less amounts,
if any, for incomplete Work and unsettled claims; and, if final completion
of the entire Work is thereafter materially delayed through no fault of the
Subcontractor, add any additional amounts payable on account of Work of the
Subcontractor in accordance with Subparagraph 9.10.3 of the General Conditions.
(If it is intended, prior to Substantial Completion of the entire Work of the
Contractor, to reduce or limit the retainage from Subcontractors resulting
from the percentages inserted in Subparagraphs 12.7.1 and 12.7.2 above, and
this is not explained elsewhere in the Contract Documents, insert here
provisions for such reduction or limitation.)
Contractor may apply to Owner for release of all retention for
those subcontractors whose work is fully complete and accepted
as satisfactory by follow-on trades that are dependent upon
such work. Owner in its reasonable judgment may effect such
early release of retention when appropriate.
The Subcontract Sum is the total amount stipulated in the subcontract to be
paid by the Contractor to the Subcontractor for the Subcontractor's performance
of the subcontract.
12.8 Except with the Owner's prior approval, the Contractor shall
not make advance payments to suppliers for materials or equipment which have
not been delivered and stored at the site.
12.9 In taking action on the Contractor's Applications for Payment,
the Architect shall be entitled to rely on the accuracy and completeness
of the information furnished by the Contractor and shall not be deemed to
represent that the Architect has made a detailed examination, audit or
arithmetic verification of the documentation submitted in accordance with
Paragraph 12.4 or other supporting data; that the Architect has made
exhaustive or continuous on-site inspections or that the Architect has made
examinations to ascertain how or for what purposes the Contractor has used
amounts previously paid on account of the Contract. Such examinations, audits
and verifications, if required by the Owner, will be performed by the Owner's
accountants acting in the sole interest of the Owner.
ARTICLE 13
----------
FINAL PAYMENT
13.1 Final payment shall be made by the Owner to the Contractor
when (1) the Contract has been fully performed by the Contractor except for
the Contractor's responsibility to correct defective or nonconforming Work,
as provided in Subparagraph 12.2.2 of the General Conditions, and to satisfy
other requirements, if any, which necessarily survive final payment; (2) a
final Application for Pay-
- -------------------------------------------------------------------------------
AIA DOCUMENT A111 * OWNER-CONTRACTOR AGREEMENT * TENTH EDITION * AIA(R) * (C)
1987 * THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 9
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND IS SUBJECT
TO LEGAL PROSECUTION.
<PAGE> 10
ment and a final accounting for the Cost of the Work have been submitted by
the Contractor and reviewed by the Owner's accountants; and (3) a final
Certificate for Payment has then been issued by the Architect; such final
payment shall be made by the Owner not more than 30 days after the issuance
of the Architect's final Certificate for Payment, or as follows:
13.2 The amount of the final payment shall be calculated as follows:
13.2.1 Take the sum of the Cost of the Work substantiated by the
Contractor's final accounting and the Contractor's Fee; but not more than
the Guaranteed Maximum Price, if any.
13.2.2 Subtract amounts, if any, for which the Architect withholds,
in whole or in part, a final Certificate for Payment as provided in
Subparagraph 9.5.1 of the General Conditions or other provisions of the
Contract Documents.
13.2.3 Subtract the aggregate of previous payments made by the Owner.
If the aggregate of previous payments made by the Owner exceeds the amount
due the Contractor, the Contractor shall reimburse the difference to the Owner.
13.3 The Owner's accountants will review and report in writing on the
Contractor's final accounting within 30 days after delivery of the final
accounting to the Architect by the Contractor. Based upon such Cost of the
Work as the Owner's accountants report to be substantiated by the Contractor's
final accounting, and provided the other conditions of Paragraph 13.1 have
been met, the Architect will, within seven days after receipt of the written
report of the Owner's accountants, either issue to the Owner a final Certifi-
cate for Payment with a copy to the Contractor, or notify the Contractor and
Owner in writing of the Architect's reasons for withholding a certificate as
provided in Subparagraph 9.5.1 of the General Conditions. The time periods
stated in this Paragraph 13.3 supersede those stated in Subparagraph 9.4.1
of the General Conditions.
13.4 If the Owner's accountants report the Cost of the Work as
substantiated by the Contractor's final accounting to be less than claimed
by the Contractor, the Contractor shall be entitled to demand arbitration of
the disputed amount without a further decision of the Architect. Such demand
for arbitration shall be made by the Contractor within 30 days after the
Contractor's receipt of a copy of the Architect's final Certificate for
Payment; failure to demand arbitration within this 30-day period shall
result in the substantiated amount reported by the Owner's accountants
becoming binding on the Contractor. Pending a final resolution by arbitration,
the Owner shall pay the Contractor the amount certified in the Architect's
final Certificate for Payment.
13.5 If, subsequent to final payment and at the Owner's request,
the Contractor incurs costs described in Article 7 and not excluded by
Article 8 to correct defective or nonconforming Work, the Owner shall reimburse
the Contractor such costs and the Contractor's Fee applicable thereto on the
same basis as if such costs had been incurred prior to final payment, but not
in excess of the Guaranteed Maximum Price, if any. If the Contractor has
participated in savings as provided in Paragraph 5.2, the amount of such
savings shall be recalculated and appropriate credit given to the Owner in
determining the net amount to be paid by the Owner to the Contractor.
ARTICLE 14
----------
MISCELLANEOUS PROVISIONS
14.1 Where reference is made in this Agreement to a provision of
the General Conditions or another Contract Document, the reference refers to
that provision as amended or supplemented by other provisions of the Contract
Documents.
14.2 Payments due and unpaid under the Contract shall bear interest
from the date payment is due at the rate stated below, or in the absence
thereof, at the legal rate prevailing from time to time at the place where
the Project is located.
(Insert rate of interest agreed upon, if any.)
(Usury laws and requirements under the Federal Truth in Lending Act, similar
state and local consumer credit laws and other regulations at the Owner's and
Contractor's principal places of business, the location of the Project and
elsewhere may affect the validity of this provision. Legal advice should be
obtained with respect to deletions or modifications, and also regarding
requirements such as written disclosures or waivers.)
- -------------------------------------------------------------------------------
AIA DOCUMENT A111 * OWNER-CONTRACTOR AGREEMENT * TENTH EDITION * AIA(R) * (C)
1987 * THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 10
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND IS SUBJECT
TO LEGAL PROSECUTION.
<PAGE> 11
14.3 Other provisions:
Contractor's current estimate is attached hereto as Exhibit B.
In addition to Contractor's current estimate (Exhibit B), there
will be an Assistant Engineer ($43.00 per hour) for a period
of approximately 2 months. Any additional staff will be mutually
agreed upon.
ARTICLE 15
----------
TERMINATION OR SUSPENSION
15.1 The Contract may be terminated by the Contractor as provided in
Article 14 of the General Conditions; however, the amount to be paid to the
Contractor under Subparagraph 14.1.2 of the General Conditions shall not
exceed the amount the Contractor would be entitled to receive under Paragraph
15.3 below, except that the Contractor's Fee shall be calculated as if the
Work had been fully completed by the Contractor, including a reasonable
estimate of the Cost of the Work for Work not actually completed.
15.2 If a Guaranteed Maximum Price is established in Article 5, the
Contract may be terminated by the Owner for cause as provided in Article 14
of the General Conditions; however, the amount, if any, to be paid to the
Contractor under Subparagraph 14.2.4 of the General Conditions shall not
cause the Guaranteed Maximum Price to be exceeded, nor shall it exceed
the amount the Contractor would be entitled to receive under Paragraph
15.3 below.
15.3 If no Guaranteed Maximum Price is established in Article 5,
the Contract may be terminated by the Owner for cause as provided in
Article 14 of the General Conditions; however, the Owner shall then pay
the Contractor an amount calculated as follows:
15.3.1 Take the Cost of the Work incurred by the Contractor
to the date of termination.
15.3.2 Add the Contractor's Fee computed upon the Cost of the
Work to the date of termination at the rate stated in Paragraph 5.1 or,
if the Contractor's Fee is stated as a fixed sum in that Paragraph, an
amount which bears the same ratio to that fixed-sum Fee as the Cost of
the Work at the time of termination bears to a reasonable estimate of the
probable Cost of the Work upon its completion.
15.3.3 Subtract the aggregate of previous payments made by the
Owner.
The Owner shall also pay the Contractor fair compensation, either by
purchase or rental at the election of the Owner, for any equipment owned
by the Contractor which the Owner elects to retain and which is not
otherwise included in the Cost of the Work under Subparagraph 15.3.1.
To the extent that the Owner elects to take legal assignment of
subcontracts and purchase orders (including rental agreements), the
Contractor shall, as a condition of receiving the payments referred to
in this Article 15, execute and deliver all such papers and take all such
steps, including the legal assignment of such subcontracts and other
contractual rights of the Contractor, as the Owner may require for the
purpose of fully vesting in the Owner the rights and benefits of the
Contractor under such subcontracts or purchase orders.
15.4 The Work may be suspended by the Owner as provided in
Article 14 of the General Conditions; in such case, the Guaranteed
Maximum Price, if any, shall be increased as provided in Subparagraph
14.3.2 of the General Conditions except that the term "cost of
performance of the Contract" in that Subparagraph shall be understood
to mean the Cost of the Work and the term "profit" shall be understood
to mean the Contractor's Fee as described in Paragraphs 5.1 and 6.3 of
this Agreement.
ARTICLE 16
----------
ENUMERATION OF CONTRACT DOCUMENTS
16.1 The Contract Documents, except for Modifications issued after
execution of this Agreement, are enumerated as follows:
16.1.1 The Agreement is this executed Standard Form of Agreement
Between Owner and Contractor, AIA Document A111, 1987 Edition.
16.1.2 The General Conditions are the General Conditions of the
Contract for Construction, AIA Document A201, 1987 Edition.
- -------------------------------------------------------------------------------
AIA DOCUMENT A111 * OWNER-CONTRACTOR AGREEMENT * TENTH EDITION * AIA(R) * (C)
1987 * THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 11
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND IS SUBJECT
TO LEGAL PROSECUTION.
<PAGE> 12
16.1.3 The Supplementary and other Conditions of the Contract are those
contained in the Project Manual dated , and are as
follows:
DOCUMENT TITLE PAGES
<TABLE>
16.1.4 The Specifications are those contained in the Project Manual
dated as in Paragraph 16.1.3, and are as follows:
(Either list the Specifications here or refer to an exhibit attached to
this Agreement.)
<CAPTION>
<S> <C> <C>
SECTION TITLE PAGES
</TABLE>
Specifications (prepared by CR&A Coad, Rascovar & Associates and David Mason &
Associates, Inc.)
<TABLE>
<CAPTION>
Number Title Date
- ------ ----- ----
<C> <S> <C>
01010E Summary of Work 02/24/95
01010 Summary of Work 1/17/95
01030 Alternates 1/17/95
01300 Submittals 1/17/95
01600 Materials and Equipment 1/17/95
02110 Site Clearing 1/17/95
02200 Earthwork 1/17/95
02363 Augercast Piles 1/17/95
03300 Cast-in-Place Concrete 1/17/95
Geotechnical Investigation 11/28/94
Supplemental Geotechnical Investigation 12/27/94
16312 Secondary Unit Substations 02/24/95
16320 Medium-Voltage Transformers 02/24/95
16344 Medium-Voltage Switchgear 02/24/95
</TABLE>
- -------------------------------------------------------------------------------
AIA DOCUMENT A111 * OWNER-CONTRACTOR AGREEMENT * TENTH EDITION * AIA(R) * (C)
1987 * THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 12
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND IS SUBJECT
TO LEGAL PROSECUTION.
<PAGE> 13
<TABLE>
16.1.5 The Drawings are as follows, and are dated unless a
different date is shown below:
(Either list the Drawings here or refer to an exhibit attached to this
Agreement.)
<CAPTION>
<S> <C> <C>
NUMBER TITLE DATE
</TABLE>
Drawings (prepared by David Mason & Associates, Inc.)
<TABLE>
<CAPTION>
Number Title Date
- ------ ----- ----
<C> <S> <C>
CS Cover Sheet 1/17/95
C-2 Grading Plan 1/17/95
S1.1 Overall Foundation Plan 1/17/95
S1.2 Area A Foundation Plan 1/17/95
S1.3 Area B Foundation Plan 1/17/95
S1.4 Area C Foundation Plan 1/17/95
S1.5 Area D Foundation Plan 1/17/95
S1.6 Sections 1/17/95
S1.7 Sections, Details and Schedules 1/17/95
S1.8 Sections, Details and Schedules 1/17/95
A1.1 Overall Building Plan 1/17/95
A1.2 Area A Floor Plan 1/17/95
A1.3 Area B Floor Plan 1/17/95
A1.4 Area C Floor Plan 1/17/95
A1.5 Area D Floor Plan and Mezz. Plans 1/17/95
A1.6 Area D Mezz. Plans 1/17/95
A1.7 Area D Mezz. Plan 1/17/95
A2.1 Building Elevations 1/17/95
A3.1 Wall Sections 1/17/95
A3.2 Wall Sections 1/17/95
A4.6 Roof Plan 1/17/95
</TABLE>
<TABLE>
16.1.6 The addenda, if any, are as follows:
<CAPTION>
<S> <C> <C>
NUMBER DATE PAGES
</TABLE>
Portions of Addenda relating to bidding requirements are not part of the
Contract Documents unless the bidding requirements are also enumerated in
this Article 16.
- -------------------------------------------------------------------------------
AIA DOCUMENT A111 * OWNER-CONTRACTOR AGREEMENT * TENTH EDITION * AIA(R) * (C)
1987 * THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 13
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND IS SUBJECT
TO LEGAL PROSECUTION.
<PAGE> 14
SUPPLEMENTARY CONDITIONS
------------------------
These Supplementary Conditions to the Agreement between Insituform
Mid-America, Inc. (Owner) and Turner Construction Company (Contractor) dated
February 28, 1995 shall amend and supersede any conflicting provisions of
such Agreement and the Contract Documents referenced therein:
AIA DOCUMENT A111
-----------------
GENERAL. Delete all references to arbitration. Disputes not resolved
-------
by negotiation or mediation, if the parties subsequently agree to mediation,
shall be resolved by litigation in the Circuit Court of St. Louis County,
Missouri.
4.3 Add a new Subparagraph 4.3 as follows:
4.3 The date of Substantial Completion referenced above for the
building and installation of the process equipment is based upon delivery
to the project site of all process equipment to be installed by Contractor
on or before September 1, 1995. If all or part of such deliveries are delayed
until after September 1, 1995, and if such delayed deliveries actually
adversely affect Contractor's ability to achieve Substantial Completion by
the agreed date, then upon written notice as required by the Contract
Documents and substantiation by Contractor of the time extension claimed,
the date of Substantial Completion shall be adjusted. No time extension
shall be allowed if failure by the Contractor to properly administer the work
either before or after September 1, 1995 contributed in any way to Contractor's
inability to achieve the agreed Substantial Completion date. Contractor has
obtained a commitment from Butler Building that the prefabricated Butler
Building ordered for the Project will be delivered on April 24, 1995. A copy
of that commitment is attached and made a part of this Agreement as Exhibit
"A". Failure of Butler Building to meet that delivery date shall not be
grounds for extension of the date of Substantial Completion.
5.2 Deleted.
6.1 Deleted.
6.2.1 In the second line, place a period after "Work" and delete the
remainder of the sentence.
6.3.2 Attached hereto as Exhibit "B" is Contractor's estimate of
the costs of the work, contingency and fee as of the date of this Agreement.
This estimate is not guaranteed and is attached to this Agreement to generally
identify the scope of work forming the basis of Contractor's fee, the basis
for projected substantial completion date and the subcontract pricing
negotiated to date for the Project.
<PAGE> 15
7.1.1.2 Delete in its entirety and substitute in lieu thereof: "Wages
or salaries at the rates listed in Exhibit "C" for the Contractor's supervisory
and administrative personnel performing the listed functions as necessary for
performance of the Work."
7.1.1.5 Only straight-time, one shift labor is authorized and all
subcontractors shall be so advised. If "spot" overtime is necessary or
advisable to regain lost schedule time for which a time extension is justified,
Contractor shall so inform the Owner, and upon receipt of Owner's advance
written authorization, Contractor shall implement such spot overtime as a
Cost of the Work.
7.1.1.6 In billing for the fringe benefits and cost imposed on labor,
Contractor shall bill only upon the basis of actual costs incurred.
7.1.5.7 Reasonable attorney's fees incurred in connection with the
Contractor's performance of the Work provided (1) the need for such legal
services does not arise out of or relate to any negligent act or omission on
the part of Turner and (2) provided such expenditure is approved in advance
by the Owner.
7.1.5.8 Whenever the contract documents state that the Contractor
shall perform any work or incur any expense, it shall be understood to mean,
unless specifically and expressly described in Article 8, that the cost
thereof shall be reimbursable.
7.1.6.1 Other costs of acceleration of the work shall not be considered
as reimbursable Costs of the Work unless authorized by Owner in writing in
advance of such costs being incurred.
8.1.2 add: "except as specifically provided in paragraph 7.1.1.2."
10.2 Delete subparagraph 10.2 and substitute the following:
10.2 Contractor intends to perform the following work with Contractor's
own work forces: General Conditions. All other work shall be based on
competitive bids requested from at least 3 subcontractor bidders approved
in advance by Owner. All bids shall be delivered to Owner.
ARTICLE 12 - PROGRESS PAYMENTS
- ----------
GENERAL. Delete all references to arbitration. Disputes not
-------
resolved by negotiation or mediation, if the parties subsequently agree to
mediation, shall be resolved by litigation in the Circuit Court of
St. Louis County, Missouri.
In Article 12, substitute Owner for Architect. Applications for
payment are to be made to Owner for review, approval, withholding if
appropriate, and payment, subject to all requirements of the Contract
Documents. Contractor will submit its lien waiver with all applications for
2
<PAGE> 16
payment, and with the second and successive applications Contractor shall
submit lien waivers from subcontractors and suppliers through the date covered
by the prior payment made by Owner to Contractor, waiving all liens paid for
by the prior payment.
12.6.2.2 Add to the end of this subparagraph the following: "Exhibit
B shall be used as the reasonable estimate of the probable Cost of the Work
upon completion."
AIA DOCUMENT A201
-----------------
GENERAL. Reference is made to Article 1 of the Agreement (AIA Document
A111) which provides that: "If anything in the other Contract Documents is
inconsistent with this Agreement, this Agreement shall govern" and to the
Supplementary Conditions which have priority over inconsistent provisions
of all Contract Documents, including the Agreement.
ARTICLE 4 - ADMINISTRATION OF THE CONTRACT
- ---------
4.2 All references in Subparagraph 4.2 to "Architect" shall be deemed
changed to "Owner" except with respect to Subparagraphs 4.2.2, 4.2.3, 4.2.6,
and 4.2.7 through 4.2.13.
4.3, 4.4 and 4.5 Delete all references and provisions of Subparagraph
4.3, 4.4 and 4.5, regarding "Arbitration". All disputes not settled by
negotiation, or mediation if the parties subsequently agree to mediation,
shall be resolved by litigation in the Circuit Court of St. Louis County,
Missouri.
ARTICLE 9 - PAYMENTS AND COMPLETION
- ---------
All references in ARTICLE 9 to Architect shall be deemed to refer
to Owner.
ARTICLE 11 - INSURANCE AND BONDS
- ----------
11.1.1 The Contractor's Comprehensive General and Automotive
Liability Insurance, as required by Subparagraph 11.1.1, shall be written
for not less than limits of liability as follows:
a. Worker's Compensation and Employer's Liability in
accordance with applicable law.
b. Comprehensive General Liability: Bodily injury liability
and property damage liability combined in the amount of
$1,000,000 per occurrence and $2,000,000 aggregate where
applicable.
3
<PAGE> 17
c. Comprehensive Automobile liability: Bodily injury
liability and property damage liability combined in the
amount of $1,000,000 per occurrence.
d. Excess Liability: Umbrella in the amount of $5,000,000 per
occurrence and in the aggregate.
11.1.4 Comprehensive General Liability Insurance may be arranged
under a single policy for the full limits required or by a combination of
underlying policies with the balance provided by an Excess or Umbrella
Liability policy.
11.1.5 The foregoing policies shall name Owner as an additional
insured and shall contain a provision that coverages afforded under the
policies will not be canceled or not renewed until at least thirty (30)
days' prior written notice has been given to the Owner. Certificates of
Insurance showing such coverage to be in force shall be filed with the Owner
prior to commencement of the Work.
14.3.4 TERMINATION FOR CONVENIENCE
The Owner may terminate the Agreement for convenience in which event
the Owner shall pay or reimburse Contractor for all Costs of the Work incurred
by Contractor as of the date Contractor is notified of such termination, plus
a pro-rata share of Contractor's fee calculated as provided in the Agreement
with respect to monthly progress payments. Contractor shall not be entitled
to fee on work not performed, and in the event of such termination for
convenience no incentive bonus of any amount shall be allowed or claimable.
4
<PAGE> 18
16.1.7 Other Documents, if any, forming part of the Contract Documents
are as follows:
(List below any additional documents which are intended to form part of the
Contract Documents. The General Conditions provide that bidding requirements
such as advertisement or invitation to bid, Instructions to Bidders, sample
forms and the Contractor's bid are not part of the Contract Documents unless
enumerated in this Agreement. They should be listed here only if intended to
be part of the Contract Documents.)
Supplementary Conditions dated February 28, 1995 (4 pages)
This Agreement is entered into as of the day and year first written above
and is executed in at least three original copies of which one is to be
delivered to the Contractor, one to the Architect for use in the administration
of the Contract, and the remainder to the Owner.
OWNER Insituform Mid-America, Inc. CONTRACTOR Turner Construction Company
/S/ Robert W. Agholder /s/ Tim Pedersen
- ----------------------------------- ---------------------------------------
(Signature) (Signature)
President Tim Pedersen TSM
- ----------------------------------- ---------------------------------------
(Printed name and title) (Printed name and title)
AIA CAUTION: YOU SHOULD SIGN AN ORIGINAL AIA DOCUMENT WHICH HAS THIS CAUTION
PRINTED IN RED. AN ORIGINAL ASSURES THAT CHANGES WILL NOT BE OBSCURED AS MAY
OCCUR WHEN DOCUMENTS ARE REPRODUCED.
- -------------------------------------------------------------------------------
AIA DOCUMENT A111 * OWNER-CONTRACTOR AGREEMENT * TENTH EDITION * AIA(R) * (C)
1987 * THE AMERICAN INSTITUTE OF ARCHITECTS, 1735 NEW YORK AVENUE, N.W.,
WASHINGTON, D.C. 20006
A111-1987 14
WARNING: UNLICENSED PHOTOCOPYING VIOLATES U.S. COPYRIGHT LAWS AND IS SUBJECT
TO LEGAL PROSECUTION.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Insituform
Mid-America, Inc. Condensed Consolidated Balance Sheet at March 31, 1995,
and from the Condensed Consolidated Statement of Earnings and Condensed
Consolidated Statement of Cash Flows for the six months ended March 31, 1995,
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 2,647,576
<SECURITIES> 0
<RECEIVABLES> 17,535,307
<ALLOWANCES> 0
<INVENTORY> 3,707,037
<CURRENT-ASSETS> 35,690,261
<PP&E> 36,407,204
<DEPRECIATION> 14,174,525
<TOTAL-ASSETS> 66,059,363
<CURRENT-LIABILITIES> 20,777,155
<BONDS> 0
<COMMON> 107,557
0
0
<OTHER-SE> 42,362,435
<TOTAL-LIABILITY-AND-EQUITY> 66,059,363
<SALES> 50,663,251
<TOTAL-REVENUES> 50,663,251
<CGS> 37,435,917
<TOTAL-COSTS> 37,435,917
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 324,472
<INCOME-PRETAX> 6,320,492
<INCOME-TAX> 2,148,968
<INCOME-CONTINUING> 3,434,729
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,434,729
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
</TABLE>
