<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): MAY 23, 1995
INSITUFORM MID-AMERICA, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-15280 43-1319439
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
organization) Number)
17988 EDISON AVENUE
CHESTERFIELD, MISSOURI 63005-3700
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (314) 532-6137
<PAGE> 2
ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On May 23, 1995, Insituform Mid-America, Inc., a Delaware
corporation (the "Company"), Insituform Technologies, Inc., a
Delaware corporation ("ITI"), and ITI Acquisition Corp., a Delaware
corporation and wholly-owned subsidiary of ITI ("ITI Sub"),
executed an Agreement and Plan of Merger (the "Merger Agreement")
which provides for the merger (the "Merger") of ITI Sub with and
into IMA, as a result of which IMA will become a wholly-owned
subsidiary of ITI.
Under the terms of the Merger Agreement, upon
consummation of the Merger holders of the class A common stock,
$.01 par value (the "Class A Common Stock"), of the Company will be
entitled to receive 1.15 shares of the class A common stock, $.01
par value (the "ITI Common Stock"), of ITI for each share of Class
A Common Stock held. In connection with the Merger Agreement, the
holders of all of the outstanding shares of class B common stock,
$.01 par value (the "Class B Common Stock") of the Company have
entered into letter agreements with the Company and ITI pursuant to
which each holder has agreed that, immediately prior to the
consummation of the Merger, such holder shall convert each
outstanding share of Class B Common Stock beneficially owned by
such person into one share of Class A Common Stock in accordance
with the terms of the Class B Common Stock. Additionally, in
connection with the pooling-of-interests treatment of the Merger
each of the directors and executive officers of the Company and
certain of the Company's stockholders have agreed to certain
restrictions on the transfer of shares of Class A Common Stock,
Class B Common Stock and ITI Common Stock owned by them.
Consummation of the Merger is subject to certain
conditions, including without limitation: (i) approval of the
Merger Agreement by the stockholders of the Company and ITI; (ii)
registration of the shares of ITI Common Stock to be issued
pursuant to the Merger under the Securities Act of 1933, as
amended, and all applicable state securities laws; (iii) receipt of
an opinion of counsel that the Merger will qualify as a tax-free
reorganization under the Internal Revenue Code of 1986, as amended;
(iv) confirmation that the transaction will qualify for pooling-of-
interests accounting treatment; (v) expiration or termination of
the applicable waiting period under The Hart-Scott-Rodino Antitrust
Improvements Act of 1976; and (vi) satisfaction of certain other
closing conditions.
Pursuant to the Merger Agreement and a letter agreement
entered into between the Company and ITI concurrently with the
Merger Agreement, the Company and ITI have extended the Amended and
Restated Cooperation Agreement dated April 28, 1995 between the
Company and ITI under which the parties agreed to stay assertion of
any rights in a dispute with respect to the Company's acquisition
of the pipeline rehabilitation business of ENVIROQ Corporation in
April 1995, without ITI's consent. The Merger Agreement and the
letter agreement provide that, subject to certain procedural steps
to preserve the rights of the parties, the Amended and Restated
Cooperation Agreement shall be extended until the consummation of
the Merger or such earlier date as shall occur upon the termination
of the Merger Agreement.
The Merger Agreement provides that in connection with the
Merger ITI shall take all actions necessary to cause Jerome
Kalishman, Robert W. Affholder and Alvin J. Siteman, current
directors of the Company, to be appointed to the Board of Directors
of ITI. Additionally, Mr. Kalishman, Chairman of the Board of the
Company, would become Vice Chairman of the Board of ITI and would
also be retained by ITI as a consultant for a period of two years.
Mr. Affholder, President of the Company, would enter into a three-
year employment agreement with ITI under which he would initially
become chief operating officer of ITI's North American contracting
operations.
-2-
<PAGE> 3
ITI is based in Memphis, Tennessee and provides
trenchless pipeline rehabilitation systems and technologies
throughout the world. For the year ended December 31, 1994, ITI
reported total revenues of $148.2 million.
For additional information regarding the Merger Agreement
and the transactions contemplated therein, please refer to the
exhibits included as part of this Current Report on Form 8-K.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits. See Exhibit Index.
--------
-3-
<PAGE> 4
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.
Dated: June 1, 1995
INSITUFORM MID-AMERICA, INC.
By /s/ Joseph F. Olson
------------------------------------------
Joseph F. Olson, Vice President - Finance
and Administration
-4-
<PAGE> 5
<TABLE>
EXHIBIT INDEX
<CAPTION>
Sequential
Exhibit Page
Number Description Number
- ------- ----------- ----------
<C> <S> <C>
2 Agreement and Plan of Merger, dated as of May 23, 1995, by and
among the Registrant, ITI Acquisition Corp. and Insituform
Technologies, Inc.
4.1 Form of Conversion Letter, dated May 23, 1995, by and among the
Registrant, Insituform Technologies, Inc. and the holders of the
Registrant's Class B Common Stock with respect to the conversion of
shares of Class B Common Stock into Class A Common Stock
99.1 Letter Agreement, dated May 23, 1995, by and between the Registrant
and Insituform Technologies, Inc.
99.2 Joint Press Release, dated May 24, 1995
</TABLE>
-5-
<PAGE> 1
================================================================
------------------------------------
AGREEMENT AND PLAN OF MERGER
Dated as of May 23, 1995
among
INSITUFORM TECHNOLOGIES, INC.,
ITI ACQUISITION CORP.
AND
INSITUFORM MID-AMERICA, INC.
------------------------------------
================================================================
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<C> <S> <C>
ARTICLE I THE MERGER. . . . . . . . . . . . . . . . . . . 2
1.1 The Merger. . . . . . . . . . . . . . . . . . . 2
1.2 Effect of Merger. . . . . . . . . . . . . . . . 2
1.3 Certificate of Incorporation and By-Laws. . . . 3
1.4 Effective Time of Merger. . . . . . . . . . . . 3
1.5 IMA Directors and Officers. . . . . . . . . . . 3
1.6 Taking of Necessary Action; Further Action. . . 3
ARTICLE II CONVERSION OF SHARES. . . . . . . . . . . . . . 4
2.1 Acquisition Sub Common Stock. . . . . . . . . . 4
2.2 IMA Common Stock. . . . . . . . . . . . . . . . 4
2.3 Options to Purchase Shares of
IMA Common Stock. . . . . . . . . . . . . . . . 4
2.4 ITI Common Stock. . . . . . . . . . . . . . . . 6
ARTICLE III DISSENTING SHARES;
EXCHANGE OF CERTIFICATES. . . . . . . . . . . . 6
3.1 Dissenting Shares . . . . . . . . . . . . . . . 6
3.2 Exchange of Shares. . . . . . . . . . . . . . . 6
3.3 Dividends and Other Distributions . . . . . . . 8
3.4 IMA Stock Transfer Ledger . . . . . . . . . . . 8
3.5 Termination of Exchange Agency. . . . . . . . . 8
ARTICLE IV CLOSING . . . . . . . . . . . . . . . . . . . . 9
4.1 Time and Place of Closing . . . . . . . . . . . 9
4.2 Certificate of Merger . . . . . . . . . . . . . 9
ARTICLE V REPRESENTATIONS AND WARRANTIES OF IMA . . . . . 10
5.1 Incorporation . . . . . . . . . . . . . . . . . 10
5.2 Authorization . . . . . . . . . . . . . . . . . 10
5.3 Conflicts . . . . . . . . . . . . . . . . . . . 11
5.4 Capitalization. . . . . . . . . . . . . . . . . 11
5.5 Subsidiaries. . . . . . . . . . . . . . . . . . 12
5.6 Securities Filings. . . . . . . . . . . . . . . 13
5.7 Financial Statements. . . . . . . . . . . . . . 14
5.8 Absence of Undisclosed Liabilities. . . . . . . 16
5.9 Absence of Certain Changes. . . . . . . . . . . 16
5.10 Pooling . . . . . . . . . . . . . . . . . . . . 17
5.11 Taxes . . . . . . . . . . . . . . . . . . . . . 18
5.12 Title . . . . . . . . . . . . . . . . . . . . . 18
5.13 Real Estate and Leases. . . . . . . . . . . . . 19
5.14 Contractual and Other Obligations . . . . . . . 20
5.15 Compensation. . . . . . . . . . . . . . . . . . 21
5.16 Employee Benefit Plans. . . . . . . . . . . . . 22
i
<PAGE> 3
5.17 Labor Relations . . . . . . . . . . . . . . . . 24
5.18 Interests of Insiders . . . . . . . . . . . . . 24
5.19 Insurance . . . . . . . . . . . . . . . . . . . 24
5.20 Intellectual Property . . . . . . . . . . . . . 25
5.21 Disputes and Litigation . . . . . . . . . . . . 26
5.22 Licenses; Franchises; Rights. . . . . . . . . . 26
5.23 Brokers and Finders . . . . . . . . . . . . . . 28
ARTICLE VI REPRESENTATIONS AND WARRANTIES
OF ITI AND ACQUISITION SUB . . . . . . . . . . 28
6.1 Incorporation . . . . . . . . . . . . . . . . . 28
6.2 Authorization . . . . . . . . . . . . . . . . . 28
6.3 Conflicts . . . . . . . . . . . . . . . . . . . 28
6.4 Capitalization. . . . . . . . . . . . . . . . . 29
6.5 Securities Filings. . . . . . . . . . . . . . . 30
6.6 Financial Statements. . . . . . . . . . . . . . 30
6.7 Absence of Undisclosed Liabilities. . . . . . . 31
6.8 Absence of Certain Changes. . . . . . . . . . . 31
6.9 Pooling . . . . . . . . . . . . . . . . . . . . 31
6.10 Interests of Insiders . . . . . . . . . . . . . 32
6.11 Disputes and Litigation . . . . . . . . . . . . 32
6.12 Brokers or Finders. . . . . . . . . . . . . . . 32
ARTICLE VII CERTAIN COVENANTS . . . . . . . . . . . . . . . 32
7.1 IMA Stockholders' Meeting . . . . . . . . . . . 32
7.2 ITI Stockholders' Meeting . . . . . . . . . . . 33
7.3 ITI Board of Directors. . . . . . . . . . . . . 33
7.4 ITI Officers. . . . . . . . . . . . . . . . . . 34
7.5 Registration Statement; Proxy Statement . . . . 34
7.6 HSR Act; Other Governmental
and Judicial Filings. . . . . . . . . . . . . . 35
7.7 Conduct of Business of IMA. . . . . . . . . . . 36
7.8 IMA Capitalization. . . . . . . . . . . . . . . 38
7.9 Interim Financial Statements;
Audited Enviroq Statements . . . . . . . . . . 39
7.10 Conduct of Business of ITI;
ITI Capitalization. . . . . . . . . . . . . . . 40
7.11 Due Diligence; SEC Filings. . . . . . . . . . . 42
7.12 Notification of Certain Matters . . . . . . . . 42
7.13 Accounting and Tax Treatment. . . . . . . . . . 43
7.14 Forbearance . . . . . . . . . . . . . . . . . . 43
7.15 Restructuring Transactions. . . . . . . . . . . 44
7.16 Indemnification . . . . . . . . . . . . . . . . 44
7.17 Registration Rights.. . . . . . . . . . . . . . 44
7.18 Additional Agreements . . . . . . . . . . . . . 46
ARTICLE VIII PUBLICITY . . . . . . . . . . . . . . . . . . . 46
8.1 Publicity . . . . . . . . . . . . . . . . . . . 46
ii
<PAGE> 4
ARTICLE IX CONDITIONS TO OBLIGATIONS
OF EACH PARTY . . . . . . . . . . . . . . . . . 47
9.1 Hart-Scott-Rodino Antitrust
Improvements Act. . . . . . . . . . . . . . . . 47
9.2 Merger Approval . . . . . . . . . . . . . . . . 47
9.3 Amendments to ITI's Certificate of
Incorporation . . . . . . . . . . . . . . . . . 47
9.4 Amendments to ITI's By-Laws . . . . . . . . . . 47
9.5 Effectiveness of Registration Statement . . . . 47
9.6 Pooling-of-Interests. . . . . . . . . . . . . . 48
9.7 Conversion of IMA Class B Common Stock. . . . . 48
9.8 No Prohibition on Consummation. . . . . . . . . 48
9.9 Tax Opinion . . . . . . . . . . . . . . . . . . 48
9.10 ITI Board; Officers . . . . . . . . . . . . . . 48
ARTICLE X CONDITIONS TO OBLIGATIONS OF IMA. . . . . . . . 49
10.1 Opinion of Counsel for ITI
and Acquisition Sub . . . . . . . . . . . . . . 49
10.2 Representations; Warranties; Covenants. . . . . 49
10.3 Certified Resolutions . . . . . . . . . . . . . 49
10.4 Kalishman and Affholder Agreements. . . . . . . 49
10.5 Fairness Opinion. . . . . . . . . . . . . . . . 50
10.6 Letter of ITI's Accountants . . . . . . . . . . 50
10.7 Director Indemnification Agreements . . . . . . 50
10.8 Litigation. . . . . . . . . . . . . . . . . . . 50
10.9 Other Certificates. . . . . . . . . . . . . . . 50
ARTICLE XI CONDITIONS TO OBLIGATIONS OF ITI AND
ACQUISITION SUB . . . . . . . . . . . . . . . . 50
11.1 Opinion of Counsel for IMA. . . . . . . . . . . 51
11.2 Representations; Warranties; Covenants. . . . . 51
11.3 Certified Resolutions; Capitalization . . . . . 51
11.4 Affiliate Undertakings. . . . . . . . . . . . . 52
11.5 Kalishman and Affholder Agreements. . . . . . . 52
11.6 Dissenters' Rights. . . . . . . . . . . . . . . 52
11.7 Third Party Consents. . . . . . . . . . . . . . 52
11.8 Resignations. . . . . . . . . . . . . . . . . . 53
11.9 Fairness Opinion. . . . . . . . . . . . . . . . 53
11.10 Letter of Accountants for IMA and Enviroq . . . 53
11.11 A-Y-K-E Equipment . . . . . . . . . . . . . . . 53
11.12 Litigation. . . . . . . . . . . . . . . . . . . 53
11.13 Other Certificates. . . . . . . . . . . . . . . 54
ARTICLE XII TERMINATION . . . . . . . . . . . . . . . . . . 54
12.1 Termination . . . . . . . . . . . . . . . . . . 54
12.2 Effect of Termination . . . . . . . . . . . . . 55
iii
<PAGE> 5
ARTICLE XIII MISCELLANEOUS . . . . . . . . . . . . . . . . . 55
13.1 Notices . . . . . . . . . . . . . . . . . . . . 55
13.2 Survival of Representations . . . . . . . . . . 56
13.3 Cooperation Agreement . . . . . . . . . . . . . 56
13.4 Entire Agreement. . . . . . . . . . . . . . . . 56
13.5 Modification. . . . . . . . . . . . . . . . . . 57
13.6 Further Action. . . . . . . . . . . . . . . . . 57
13.7 Expenses. . . . . . . . . . . . . . . . . . . . 57
13.8 Governing Law . . . . . . . . . . . . . . . . . 57
13.9 Captions. . . . . . . . . . . . . . . . . . . . 57
13.10 Accounting Terms. . . . . . . . . . . . . . . . 57
13.11 Specific Performance. . . . . . . . . . . . . . 58
13.12 Assignment. . . . . . . . . . . . . . . . . . . 58
13.13 No Third Party Beneficiary. . . . . . . . . . . 58
13.14 Partial Invalidity. . . . . . . . . . . . . . . 58
13.15 Counterparts. . . . . . . . . . . . . . . . . . 58
</TABLE>
<TABLE>
<C> <S>
Schedule 5.3 - IMA Third Party Consents
Schedule 5.5 - Subsidiaries
Schedule 5.8 - Certain IMA Liabilities
Schedule 5.9 - Certain IMA Changes since December 31, 1994
Schedule 5.11 - Tax Deficiencies
Schedule 5.12 - Exceptions to Title
Schedule 5.13 - Real Estate
Schedule 5.14 - Certain Contracts and Agreements
Schedule 5.15 - Key Employees
Schedule 5.16 - Employee Benefit Plans
Schedule 5.18 - IMA Related Party Transactions
Schedule 5.19 - Insurance and Bonding Arrangements
Schedule 5.20 - Intellectual Property
Schedule 5.21 - IMA Litigation
Schedule 5.22 - State Contractor Permits
Schedule 6.3 - ITI Third Party Consents
Schedule 6.4 - ITI Stock Commitments
Schedule 6.7 - Certain ITI Liabilities
Schedule 6.8 - Certain ITI Changes since December 31, 1994
Schedule 6.10 - ITI Related Party Transactions
Schedule 6.11 - ITI Litigation
Schedule 7.7 - Conduct of IMA Business
Schedule 7.8 - IMA Dividends
Schedule 7.10 - Conduct of ITI Business
Exhibit A - Agreement of Merger
Exhibit B - Pooling Letter
Exhibit C-1 - KPMG Peat Marwick Comfort Letter
Exhibit C-2 - Deloitte & Touche Comfort Letter
Exhibit D - BDO Seidman Comfort Letter
Exhibit E - Amendments to ITI Certificate of Incorporation
iv
<PAGE> 6
Exhibit F - Amendments to ITI By-Laws
Exhibit G - Conversion Letter
Exhibit H - Opinion of Messrs. Krugman, Chapnick & Grimshaw
Exhibit I - Opinion of Messrs. Thompson & Mitchell
Exhibit J - Rule 145 Letter
Exhibit K - Affholder Agreement
Exhibit L - Kalishman Agreements
</TABLE>
v
<PAGE> 7
<TABLE>
INDEX OF DEFINED TERMS
<S> <C>
Acquisition Sub........................... Recitals
Acquisition Sub Common Stock.............. Recitals
Affiliate Agreement....................... Section 11.4
Agreement................................. Recitals
Benefit Plans............................. Section 5.16
business day.............................. Section 4.1
Certificate of Merger..................... Section 1.4
Class I Directors......................... Section 7.3
Class II Directors........................ Section 7.3
Class III Directors....................... Section 7.3
Closing................................... Section 4.1
Closing Date.............................. Section 4.1
Code...................................... Section 2.3
Confidentiality Agreement................. Section 7.11(c)
Constituent Corporations.................. Recitals
Cooperation Agreement..................... Section 13.3
Defined Benefit Plans..................... Section 5.15
Demand Registration....................... Section 7.17(b)
Dissenting Shares......................... Section 3.1(a)
Effective Time............................ Section 1.4
ERISA..................................... Section 5.15
Environmental Laws........................ Section 5.22(c)
Enviroq................................... Section 5.6
Enviroq Audited Financial Statements...... Section 5.7(b)
Enviroq Form 10-K......................... Section 5.6
Enviroq Form 10-Q......................... Section 5.6
Enviroq Interim Financial Statements...... Section 5.7(d)
Enviroq Pro Forma Financial Statements.... Section 5.7(e)
Enviroq Proxy Statement................... Section 5.6
Exchange Act.............................. Section 5.3
Exchange Agent............................ Section 3.2(a)
GCL....................................... Section 1.1
Group..................................... Section 7.3
HSR Act................................... Section 5.3
IGL Group................................. Section 7.3
IMA....................................... Recitals
IMA Agreements............................ Section 5.14(a)
IMA Audited Financial Statements.......... Section 5.7(a)
IMA Financial Statements.................. Section 5.7(c)
IMA Group................................. Section 7.3
IMA Interim Financial Statements.......... Section 5.7(c)
IMA's business or condition............... Section 5.4
IMA Preferred Stock....................... Recitals
IMA Convertible Preferred Stock........... Recitals
IMA Class A Convertible Preferred Stock... Recitals
IMA Class A Common Stock.................. Recitals
IMA Class B Common Stock.................. Recitals
IMA Common Stock.......................... Recitals
IMA Form 10-K............................. Section 5.6
IMA Form 10-Q............................. Section 5.6
IMA Option Plan........................... Section 2.3(a)
IMA Options............................... Section 2.3(a)
</TABLE>
vi
<PAGE> 8
<TABLE>
INDEX OF DEFINED TERMS (Continued)
<S> <C>
IMA SEC Documents......................... Section 5.6
INA Group................................. Section 7.3
Incidental Registration................... Section 7.17(b)(ii)
Insider................................... Section 5.14(a)
Insituform Process........................ Section 5.19
Intellectual Property..................... Section 5.20
ITI....................................... Recitals
ITI Audited Financial Statements.......... Section 6.6(a)
ITI Interim Financial Statements.......... Section 6.6(b)
ITI Form 10-K............................. Section 6.5
ITI Form 10-Q............................. Section 6.5
ITI Common Stock.......................... Section 2.2(a)
ITI Preferred Stock....................... Section 6.4
ITI SEC Documents......................... Section 6.5
Joint Proxy Statement..................... Section 7.5(b)
Lien...................................... Section 5.9
Material Adverse Effect................... Section 5.1(b)
Merger.................................... Recitals
Multiemployer Plans....................... Section 5.16
NuPipe Process............................ Section 5.20
PBGC...................................... Section 5.16
Plan of Merger............................ Section 4.1
Prior Registration Rights Agreement....... Section 7.17(b)
Registrable Securities.................... Section 7.17(b)(i)
Registration Rights Agreement............. Section 7.17(a)
Registration Statement.................... Section 7.5(a)
Removal Pleadings......................... Section 13.3
Stockholder............................... Section 7.17(a)
subsidiary................................ Section 5.1(b)
Subsidiary................................ Section 5.5
SEC....................................... Section 2.3(c)
Securities Act............................ Section 3.2(c)
Surviving Corporation..................... Section 1.1
Term...................................... Section 7.3
</TABLE>
vii
<PAGE> 9
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of this 23rd day of May,
1995 (hereinafter referred to as this "Agreement"), by and among
INSITUFORM TECHNOLOGIES, INC., a corporation organized and existing
under the laws of the State of Delaware (hereinafter referred to as
"ITI"), ITI ACQUISITION CORP., a corporation organized and existing
under the laws of the State of Delaware and a wholly-owned
subsidiary of ITI (hereinafter referred to as "Acquisition Sub"),
and INSITUFORM MID-AMERICA, INC., a corporation organized and
existing under the laws of the State of Delaware (hereinafter
referred to as "IMA"; and, together with Acquisition Sub, as the
"Constituent Corporations").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, IMA, together with its Subsidiaries (as hereinafter
defined), is primarily engaged in the application of trenchless and
other technologies to the rehabilitation, construction and
improvement of pipeline systems, and is a licensee of the
Insituform Process (as more particularly hereinafter described,
the "Insituform Process") and the NuPipe Process (as more
particularly hereinafter described, the "NuPipe Process"), in those
states and other territories covered by license agreements extended
by, respectively, Insituform North America Corp. and NuPipe, Inc.,
both wholly-owned subsidiaries of ITI; and
WHEREAS, IMA, pursuant to its certificate of incorporation
(filed in the office of the Secretary of State of the State of
Delaware on December 22, 1983, as subsequently amended on,
respectively, January 6 and February 8, 1984, November 6, 1985 and
December 10, 1986), has an authorized capital stock consisting of:
500,000 shares of preferred stock, $.01 par value (hereinafter
referred to as the "IMA Preferred Stock"), none of which are
presently issued and outstanding; 10,000 shares of convertible
preferred stock, $100 par value (hereinafter referred to as the
"IMA Convertible Preferred Stock"), none of which are presently
issued and outstanding; 500 shares of class A convertible preferred
stock, $1,000 par value (hereinafter referred to as the "IMA Class
A Convertible Preferred Stock"), none of which are presently issued
and outstanding; 13,000,000 shares of class A common stock, $.01
par value (hereinafter referred to as the "IMA Class A Common
Stock"), of which 8,282,676 shares are presently issued and
outstanding, and 6,000,000 shares of class B common stock, $.01 par
value (hereinafter referred to as the "IMA Class B Common Stock",
and together with the IMA Class A Common Stock, the "IMA Common
Stock"), of which 2,472,985 shares are presently issued and
outstanding; and
WHEREAS, Acquisition Sub has been duly organized as a
corporation under the laws of the State of Delaware, and, pursuant
to its certificate of incorporation (filed in the office of the
Secretary of State of the State of Delaware on March 16, 1995), has
an authorized capital stock consisting of 10,000 shares of common
<PAGE> 10
stock, $.01 par value (hereinafter referred to as the "Acquisition
Sub Common Stock"), of which 1,000 shares are issued and
outstanding and held by ITI; and
WHEREAS, the respective Boards of Directors of the Constituent
Corporations, and of ITI, deem it advisable and in the best
interests of such corporations and their stockholders,
respectively, that Acquisition Sub be merged into and with IMA
(hereinafter referred to as the "Merger"), in accordance with the
terms and conditions hereinafter set forth, so that IMA shall
become a subsidiary of ITI;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements hereinafter set forth, the parties hereby agree as
follows:
ARTICLE I
THE MERGER
----------
1.1 The Merger.
----------
At the Effective Time (as hereinafter defined), in accordance
with this Agreement and the Delaware General Corporation Law
(hereinafter referred to as the "GCL"), Acquisition Sub shall be
merged into and with IMA, the separate corporate existence of
Acquisition Sub shall cease and IMA shall continue as the surviving
corporation, governed by the laws of the State of Delaware, under
the corporate name it possesses immediately prior to the Effective
Time. IMA, from and after the Effective Time, is hereinafter
sometimes referred to as the "Surviving Corporation".
1.2 Effect of Merger.
----------------
(a) At the Effective Time, the Surviving Corporation
shall possess all the rights, privileges, immunities and
franchises, as well as of a public as of a private nature, of the
Constituent Corporations. All of the rights, privileges, immunities
and franchises, and all property, real and personal, and all debts
due on whatever account to each of the Constituent Corporations,
shall be taken and deemed to be transferred to and vested in the
Surviving Corporation without further act or deed; and all of the
property, rights, privileges, immunities, powers, franchises and
all and every other interest of each of the Constituent
Corporations thereafter shall be vested as effectively and fully in
the Surviving Corporation as they were in each of the Constituent
Corporations.
(b) The Surviving Corporation shall be responsible and
liable for all of the liabilities, obligations and penalties of
each of the Constituent Corporations; provided, however, that the
liabilities, obligations and penalties of the Constituent
Corporations shall not be affected by the Merger, and that the
rights of the creditors of the Constituent Corporations, or any
2
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liens upon the property of the Constituent Corporations shall not
be impaired by the Merger, and any claim existing or action or
proceeding, civil or criminal, pending by or against the
Constituent Corporations may be prosecuted to judgment as if the
Merger had not taken place, or the Surviving Corporation may be
proceeded against or substituted in the place of the Constituent
Corporations.
1.3 Certificate of Incorporation and By-Laws.
----------------------------------------
The certificate of incorporation and by-laws of IMA, as in
effect immediately prior to the Effective Time, shall be the
certificate of incorporation and by-laws of the Surviving
Corporation and thereafter shall continue to be its certificate of
incorporation and by-laws until changed as provided therein and
under the laws of the State of Delaware. The first annual meeting
of the stockholders of the Surviving Corporation held after the
Effective Time shall be the next annual meeting of stockholders
provided for in the by-laws of IMA.
1.4 Effective Time of Merger.
------------------------
The Merger shall become effective at the time of filing of a
certificate of merger with respect to the Merger (hereinafter
referred to as the "Certificate of Merger") in the office of the
Secretary of State of the State of Delaware, as required by the
GCL. Such time is herein referred to as the "Effective Time".
1.5 IMA Directors and Officers.
--------------------------
At the Effective Time and until their successors have been
duly elected and have qualified, the Board of Directors of the
Surviving Corporation shall consist of three members, and the
members of the Board of Directors of Acquisition Sub shall become
the directors of the Surviving Corporation; and at the Effective
Time and until their successors have been duly elected and have
qualified, the officers of Acquisition Sub shall become the
officers of the Surviving Corporation.
1.6 Taking of Necessary Action; Further Action.
------------------------------------------
IMA, ITI and Acquisition Sub, respectively, shall take all
such lawful action as may be necessary or appropriate in order to
effectuate the transactions contemplated by this Agreement. In case
at any time after the Effective Time, any further action is
necessary or desirable to carry out the purposes of this Agreement
and to vest the Surviving Corporation with full title to all
assets, rights, privileges, powers, immunities, purposes and
franchises of either of the Constituent Corporations, the officers
and directors of such corporation shall take all such lawful and
necessary action.
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ARTICLE II
CONVERSION OF SHARES
--------------------
The manner and basis of converting in the Merger the
outstanding shares of IMA Common Stock and Acquisition Sub Common
Stock into shares of the capital stock of the Surviving Corporation
are as follows:
2.1 Acquisition Sub Common Stock.
----------------------------
Each share of the 1,000 shares of Acquisition Sub Common Stock
issued and outstanding immediately prior to the Effective Time
shall, by virtue of the Merger and without any action by the holder
thereof, be deemed cancelled and converted into and shall represent
the right to receive one share of the class A common stock, $.01
par value, of the Surviving Corporation.
2.2 IMA Common Stock.
----------------
(a) Each share of IMA Class A Common Stock issued and
outstanding immediately prior to the Effective Time (including,
without limitation, all shares of IMA Class A Common Stock issued
upon conversion of the IMA Class B Common Stock as hereinafter
provided, but other than Dissenting Shares [as defined and to the
extent provided in Section 3.1 hereof], if any), shall, by virtue
of the Merger and without any action by the holder thereof, be
deemed cancelled and converted into and shall represent the right
to receive 1.15 shares of the class A common stock, $.01 par value
(hereinafter referred to as the "ITI Common Stock"), of ITI.
(b) Solely to avoid the expense and inconvenience to ITI
and Acquisition Sub, and not as separately bargained for
consideration, no fractional shares of ITI Common Stock shall be
issued in the Merger and no dividend, stock split or interest shall
relate to any such fractional shares, and such fractional shares
shall not entitle the owner thereof to any rights of a security
holder. In lieu of issuing certificates for fractional shares of
ITI Common Stock, the Exchange Agent (as hereinafter defined)
shall, on behalf of all holders of such fractional shares, on or
before the tenth day following the Effective Time, aggregate all
such fractional shares and sell the resulting shares of ITI Common
Stock for the accounts of holders of such respective fractional
shares, and such holders shall thereafter be entitled to receive on
a pro rata basis the net proceeds of the sale thereof, without
interest thereon, upon the surrender of all of such holder's
certificates for exchange pursuant to Section 3.2 hereof.
2.3 Options to Purchase Shares of IMA Common Stock.
----------------------------------------------
(a) All options (hereinafter referred to as the "IMA
Options") to acquire IMA Class A Common Stock outstanding, whether
or not exercisable at the Effective Time, under the Insituform
Mid-America, Inc. Stock Option Plan (hereinafter referred to as the
4
<PAGE> 13
"IMA Option Plan"), shall remain outstanding following the
Effective Time. At the Effective Time, the IMA Options shall, by
virtue of the Merger and without any further action on the part of
IMA or the holder thereof, be assumed by ITI in such manner that
ITI: (i) is a corporation "assuming a stock option in a transaction
to which Section 424(a) applies" within the meaning of Section 424
of the United States Internal Revenue Code of 1986, as amended
(hereinafter referred to as the "Code"); or (ii) to the extent that
Section 424 of the Code does not apply to any such IMA Options,
would be such a corporation were Section 424 of the Code applicable
to such IMA Options. From and after the Effective Time, all
references to IMA in the IMA Stock Option Plan and the applicable
stock option agreements issued thereunder shall be deemed to refer
to ITI, except that each reference to the name of such plan therein
(or any predecessor thereof) shall be deemed a reference to the
"Insituform Mid-America, Inc. Stock Option Plan", and provided that
each reference to the "Stock Option Committee" or "Committee"
therein shall be deemed a reference to ITI's Compensation
Committee. Each IMA Option assumed by ITI shall be exercisable upon
the same terms and conditions as under the IMA Stock Option Plan
and the applicable option agreement issued thereunder, except that:
(A) each such IMA Option shall be exercisable for that
whole number of shares of ITI Common Stock (rounded to the
nearest whole share) into which the number of shares of IMA
Class A Common Stock subject to such IMA Option immediately
prior to the Effective Time would be convertible under Section
2.2 hereof if such shares were outstanding at the Effective
Time; and
(B) the option price per share of ITI Class A Common
Stock shall be an amount equal to the quotient obtained by
dividing (x) the product obtained by multiplying the exercise
price per share of IMA Class A Common Stock subject to such
IMA Option in effect immediately prior to the Effective Time
by the number of shares of IMA Class A Common Stock subject to
such option immediately prior to the Effective Time, by (y)
the number of shares of ITI Common Stock covered by the option
as so assumed (the option price as so determined being rounded
upward to the nearest full cent).
No payment or adjustment shall be made for fractional shares which
otherwise would be issuable upon exercise of any IMA Option assumed
as aforesaid.
(b) The assumption of IMA Options pursuant hereto shall not
confer on any holder thereof any additional benefits which such
holder did not have immediately prior to the Effective Time, result
in any acceleration of any vesting or exercise schedule for any IMA
Option, or release any holder of any IMA Option of any obligations
or restrictions applicable to his option or the shares obtainable
upon exercise of such option. At the Effective Time, the IMA Option
Plan shall, by virtue of the Merger and without any further action
on the part of IMA, be deemed terminated, except for the rights of
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<PAGE> 14
the holders of outstanding IMA Options subject to the terms and
provisions hereinbefore set forth, and no further options shall be
granted thereunder.
(c) As soon as practicable following the Effective Time, ITI
shall prepare and file with the Securities and Exchange Commission
(hereinafter referred to as the "SEC"), a registration statement on
Form S-8 under the Securities Act of 1933, as amended (hereinafter
referred to as the "Securities Act"), with respect to the shares of
ITI Common Stock deliverable by ITI upon exercise of the IMA
Options, as so assumed.
2.4 ITI Common Stock.
----------------
The Merger shall effect no change in any shares of ITI Common
Stock issued by ITI prior to the Effective Time.
ARTICLE III
DISSENTING SHARES;
EXCHANGE OF CERTIFICATES
------------------------
3.1 Dissenting Shares.
-----------------
Notwithstanding anything in this Agreement to the contrary,
shares of IMA Common Stock which are issued and outstanding
immediately prior to the Effective Time and which are held by
stockholders who have not voted such shares in favor of the Merger
and, if entitled to elect to demand the appraisal of such shares
pursuant to Section 262 of the GCL, shall have delivered a written
demand for payment of the fair value of such shares within the time
and in the manner provided in said Section 262 (herein referred to
as "Dissenting Shares") shall not be converted into or be
exchangeable for the right to receive the consideration provided in
Article II of this Agreement,unless and until such holder shall
have failed to perfect or shall have effectively withdrawn or lost
his right to appraisal and payment under the GCL. If any such
holder shall have so failed to perfect or shall have effectively
withdrawn or lost such right, such holder's shares of IMA Common
Stock shall thereupon be deemed to have been converted into and to
have become exchangeable for, at the Effective Time, the right to
receive the consideration therefor specified under Article II
hereof, without any interest thereon.
3.2 Exchange of Shares.
------------------
(a) Prior to the Effective Time, Acquisition Sub shall
designate American Stock Transfer & Trust Company, or, at its
election, a bank or trust company or similar entity, reasonably
satisfactory to IMA, which is authorized to exercise corporate
trust or stock powers, to act as the exchange agent (hereinafter
referred to as the "Exchange Agent") in the Merger. Promptly after
the Effective Time, ITI shall cause the delivery to the Exchange
6
<PAGE> 15
Agent of certificates evidencing the shares of ITI Common Stock
contemplated to be issued by Section 2.2 hereof.
(b) As soon as practicable after the Effective Time, but
in no event later than 15 business days after the Effective Time,
the Exchange Agent shall send a notice and transmittal form to each
holder of a certificate theretofore evidencing shares of IMA Common
Stock, advising such holders of the terms of the exchange effected
by the Merger and the procedure for surrendering to the Exchange
Agent (who may appoint forwarding agents with the approval of ITI)
such record holder's certificate(s) evidencing IMA Common Stock for
exchange for certificates evidencing shares of ITI Common Stock.
Each holder of a certificate theretofore evidencing shares of IMA
Common Stock, upon surrender of the same to the Exchange Agent in
accordance with such transmittal form, shall be entitled to
receive, in exchange for such certificate, a certificate evidencing
the number of full shares of ITI Common Stock for which the shares
of IMA Common Stock theretofore represented by the certificate so
surrendered shall have been exchanged pursuant to Section 2.2
hereof and the cash in lieu of fractional shares hereinabove
contemplated, and the certificate so surrendered shall forthwith be
cancelled.
(c) If any certificate evidencing shares of ITI Common
Stock is to be issued in a name other than that in which the
certificate surrendered in exchange therefor is registered, or if
any payment of cash is to be made to a person other than the person
in whose name such certificate is registered, it shall be a
condition of the issuance thereof or such payment, as the case may
be, that the certificate so surrendered shall be properly endorsed
and otherwise in proper form for transfer and that the person
requesting such exchange (i) pay to the Exchange Agent any transfer
or other taxes required by reason of the issuance of a certificate
for shares of ITI Common Stock in any name other than that of, and
payment of cash to a person other than, the registered holder of
the certificate surrendered or (ii) establish to the satisfaction
of the Exchange Agent that such transfer or other taxes have been
paid or are not applicable. Certificates representing shares of ITI
Common Stock issued to IMA "affiliates", within the meaning of Rule
145 under the Securities Act, shall bear the legend referred to in
Paragraph (a)(ii) of Section 11.4 hereof.
(d) In the event any certificate representing any shares
of IMA Common Stock shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such
certificate to be lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed
certificate the consideration payable in exchange therefor pursuant
to Article II. The Exchange Agent or the Surviving Corporation may,
in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen or destroyed
certificate to give the Exchange Agent a bond in such reasonable
sum as it may direct as indemnity against any claim that may be
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<PAGE> 16
made against the Surviving Corporation with respect to the
certificate alleged to have been lost, stolen or destroyed.
3.3 Dividends and Other Distributions.
---------------------------------
No dividends or other distributions to holders of ITI Common
Stock as of any date subsequent to the Effective Time shall be paid
to the holders of outstanding certificates formerly representing
shares of IMA Common Stock until such certificates are so
surrendered. Subject to the effect, if any, of applicable law upon
surrender of certificates evidencing shares of IMA Common Stock,
there shall be paid to the record holders of ITI Common Stock
issued in exchange therefor (i) the amount of dividends or other
distributions with a record date for payment after the Effective
Time that have theretofore been paid with respect to full shares of
ITI Common Stock as of any date subsequent to the Effective Time
which have not yet been paid to a public official pursuant to
abandoned property laws and (ii) at the appropriate payment date,
the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date
subsequent to surrender. No interest shall be payable with respect
to the payment of such dividends or other distributions on
surrender of outstanding certificates. Notwithstanding the
foregoing, neither ITI, Acquisition Sub, the Exchange Agent nor any
other party hereto shall be responsible or liable to any holder of
shares of IMA Common Stock for any ITI Common Stock, or dividends
or distributions thereon or cash, including cash in lieu of
fractional share interests, delivered to any public official
pursuant to applicable escheat laws.
3.4 IMA Stock Transfer Ledger.
-------------------------
At the Effective Time, it shall be deemed that the stock
transfer books of IMA are closed, and no transfer of IMA Common
Stock on the books of IMA shall thereafter be made or consummated.
Until surrendered and exchanged in accordance with the provisions
of Section 3.2 hereof, the outstanding certificates evidencing
shares of IMA Common Stock immediately prior to the Effective Time
shall, from and after the Effective Time, be deemed for all
corporate purposes to evidence the right to receive the number of
shares of ITI Common Stock, together with cash in lieu of
fractional shares, into which the shares of IMA Common Stock
theretofore evidenced by such certificate or certificates shall
have been so converted, together with any dividends or other
distributions thereon pursuant to Section 3.3 hereof, as though
such surrender and exchange had taken place.
3.5 Termination of Exchange Agency.
------------------------------
Any portion of the shares of ITI Common Stock or cash in lieu
of fractional shares, which remains undistributed to the holders of
IMA Common Stock for one year after the Effective Time shall be
delivered to ITI, upon demand, and any holders of IMA Common Stock
who have not theretofore complied with this Article III shall
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<PAGE> 17
thereafter look only to ITI for the shares of ITI Common Stock, any
cash in lieu of fractional shares of ITI Common Stock to which they
are entitled pursuant to Paragraph (b) of Section 2.2 hereof and
any dividends or other distributions with respect to ITI Common
Stock to which they are entitled pursuant to Section 3.3. Any
portion of such remaining shares or cash unclaimed by holders of
IMA Common Stock as of a date which is immediately prior to such
time as such shares or amounts would otherwise escheat to or become
property of any governmental entity shall, to the extent permitted
by applicable law, become the property of ITI free and clear of any
claims or interest of any person previously entitled thereto.
ARTICLE IV
CLOSING
-------
4.1 Time and Place of Closing.
-------------------------
IMA, ITI and Acquisition Sub shall regularly communicate and
consult with each other with respect to the fulfillment of the
various conditions to the obligations under this Agreement of the
parties hereto. The exchange of certificates, opinions and other
documents contemplated by this Agreement (hereinafter referred to
as the "Closing") shall be held at the offices of Messrs. Krugman,
Chapnick & Grimshaw, Park 80 West-Plaza Two, Saddle Brook, New
Jersey 07663, at 10:00 A.M., local time, at such time and date
(hereinafter referred to as the "Closing Date") as the parties may
determine, such date to fall within ten business days after the
satisfaction or waiver of the last of the conditions set forth in
Articles IX, X and XI hereof to be satisfied or waived (other than
conditions with respect to actions the parties shall take at the
Closing), and provided that ITI may delay the Closing for up to 15
business days after the date on which the Closing would otherwise
occur as aforesaid in order to effectuate the restructurings
contemplated by Section 7.15 hereof, or such other time and date as
may be agreed upon by the parties hereto. For purposes of this
Agreement, "business day" shall mean any day on which the principal
offices of the SEC in Washington, D.C. are open to accept filings,
or, in the case of determining a date when any payment is due, any
day on which banks are not required or authorized to close in the
City of New York.
4.2 Certificate of Merger.
---------------------
In the event that, at or prior to the Closing, none of the
parties has exercised any right it may have to terminate this
Agreement, and no condition to the obligations of the parties
exists that is not waived, the parties shall, on the Closing Date,
execute the agreement of merger, in the form attached hereto as
Exhibit A (hereinafter referred to as the "Plan of Merger"),
- ---------
appropriately completed, and, as soon thereafter as is practicable
cause an appropriate Certificate of Merger to be executed by the
Constituent Corporations and filed with the Secretary of State of
the State of Delaware in accordance with the GCL.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF IMA
-------------------------------------
IMA represents, warrants and covenants that:
5.1 Incorporation.
-------------
(a) IMA is duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full
corporate power and authority to own or hold under lease the assets
and properties which it owns or holds under lease, to conduct its
business as currently conducted, to perform all its obligations
under the agreements to which it is a party, including, without
limitation, this Agreement, and to consummate the Merger. IMA is in
good standing in each other jurisdiction wherein the failure so to
qualify, individually or in the aggregate, would have a Material
Adverse Effect (as hereinafter defined). The copies of IMA's
certificate of incorporation and by-laws, each as currently in
effect, which have been delivered to ITI and Acquisition Sub by IMA
are complete and correct.
(b) For purposes of this Agreement:
(i) "Material Adverse Effect" with respect to a party shall
mean any change in, or effect on such party or any subsidiary
thereof (as hereinafter defined) which is, or with reasonable
probability might be, materially adverse to the business,
properties, operations, income, assets, prospects or condition,
financial or otherwise of such party and its subsidiaries, taken as
a whole; and the term "Material Adverse Effect" used without a
specific reference to a party shall mean a Material Adverse Effect
with respect to IMA and its Subsidiaries, taken as a whole; and
(ii) each reference to a "subsidiary" or "subsidiaries" of any
person means any corporation, partnership, joint venture or other
legal entity of which such person (either alone or through or
together with any other subsidiary), owns, directly or indirectly,
more than 50% of the stock or other equity interests the holder of
which are generally entitled to vote for the election of the board
of directors or other governing body of such corporation or other
legal entity.
5.2 Authorization.
-------------
The execution and delivery of this Agreement, the performance
by IMA of its covenants and agreements hereunder and the
consummation by IMA of the transactions contemplated hereby have
been duly authorized by all necessary corporate action of IMA,
other than the approval of the holders of IMA Common Stock
contemplated under Section 7.1 hereof. When executed and delivered
by IMA, this Agreement shall constitute the valid and legally
binding obligation of IMA, enforceable against IMA in accordance
with its terms, except as may be limited by bankruptcy, insolvency
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or other laws affecting generally the enforceability of creditors'
rights and by limitations on the availability of equitable
remedies.
5.3 Conflicts.
---------
Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated herein, will violate
any provision of IMA's certificate of incorporation or by-laws, as
currently in effect, or, subject to approval of this Agreement by
the holders of IMA Common Stock as contemplated under Section 7.1
hereof and compliance with the regulatory requirements hereinafter
specified in this Section 5.3, any law, rule, regulation, writ,
judgment, injunction, decree, determination, award or other order
of any court, government or governmental agency or instrumentality,
domestic or foreign, binding upon IMA or any of its Subsidiaries
or, except as set forth on Schedule 5.3(A) attached hereto and
------------
other than any such conflicts, breaches, creation, imposition or
termination which would not have a Material Adverse Effect,
conflict with or result in any breach of any of the terms of or the
creation or imposition of any mortgage, deed of trust, pledge,
lien, security interest or other charge or encumbrance of any
nature pursuant to, or create any cause for termination under, the
terms of any contract or agreement to which IMA or any Subsidiary
is a party or by which IMA or any Subsidiary or any of their
respective properties or assets is bound. Other than the approval
of this Agreement by the holders of IMA Common Stock contemplated
under Section 7.1 hereof and except for compliance with the
requirements of the federal Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (hereinafter referred to as
the "HSR Act"), the Securities Act, with respect to the
Registration Statement (as hereinafter defined), the securities or
blue sky laws of the various states, the federal Securities
Exchange Act of 1934, as amended (hereinafter referred to as the
"Exchange Act"), with respect to the Joint Proxy Statement (as
hereinafter defined), and except as set forth on Schedule 5.3(A)
and (C) and any such consents, approvals, authorizations, filings
or registrations with or notices to any such person or entity other
than any governmental agency or instrumentality the failure to
effectuate which would not have a Material Adverse Effect, no
consents, approvals or authorizations, or registrations with any
governmental agency or authority or any other person or entity and,
except as set forth on Schedule 5.3(B), filings with or notices to
any such person or entity, are required in connection with the
execution and delivery of this Agreement by IMA or the consummation
by IMA of the transactions contemplated hereby.
5.4 Capitalization.
--------------
The authorized capital stock of IMA consists of 500,000 shares
of IMA Preferred Stock, none of which are issued and outstanding,
10,000 shares of IMA Convertible Preferred Stock, none of which are
issued and outstanding, 500 shares of IMA Class A Convertible
Preferred Stock, none of which are issued and outstanding on the
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date hereof, 13,000,000 shares of IMA Class A Common Stock, of
which 8,282,676 shares are issued and outstanding, and 6,000,000
shares of IMA Class B Common Stock, of which 2,472,985 shares are
issued and outstanding on the date hereof. No shares of any class
or series of the capital stock of IMA are held as treasury stock.
All of the outstanding shares of IMA Common Stock are, and all
outstanding shares of IMA Class A Common Stock issuable upon
exercise of IMA Options will be, duly authorized, validly issued
and fully paid and non-assessable, issued without violation of the
preemptive rights of any person. There are no subscriptions,
warrants, options, calls, commitments by or agreements to which IMA
is bound relating to the issuance, conversion, or purchase of any
shares of IMA Common Stock, or any other capital stock of IMA,
except for the IMA Options granted by IMA pursuant to the IMA
Option Plan, covering an aggregate of 365,040 shares of IMA Class
A Common Stock on the date hereof, and except for this Agreement.
IMA has delivered to ITI and Acquisition Sub true and complete
copies of each form of certificate or agreement evidencing options
granted and outstanding under the IMA Option Plan. IMA is not a
party to any agreement or arrangement relating to the voting or
control of any of its capital stock, or obligating IMA, directly or
indirectly, to sell any assets in a transaction which is not in the
ordinary course or which is otherwise material to the businesses,
financial condition, results of operations or prospects of IMA and
its Subsidiaries, taken as a whole (hereinafter referred to as
"IMA's business or condition"), except for this Agreement. IMA has
no currently outstanding obligations to register any securities
under the Securities Act, under any arrangements that would require
any such registration as a result of this agreement or the
transactions contemplated hereby or under any arrangements that
would permit any party to such arrangements other than IMA to
require IMA to file a registration statement under the Securities
Act.
5.5 Subsidiaries.
------------
Schedule 5.5(1), (2) and (3) annexed hereto sets forth the
------------
name of each corporation, partnership, joint venture, business
trust or other legal entity in which IMA, directly or indirectly,
beneficially or legally owns or holds any capital stock or other
proprietary interest (herein referred to, individually, as a
"Subsidiary" and, collectively, as the "Subsidiaries"), the
jurisdiction of its incorporation or formation, and IMA's direct or
indirect ownership thereof. Neither IMA nor any Subsidiary,
directly or indirectly, beneficially or legally owns or holds any
capital stock of ITI. Each corporate Subsidiary is a corporation
duly organized and in good standing under the laws of the
jurisdiction of its incorporation, and has full corporate power and
authority to own or hold under lease the assets and properties
which it owns or holds under lease and to perform all its
obligations under the agreements to which it is a party and to
conduct such Subsidiary's business. Each Subsidiary consisting of
a joint venture, partnership, or limited liability partnership is
duly organized, validly existing and, in the case of any limited
12
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liability partnership, in good standing as such entity under the
laws of the jurisdiction of its formation, and has full partnership
authority to own or hold under lease the assets or properties which
it owns or holds under lease and to perform all of its obligations
under the agreements to which it is a party and to conduct such
Subsidiary's business. Each Subsidiary is in good standing in each
other jurisdiction wherein the failure so to qualify would,
individually or in the aggregate, have a Material Adverse Effect.
All of the outstanding shares of the capital stock of each
Subsidiary are so owned and are duly authorized and validly issued,
fully paid and non-assessable, issued without violation of the
preemptive rights of any person, and, except as identified on
Schedule 5.5(4), are owned free and clear of any mortgages, deeds
of trust, pledges, liens, security interests or any charges or
encumbrances of any nature. Except as set forth in Schedule 5.5(5),
no shares of capital stock or other proprietary interest of any
Subsidiary is subject to any option, call, commitment or other
agreement of any nature, and there are no subscriptions, warrants,
options, calls, commitments by or agreements to which IMA or any
Subsidiary is bound relating to the issuance or purchase of any
shares of capital stock of any Subsidiary. Except for partnership
and joint venture arrangements as set forth on Schedule 5.5(2) and
(3), neither IMA nor any Subsidiary is party to any agreement or
arrangement relating to the voting or control of any capital stock
of any Subsidiary, or obligating IMA or any Subsidiary to sell any
assets of any Subsidiary in a transaction which is not in the
ordinary course or which is otherwise material to IMA's business or
condition. The copies of the certificates of incorporation and
by-laws, or other instruments of formation, as currently in effect,
of each such Subsidiary, which have been delivered or made
available to ITI by IMA are complete and correct.
5.6 Securities Filings.
------------------
IMA and each Subsidiary have made all filings with the SEC
that it has been required to make under the Securities Act, and the
rules and regulations promulgated thereunder, and the Exchange Act,
and the rules and regulations promulgated thereunder. IMA has
provided to ITI and Acquisition Sub complete and correct copies of
all reports, registration statements, final prospectuses,
definitive proxy statements and other filings made by IMA or any
Subsidiary with the SEC, including all exhibits to such filings,
since October 1, 1989 (all such documents that have been filed with
the SEC, as amended, hereinafter referred to as the "IMA SEC
Documents"), including, without limitation, IMA's Annual Report on
Form 10-K for the fiscal year ended September 30, 1994, as filed
with the SEC on January 3, 1995 (together with all documents
incorporated therein by reference, hereinafter referred to as the
"IMA Form 10-K"), and its Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995, as filed with the SEC on May 15, 1995
(hereinafter referred to as the "IMA Form 10-Q"), the Annual Report
on Form 10-K for the fiscal year ended March 26, 1994 of IMA Merger
Sub, Inc. (formerly, Enviroq Corporation; hereinafter referred to
as "Enviroq"), as filed with the SEC on June 24, 1994 (together
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<PAGE> 22
with all documents incorporated therein by reference, hereinafter
referred to as the "Enviroq Form 10-K"), Enviroq's Quarterly Report
on Form 10-Q for the quarter ended December 24, 1994, as filed with
the SEC on February 7, 1995 (hereinafter referred to as the
"Enviroq Form 10-Q"), and Enviroq's Proxy Statement dated March 14,
1995 (hereinafter referred to as the "Enviroq Proxy Statement").
The IMA SEC Documents comply in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case
may be, and neither any of the IMA SEC Documents (as of the date of
their respective filing with the SEC), or any information relating
to IMA or any of its Subsidiaries contained in this Agreement or
any schedule hereto, contains any untrue statement of a material
fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
5.7 Financial Statements.
--------------------
(a) The consolidated financial statements (hereinafter
referred to, collectively, as the "IMA Audited Financial
Statements") of IMA and its consolidated subsidiaries contained or
incorporated by reference in the IMA Form 10-K in response to "Item
8. Consolidated Financial Statements and Supplementary Data", are
true and correct and have been prepared in conformity with
generally accepted accounting principles consistently applied
throughout the periods to which such financial statements relate.
The IMA Audited Financial Statements fully and fairly present, in
conformity with such principles as so utilized, the consolidated
financial position and results of operations and cash flows of IMA
and its consolidated subsidiaries, at the dates shown and for the
periods therein specified, except as described therein.
(b) The consolidated financial statements (hereinafter
referred to, collectively, as the "Enviroq Audited Financial
Statements") of Enviroq and its consolidated subsidiaries contained
or incorporated by reference in the Enviroq Form 10-K in response
to "Item 8. Consolidated Financial Statements and Supplementary
Data", are true and correct and have been prepared in conformity
with generally accepted accounting principles consistently applied
throughout the periods to which such financial statements relate.
The Enviroq Audited Financial Statements fully and fairly present,
in conformity with such principles as so utilized, the consolidated
financial position and results of operations and cash flows of
Enviroq and its consolidated subsidiaries, at the dates shown and
for the periods therein specified, except as described therein.
(c) The consolidated financial statements (hereinafter
referred to as the "IMA Interim Financial Statements", and,
together with the IMA Audited Financial Statements, herein referred
to as the "IMA Financial Statements") of IMA and its consolidated
subsidiaries contained in the IMA Form 10-Q in response to "Item 1.
Financial Statements" are true and correct and have been prepared
in conformity with generally accepted accounting principles
consistently applied throughout the periods to which such financial
14
<PAGE> 23
statements relate, except as permitted by Form 10-Q. The IMA
Interim Financial Statements fully and fairly present the
consolidated financial position and results of operations and cash
flows of IMA and its consolidated subsidiaries, at the dates shown
and for the periods therein specified, subject to normal year-end
adjustments in accordance with generally accepted accounting
principles and except as described therein.
(d) The consolidated financial statements (hereinafter
referred to as the "Enviroq Interim Financial Statements") of
Enviroq and its consolidated subsidiaries contained in the Enviroq
Form 10-Q in response to "Item 1. Financial Statements" are true
and correct and have been prepared in conformity with generally
accepted accounting principles consistently applied throughout the
periods to which such financial statements relate, except as
permitted by Form 10-Q. The Enviroq Interim Financial Statements
fully and fairly present the consolidated financial position and
results of operations and cash flows of Enviroq and its
consolidated subsidiaries, at the dates shown and for the periods
therein specified, subject to normal year-end adjustments in
accordance with generally accepted accounting principles and except
as described therein.
(e) The consolidated pro forma financial statements
(hereinafter referred to as the "Enviroq Pro Forma Financial
Statements") of Enviroq and its consolidated subsidiaries contained
in the Enviroq Proxy Statement are true and correct and have been
prepared in all material respects in conformity with Article 11 of
Regulation S-X promulgated by the SEC. The Enviroq Pro Forma
Financial Statements fully and fairly present the consolidated
financial position and results of operations of Enviroq and its
consolidated subsidiaries, at the dates shown and for the periods
therein specified, after giving pro forma effect to the
transactions described therein.
(f) Each of IMA and each Subsidiary: (i) make and keep
books, records, and accounts, which, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of
their respective assets; and (ii) maintain a system of internal
accounting controls sufficient to provide reasonable assurances
that (A) transactions are executed in accordance with management's
general or specific authorization; (B) transactions are recorded as
necessary (I) to permit preparation of financial statements in
conformity with generally accepted accounting principles or any
other criteria applicable to such statements, and (II) to maintain
accountability for assets; (C) access to assets is permitted only
in accordance with management's general or specific authorization;
and (D) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
15
<PAGE> 24
5.8 Absence of Undisclosed Liabilities.
----------------------------------
Except to the extent disclosed in the IMA Form 10-K or the IMA
Form 10-Q (in each case without reference to the exhibits thereto),
or the Enviroq Pro Forma Financial Statements (after giving effect
to the transactions described therein), or incurred after December
31, 1994 (or, in the case of Enviroq or its subsidiaries,
December 24, 1994) in the ordinary course of business and
consistent with past practice, neither IMA, nor any of the
Subsidiaries has any liabilities, whether accrued, absolute,
contingent, or otherwise, whether due or to become due and whether
the amount thereof is readily ascertainable or not, other than
liabilities which, individually or in the aggregate, would not have
a Material Adverse Effect, or any unrealized or anticipated losses
from any unfavorable commitments or sales of products, other than
those which, individually or in the aggregate, would not have a
Material Adverse Effect, in each case under this Section 5.8 except
as set forth in Schedule 5.8.
------------
5.9 Absence of Certain Changes.
--------------------------
Subsequent to December 31, 1994 (or, in the case of Enviroq or
its subsidiaries, December 24, 1994), neither IMA nor any
Subsidiary has:
(a) except as disclosed in Schedule 5.9 attached hereto,
------------
declared, set aside or made any payment or distribution upon any
capital stock or, directly or indirectly, purchased, redeemed or
otherwise acquired or disposed of any shares of capital stock;
(b) except as disclosed in Schedule 5.9 attached hereto,
incurred any liability or obligation under agreements or otherwise,
except current liabilities entered into or incurred in the ordinary
course of business consistent with past practice; issued any notes
or other corporate debt securities or paid or discharged any
outstanding indebtedness, except in the ordinary course of business
consistent with past practice; or, in a manner that would,
individually or in the aggregate, have a Material Adverse Effect,
waived any of its respective rights;
(c) mortgaged, pledged or subjected to any Lien (as
hereinafter defined) any of its assets or properties; entered into
any lease of real property or buildings; or, except in the ordinary
course of business consistent with past practice, entered into any
lease of machinery or equipment, or sold or transferred any
tangible or intangible asset or property;
(d) effected any increase in salary, wages or other
compensation of any kind, whether current or deferred, to any
employee or agent, other than routine increases in the ordinary
course of business consistent with past practice or as was required
from time to time by governmental legislation affecting wages
(provided, however, that in no event was any such increase in
compensation made with respect to any employee or agent earning in
16
<PAGE> 25
excess of $50,000 per annum, except as identified in Schedule 5.9);
except as set forth in Schedule 5.9, made any bonus, pension,
option, deferred compensation, or retirement payment, severance,
profit sharing, or like payment to any employee or agent, except as
required by the terms of plans or arrangements existing prior to
such date (provided, however, that in no event was any such payment
made with respect to any employee or agent earning in excess of
$50,000 per annum, except as identified in Schedule 5.9); or
entered into any salary, wage, severance, or other compensation
agreement with a term of one year or longer with any employee or
agent or made any contribution to any trust or plan for the benefit
of any employee or agent, except as required by the terms of plans
or arrangements existing prior to such date;
(e) except as set forth in Schedule 5.9, entered into
any transaction other than in the ordinary course of business
consistent with past practice, except in connection with the
execution and performance of this Agreement and the transactions
contemplated hereby;
(f) suffered any damage, destruction, or loss to any of
its assets or properties (whether or not covered by insurance)
except for damage, destruction or loss occurring in the ordinary
course of business which, individually or in the aggregate, would
not have a Material Adverse Effect; or
(g) suffered any Material Adverse Effect;
and, since December 31, 1994 (or, in the case of Enviroq and its
subsidiaries, December 24, 1994), there has been no condition,
development or contingency which, so far as reasonably may be
foreseen, may, individually or in the aggregate, have a Material
Adverse Effect. For purposes of this Agreement, the term "Lien"
shall be defined to mean any mortgage, deed of trust, security
interest, pledge, lien, or other charge or encumbrance of any
nature whatsoever except: (a) liens disclosed in the IMA Financial
Statements; (b) liens for taxes, assessments, or governmental
charges or levies not yet due and delinquent; and (c) liens
consisting of zoning or planning restrictions, easements, permits,
any other restrictions or limitations on the use of real property
or irregularities in title thereto which do not materially detract
from the value of, or impair the use of, such property by IMA or
any of its Subsidiaries.
5.10 Pooling.
-------
As of the date hereof, there has not been any action taken by
IMA or any Subsidiary or affiliate under Rule 1-02 of Regulation
S-X of the SEC that would prevent the Merger from being accounted
for as a pooling-of-interests. Contemporaneously with the execution
and delivery of this Agreement, IMA has delivered to ITI an
executed letter agreement, substantially in the form of Exhibit B
---------
attached hereto (together with such changes therein as may
reasonably have been requested by ITI or IMA, such reasonableness
17
<PAGE> 26
to be determined in good faith by BDO Seidman), from each such
affiliate.
5.11 Taxes.
-----
IMA and each Subsidiary have filed or caused to be filed all
foreign, federal, state, provincial, municipal and other tax
returns, reports and declarations required to be filed by it so as
to prevent any Lien of any nature on the assets or properties of
IMA or any of the Subsidiaries, and have paid or shall pay all
taxes which have been or shall become due with respect to the
periods covered by said returns or pursuant to any assessment
received by it in connection therewith. Except as set forth in
Schedule 5.11, the Internal Revenue Service has not examined the
- -------------
federal tax returns of IMA or any of the Subsidiaries for any
period subsequent to September 30, 1993; and only periods
subsequent to September 30, 1993 remain open for examination and
assessment of additional federal income taxes. All assessments and
charges (including penalties and interest, if any) related to
periods ended on or before September 30, 1994 have been paid by IMA
and each Subsidiary, including any necessary adjustments with state
and local tax authorities, and, except as set forth in Schedule
5.11, no deficiency in payment of any taxes for any period has been
asserted by any taxing authority which remains unsettled at the
date hereof. Adequate provision has been made in the IMA Financial
Statements for the payment of all then accrued and unpaid federal
and other taxes of IMA and its Subsidiaries, whether or not yet due
and payable and whether or not disputed by IMA. Neither IMA nor any
Subsidiary has agreed to the extension of the statute of
limitations with respect to any tax return for any open year.
5.12 Title.
-----
IMA and its Subsidiaries have good and marketable title to all
of their respective assets and properties, in each case, except as
set forth on Schedule 5.12(1), (2), (3), (4) and (5), free and
-------------
clear of all Liens. IMA and the Subsidiaries lease or own all
properties and assets necessary for the operation of their
respective businesses as presently conducted, and the assets and
properties of IMA and its Subsidiaries include all of the assets,
of every kind and nature, whether tangible or intangible, and
wherever located, which are utilized by IMA or its Subsidiaries in
the conduct of their respective businesses. Neither IMA nor its
Subsidiaries have received notice of any violation of, or default
under, any law, ordinance, order, regulation, or governmental or
contractual requirement relating to the assets and properties of
IMA or its Subsidiaries which remains uncured or has not been
dismissed, other than with respect to any violation which,
individually or in the aggregate, would not have a Material Adverse
Effect and other than as identified on Schedule 5.12(7). All leases
and licenses pursuant to which IMA or the Subsidiaries lease or
license personal and intangible property from others, are in good
standing, valid and effective in accordance with their respective
terms, and there is not, under any of such leases or licenses, any
18
<PAGE> 27
existing default, or event of default (or event which with notice
or lapse of time, or both, would constitute a default, or would
constitute a basis for a claim of force majeure or other claim of
----- -------
excusable delay or non-performance) caused, by IMA or any
Subsidiary or, to the best of IMA's knowledge, any other party. All
the tangible personal property owned or leased by IMA or its
Subsidiaries is in good operating condition and repair, subject
only to ordinary wear and tear, and conforms in all respects to all
applicable laws, ordinances, orders, regulations or governmental or
contractual requirements relating to their operation, except for
any such non-conformity which, individually or in the aggregate,
would not have a Material Adverse Effect.
5.13 Real Estate and Leases.
----------------------
(a) Set forth in Schedule 5.13 attached hereto is a brief
-------------
description of every parcel of real estate owned by IMA or any
Subsidiary (including, in each case, a description of the
improvements and uses, the annual taxes payable and depreciation
reserve of any improvements), and lease agreements (including, in
each case, the annual rental payable and the expiration date, the
cost and depreciation reserve of any leasehold improvements and a
brief description of the property covered) under which IMA or any
of its Subsidiaries is lessee of, or holds or operates, any real
estate owned by any third party. Each of such leases and agreements
is in full force and effect and constitutes a legal, valid and
binding obligation of the respective parties thereto. Neither IMA
nor any Subsidiary is in default under any such lease or agreement,
nor, to the best of the knowledge of IMA, is any other party to any
such lease or agreement in default thereunder, and no event has
occurred, or is alleged to have occurred, which constitutes, or
with lapse of time or giving of notice or both would constitute, a
default by IMA or any Subsidiary or, to the best of the knowledge
of IMA, any other party to any such lease or agreement, or a basis
for a claim of force majeure or other claim of excusable delay or
non-performance thereunder by IMA or any Subsidiary or, to the best
of the knowledge of IMA, any other party, other than with respect
to any default, event or claim which, individually or in the
aggregate, would not have any Material Adverse Effect.
(b) IMA or a Subsidiary has good, clear and marketable title
to the properties set forth on Schedule 5.13 and all fixtures
thereon in fee simple absolute, subject to no Liens (other than
covenants, easements and restrictions of record which do not,
individually or in the aggregate, materially impair the value or
the present use of such properties and other than as set forth in
Schedule 5.13). There is no option or right held by any third party
to purchase any such properties or any part thereof, or any of the
fixtures and equipment thereon. All buildings, driveways and other
improvements on such properties, respectively, are within its
boundary lines, and no improvements on adjoining properties extend
across the boundary lines onto such properties.
19
<PAGE> 28
(c) The foundation, floor and roof of the buildings and all
other structural and mechanical components of the properties owned
or leased by IMA or its Subsidiaries are sound and free of any
structural, mechanical or other defect, and all heating,
ventilating, air conditioning, electrical, plumbing and other
mechanical systems and equipment thereon are in good working order,
in each case except for construction-in-progress and except insofar
as would not, individually or in the aggregate, have a Material
Adverse Effect. There are no condemnation or eminent domain
proceedings pending or threatened with respect to the properties
owned or leased by IMA or any Subsidiary, all required certificates
of occupancy and other government permits necessary to utilize such
properties as they are presently utilized have been obtained, and
such properties, and the operation thereof, conform to all existing
building, zoning, and other laws and ordinances relating to their
use or occupancy, in each case except insofar as would not,
individually or in the aggregate, have a Material Adverse Effect.
5.14 Contractual and Other Obligations.
---------------------------------
(a) As used in this Agreement, the term the "IMA
Agreements" shall mean all mortgages, indentures, notes,
agreements, contracts, leases, licenses, franchises, obligations,
instruments or other commitments, arrangements or understandings of
any kind, whether written or oral, binding or non-binding, to which
IMA or any of the Subsidiaries is a party or by which IMA or any of
the Subsidiaries or any of their respective properties may be bound
or affected, other than those which by their terms have expired
prior to the date hereof. There is no IMA Agreement which is
material to IMA's business or condition and which is not otherwise
listed in the IMA Form 10-K or otherwise identified pursuant to the
immediately succeeding sentence. Set forth or provided for on
Schedule 5.14 attached hereto is a list, without regard to
- -------------
materiality, of each of the following IMA Agreements which is not
otherwise listed in the IMA Form 10-K: (i) any mortgage, indenture,
note, or other instrument, agreement or arrangement for or relating
to any borrowing of money by IMA or any Subsidiary, or any other
installment obligation in excess, individually, of $100,000 per
year; (ii) any guaranty, direct or indirect, by IMA or any
Subsidiary of any obligation for borrowings or otherwise, excluding
endorsements made for collection in the ordinary course of business
and guaranties of construction performance bonds in the ordinary
course of business disclosed on Schedule 5.19; (iii) any IMA
Agreement made other than in the ordinary course of its business or
providing for the grant of any preferential rights to purchase or
lease any assets of IMA or any Subsidiary, except for such
agreements which, individually and in the aggregate, are not
material to IMA's business or condition; (iv) any obligation to
make payments, contingent or otherwise, arising out of the prior
acquisition of the business, assets or stock of other companies;
(v) any collective bargaining agreement with any trade or labor
union; (vi) any IMA Agreement to which any officer or director of
IMA or any stockholder (herein referred to collectively, as the
"Insiders") of IMA beneficially owning (within the meaning of
20
<PAGE> 29
Section 13(d) of the Exchange Act) more than 5% of the outstanding
shares of IMA Class A Common Stock, or any shares of IMA Class B
Common Stock, is a party; (vii) any IMA Agreement containing non-
competition or other limitations restricting the conduct of the
business of IMA or any Subsidiary; (viii) any license agreements to
which IMA or any Subsidiary is a party relating to any Intellectual
Property (as hereinafter defined), other than the Insituform
Process or the NuPipe Process; and (ix) any partnership,
shareholder agreement, joint venture or similar agreement.
(b) No event has occurred, or, is alleged to have
occurred, which constitutes or with lapse of time or giving of
notice or both, would constitute a default or a basis for a claim
of force majeure or other claim of excusable delay or
----- -------
non-performance by IMA or any Subsidiary under any IMA Agreements,
except for any such default or claim which, individually or in the
aggregate, would not have a Material Adverse Effect. To the best of
the knowledge of IMA, no party with whom IMA or any Subsidiary has
any IMA Agreement is in default in the performance of any covenant
or condition thereunder or has failed in performance thereunder by
reason of a claim of force majeure or other claim of excusable
----- -------
delay or non-performance thereunder, except for any such default or
claim which, individually or in the aggregate, would not have a
Material Adverse Effect.
5.15 Compensation.
------------
Except as disclosed in the IMA Form 10-K (including, without
limitation, the proxy statement incorporated therein) or in
Schedule 5.14 or Schedule 5.15(2) attached hereto, neither IMA nor
-------------
any Subsidiary has any agreement with any employee with regard to
compensation, whether individually or collectively, except
agreements terminable by IMA or any Subsidiary at will without
penalty, or oral agreements terminable by IMA or a Subsidiary on
not more than 30 days' notice without penalty, and set forth in
Schedule 5.15 is a list of all employees of IMA and each Subsidiary
other than hourly employees subject to collective bargaining
agreements, entitled to receive annual compensation in excess of
$50,000 and their respective positions and salaries. Except for
those unions identified on Schedule 5.14 as parties to IMA
Agreements, no union or other collective bargaining unit has been
certified or recognized by IMA or any Subsidiary as representing
any of their respective employees. Without reference to any plans
or proposals of ITI (other than the execution, delivery and
performance of this Agreement), neither IMA nor ITI will incur any
liability with respect to any payment due or damage suffered by any
employee of IMA or any Subsidiary, including, but not limited to,
any claims for severance, termination benefits or similar claims,
by virtue of the operation of the Merger and the transactions
contemplated hereby.
21
<PAGE> 30
5.16 Employee Benefit Plans.
----------------------
Except as listed and accurately described in Schedule 5.16,
-------------
IMA and the Subsidiaries do not maintain or sponsor and are not
required to make contributions to any pension, profit-sharing,
bonus, incentive, welfare, or other employee benefit plan. All
pension, profit-sharing, bonus, incentive, welfare, or other
employee benefit plans within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended
(hereinafter referred to as "ERISA"), in which the employees of IMA
or its Subsidiaries participate, or with respect to which IMA or
the Subsidiaries have any liability or obligation (such plans and
related trusts, insurance, and annuity contracts, funding media,
and related agreements and arrangements, other than any
"multiemployer plan" (within the meaning of section 3(37) or ERISA)
being hereinafter referred to as the "Benefit Plans", and such
multiemployer plans being hereinafter referred to as the
"Multiemployer Plans") comply in form and as administered in all
material respects with all requirements of the U.S. Department of
Labor, the Internal Revenue Service and the Pension Benefit
Guaranty Corp. (hereinafter referred to as "PBGC") promulgated
under ERISA and with all other applicable law (including, without
limitation, the health care continuation coverage requirements of
Section 4980B of the Code). Neither IMA nor any of its Subsidiaries
has taken or failed to take any action with respect to either the
Benefit Plans or the Multiemployer Plans which might create any
material liability on the part of IMA, any Subsidiary or ITI. Each
"fiduciary" (within the meaning of section 3(21)(a) of ERISA) as to
each Benefit Plan and, to the best of the knowledge of IMA, as to
each Multiemployer Plan has complied in all material respects with
the requirements of ERISA and all other applicable law in respect
of each such Plan. All required employer and employee contribution
and premiums under the Benefit Plans and the Multiemployer Plans to
the date hereof have been paid, the respective fund or funds
established under the Benefit Plans and the Multiemployer Plans are
funded in accordance with all applicable laws and such plans, and
no material past service funding liabilities exist thereunder. IMA
has furnished to ITI and Acquisition Sub copies of all Benefit
Plans, and of all documents relating thereto required by ITI,
including, without limitation, annual reports and financial
statements with respect to such Benefit Plans for all periods ended
on a date subsequent to September 30, 1991 during which IMA or any
Subsidiary was a sponsor or participating employer in or was
required to make contributions to such Benefit Plans. Such
financial statements are true and correct in all material respects,
and none of the actuarial assumptions underlying such statements
have changed since the respective dates thereof. In addition, as of
the date hereof:
(i) No Benefit Plan which is a "defined benefit plan"
(within the meaning of Section 3(35) of ERISA) (hereinafter
referred to as the "Defined Benefit Plans") or, to the best of the
knowledge of IMA, Multiemployer Plan has incurred an "accumulated
funding deficiency" (within the meaning of section 412(a) of the
22
<PAGE> 31
Code), whether or not waived, and there are no excise taxes due or
hereafter to become due, based upon current facts and circum-
stances, under section 4971 of the Code with respect to the funding
of any Benefit Plan;
(ii) No "reportable event" (within the meaning of
section 4043 of ERISA) has occurred with respect to any Defined
Benefit Plan or, to the best of the knowledge of IMA, any
Multiemployer Plan; there have been no terminations of any Defined
Benefit Plan or, to the best of the knowledge of IMA, any
Multiemployer Plan or any related trust; no such termination of any
of the foregoing reasonably can be expected to occur, whether as a
consequence of the execution and delivery of this Agreement, the
consummation of the transactions contemplated herein, or otherwise;
(iii) Neither IMA nor any Subsidiary has withdrawn
(partially or totally within the meaning of ERISA) from any Benefit
Plan or any Multiemployer Plan; and neither the execution and
delivery of this Agreement nor the consummation of the transactions
contemplated herein will result in the withdrawal (partial or total
within the meaning of ERISA) from any Benefit Plan or Multiemployer
Plan, or in any withdrawal or other liability of any nature to IMA,
any Subsidiary, or ITI under any Benefit Plan or any Multiemployer
Plan;
(iv) No "prohibited transaction" (within the meaning of
section 406 of ERISA or section 4975(c) of the Code) has occurred
with respect to any Benefit Plan or, to the best of the knowledge
of IMA, any Multiemployer Plan;
(v) There is no excess of the aggregate present value
of accrued benefits on a termination basis over the aggregate value
of the assets of the Defined Benefit Plans, and no withdrawal
liability of IMA and the Subsidiaries with respect to the
Multiemployer Plans;
(vi) There are no contributions which are, or hereafter
will be, required to have been made to trusts in connection with
"defined contribution plans" (within the meaning of section 3(34)
of ERISA) with respect to services rendered by employees of IMA or
the Subsidiaries prior to the date hereof, and all PBGC premiums
due on or before the date of this Agreement by IMA or any
Subsidiary have been paid in full, including any late fees,
interest and penalties;
(vii) Other than claims in the ordinary course for
benefits with respect to the Benefit Plans or the Multiemployer
Plans, there are no actions, suits, or claims pending with respect
to any Benefit Plan or any Multiemployer Plan or any circumstances
known to IMA which might give rise to any such action, suit or
claims; and there are presently no outstanding judgments, decrees
or orders of any court or any government or administrative agency
23
<PAGE> 32
against or affecting any Benefit Plan, the assets of any Benefit
Plan or any Benefit Plan fiduciary; and
(viii) Other than the pension benefits payable under the
Benefit Plans and except as set forth on Schedule 5.16, neither IMA
nor any Subsidiary is under any obligation to provide benefits or
coverage under a Benefit Plan to retirees of IMA or any Subsidiary
or other former employees of IMA or any Subsidiary (or the
beneficiaries of such retirees or former employees), including but
not limited to retiree health care coverage (except as may be
mandated by the Consolidated Omnibus Budget Reconciliation Act of
1985).
5.17 Labor Relations.
---------------
There are no controversies pending or threatened between IMA
and any Subsidiary and any of their respective employees which,
individually or in the aggregate, are reasonably likely to result
in a Material Adverse Effect, and, there are no organizational
efforts currently being made or threatened involving any of such
employees. IMA has complied with all laws relating to the
employment of labor, including without limitation, any provisions
thereof relating to wages, hours, collective bargaining and the
payment of social security and similar taxes, and is not liable for
any arrearage of wages or any taxes or penalties for failure to
comply with any of the foregoing, except for any such
non-compliance or such amounts which, individually or in the
aggregate, would not have a Material Adverse Effect.
5.18 Interests of Insiders.
---------------------
Except pursuant to an IMA Agreement identified on Schedule
5.14(vi) or Schedule 5.18, no Insider has, nor does any officer or
-------------
director of any of the Subsidiaries have, any interest in any
property, real or personal, tangible or intangible, used in or
pertaining to the businesses engaged in by IMA or any Subsidiary,
except for the legal rights of stockholders and except for rights
under existing employee benefit plans described in Section 5.16
hereof. Except as set forth on Schedule 5.14(vi) or Schedule 5.18,
no Insider owns, nor do any officers of directors of any Subsidiary
own, directly or indirectly, any interest in, or is a director,
officer or employee of, any business which is a competitor or
significant supplier of IMA or any Subsidiary.
5.19 Insurance.
---------
As of the date of this Agreement, IMA and its Subsidiaries
maintain insurance policies, and bonding arrangements, covering all
of their respective assets and properties, and in each case the
various occurrences which may arise in connection with the
operation of their respective businesses, except those occurrences
which, individually or in the aggregate, would not have a Material
Adverse Effect. Schedule 5.19 attached hereto accurately summarizes
-------------
the principal terms of all such policies and bonding arrangements.
24
<PAGE> 33
Such policies and bonding arrangements are in full force and
effect, all premiums and other amounts due thereon have been paid,
and IMA and the Subsidiaries have complied with the provisions of
such policies and bonding arrangements. Such insurance and such
bonding arrangements are of comparable amounts and coverage as that
which companies engaged in similar businesses would maintain in
accordance with good business practice. There are no notices of any
pending or threatened terminations or premium increases with
respect to any such policies or bonding arrangements, and such
policies and bonding arrangements will not be modified as a result
of or terminate or lapse by reason of, the transactions
contemplated by this Agreement.
5.20 Intellectual Property.
---------------------
Other than the rights of IMA and its Subsidiaries, each as
licensee, to the subject matter (herein referred to as the
"Insituform Process") under their respective license agreements
with Insituform North America Corp., and the rights, of IMA and its
Subsidiaries, as licensee, to the subject matter (herein referred
to as the "NuPipe Process") under agreements with NuPipe, Inc., set
forth in Schedule 5.20 attached hereto is a list and brief
-------------
description of all of IMA's and each Subsidiary's patents,
invention disclosures, registered and common law trademarks,
service marks, tradenames, copyrights, licenses and other similar
rights and applications for each of the foregoing (together with
those rights under license relative to the Insituform Process and
the NuPipe Process, hereinafter referred to as the "Intellectual
Property"). IMA and its Subsidiaries, respectively, own all right,
and title and interest in and to all such Intellectual Property,
except as set forth in Schedule 5.20(1)(a) free and clear of all
Liens. Neither IMA nor any of its Subsidiaries has, except as set
forth in Schedule 5.20, granted any outstanding licenses or other
rights, and has no obligations to grant licenses or other rights,
under any such Intellectual Property. The Intellectual Property
listed in Schedule 5.20, together with those rights under license
relative to the Insituform Process and the NuPipe Process,
respectively, are all such rights necessary to the operation and
the conduct of the business of IMA and its Subsidiaries as
currently conducted; no adverse claims have been made, and no
dispute has arisen, with respect to any of the said Intellectual
Property (including without limitation those under license relative
to the Insituform Process and the NuPipe Process, respectively);
and the operations of IMA and each Subsidiary and the use by each
of the Intellectual Property identified on Schedule 5.20 would not
involve infringement or claimed infringement of any patent,
trademark, servicemark, tradename, copyright, license or similar
right, except for any such infringement which, individually or in
the aggregate, would not have a Material Adverse Effect. Without
limiting the generality of the foregoing or any other provision
contained in this Agreement: the license identified under Schedule
5.20(3)(b) is in full force and effect; no event has occurred, or
is alleged to have occurred, which constitutes or with lapse of
time or giving of notice or both, would constitute a material
25
<PAGE> 34
default or a basis for a claim of force majeure or other material
----- -------
claim of excusable delay or non-performance by IMA under such
license; to the best of the knowledge of IMA, no party to such
license other than IMA is in default in any material respect in the
performance of any covenant or condition thereunder or has failed
in performance thereunder in any material respect by reason of a
claim of force majeure or other claim of excusable delay or non-
----- -------
performance thereunder; and the execution and delivery of this
Agreement and the consummation of the Merger will not adversely
affect or otherwise impair the ability of the Surviving Corporation
fully to enjoy the benefits of such license. Except as set forth on
Schedule 5.20(3)(a), no license or other right has in any manner
been granted by IMA or any of its Subsidiaries which constrains IMA
or any Subsidiary from utilizing or commercializing any patent,
registered or common law trademark, service name, tradename,
copyright, license or other similar right. To the best of the
knowledge of IMA, and except as would not have a Material Adverse
Effect, neither IMA nor any Subsidiary has suffered any of its
trade secrets, know-how or other confidential intellectual or
intangible property rights utilized in connection with the Business
to enter into the public domain.
5.21 Disputes and Litigation.
-----------------------
Except as described in the IMA Form 10-K or as set forth on
Schedule 5.21, there is no action, suit, proceeding, or claim,
- -------------
pending or threatened, and no investigation by any court or
government or governmental agency or instrumentality, domestic or
foreign, pending or threatened, against IMA or any of its
Subsidiaries, before any court, government or governmental agency
or instrumentality, domestic or foreign, nor is there any
outstanding order, writ, judgment, stipulation, injunction, decree,
determination, award, or other order of any court or government or
governmental agency or instrumentality, domestic or foreign,
against IMA or any of its Subsidiaries, except for any such matter
which, individually or in the aggregate, would not have a Material
Adverse Effect.
5.22 Licenses; Franchises; Rights.
----------------------------
(a) Each of IMA and its Subsidiaries has (or has made
timely application for) all franchises, licenses, permits and other
governmental and non-governmental approvals necessary to enable it
to carry on its business as currently conducted, and the employees
and agents of IMA and its Subsidiaries also have all such
franchises, licenses, permits, governmental and other approvals
required of them in carrying out their duties on behalf of IMA and
the Subsidiaries, except for such franchises, licenses, permits and
other approvals the failure to hold which, individually or in the
aggregate, would not have a Material Adverse Effect. All such
franchises, licenses, permits, and governmental and other approvals
are in full force and effect, there has been no default or breach
thereunder, and there is no pending or threatened proceeding under
which any may be revoked, terminated or suspended, except insofar
26
<PAGE> 35
as would not, individually or in the aggregate, have a Material
Adverse Effect. The execution and delivery of this Agreement, and
the consummation of the Merger, will not adversely affect or
otherwise impair the ability of the Surviving Corporation fully to
enjoy the benefits of any such franchises, licenses, permits or
governmental and other approvals. Schedule 5.22 attached hereto
-------------
identifies each permit, license and other approval required by any
national, state, commonwealth, or territorial government (but not
by any county, municipality or local authority) to be maintained by
IMA or any Subsidiary in order to conduct its current construction
operations. Neither IMA nor any Subsidiary has violated, or is
alleged to have violated, any law, rule, regulation, judgment,
stipulation, injunction, decree, determination, award or other
order of any government, or governmental agency or instrumentality,
domestic or foreign, binding upon IMA or any Subsidiary which
violation, individually or in aggregate, would have a Material
Adverse Effect.
(b) Without limiting the generality of the foregoing,
neither IMA nor any Subsidiary: (i) has filed any notice under any
Environmental Law (as hereinafter defined) indicating past or
present treatment, storage, or disposal of a hazardous waste or
reporting a spill or release of a hazardous or toxic waste,
substance or constituent, or other substance into the environment,
or (ii) has any liability, contingent or otherwise, under any
Environmental Law in connection with any release of any hazardous
or toxic waste, substance or constituent, or other substance on
property, now or formerly owned or leased by IMA or any of its
Subsidiaries, which, individually or in the aggregate, would have
a Material Adverse Effect. No hazardous materials and no hazardous
substances have been generated, treated, stored or disposed of or
placed in violation of any Environmental Law on any property owned
or leased by IMA or any Subsidiary or on or into any waste disposal
site owned or operated by a third party except for violations
which, individually or in the aggregate, would not have a Material
Adverse Effect.
(c) For purposes hereof, "Environmental Laws" shall mean
any and all federal, state or local laws, statutes, ordinances,
rules, regulations, orders, or determinations of any federal, state
or local governmental authority pertaining to health or the
environment, including with limitations, the federal Clean Air Act,
as amended, Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, Water Pollution Control Act, as
amended, Occupational Safety and Health Act of 1970, as amended,
Resource Conservation and Recovery Act of 1976, as amended, Safe
Drinking Water Act, as amended, Toxic Substances Control Act, as
amended, Superfund Amendments and Reauthorization Act of 1986, as
amended, Hazardous Materials Transportation Act, as amended, and
all other environmental, conservation or protection laws.
27
<PAGE> 36
5.23 Brokers and Finders.
-------------------
Neither IMA, nor any Subsidiary, nor any director, officer,
agent or employee thereof has employed any broker or finder or has
incurred or will incur any broker's, finder's or similar fees,
commissions or expenses, in each case in connection with the
transactions contemplated by this Agreement, except for a fee
payable to Wertheim Schroder & Co. pursuant to a financial advisory
agreement with IMA, a copy of which agreement and all amendments
thereto has been furnished to ITI and Acquisition Sub prior to the
date of this Agreement.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
OF ITI AND ACQUISITION SUB
------------------------------
ITI and Acquisition Sub hereby, jointly and severally,
represent, warrant, and covenant as follows:
6.1 Incorporation.
-------------
Each of ITI and Acquisition Sub is a corporation duly
organized, validly existing, and in good standing under the laws of
the State of Delaware and has full corporate power and authority to
own or hold under lease the assets and properties which it owns or
holds under lease, to conduct its businesses as currently
conducted, to perform all its obligations under the agreements to
which it is a party, including, without limitation, this Agreement
and to consummate the Merger. Each is in good standing in each
other jurisdiction wherein the failure so to qualify, individually
or in the aggregate, would have a Material Adverse Effect with
respect to ITI.
6.2 Authorization.
-------------
The execution and delivery of this Agreement by each, the
performance by each of its covenants and agreements hereunder and
the consummation by each of the transactions contemplated hereby
have been duly authorized by all necessary corporate action of
each, other than the approval of the holders of ITI Common Stock
contemplated under Section 7.2 hereof. When executed and delivered
by each, this Agreement, shall constitute their valid and legally
binding obligations, respectively, enforceable against them in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, or other laws affecting generally the enforceability of
creditors' rights and by limitations on the availability of
equitable remedies.
6.3 Conflicts.
---------
Neither the execution and delivery of this Agreement, nor the
consummation of the transactions contemplated herein, will violate
any provision of its certificate of incorporation or of its
28
<PAGE> 37
by-laws, as currently in effect (but subject to the adoption of the
amendments thereto contemplated by this Agreement), or, subject to
approval of this Agreement by the holders of ITI Common Stock
contemplated under Section 7.2 hereof and compliance with the
regulatory requirements hereinafter specified in this Section 6.3,
any law, rule, regulation, writ, judgment, injunction, decree,
determination, award, or other order of any court, government or
governmental agency or instrumentality, domestic or foreign,
binding upon ITI or Acquisition Sub, or, except as set forth on
Schedule 6.3 attached hereto and other than any such conflicts,
- ------------
breaches, creation, imposition or termination which would not have
a Material Adverse Effect with respect to ITI, conflict with or
result in any breach of any of the terms of or constitute a default
under or result in the termination of or the creation or imposition
of any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature pursuant to the terms of
any contract or agreement to which it is a party to or by which it
or any of its assets and properties are bound. Other than the
approval of this Agreement by the holders of ITI Common Stock as
contemplated under Section 7.2 hereof and except for compliance
with the requirements of the HSR Act, the Securities Act, with
respect to the Registration Statement, the securities and blue sky
laws of the various states, the Exchange Act, with respect to the
Proxy Statement, and except as set forth on Schedule 6.3 and any
such consents, approvals, authorizations, filings or registrations
with or notices to any such person or entity other than any
governmental agency or instrumentality the failure to effectuate
which would not have a Material Adverse Effect with respect to ITI,
no consents, approvals or authorizations, or filings or
registrations with, or notices to, any governmental agency or
authority or any other person or entity are required in connection
with the execution and delivery of this Agreement by ITI or
Acquisition Sub or the consummation by ITI or Acquisition Sub of
the transactions contemplated hereby.
6.4 Capitalization.
--------------
The authorized capital stock of ITI consists of 2,000,000
shares of preferred stock, $.01 par value (hereinafter referred to
as "ITI Preferred Stock"), none of which are issued and
outstanding, and 25,000,000 shares of ITI Common Stock, of which
14,402,085 shares are issued and outstanding on the date hereof.
The shares of ITI Common Stock to be issued to holders of IMA
Common Stock in the Merger will, at the Effective Time, and the
shares of ITI Common Stock to be issued upon exercise of IMA
Options assumed by ITI in accordance with this Agreement will, upon
exercise thereof in accordance with the terms thereof, be duly
authorized, validly issued and fully paid and non-assessable,issued
without violation of the preemptive rights of any person. There are
no subscriptions, warrants, options, calls, commitments by or
agreements to which ITI is bound on the date hereof relating to the
issuance, conversion or purchase of any shares of ITI Common Stock,
or any other capital stock of ITI, except as set forth on Schedule
--------
6.4 attached hereto and except for: (x) options granted by ITI
- ---
29
<PAGE> 38
pursuant to option plans in effect on the date hereof and options
granted to ITI's President, covering an aggregate of 1,167,600
shares of ITI Common Stock on the date hereof, and (y) warrants to
purchase an aggregate of 350,877 shares of ITI Common Stock issued
contemporaneously with ITI's 8.5% Senior Subordinated Note due July
26, 2002.
6.5 Securities Filings
------------------
ITI and each Subsidiary has made all filings with the SEC that
it has been required to make under the Securities Act and the rules
and regulations promulgated thereunder and the Exchange Act and the
rules and regulations promulgated thereunder. ITI has provided to
IMA a complete and correct copy of all reports, registration
statements, final prospectuses, definitive proxy statements and
other filings made by ITI or any Subsidiary with the SEC, including
all exhibits to such filings, since January 1, 1990 (all such
documents that have been filed with the SEC, as amended,
hereinafter referred to as the "ITI SEC Documents"), including,
without limitation, ITI's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994, as filed with the SEC on March 31,
1995 (together with all documents incorporated therein by
reference, hereinafter referred to as the "ITI Form 10-K") and its
Quarterly Report on Form 10-Q for the quarter ended March 31, 1995,
as filed with the SEC on May 15, 1995 (hereinafter referred to as
the "ITI Form 10-Q"). The ITI SEC Documents comply in all material
respects with the requirements of the Securities Act or the
Exchange Act, as the case may be, and neither the ITI SEC Documents
(as of the date of filing with the SEC), nor any information
relating to ITI or any of its subsidiaries contained in this
Agreement or any schedule hereto, contains any untrue statement of
a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
6.6 Financial Statements.
--------------------
(a) The consolidated financial statements (hereinafter
referred to, collectively, as the "ITI Audited Financial
Statements") of ITI and its consolidated subsidiaries contained in
the ITI Form 10-K in response to "Item 8. Consolidated Financial
Statements and Supplementary Data" are true and correct and have
been prepared in conformity with generally accepted accounting
principles consistently applied throughout the periods to which
such financial statements relate. The ITI Audited Financial
Statements fully and fairly present, in conformity with such
principles as so utilized, the consolidated financial position and
results of operations and cash flows of ITI and its consolidated
subsidiaries, at the dates shown and for the periods therein
specified, except as described therein.
(b) The consolidated financial statements (hereinafter
referred to, collectively, as the "ITI Interim Financial
30
<PAGE> 39
Statements") of ITI and its consolidated subsidiaries contained in
the ITI Form 10-Q in response to "Item 1. Financial Statements" are
true and correct and have been prepared in conformity with
generally accepted accounting principles consistently applied
throughout the periods to which such financial statements relate,
except as permitted by Form 10-Q. The ITI Interim Financial
Statements fully and fairly present the consolidated financial
position and results of operations and cash flows of ITI and its
consolidated subsidiaries, at the dates shown and for the periods
therein specified, subject to normal year-end adjustments in
accordance with generally accepted accounting principles and except
as described therein.
6.7 Absence of Undisclosed Liabilities.
----------------------------------
Except to the extent disclosed in the ITI Form 10-K or the ITI
Form 10-Q (in each case without reference to the exhibits thereto)
or incurred after December 31, 1994 in the ordinary course of
business and consistent with past practice, neither ITI, nor any of
its subsidiaries has any liabilities, whether accrued, absolute,
contingent, or otherwise, whether due or to become due and whether
the amount thereof is readily ascertainable or not, other than
liabilities which, individually or in the aggregate, would not have
a Material Adverse Effect, or any unrealized or anticipated losses
from any unfavorable commitments or sales of products, other than
those which, individually or in the aggregate, would not have a
Material Adverse Effect with respect to ITI, in each case under
this Section 6.7 except as set forth in Schedule 6.7.
------------
6.8 Absence of Certain Changes.
--------------------------
Except as set forth in Schedule 6.8:(i) subsequent to December
------------
31, 1994 and except as disclosed in the ITI Form 10-K or the ITI
Form 10-Q, neither ITI nor any subsidiary has suffered any Material
Adverse Effect with respect to ITI; and (ii) since December 31,
1994 and except as disclosed in the ITI Form 10-K or the ITI Form
10-Q, there has been no condition, development or contingency
which, so far as reasonably may be foreseen, may, individually or
in the aggregate, have a Material Adverse Effect with respect to
ITI.
6.9 Pooling.
-------
As of the date hereof, there has not been any action taken by
ITI or any subsidiaries or affiliates under Rule 1-02 of Regulation
S-X of the SEC that would prevent the Merger from being accounted
for as a pooling-of-interests. Contemporaneously with the execution
and delivery of this Agreement, ITI has delivered to IMA an
executed letter agreement, substantially in the form of Exhibit B
attached hereto (together with such changes therein as may
reasonably have been requested by IMA or ITI, such reasonableness
to be determined in good faith by BDO Seidman), from each such
affiliate.
31
<PAGE> 40
6.10 Interests of Insiders.
---------------------
Except as disclosed in the ITI Form 10-K (including the
amendments thereto and Schedule 6.10 attached hereto), as of the
-------------
date hereof no officer or director of ITI, nor any stockholder
beneficially owning (within the meaning of Section 13(d) of the
Exchange Act) more than 5% of the outstanding shares of ITI Common
Stock, has, nor does any officer or director of any of ITI's
subsidiaries have, any interest in any property, real or personal,
tangible or intangible, used in or pertaining to the businesses
engaged in by ITI or any subsidiary of ITI, except for the legal
rights of stockholders and except for rights under existing
employee benefit plans. As of the date hereof, no such party owns,
directly or indirectly, any interest in, or is a director, officer
or employee of, any business which is a competitor or significant
supplier of ITI or any of its subsidiaries.
6.11 Disputes and Litigation.
-----------------------
Except as described in the ITI Form 10-K or the ITI Form 10-Q
or as set forth in Schedule 6.11, there is no action, suit,
-------------
proceeding, or claim, pending or threatened, and no investigation
by any court or government or governmental agency or
instrumentality, domestic or foreign, pending or threatened,
against ITI or any of its subsidiaries, before any court,
government or governmental agency or instrumentality, domestic or
foreign, nor is there any outstanding order, writ, judgment,
stipulation, injunction, decree, determination, award, or other
order of any court or government or governmental agency or
instrumentality, domestic or foreign, against ITI, except for any
such matter which, individually or in the aggregate, would not have
a Material Adverse Effect with respect to ITI.
6.12 Brokers or Finders.
------------------
Neither ITI nor Acquisition Sub, nor any director, officer,
agent or employee thereof, has employed any broker or finder or has
incurred or will incur any broker's, finder's or similar fees,
commissions or expenses, in each case in connection with the
transactions contemplated by this Agreement, except for a fee
payable to Merrill Lynch & Co. pursuant to a financial advisory
agreement with ITI, a copy of which agreement and all amendments
thereto have been furnished to IMA prior to the date of this
Agreement.
ARTICLE VII
CERTAIN COVENANTS
-----------------
7.1 IMA Stockholders' Meeting.
-------------------------
IMA, acting through its Board of Directors, shall take all
action necessary in accordance with applicable law and its
certificate of incorporation and by-laws, to convene as promptly as
32
<PAGE> 41
practicable a special meeting of the holders of shares of IMA
Common Stock, to vote upon this Agreement, the Merger and the
transactions contemplated hereby, and shall include in the Joint
Proxy Statement the recommendation (subject to the fiduciary duty
of the Board of Directors under applicable law) of its Board of
Directors that the holders of the shares of IMA Common Stock vote
in favor of the adoption and approval of this Agreement, the Merger
and the transactions contemplated hereby. IMA shall use its best
efforts to solicit from such stockholders proxies in favor of such
adoption and approval and shall take all other action necessary or,
in the reasonable opinion of ITI, helpful to secure a favorable
vote for the purpose of voting on and approving this Agreement, the
Merger and the transactions contemplated hereby. IMA shall adjourn
such stockholders' meeting to a later date, at the reasonable
request of ITI, if (i) the requisite vote of holders of the shares
of IMA Common Stock has not been obtained; or (ii) ITI shall
otherwise request an adjournment in order to attempt to increase
the percentage of the vote in favor of the foregoing.
7.2 ITI Stockholders' Meeting.
-------------------------
ITI, acting through its Board of Directors, shall take all
action necessary, in accordance with applicable law and its
certificate of incorporation and by-laws, to convene as promptly as
practicable an annual or special meeting of the holders of shares
of ITI Common Stock, to vote upon this Agreement, the issuance of
ITI Common Stock in the Merger and the transactions contemplated
hereby, including, without limitation, an amendment to its
certificate of incorporation so as to increase the authorized
number of shares of ITI Class A Common Stock, and to modify
provisions relating to its board of directors, as set forth under
Section 9.3 hereof, and shall include in the Joint Proxy Statement
the recommendation (subject to the fiduciary duty of the Board of
Directors under applicable law) of its Board of Directors that the
holders of ITI Common Stock vote in favor of such Agreement,
issuance and transactions. ITI shall use its best efforts to
solicit from such stockholders proxies in favor of such matters and
shall take all other action necessary to secure a favorable vote.
7.3 ITI Board of Directors.
----------------------
ITI shall take such action as may be necessary so that the ITI
Board of Directors will be expanded as of the Effective Time and
pursuant to ITI's certificate of incorporation, amended as
contemplated under Section 9.3 hereof, and ITI's by-laws, amended
as contemplated by Section 9.4 hereof, to include the following
persons: William Gorham, Alvin J. Siteman, Silas Spengler and
Sheldon Weinig, for a one-year term expiring in 1996 (hereinafter
referred to as "Class I Directors"); Robert W. Affholder, Paul A.
Biddelman, Douglas K. Chick and Steven Roth, for a two-year term
expiring in 1997 (hereinafter referred to as "Class II Directors");
and Brian Chandler, Jerome Kalishman, James D. Krugman, Jean-Paul
Richard and Russell B. Wight, Jr., for a three-year term expiring
in 1998 (hereinafter referred to as "Class III Directors"). Other
33
<PAGE> 42
than Mr. Richard, the directors shall be grouped as follows: (i)
Messrs. Biddelman, Chandler, Chick, Krugman and Spengler shall be
referred to as the "INA Group"; (ii) Messrs. Gorham, Roth, Weinig
and Wight shall be referred to as the "IGL Group"; and Messrs.
Affholder, Kalishman and Siteman shall be referred to as the "IMA
Group" (each of the INA Group, the IGL Group and the IMA Group,
hereinafter referred to as a "Group"). During the period from the
Effective Time until December 9, 1998 (hereinafter referred to as
the "Term"), ITI shall nominate and recommend for re-election to
the ITI Board of Directors, upon expiration of their terms, the
Class I Directors, the Class II Directors and the Class III
Directors. If during the Term any director resigns or is unable to
serve for any reason, such vacancy shall be filled with a designee
chosen by the remaining members of that director's Group and
thereafter ITI shall nominate and recommend such designee for
election to the ITI Board of Directors as provided in the previous
sentence. The provisions of this paragraph (a) shall be deemed to
restate and amend, and supersede, the provisions of Section 7.3 of
the Agreement dated as of July 3, 1992 among ITI, INA Acquisition
Corp. and Insituform Group Limited.
7.4 ITI Officers.
------------
ITI shall take such action as may be necessary so that Jerome
Kalishman shall be appointed to the office of Vice Chairman of the
Board of ITI at the Effective Time in accordance with and subject
to the provisions of the by-laws of ITI, amended as contemplated
under Section 9.4 hereof.
7.5 Registration Statement; Proxy Statement.
---------------------------------------
(a) ITI shall (i) prepare and file with the SEC as soon
as reasonably practicable a Registration Statement on Form S-4 (or
another appropriate form) under the Securities Act (herein referred
to as the "Registration Statement"), and preliminary joint proxy
materials which comply as to form with the requirements of the
Exchange Act, with respect to the transactions contemplated by this
Agreement, (ii) use its best efforts to have the Registration
Statement declared effective by the SEC under the Securities Act
and the preliminary joint proxy materials cleared by the SEC under
the Exchange Act as promptly as practicable, and (iii) take all
such action as may be required under state blue sky or securities
laws in connection with the transactions contemplated by this
Agreement. IMA will promptly furnish ITI with all information (and
shall update such information) concerning IMA and its Subsidiaries,
and their respective businesses and affairs and IMA's designees to
the ITI Board of Directors, including, without limitation,
financial statements, financial statement schedules, and pro forma
financial statements and information, which, in the reasonable
judgment of ITI or its counsel, may be required or appropriate for
inclusion in the Registration Statement, and shall cooperate with
and assist ITI in the preparation of all such materials.
34
<PAGE> 43
(b) Promptly after the Registration Statement (including
the definitive joint proxy material contained therein (herein
referred to as the "Joint Proxy Statement")) becomes effective, IMA
and ITI shall cause the Joint Proxy Statement to be mailed to their
respective stockholders and, if necessary, after the Joint Proxy
Statement shall have been so mailed, promptly circulate amended,
supplemental or supplemented proxy material and, if required in
connection therewith, resolicit proxies. Neither IMA nor ITI shall
use any proxy material in connection with the meetings of their
respective stockholders hereinabove referred without the prior
approval of the other parties hereto, which approval shall not be
unreasonably withheld.
(c) IMA and ITI each represents and warrants to the
other that at the time the Registration Statement and any
post-effective amendment thereto becomes effective, and the Joint
Proxy Statement and any other related proxy soliciting material
filed with the SEC is cleared, and at all times subsequent thereto
up to and including the Effective Time, none of the information set
forth therein with respect to (in the case of IMA), IMA, its
directors, officers, stockholders or any Subsidiary or (in the case
of ITI) ITI, its directors, officers, stockholders or any of its
subsidiaries will contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading.
(d) IMA shall cause to be delivered to ITI (i) a letter
of KPMG Peat Marwick LLP, IMA's independent auditors, and (ii) a
letter of Deloitte & Touche, Enviroq's independent auditors, each
dated within two business days before the date as of which the
Registration Statement becomes effective and addressed to ITI, in
form and substance reasonably satisfactory to ITI, to the effect
set forth on, respectively, Exhibit C-1 and Exhibit C-2 hereto.
----------- -----------
(e) ITI shall cause to be delivered to IMA a letter of
BDO Seidman, ITI's independent auditors, dated within two business
days before the date as of which the Registration Statement becomes
effective and addressed to IMA, in form and substance reasonably
satisfactory to IMA, to the effect set forth on Exhibit D hereto.
---------
7.6 HSR Act; Other Governmental and Judicial Filings.
------------------------------------------------
As soon as practicable after the date hereof, IMA, ITI and
Acquisition Sub will cooperate in the preparation and filing of all
materials necessary or desirable to obtain the approval of the
transactions contemplated hereby or the disclaimer of jurisdiction
with respect thereto by any regulatory body or other governmental
or judicial authority that has jurisdiction over the transactions
contemplated hereby, including, without limitation, all filings,
with the Federal Trade Commission and the U.S. Department of
Justice required under the HSR Act.
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7.7 Conduct of Business of IMA.
--------------------------
IMA covenants and agrees that, except as consented to in
writing by ITI, from and after the date of this Agreement and until
the Effective Time, IMA and each Subsidiary shall:
(a) Make no purchase, sale, or lease in respect of, nor
introduce any method of management or operation in respect of, its
business or its assets and properties, except in a manner
consistent with prior practice and as set forth in IMA's capital
expenditure budget previously provided to ITI and except as set
forth in Schedule 7.7(1).
---------------
(b) Maintain, preserve, and in no way further encumber
its assets and properties other than in the ordinary course of
business consistent with past practice after the date hereof, and
not enter into any agreement to effectuate the foregoing after the
Effective Time.
(c) Use its best efforts: (i) to preserve its present
business organization intact, (ii) to keep available the services
of the present employees assigned to it, and (iii) to preserve its
present relationships with entities or persons having business
dealings with IMA or any of the Subsidiaries, in each case except
insofar as would not have a Material Adverse Effect.
(d) Maintain its books and records in accordance with
good business practices, on a basis consistent with prior practice.
(e) Comply in all material respects with all laws, rules,
regulations, writs, statutes, ordinance, judgments, injunctions,
decrees, determinations, awards, and other orders of every court,
government and governmental agency and instrumentality, domestic or
foreign, applicable to it and to the conduct of its business and
perform in all material respects all its obligations without
default.
(f) Not incur, or agree to incur, any indebtedness for
money borrowed, except in the ordinary course of business under its
line of credit dated February 14, 1995 among IMA, The Boatmen's
National Bank of St. Louis and Mark Twain Bank, subtracting
therefrom the amount of $8.6 million set forth on the foregoing
budget and intended for use in the development referenced in
Paragraph (q) of this Section 7.7, but adding thereto amounts
utilized for such development to the extent permitted by said
Paragraph (q); or issue any bond, debenture, note, or similar
obligation, or any guarantee any obligation of any person or
entity, except for guarantees of construction performance bonds in
the ordinary course of business.
(g) Not mortgage, pledge, or subject to Lien any of its
assets and properties, other than encumbrances in existence on the
date hereof.
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<PAGE> 45
(h) Not make any loans, advances or contributions to, or
investments in, or guarantees of, any other person (other than a
wholly-owned subsidiary and other than short-term investments in
the ordinary course of business in obligations of the United States
of America for which the full faith and credit of the United States
of America is pledged to provide for the payment of principal and
interest, or certificates of deposit issued by a commercial bank or
banks having at least $100,000,000 in individual capital and
surplus, and other than foreign currency hedging transactions in
the ordinary course of business consistent with past practice); and
without limiting the generality of the foregoing, not acquire any
shares of ITI Common Stock.
(i) Maintain and pay all premiums with respect to all
policies of insurance relating to its business, and its assets and
properties, as are presently held in its name and timely renew all
such policies or substitute substantially similar coverage
therefor.
(j) Not make any change adverse to it in any material
respect in the terms of any IMA Agreement (nor, without the prior
review thereof and consent thereto of ITI, which consent shall not
unreasonably be withheld, enter into definitive arrangements
implementing the matters described under Item (5) of Schedule 5.5),
nor approve, amend or modify any IMA Agreement to which an Insider
is a party.
(k) Not make any capital expenditure (including, without
limitation expenditures for property, plant and equipment) or
appropriations or commitments with respect thereto, except (subject
to the provisions of Paragraph (q) of this Section 7.7) to the
extent of the total dollar amount and, to the extent indicated
therein, at the times set forth in IMA's capital expenditure budget
which has been previously furnished to ITI.
(l) Not acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest
in or substantial portion of the assets of, or by any other manner,
any business or any corporation, partnership, joint venture,
association or other business organization or division thereof or
otherwise acquire or agree to acquire any assets outside the
ordinary course of business consistent with past practice; or
consummate or implement the transactions contemplated by Items
(2)(b) and (c) of Schedule 5.5, or by Items (ix)(3) and (4) of
Schedule 5.14, in each case without prior review and approval of
the terms thereof by ITI, which approval shall not unreasonably be
withheld.
(m) Not take any action described in Section 5.9(d)
hereof except as set forth in Schedule 7.7(2), nor amend, modify,
supplement, or in any way change in any material respect any plan
or arrangement established for the benefit of its employees.
37
<PAGE> 46
(n) Not enter into any license or sublicense agreement or
other arrangement conferring any rights to utilize any Intellectual
Property the rights to which are held by IMA or any Subsidiary.
(o) Not settle or compromise any litigation involving the
payment of, or an agreement to pay over time an amount in cash,
notes, or other property, except that IMA may in good faith obtain
the release of any and all claims and potential claims described
under Item (3) of Schedule 5.21 in exchange for a settlement not in
excess of $400,000 without the consent of ITI, and, if in excess of
such amount, with the consent of ITI, which consent shall not
unreasonably be withheld; and except that IMA may in good faith
obtain the release of any and all claims and potential claims
described under Item (5) of Schedule 5.21 in exchange for a
settlement not in excess of $750,000 without the consent of ITI,
and, if in excess of such amount with the consent of ITI, which
consent shall not unreasonably be withheld.
(p) Not pay, discharge or satisfy claims, liabilities or
obligations (absolute, accrued, contingent or otherwise and whether
due or to become due) which involve payments or commitments to make
payments exceeding $100,000 in the aggregate, other than (A)
liabilities or obligations incurred in the ordinary course of
business and consistent with past practice, and (B) scheduled
repayments of current portions of and interest on long term
indebtedness or repayments under existing revolving credit
agreements.
(q) Notwithstanding any other provision contained in
this Agreement, or the schedules hereto, to the contrary, not take
any action in furtherance of the utilization for commercial
purposes of the development contemplated by Item (1) of Schedule
5.8 (and Items (e)(2) of Schedule 5.9 and (i)(10) of Schedule
5.14), nor acquire nor install any equipment or machinery on any
such property, nor take any action in furtherance of any loan
arrangements contemplated by said schedules, without the prior
consent of ITI in each case; it being understood and agreed that,
without the consent of ITI: (i) IMA shall be permitted to complete
construction of such facility in accordance with the plans
contemplated by the capital expenditure budget referenced in
Section 7.7(f) without the contemplated tower and manufacturing
equipment (and subject to the provisions regarding financing
hereinabove set forth); and (ii) IMA shall be permitted to acquire
(but not install) manufacturing equipment which it has ordered
prior to the date hereof.
(r) Take any action or fail to take any action which
would result in any breach of any of its representations,
warranties or covenants contained herein.
7.8 IMA Capitalization.
------------------
Except as consented to in writing by ITI, from and after the
date of this Agreement and until the Effective Time:
38
<PAGE> 47
(a) No change shall be made or proposed in the
certificate of incorporation or by-laws, or (subject to Section
7.7(l)) partnership or joint venture agreement, or any other
organic instrument of IMA or of any Subsidiary.
(b) Neither IMA nor any Subsidiary shall: (i) issue,
grant, sell or encumber any shares of its capital stock, (ii)
issue, grant, sell or encumber any security, option, warrant, put,
call, subscription or other right of any kind, fixed or contingent,
that directly or indirectly calls for the acquisition, issuance,
sale, pledge or other disposition of any shares of capital stock or
other equity interests of IMA or any Subsidiary (other than
pursuant to the arrangements described under Item (5) of Schedule
5.5 or under item (1) of Schedule 7.8), (iii) enter into any
------------
agreement, commitment or understanding calling for any transaction
referred to in clause (i) or (ii) of this Paragraph (b), or (iv)
make any other changes in its equity capital structure except, in
all such cases under this Paragraph (b), for the issuance of shares
of IMA Common Stock upon exercise of the IMA Options, and
conversion of shares of IMA Class B Common Stock, which are
outstanding prior to the execution and delivery of this Agreement
and pursuant to the present terms thereof and except for the
issuance by a Subsidiary of shares to IMA or to a wholly-owned
Subsidiary.
(c) Neither IMA nor any Subsidiary shall split, combine
or reclassify any shares of its capital stock, or (other than as
set forth under item (2) of Schedule 7.8) declare, set aside or pay
any dividend or other distribution (whether in cash, stock,
securities, indebtedness, rights or property or any combination
thereof) in respect of any shares of its capital stock or other
equity interests, or redeem or otherwise acquire any shares of the
capital stock or other equity interests.
7.9 Interim Financial Statements; Audited Enviroq Statements.
--------------------------------------------------------
(a) IMA shall deliver to ITI all regularly prepared
audited and unaudited consolidated and consolidating financial
statements of IMA and its Subsidiaries, respectively, prepared
after the date of this Agreement, in the format historically
published or utilized internally, as the case may be, and any
financial statements prepared for filing with the SEC, as soon as
each is available. Without limiting the provisions of Section
7.7(l), the financial statements delivered by IMA to ITI shall
include pro forma financial statements or information prepared to
illustrate any merger or acquisition occurring subsequent to the
most recent financial statement delivered before the Effective
Time.
(b) To the extent not furnished pursuant to Paragraph
(a) immediately preceding, within 30 days after the end of each
calendar month after the date of this Agreement, IMA will deliver
to ITI unaudited consolidated statements of income for such
calendar month and the corresponding calendar month of the
39
<PAGE> 48
preceding fiscal year. All such financial statements shall be true
and correct and prepared in accordance with generally accepted
accounting principles consistently applied and shall fully and
fairly present, in conformity with such principles as so utilized,
the consolidated financial position, results of operations and cash
flows of IMA and its consolidated subsidiaries as at the date or
for the periods indicated (and shall be accompanied by a
certificate of the chief financial or accounting officer of IMA to
such effect), except as otherwise indicated in such statements and
subject to normal and recurring year-end audit adjustments which
would not, individually or in the aggregate, have a Material
Adverse Effect. All unaudited financial statements delivered
pursuant to this Paragraph (b) shall be prepared on a basis
consistent with the IMA Interim Financial Statements.
(c) IMA shall prepare or cause the preparation of the
consolidated financial statements and financial statement schedules
of Enviroq and its subsidiaries as of March 25, 1995 and March
26, 1994 and for the years ended, respectively, March 25, 1995,
March 26, 1994 and March 27, 1993, as required to be filed by IMA
pursuant to Form 8-K promulgated by the SEC in connection with the
consummation of the transactions under the agreement dated November
2, 1994 entered into by IMA and Enviroq among other parties. Such
financial statements and schedules shall be true and correct and
prepared in accordance with generally accepted accounting
principles consistently applied and shall fully and fairly present,
in conformity with such principles as so utilized, the consolidated
financial position, results of operations and cash flows of Enviroq
and its consolidated subsidiaries as of the dates and for the
periods indicated. As promptly as practicable after the date
hereof, IMA shall deliver to ITI such financial statements and
related financial statement schedules, together with the audit
reports of Deloitte & Touche with respect thereto. IMA shall
furnish ITI with access to all computations, calculations and
determinations made in preparing such financial statements and
schedules and shall consult with ITI and its auditors in the
completion of such financial statements and schedules.
7.10 Conduct of Business of ITI; ITI Capitalization.
----------------------------------------------
(a) ITI covenants and agrees that, except as set forth
on Schedule 7.10 attached hereto or consented to in writing by IMA,
-------------
from and after the date of this Agreement and until the Effective
Time, ITI and each subsidiary shall:
(i) Make no purchase, sale, or lease in respect of, nor
introduce any method of management or operation in respect of, its
business or its assets and properties, except in a manner in all
material respects consistent with prior practice.
(ii) Use its best efforts: (x) to preserve its present
business organization intact, and (y) to preserve its present
relationships with entities or persons having business dealings
40
<PAGE> 49
with ITI or any of its subsidiaries, in each case except insofar as
would not have a Material Adverse Effect with respect to ITI.
(iii) Maintain its books and records in accordance with
good business practices, on a basis consistent with prior practice.
(iv) Maintain in all material respects the current
character of the business of ITI and its subsidiaries, taken as a
whole, other than as contemplated under this Agreement and not
enter into any agreement to effectuate the foregoing after the
Effective Time.
(b) ITI shall not other than as set forth on Schedule
7.10, (i) issue, grant, sell or encumber any shares of its capital
stock, (ii) issue, grant, sell or encumber any security, option,
warrant, put, call, subscription or other right of any kind, fixed
or contingent, that directly or indirectly calls for the
acquisition, issuance, sale, pledge or other disposition of any
shares of capital stock of ITI, (iii) enter into any agreement,
commitment or understanding calling for any transaction referred to
in clause (i) or (ii) of this Paragraph (b) or (iv) make any other
changes in its equity capital structure, except, in all such cases
under this Paragraph (b), for (1) issuances or grants of options to
purchase shares of ITI Common Stock pursuant to any option plan of
ITI in effect on the date of this Agreement or pursuant to any
options or warrants outstanding on the date of this Agreement or
set forth on Schedule 7.10, and (2) any transaction or transactions
relating directly or indirectly (through issuance, grant or sale of
rights, warrants, options or otherwise) to the issuance of up to an
aggregate number of shares of ITI Common Stock which would not,
without reference to any transaction or transactions, or issuance,
prior to the date of this Agreement, or any transaction or
transactions described under clause (1) immediately preceding,
require the filing of a Report on Form 10-C under the rules of the
SEC.
(c) Except as consented to in writing by IMA or as set
forth on Schedule 7.10, ITI shall not split, combine or reclassify
any shares of its capital stock, declare, set aside or pay any
dividend or other distribution (whether in case, stock, securities,
indebtedness, rights or property or any combination thereof) in
respect of any shares of its capital stock or other equity
interests, or redeem or otherwise acquire any shares of its capital
stock or other equity interests.
(d) ITI shall deliver prior communication to IMA of any
agreement proposed to be entered into after the date hereof with
any beneficial owner (as defined pursuant to Section 13(d) of the
Exchange Act) of more than 5% of the outstanding shares of ITI
Common Stock, in each case other than the matters set forth on
Schedule 7.10.
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7.11 Due Diligence; SEC Filings.
--------------------------
(a) IMA shall afford ITI and its officers, employees,
accountants, counsel and other authorized representatives
reasonable access, during ordinary business hours, to its plants,
properties, books and records, and those of its Subsidiaries, and
shall use its best efforts to cause its representatives to, furnish
to ITI such additional financial and operating data and other
information as to its and its Subsidiaries' respective businesses
and properties as ITI may from time to time reasonably request. IMA
shall furnish ITI with copies of all filings with the SEC by it or
any Subsidiary subsequent to the date hereof, which shall be
prepared in all material respects in accordance with the rules and
regulations promulgated by the SEC if any such filings are made
prior to the Effective Time.
(b) ITI shall provide IMA and its officers, employees,
accountants, counsel and other authorized representatives such
information concerning ITI and its subsidiaries as may be
reasonably necessary for IMA to ascertain the accuracy and
completeness of the information furnished by ITI for inclusion in
the Registration Statement and to verify the warranties and
covenants of ITI herein contained. ITI shall furnish IMA with
copies of all filings with the SEC subsequent to the date hereof,
which shall be prepared in all material respects in accordance with
the rules and regulations promulgated by the SEC if any such
filings are made prior to the Effective Time.
(c) All information provided to ITI or its representa-
tives by or on behalf of IMA or any Subsidiary, or to IMA or its
representatives by or on behalf of ITI or any subsidiary of ITI,
before or after the date of this Agreement in connection with the
transactions contemplated by this Agreement shall, notwithstanding
the absence of any other specific reference thereto, be governed by
the Confidentiality Agreement dated June 30, 1994, as amended
(hereinafter referred to as the "Confidentiality Agreement")
executed by ITI and IMA.
7.12 Notification of Certain Matters.
-------------------------------
(a) Between the date hereof and the Effective Time, each
party will give prompt notice in writing to the other parties, of:
(i) the occurrence, or failure to occur, of any event, which
occurrence or failure would be likely to cause any of its
representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect from the date hereof
to the Effective Time, (ii) any notice or other communication from
any person alleging that the consent of such person is or may be
required in connection with the transactions contemplated by this
Agreement, (iii) any notice or other communication from any
governmental or regulatory agency or authority in connection with
the transactions contemplated by this Agreement, (iv) any actions,
suits, claims, investigations or proceedings commenced or, to the
best of its knowledge, threatened against the notifying party or
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<PAGE> 51
any subsidiary or relating to or involving or otherwise affecting
the notifying party or which relate to the consummation of the
transactions contemplated by this Agreement, and (v) any material
failure of the notifying party or any officer, director, employee
or agent thereof to comply with or satisfy any covenant, condition
or agreement to be complied with or satisfied by it hereunder.
(b) IMA will (i) confer on a regular and frequent basis
with one or more designated representatives of ITI to report
operational matters and to report the general status of ongoing
operations, and (ii) notify ITI of any emergency or other change in
the normal course of business or in the operation of the properties
of IMA or any Subsidiary and of any governmental complaints,
investigations or hearings (or communications indicating that the
same may be contemplated) or adjudicatory proceedings involving any
property of IMA or any Subsidiary, and will keep ITI fully informed
of such events and permit ITI's representatives access to all
materials prepared in connection therewith. ITI will notify IMA of
any emergency or other change in the normal course of business, or
in the operation of the properties of ITI or any subsidiary, and of
any governmental complaints, investigations or hearings (or
communications indicating that the same may be contemplated) or
adjudicatory proceedings involving any property of ITI or any
subsidiary, in each case if such event would, individually or in
the aggregate, have a Material Adverse Effect with respect to ITI,
and will keep IMA fully informed of such events.
(c) The giving of any such notice under this Section 7.12
shall in no way change or modify the representations and warranties
or the conditions to any party's obligations contained herein or
otherwise affect the remedies available to any party hereunder.
7.13 Accounting and Tax Treatment.
----------------------------
Each of the parties undertakes and agrees to use its best
efforts to cause the transactions contemplated by this Agreement
and the Merger to qualify for pooling-of-interests accounting
treatment under generally accepted accounting principles. None of
the parties will take a position on their respective tax returns or
elsewhere, nor take any action or fail to take any action, that is
or would be inconsistent with the treatment of the transactions
contemplated by this Agreement and the Merger as a reorganization
within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the
Code unless counsel to the party taking the inconsistent position
shall have advised such party that there is no basis for the party
to do otherwise.
7.14 Forbearance.
-----------
IMA agrees that, from and after the date hereof and until the
Effective Time, it shall not, and shall not permit any Subsidiary,
or any officers, directors, employees, agents or representatives of
IMA or of any Subsidiary to, directly or indirectly, initiate,
solicit or encourage discussions, inquiries or proposals, or
43
<PAGE> 52
participate in any negotiation or discussion for the purpose or
with the intention of leading to any proposal, concerning any
merger, consolidation or other business combination involving IMA
or any Subsidiary or any acquisition of any equity interest in IMA
or any Subsidiary, or a material portion of the assets of, IMA and
its Subsidiaries, taken as a whole, or any similar transaction, or
effectuate any such transaction, in each case, except for the
Merger. Notwithstanding the foregoing, IMA may furnish information
concerning its business, properties or assets, and may engage in
negotiations and discussions in connection with such a transaction,
if the Board of Directors of IMA, based on the written opinion of
counsel reasonably satisfactory to IMA, determines that the
exercise of its fiduciary responsibilities requires that such
information be furnished or such negotiations be commenced. IMA
shall notify ITI immediately of any such inquiry (including the
terms thereof and the person making such inquiry) which it may
receive in respect of any possible such transaction.
7.15 Restructuring Transactions.
--------------------------
Following the receipt of the approvals by IMA and ITI
stockholders contemplated by Sections 7.1 and 7.2, respectively,
IMA shall effect restructurings of IMA's Subsidiaries and transfers
of the assets and liabilities of IMA and its Subsidiaries that are
requested by ITI; provided that, if so requested by IMA in
connection with any particular transaction, ITI shall agree, on a
basis reasonably satisfactory to IMA, to indemnify IMA and its
Subsidiaries against any out-of-pocket costs and tax liabilities,
arising out of such transaction if the transactions contemplated by
this Agreement are not consummated. No such restructuring or other
transfer of assets or liabilities shall be undertaken if such
restructuring or transfer would, in the reasonable judgment of
Messrs. Thompson & Mitchell (as reasonably concurred with by
Messrs. Krugman, Chapnick & Grimshaw), impede in any material
respect Messrs. Thompson & Mitchell's ability to render the tax
opinion described in Section 9.9.
7.16 Indemnification.
---------------
From and after the Effective Time, ITI and the Surviving
Corporation shall, to the extent permitted by the GCL and other
law, honor all obligations of IMA pursuant to Section 8(b) of IMA's
certificate of incorporation, Article IX of its by-laws, and those
indemnification agreements with directors set forth on Schedule
5.14, in each case in effect on the date hereof, which provide for
indemnification of officers and directors of IMA with respect to
events occurring prior to the Effective Time; it being acknowledged
and agreed that no such provisions shall obligate ITI to procure or
maintain any insurance coverage.
7.17 Registration Rights.
-------------------
(a) Prior to the mailing of the Joint Proxy Statement,
ITI will use its best efforts to enter into a registration rights
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agreement (hereinafter referred to as the "Registration Rights
Agreement") with each person who signs an Affiliate Agreement (as
hereinafter defined), other than those who, immediately following
the consummation of the Merger, would own less than 1% of the
outstanding shares of ITI Common Stock (hereinafter referred to,
individually, as a "Stockholder" and, collectively, as the
"Stockholders").
(b) The Registration Rights Agreement will provide for
the following registration rights and other provisions
substantially similar to those provisions contained in the
Registration Rights Agreement dated October 19, 1992 (hereinafter
referred to as the "Prior Registration Rights Agreement") among
ITI, Interstate Properties and the Ringwood Group named therein,
and will become effective on the date of the first publication of
the operating results of ITI covering at least a 30-day period
after the Merger has been consummated:
(i) Demand Registration. A Stockholder may make a
written request for registration under the Securities Act
(hereinafter referred to as a "Demand Registration") of all or part
of the shares of ITI Common Stock that it or its Affiliates
beneficially own (hereinafter referred to as the "Registrable
Securities"); provided, that ITI shall not be obligated (i) to
effect more than one Demand Registration for each Stockholder and
its Affiliates unless ITI qualifies and is entitled to use a
Registration Statement on Form S-3 (in which case such Stockholder
shall be entitled to a total of three Demand Registrations), (ii)
to effect a Demand Registration for less than 500,000 shares of ITI
Common Stock, (iii) to effect a Demand Registration if such written
request is given after the sixth anniversary of the consummation of
the Merger, (iv) to effect a Demand Registration for any
Registrable Securities if, in the written opinion of counsel to
ITI, such Registrable Securities could, within three months of the
date of a Stockholder's request but based on the facts and
circumstances known at the date of such request, be publicly
offered and sold without registration under the Securities Act (and
such Stockholder shall provide such information as counsel to ITI
shall reasonably request in connection with such opinion) or (v) to
effect a Demand Registration in any other circumstances exempted
from such requirement pursuant to the Prior Registration Rights
Agreement. Such request will specify the number of shares of
Registrable Securities proposed to be sold and will also specify
the intended method of disposition thereof. A registration will not
count as a Demand Registration until it has become effective.
(ii) Incidental Registration. If ITI proposes to
file a registration statement under the Securities Act (other than
a Registration Statement on Form S-4 of Form S-8) relating to an
underwritten public offering of shares of ITI Common Stock to be
offered for its own account or the account of others at any time
prior to the sixth anniversary of the consummation of the Merger,
and if the managing underwriter for such proposed offering advises
ITI that the inclusion of some or all of the Registrable Securities
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in such registration statement would not interfere with the
successful marketing of ITI Common Stock, ITI shall (i) provide
written notice of the proposed offering to the Stockholders,
setting forth a description of the intended method of distribution,
and (ii) use its best efforts to register pursuant to such
registration statement (hereinafter referred to as an "Incidental
Registration") such number of Registrable Securities as shall be
specified in a written request by each Stockholder made within 20
days after such written notice from ITI, subject to such limits as
may have been set by ITI's Board of Directors or the managing
underwriter on the number of Registrable Securities which may be
included in the proposed offering; provided, however, that, for
purposes of this sentence, the use by ITI of its "best efforts"
shall not require any reduction in the amount or sale price of the
securities it proposes to distribute for its own account. ITI shall
not be obligated to effect an Incidental Registration for any
Registrable Securities (x) if in the written opinion of counsel to
ITI, such Registrable Securities could, within three months of the
date of a Stockholder's request but based on the facts and
circumstances known at the date of such request, be publicly
offered and sold without registration under the Securities Act (and
the Stockholder shall provide such information as counsel to ITI
shall reasonably request in connection with such opinion) or (y) in
any other circumstances exempted from such requirement pursuant to
the Prior Registration Rights Agreement.
7.18 Additional Agreements.
---------------------
Subject to the terms and conditions of this Agreement, each of
the parties hereto shall cooperate with one another and use its
best efforts to complete in a timely manner the transactions
contemplated by this Agreement, including (i) using its best
efforts to comply with any and all applicable rules and
regulations, and to send all notices to, make all declarations,
filings and registrations with,and obtain all consents,
authorizations, approvals and waivers from third parties and
governmental and regulatory bodies required to consummate the
transactions contemplated hereby or comply with any and all
applicable rules and regulations governing such transactions, and
(ii) furnishing the other parties with all information necessary or
advisable for the matters referred to in Sections 7.5 and 7.6
hereof and any other statements or applications made by or on
behalf of any party to any governmental or regulatory body in
connection with the transactions contemplated by this Agreement.
ARTICLE VIII
PUBLICITY
---------
8.1 Publicity.
---------
None of the parties hereto shall, nor shall any such party
cause or allow any affiliate, directly or indirectly, to issue any
press release or otherwise make any public announcement or
statement with respect to the matters contemplated hereby without
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the prior approval of all parties (which consent shall not be
unreasonably withheld); provided that nothing herein shall prohibit
any party hereto or any of their affiliates from making any
announcement or disclosure required to be made by it or them under
applicable law if it or its affiliates determines in good faith
that it is appropriate to do so and, if practicable, gives prior
notice to the other parties hereto of such determination.
ARTICLE IX
CONDITIONS TO OBLIGATIONS
OF EACH PARTY
-------------------------
The obligations of each of ITI, Acquisition Sub and IMA to
consummate the Merger and the Closing are subject to the following
conditions precedent, any or all of which may be waived by such
party at its sole discretion:
9.1 Hart-Scott-Rodino Antitrust Improvements Act.
--------------------------------------------
The waiting period (and any extensions thereof) applicable to
the consummation of the transactions contemplated hereby required
under the HSR Act shall have expired or been terminated.
9.2 Merger Approval.
---------------
This Agreement, the Merger and the transactions contemplated
hereby shall have been duly approved and adopted by the requisite
vote of the respective stockholders of ITI and IMA in accordance
with applicable law and the rules promulgated by the National
Association of Securities Dealers, Inc.
9.3 Amendments to ITI's Certificate of Incorporation.
------------------------------------------------
The amendments to ITI's certificate of incorporation which are
contemplated by Section 7.2, in the respective forms thereof
attached hereto as Exhibit E-1 and Exhibit E-2 shall have been
----------- -----------
approved by the requisite vote of ITI stockholders entitled to vote
thereon and duly filed in accordance with the requirements of the
GCL.
9.4 Amendments to ITI's By-Laws.
---------------------------
The amendments to ITI's by-laws in the form thereof attached
hereto as Exhibit F shall have been adopted by the Board of
---------
Directors of ITI.
9.5 Effectiveness of Registration Statement.
---------------------------------------
Prior to the first date on which the Joint Proxy Statement is
mailed to stockholders, the SEC shall have declared the
Registration Statement effective and, at or prior to the time
required, any required approvals of state securities administrators
shall have been obtained. At the Closing and the Effective Time,
47
<PAGE> 56
the Registration Statement shall be effective and no stop order
suspending the effectiveness of the Registration Statement or
similar restraining order shall have been threatened or initiated
by the SEC or any state or foreign securities administrator.
9.6 Pooling-of-Interests.
--------------------
ITI shall have received an opinion from BDO Seidman, dated the
Closing Date, in form and substance reasonably satisfactory to ITI
and to IMA, to the effect that the transactions contemplated by
this Agreement and the Merger will qualify for pooling-of-interests
accounting treatment under generally accepted accounting
principles.
9.7 Conversion of IMA Class B Common Stock.
--------------------------------------
At or prior to the Effective Time, all of the shares of IMA
Class B Common Stock issued and outstanding immediately prior to
the Effective Time shall have been converted into shares of IMA
Class A Common Stock on a share for share basis in accordance with
IMA's certificate of incorporation, as currently in effect; and, in
furtherance thereof, each holder of shares of IMA Class B Common
Stock shall have executed and delivered to ITI and IMA a letter in
the form of Exhibit G attached hereto (together with such changes
---------
therein as may reasonably be requested by ITI).
9.8 No Prohibition on Consummation.
------------------------------
No order, stay, judgment, injunction or decree shall have been
issued and be in effect by any court restraining or prohibiting the
consummation of the transactions contemplated hereby. No statute,
rule or regulation shall have been promulgated or enacted by any
foreign or United States federal or state government, governmental
authority or governmental agency, which would prevent or make
illegal the consummation of the transactions contemplated hereby,
including the Merger.
9.9 Tax Opinion.
-----------
IMA shall have received from Messrs. Thompson & Mitchell, an
opinion, dated the Closing Date, in form and substance reasonably
satisfactory to IMA and to ITI and its counsel, to the effect that
the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Sections 368(a)(1)(A) and
368(a)(2)(E) of the Code, and that ITI, Acquisition Sub and IMA
will each be a party to that reorganization within the meaning of
Section 368(b) of the Code.
9.10 ITI Board; Officers.
-------------------
ITI's Board of Directors and its offices shall have been
expanded and filled, respectively, as set forth under Sections 7.3
and 7.4 hereof.
48
<PAGE> 57
ARTICLE X
CONDITIONS TO OBLIGATIONS OF IMA
--------------------------------
The obligation of IMA to consummate the Merger and the Closing
is subject to the following additional conditions precedent, any or
all of which may be waived by IMA at its sole discretion:
10.1 Opinion of Counsel for ITI and Acquisition Sub.
----------------------------------------------
IMA shall have received an opinion of Messrs. Krugman,
Chapnick & Grimshaw, counsel for ITI and Acquisition Sub, dated the
Closing Date, in form and substance reasonably satisfactory to IMA
and its counsel, to the effect set forth in Exhibit H.
---------
10.2 Representations; Warranties; Covenants.
--------------------------------------
The representations and warranties of ITI and Acquisition Sub
contained in this Agreement shall be true and correct in all
material respects at and as of the Closing Date with the same
effect as though all such representations and warranties were made
at and as of the Closing Date (except for representations and
warranties which are as of a specific date or which relate to a
specific period other than or not including the Closing Date, as
the case may be, and except for changes therein contemplated or
permitted by this Agreement and provided, however, that if any such
representation or warranty is already qualified by materiality, for
purposes of determining whether this condition has been satisfied,
such representation or warranty must be true and correct in all
respects); and ITI and Acquisition Sub shall have complied with
their respective covenants contained under this Agreement in all
material respects; and ITI and Acquisition Sub shall have delivered
to IMA a certificate to that effect, dated the Closing Date, signed
by its Chairman of the Board, its President and Chief Executive
Officer or one of its Vice Presidents.
10.3 Certified Resolutions.
---------------------
IMA shall have received a certificate of the Secretary or an
Assistant Secretary of each of ITI and Acquisition Sub, in form and
substance satisfactory to IMA, with respect to the authorization by
their respective boards of directors and stockholders of the
execution and delivery of this Agreement and the consummation of
the transactions contemplated herein, the number of authorized
shares of the capital stock of ITI as of the Closing Date and the
number of issued and outstanding shares of the capital stock of
ITI, and the number of shares subject to outstanding options and
warrants, convertible securities or similar obligations to issue
capital stock, as of such date.
10.4 Kalishman and Affholder Agreements.
----------------------------------
ITI shall have executed and delivered to Robert W. Affholder
the agreement in the form attached hereto as Exhibit K, and shall
---------
49
<PAGE> 58
have executed and delivered to Jerome Kalishman the agreements in
the respective forms attached hereto in Exhibit L, in each case
dated the Closing Date. ---------
10.5 Fairness Opinion.
----------------
IMA shall have received from Wertheim Schroder & Co.
Incorporated on or prior to the date of mailing of the Joint Proxy
Statement its opinion that the terms of the Merger are fair to the
holders of IMA Common Stock from a financial point of view, and
such opinion shall not have been withdrawn between the date of its
delivery and the Effective Time.
10.6 Letter of ITI's Accountants.
---------------------------
IMA shall have received a letter of BDO Seidman, ITI's
independent auditors, dated the Closing Date, addressed to IMA, in
form and substance reasonably satisfactory to IMA and counsel for
IMA, making the statements required by Paragraph (e) of Section 7.5
on the basis of procedures set forth therein carried out by them
not more than three business days prior to the Closing Date.
10.7 Director Indemnification Agreements.
-----------------------------------
ITI shall have executed to Jerome Kalishman, Robert W.
Affholder and Alvin J. Siteman its customary form of director
indemnification agreement, in each case dated the Closing Date.
10.8 Litigation.
----------
No action, suit or proceeding against any current director of
IMA relating to the consummation of any of the transactions
contemplated in this Agreement, and seeking material damages in
connection therewith, shall be pending or threatened which IMA, in
good faith and with the advice of Messrs. Thompson & Mitchell,
reasonably believes makes it undesirable to proceed with the
consummation of the transactions contemplated hereby.
10.9 Other Certificates.
------------------
IMA shall have received such additional certificates,
instruments and other documents, in form and substance satisfactory
to IMA and counsel for IMA, as IMA shall have reasonably requested
in connection with compliance with the conditions set forth in this
Article X.
ARTICLE XI
CONDITIONS TO OBLIGATIONS OF ITI AND ACQUISITION SUB
----------------------------------------------------
The obligations of each of ITI and Acquisition Sub to
consummate the Merger and the Closing are subject to the following
conditions precedent, any or all of which may be waived by such
party at its sole discretion:
50
<PAGE> 59
11.1 Opinion of Counsel for IMA.
--------------------------
ITI shall have received an opinion of Messrs. Thompson &
Mitchell, counsel for IMA, dated the Closing Date, in form and
substance reasonably satisfactory to ITI and its counsel to the
effect set forth in Exhibit I.
---------
11.2 Representations; Warranties; Covenants.
--------------------------------------
The representations and warranties of IMA contained in this
Agreement shall be true and correct in all material respects at and
as of the Closing Date with the same effect as through all such
representations and warranties were made at and as of the Closing
Date (except for representations and warranties which are as of a
specific date or which relate to a specific period other than or
not including the Closing Date, as the case may be, and except for
changes therein contemplated or permitted by this Agreement, and
provided, however, that if any such representation or warranty is
already qualified by materiality, for purposes of determining
whether this condition has been satisfied, such representation or
warranty must be true and correct in all respects); and IMA shall
have complied with all of its covenants contained in this Agreement
in all material respects; and IMA shall have delivered to ITI a
certificate to that effect, dated the Closing Date, signed by its
Chairman of the Board, its President or one of its Vice Presidents.
11.3 Certified Resolutions; Capitalization.
-------------------------------------
(a) ITI shall have received a certificate of the Secretary or
an Assistant Secretary of IMA in form and substance satisfactory to
ITI, with respect to the authorization by the board of directors
and the stockholders of IMA of the execution and delivery of this
Agreement and the consummation of the transactions contemplated
herein, the number of authorized shares of the capital stock of IMA
as of the Closing Date and the number of issued and outstanding,
fully paid and non-assessable shares of the capital stock of IMA as
of such date (which shall not include any shares other than the
shares of IMA Class A Common Stock outstanding on the date hereof,
the shares of IMA Class A Common Stock issued upon conversion of
shares of IMA Class B Common Stock outstanding on the date hereof,
and any shares of IMA Class A Common Stock issued upon exercise of
IMA Options outstanding on the date hereof and exercisable prior to
the Effective Time).
(b) ITI shall have received assurances, reasonably
satisfactory to it, that at and after the Effective Time, there
shall not exist any security, option, warrant, right, put, call,
subscription, agreement, commitment, understanding or claim of any
kind, fixed or contingent (including the IMA Options), that
directly or indirectly calls for IMA or (except as identified under
Item (5) of Schedule 5.5) any of its Subsidiaries to acquire,
issue, deliver or sell, or to cause to be acquired, issued,
delivered or sold, any shares of the capital stock of or equity
51
<PAGE> 60
interest in IMA or any Subsidiary or obligating IMA or any
Subsidiary to grant, extend or enter into any of the foregoing.
11.4 Affiliate Undertakings.
----------------------
(a) ITI shall have received an agreement, in form and
substance reasonably satisfactory to it (herein referred to as an
"Affiliate Agreement"), executed and delivered by each officer and
director of IMA and each other holder of securities of IMA who, in
the opinion of counsel for ITI, after review of opinions of counsel
for IMA, is or may be an "affiliate" of IMA within the meaning of
Rule 145 under the Securities Act, to the effect set forth in
Exhibit J, stating that:
- ---------
(i) no disposition shall be made by such "affiliate" of
shares of ITI Common Stock, except in accordance with the
applicable provisions of the Securities Act and the rules and
regulations thereunder; and
(ii) the certificates evidencing such shares received
pursuant to the Merger shall bear a legend setting forth such
restrictions in a form satisfactory to ITI.
(b) ITI shall also have received from IMA or from the
stockholders of IMA, as the case may be, representations with
respect to such other matters as ITI reasonably may require in
order to be assured that the Merger will constitute a tax-free
reorganization under Section 368 of the Code.
11.5 Kalishman and Affholder Agreements.
----------------------------------
Robert W. Affholder shall have executed and delivered to ITI
an agreement in the form thereof contained in Exhibit K attached
---------
hereto, dated the Closing Date, and Jerome Kalishman shall have
executed and delivered to ITI the agreements in the respective
forms thereof attached hereto as Exhibit L attached hereto, in each
case dated the Closing Date. ---------
11.6 Dissenters' Rights.
------------------
The holders of not more than 5% of the outstanding shares of
IMA Common Stock shall, at the Closing Date, be entitled to demand
payment of the fair value of their shares as dissenting
shareholders.
11.7 Third Party Consents.
--------------------
All notices to, and declarations, filings and registrations
with, and consents, authorizations, approvals and waivers from,
governmental and regulatory bodies required to consummate the
transactions contemplated hereby shall have been made or obtained,
and all other notices, consents or waivers with respect to the
transactions contemplated by this Agreement shall have been made or
obtained.
52
<PAGE> 61
11.8 Resignations.
------------
ITI shall have received the resignations of all such officers
and directors of IMA and each Subsidiary requested by it.
11.9 Fairness Opinion.
----------------
ITI shall have received from Merrill Lynch & Co. on or prior
to the date of mailing of the Joint Proxy Statement its opinion
that the terms of the Merger are fair to the holders of ITI Common
Stock from a financial point of view, and such opinion shall not
have been withdrawn between the date of its delivery and the
Effective Time.
11.10 Letter of Accountants for IMA and Enviroq.
-----------------------------------------
ITI shall have received a letter of KPMG Peat Marwick LLP,
IMA's independent auditors, and Deloitte & Touche, L.L.P.,
Enviroq's independent auditors, each dated the Closing Date,
addressed to ITI, in form and substance reasonably satisfactory to
ITI and counsel for ITI, making the statements required by
Paragraph (d) of Section 7.5, on the basis of procedures set forth
therein carried out by them, respectively, not more than three
business days prior to the Closing Date.
11.11 A-Y-K-E Equipment.
-----------------
IMA or Affholder, Inc. shall have entered into arrangements,
reasonably satisfactory to ITI, with respect to: (x) the purchase,
at fair market value determined by an independent appraiser
qualified in such matters and reasonably satisfactory to ITI, or
(y) the long-term lease, at fair market rental rates determined by
an appraiser as aforesaid, which at the option of ITI may be on a
non-exclusive basis and from time to time, and terminable by IMA on
the same or substantially similar basis as is contained in the
arrangements currently in effect, or (z) the modification of the
arrangements currently in effect pursuant to terms reasonably
satisfactory to ITI, in each case under clauses (x), (y) and (z)
immediately preceding with respect to such equipment covered by the
Equipment Lease dated October 10, 1989, as from time to time
supplemented, between Affholder, Inc. and A-Y-K-E Partnership and
such other equipment, tools, machinery, supplies and other
properties owned or controlled by said partnership and used,
useable or useful in the business of IMA or any Subsidiary thereof,
as shall in each case be identified by ITI.
11.12 Litigation.
----------
No action, suit or proceeding against any party hereto
relating to the consummation of any of the transactions
contemplated in this Agreement or any governmental action seeking
to delay or enjoin any such transactions shall be pending or
threatened and no investigation by any governmental or regulatory
body shall have been commenced (and be pending), seeking to
53
<PAGE> 62
restrain or prohibit (or questioning the validity or legality of)
the consummation of the transactions contemplated by this
Agreement, including the Merger, or seeking material damages in
connection therewith which ITI, in good faith and with the advice
of Messrs. Krugman, Chapnick & Grimshaw, reasonably believes makes
it undesirable to proceed with the consummation of the transactions
contemplated hereby.
11.13 Other Certificates.
------------------
ITI shall have received such additional certificates,
instruments and other documents, in form and substance satisfactory
to ITI and counsel for ITI, as it shall have reasonably requested
in connection with the transactions contemplated hereunder.
ARTICLE XII
TERMINATION
-----------
12.1 Termination.
-----------
This Agreement may be terminated and the Merger abandoned at
any time prior to the Effective Time, whether prior to or after
approval by the stockholders of either IMA or ITI, by the consent
of all parties hereto, or by either IMA or ITI if: (i) the other
party shall have breached in any material respect any of its
representations or warranties contained in this Agreement; (ii) any
such representation or warranty shall not be correct or accurate in
all material respects at and as of the Closing Date with the same
effect as if made at such time (with such exceptions as are
permitted by Sections 10.2 and 11.2, respectively); (iii) the other
party shall have failed to comply in all material respects with any
of its covenants or agreements contained in this Agreement to be
complied with or performed by it at or prior to the Closing; (iv)
at the stockholders meeting (including any adjournment or
postponement thereof) of the other party called pursuant to Section
7.1 or 7.2, as the case may be, or any successor meeting called for
the same purpose, the requisite affirmative approval of the
stockholders of the other party shall not have been obtained; (v)
if a permanent injunction is entered, enforced or deemed applicable
to this Agreement, or the Plan of Merger, which prohibits the
consummation of the transactions contemplated hereby and thereby
and all appeals of such injunction shall have been taken and shall
have been unsuccessful; (vi) if any governmental entity, the
consent of which is a condition to the obligation of such party to
consummate the transactions contemplated hereby, shall have
determined not to grant its consent and all appeal of such
determination shall have been taken and shall have been
unsuccessful; or (vii) the Closing shall not have occurred on or
prior to January 31, 1996.
54
<PAGE> 63
12.2 Effect of Termination.
---------------------
In the event of termination of this Agreement pursuant to
Section 12.1 hereof, all rights of all parties hereto shall cease
and terminate, except for such rights as any party may otherwise
have for breach of contract (other than breaches which are not
willful), including, without limitation, rights for any such
breaches of any representations, warranties or covenants contained
herein, and, provided that the provisions of this Section 12.2 and
Sections 7.11(c), 13.3, 13.7 and 13.8 shall survive any such
termination.
ARTICLE XIII
MISCELLANEOUS
-------------
13.1 Notices.
-------
All notices, requests or instruction hereunder shall be in
writing and delivered personally or sent by registered or certified
mail, postage prepaid or by telecopy (or like transmission), as
follows:
(1) if to IMA:
17988 Edison Avenue
Chesterfield, Missouri 63005-3700
Attention: Chairman
Fax: (314) 537-1214
with a copy to:
Thomas A. Litz, Esq.
Thompson & Mitchell
One Mercantile Center
St. Louis, Missouri 63101
Fax: (314) 342-1717
(2) if to ITI or Acquisition Sub:
1770 Kirby Parkway
Suite 300
Memphis, Tennessee 38138
Attention: President and Chief Executive
Officer
Fax: (901) 759-7513
55
<PAGE> 64
with a copy to:
Howard Kailes, Esq.
Krugman, Chapnick & Grimshaw
Park 80 West - Plaza Two
Saddle Brook, New Jersey 07663
Fax: (201) 845-9627
Any of the above addresses may be changed at any time by notice
given as provided above; provided, however, that any such notice of
change of address shall be effective only upon receipt. All notices
and other communications given to any party hereto in accordance
with the provisions hereof shall be deemed to have been given on
the date of receipt, provided that any notice or other
communication that is received other than during regular business
hours of the recipient shall be deemed to have been given at the
opening of business on the next business day of the recipient.
13.2 Survival of Representations.
---------------------------
The respective representations and warranties of the parties
contained in this Agreement shall not be deemed waived or otherwise
affected by any investigation of any party. The representations,
warranties, covenants and agreements of the parties hereto herein
contained in Articles I, II and III and Sections 7.3, 7.16 and 7.17
of this Agreement shall survive the Effective Time. All other
representations, warranties, covenants and agreements in and
pursuant to this Agreement shall not survive the Effective Time.
13.3 Cooperation Agreement.
---------------------
The parties acknowledge and agree, on behalf of themselves and
their subsidiaries, respectively, that: (x) ITI, IMA and Enviroq
have entered into an Amended and Restated Cooperation Agreement
dated April 28, 1995 (hereinafter referred to as the "Cooperation
Agreement"); (y) the Cooperation Agreement shall extend in full
force and effect through the Effective Time or such earlier date as
shall occur upon the termination of this Agreement; and (z) without
limiting any provision contained in the Cooperation Agreement,
neither the execution and delivery of this Agreement, nor the
performance hereof, shall operate as a waiver of any right, power
or privilege subject to the Cooperation Agreement, and none of such
execution, performance nor delivery shall prejudice the rights of
any party hereto with respect to the subject matter of the
Cooperation Agreement.
13.4 Entire Agreement.
----------------
This Agreement and the documents referred to herein
(including, without limitation, the Confidentiality Agreement and
the Cooperation Agreement), together with the letter dated this
date with respect to the Cooperation Agreement, contain the entire
agreement between the parties hereto with respect to the
56
<PAGE> 65
transactions contemplated hereby, and supersede all prior
understandings, arrangements and agreements with respect to the
subject matter hereof. No modification hereof shall be effective
unless in writing and signed by the party against which it is
sought to be enforced.
13.5 Modification.
------------
At any time prior to the Effective Time, the parties hereto
may, by written agreement, make any modification or amendment of
this Agreement approved by their respective Boards of Directors;
provided however, that the per share number of shares of ITI Common
Stock to be received by holders of the IMA Common Stock in the
Merger, as set forth in Article II hereof, shall not be amended or
modified without the approval of such holders at any time after
such holders have approved this Agreement, and any and all such
modifications and amendments shall conform to the requirements of
the GCL.
13.6 Further Action.
--------------
Each of the parties hereto shall use such party's reasonable
best efforts to take such actions as may be necessary or reasonably
requested by the other parties hereto to carry out and consummate
the transactions contemplated by this Agreement.
13.7 Expenses.
--------
Each of the parties hereto shall bear such party's own
expenses in connection with this Agreement and the transactions
contemplated hereby.
13.8 Governing Law.
-------------
This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable in the
case of agreements made and to be performed entirely within such
State.
13.9 Captions.
--------
The captions appearing herein are for the convenience of the
parties only and shall not be construed to affect the meaning of
the provisions of this Agreement.
13.10 Accounting Terms.
----------------
All accounting terms used herein which are not expressly
defined in this Agreement shall have the respective meanings given
to them in accordance with generally accepted accounting principles
on the date hereof.
57
<PAGE> 66
13.11 Specific Performance.
--------------------
ITI, Acquisition Sub and IMA recognize that any breach of the
terms of this Agreement may give rise to irreparable harm for which
money damages would not be an adequate remedy, and accordingly
agree that, in addition to other remedies, any nonbreaching party
shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce the
terms and provisions of this Agreement and the Plan of Merger by a
decree of specific performance in any action instituted in any
court of the United States or any state hereof having jurisdiction
without the necessity of proving the inadequacy as a remedy of
money damages.
13.12 Assignment.
----------
This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests, or obligations
hereunder may be assigned by any of the parties hereto without the
prior written consent of the other parties and any such attempted
assignment without consent shall be void.
13.13 No Third Party Beneficiary.
--------------------------
This Agreement is not intended, and shall not be construed, to
confer any rights or remedies hereunder upon any party other than
the parties hereto and those parties designated as directors
pursuant to Section 7.3 and those parties entitled to
indemnification under Section 7.16, which parties shall be entitled
to enforce their rights under such provisions to which they are
entitled to benefits.
13.14 Partial Invalidity.
------------------
Any term or provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability
without rendering invalid or unenforceable the remaining terms and
provisions of this Agreement, or any such terms in any other
jurisdiction. If any provision of this Agreement is so broad as to
be unenforceable, such provision shall be interpreted to be only so
broad as is enforceable.
13.15 Counterparts.
------------
This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
58
<PAGE> 67
IN WITNESS WHEREOF, this Agreement has duly executed by
the parties hereto as of the date first above written.
ATTEST: INSITUFORM MID-AMERICA, INC.
s/Joseph A. Olson By s/Jerome Kalishman
- ----------------------------- -----------------------------
Vice President-Finance and Chairman
Administration
ATTEST: INSITUFORM TECHNOLOGIES,INC.
s/Howard Kailes By s/Jean-Paul Richard
- ----------------------------- -----------------------------
Assistant Secretary President
ATTEST: ITI ACQUISITION CORP.
s/Howard Kailes By s/Jean-Paul Richard
- ----------------------------- -----------------------------
Assistant Secretary President
59
<PAGE> 1
--------, 1995
Insituform Technologies, Inc.
1770 Kirby Parkway
Suite 300
Memphis, Tennessee 38138
Insituform Mid-America, Inc.
17988 Edison Avenue
Chesterfield, Missouri 63005
Gentlemen:
In connection with the transactions contemplated by the
Agreement and Plan of Merger dated May 23, 1995 (the "Agreement")
among Insituform Technologies, Inc., a Delaware corporation (the
"Company"), ITI Acquisition Corp., a Delaware corporation ("ITI
Sub"), and Insituform Mid-America, Inc., a Delaware corporation
("IMA"), the undersigned hereby agrees to convert or to cause the
conversion of, immediately prior to the consummation of the
transactions contemplated by the Agreement, each outstanding share
of Class B Common Stock, $.01 par value ("Class B Common Stock"),
of IMA, that may be beneficially owned by the undersigned into one
share of Class A Common Stock, $.01 par value, of IMA in accordance
with the terms of IMA's certificate of incorporation, as currently
in effect.
The undersigned represents and warrants to the Company that
the undersigned is the record and beneficial owner of -------
shares of Class B Common Stock. The undersigned is not the record
or beneficial owner of any other shares of Class B Common Stock.
In the event that the merger of IMA and ITI Sub contemplated
by the Agreement is terminated this Agreement shall be null and
void.
-------------------------------
<PAGE> 1
May 23, 1995
Insituform Mid-America, Inc.
P.O. Box 1026
17988 Edison Avenue
Chesterfield, Missouri 63005
Dear Sirs:
This letter shall memorialize the agreement between Insituform
Technologies, Inc., for itself and on behalf of Insituform Acquisition
Corp., Insituform North America Corp., NuPipe, Inc. and Insituform
California, Inc. (collectively "ITI"), and Insituform Mid-America, Inc.,
for itself and on behalf of IMA Merger Sub, Inc. (formerly, Enviroq
Corporation), Insituform Southeast, Inc., NuPipe Southeast, Inc. and
E-Midsouth, Inc. (collectively "IMA") with respect to the manner in which
the parties will proceed with the litigation currently pending in the
United States District Court for the Western District of Tennessee,
Western Division, entitled Insituform North America Corp., and NuPipe,
-------------------------------------------
Inc., Plaintiffs vs. Insituform Southeast, Inc., NuPipe Southeast, Inc.,
- ------------------------------------------------------------------------
Enviroq Corporation and Insituform Mid-America, Inc., Defendants,
- ----------------------------------------------------------------
Docket No. 95-2329 (the "Litigation").
IMA and ITI have concurrently herewith entered into an Agreement
and Plan of Merger dated this date (the "Merger Agreement"), Section 13.3
of which provides that ITI and IMA will extend the Cooperation Agreement
(the "Cooperation Agreement") as defined in the Merger Agreement through
the Effective Time (as defined in the Merger Agreement) or such earlier
date as shall occur upon the termination of the Merger Agreement (which,
under the provisions of Section 12.1 of the Merger Agreement may be
effectuated by a party if closing has not occurred on or prior to
January 31, 1996).
To effectuate the purposes of the Cooperation Agreement in the
context of the Merger Agreement, we have agreed to the following:
1. The parties in the Litigation shall submit a joint motion
to the Court seeking to stay all proceedings in the Litigation until
January 31, 1996 or the earlier termination of the Merger Agreement.
2. If the Court declines to grant the requested relief, the
following procedure shall be the exclusive procedure utilized with
respect to the subject matter of the Litigation or the Consent (as
defined in the Cooperation Agreement):
(a) The parties in the Litigation shall sign a Stipulation
of Dismissal dismissing the Litigation without prejudice;
<PAGE> 2
(b) In the event (i) the Effective Time does not occur on
or before January 31, 1996, or (ii) the Merger Agreement is terminated
prior to that time, plaintiffs may recommence the Litigation by filing
a complaint (substantially in the form heretofore filed by plaintiffs)
in the United States District Court for the Western District of
Tennessee within thirty (30) days of January 31, 1996 or such earlier
date as the Merger Agreement is terminated;
(c) In the event plaintiffs do not commence proceedings
contemplated by the preceding paragraph (b) defendants in the
Litigation may demand that plaintiffs reinstitute litigation in the
United States District Court for the Western District of Tennessee
by filing a complaint (substantially in the form heretofore filed
by plaintiffs) which complaint shall be filed by plaintiffs in the
United States District Court for the Western District of Tennessee
within thirty (30) days of receipt of such demand (provided, however,
that such demand by defendants shall not be deemed to be a waiver of
any defenses to jurisdiction or venue defendants otherwise could assert
in the Litigation);
(d) If plaintiffs do not commerce proceedings within the
time specified in the preceding paragraph (c), defendants may file a
lawsuit in the United States District Court for the Western District
of Tennessee or another state or federal court in Tennessee or any
other state raising claims otherwise involved in the Litigation; and
(e) In the event litigation is commenced or recommenced in
the United States District Court for the Western District of Tennessee
or another jurisdiction, no party shall assert any defense relating to
any statute of limitations, laches or any other passage of time as a
result of the dismissal of the Litigation and reinstitution of
proceedings.
Subject to the foregoing, the Cooperation Agreement shall extend
in full force and effect.
Please confirm your consent to the foregoing by signing the copy
of this letter in the space provided.
Very truly yours,
INSITUFORM TECHNOLOGIES, INC.
By: /s/ J.P. Richard
-------------------------
J.P. Richard, President
AGREED TO:
INSITUFORM MID-AMERICA, INC.
By: /s/ Jerome Kalishman
---------------------------
Jerome Kalishman,
Chief Executive Officer and
Chairman of the Board
<PAGE> 1
FOR RELEASE AT 8:30 AM EASTERN DAYLIGHT TIME, MAY 24, 1995
----------------------------------------------------------
INSITUFORM TECHNOLOGIES, INC. AND INSITUFORM MID-AMERICA, INC.
--------------------------------------------------------------
TO COMBINE
----------
Memphis, TN and St. Louis, MO -- May 24, 1995 -- Insituform Technologies, Inc.
("ITI") (Nasdaq National Stock Market: INSUA) and Insituform Mid-America, Inc.
("IMA") (Nasdaq National Stock Market: INSMA) jointly announced that they have
entered into a definitive agreement which provides for the combination of ITI
and IMA in a transaction in which holders of IMA's Class A Common Stock will
receive 1.15 shares of ITI's Class A Common Stock for each share of IMA Class
A Common Stock held. Holders of IMA's Class B Common Stock have agreed to
convert their shares into IMA Class A Common Stock on a share for share basis
in connection with the transaction. The combination will be effected through
the merger into IMA of a subsidiary of ITI formed for that purpose, as a
result of which IMA would become a wholly-owned subsidiary of ITI.
The transaction is conditioned, upon, among other things, approval by
the stockholders of both ITI and IMA, registration under the Securities Act
of 1933 of the ITI shares to be issued in the transaction, receipt of a legal
opinion that the transaction will qualify as a tax-free reorganization,
confirmation that the transaction will qualify for pooling-of-interests
accounting treatment, expiration of the premerger notification period
under the Hart-Scott-Rodino Act, and other customary conditions. ITI and
IMA expect the transaction to be consummated toward the end of the third
quarter of 1995.
As a result of the consummation of the transaction, three directors
designated by IMA would join the ten current directors on ITI's board. James
D. Krugman would continue as Chairman of the Board and Jean-Paul Richard as
President and Chief Executive Officer of ITI. Jerome Kalishman, Chairman of
the Board of IMA, would become Vice Chairman of the Board of ITI, and Robert W.
Affholder, President of IMA, would become Chief Operating Officer of ITI's
North American contracting operations, which would be headquartered in
Chesterfield, MO.
The arrangements between the parties continue the previously announced
moratorium on further assertion of any rights in dispute as a result of IMA's
acquisition of the pipeline rehabilitation business of Enviroq Corporation in
April 1995 without consent of ITI, except for certain procedural steps to
preserve the respective rights of the parties.
<PAGE> 2
Page 2
May 24, 1995
Mr. Richard said that, "I am obviously delighted that an agreement could
be reached between ITI and IMA to combine the two companies. The strategic
logic for such a merger is, in ITI's opinion, extremely strong. The most obvious
reason for the merger is achieving greater "critical mass." This means having
better economies of scale, greater operations flexibility and the enhanced
ability to fund key strategic initiatives such as technology development,
industrial marketing and overseas territorial expansion. We believe another
major reason for the transaction is the high degree to which the two companies
complement one another. ITI has strong technology development and manufacturing
skills as well as a wide international presence. IMA has a broad contracting
capability and a strong contracting culture, and is also well positioned to take
advantage of the large and growing U.S. gas rehabilitation market with its
PALTEM(R) hoselining technology. This merger constitutes a major step in our
efforts to build the leading worldwide trenchless rehabilitation business."
Mr. Kalishman added, "Those who follow the Insituform industry should
fully understand the strategic advantages of this combination. Among other
objectives, we look forward to the expansion of opportunities for employees
of both companies, and to a successful conclusion of the merger and the
development of the leading world-wide trenchless rehabilitation business."
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(R) Process. By eliminating the
need for disruptive excavation, ITI believes the Insituform(R) Process provides
a cost-effective solution to the problem of deteriorated pipe systems.
Insituform Technologies, Inc. also offers the NuPipe(R) 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(R) name.
Insituform Mid-America, Inc. is a leader in the utilization of trenchless
technologies for rehabilitation, new construction and improvement of sewer, pipe
and conduit systems.
CONTACT: -OR- ITI'S INVESTOR RELATIONS COUNSEL:
Insituform Technologies, Inc. The Equity Group Inc.
Jean-Paul Richard, Pres. & CEO Linda Latman
(901) 759-7473 (212) 836-9609
Insituform Mid-America, Inc.
Jerome Kalishman, Chairman
(314) 532-6173
