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EXHIBIT 10.2
Draft of March 15, 2005
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INSITUFORM TECHNOLOGIES, INC.
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FIFTH AMENDMENT AND WAIVER
TO
NOTE PURCHASE AGREEMENT
Dated as of March 16, 2005
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Re: Note Purchase Agreement dated as of February 14, 1997
and
$110,000,000 Senior Notes, Series A,
Due February 14, 2007
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FIFTH AMENDMENT AND WAIVER
TO
NOTE PURCHASE AGREEMENT
THIS FIFTH
AMENDMENT AND WAIVER TO NOTE PURCHASE AGREEMENT dated as of
March 16, 2005 (the or this "Fifth
Amendment") is between INSITUFORM
TECHNOLOGIES, INC., a Delaware corporation
(the "Company"), and each of the
institutions holding a Note (as hereinafter
defined) and party hereto
(collectively, the "Noteholders").
RECITALS:
A. The
Company entered into the Note Purchase Agreement dated as of
February 14, 1997 (as amended, supplemented
or otherwise modified through the
date hereof, the "Note Agreement"),
pursuant to which the Company issued its
7.88% Senior Notes, Series A, due February
14, 2007 in the original aggregate
principal amount of $110,000,000 (as
amended, supplemented or otherwise modified
through the date hereof, the "Notes").
B. The
Company and the Noteholders now desire to amend the Note
Agreement
and the Notes in the respects, but only in
the respects, hereinafter set forth
in order to reflect certain agreements
between the Company and the Noteholders.
C. The
Company has also advised the Noteholders that the Company has
violated certain terms and conditions set
forth in the Note Agreement and more
particularly described herein and requests
that the Noteholders waive such
Defaults and Events of Default.
D.
Capitalized terms used herein shall have the respective
meanings
ascribed thereto in the Note Agreement
unless herein defined or the context
shall otherwise require.
E. All
requirements of law have been fully complied with and all other
acts and things necessary to make this
Fifth Amendment a valid, legal and
binding instrument according to its terms
for the purposes herein expressed have
been done or performed.
NOW,
THEREFORE, upon the full and complete satisfaction of the
conditions
precedent to the effectiveness of this
Fifth Amendment set forth in Section 4.1
hereof, and in consideration of good and
valuable consideration the receipt and
sufficiency of which is hereby
acknowledged, the Company and the Noteholders do
hereby agree as follows:
SECTION 1. WAIVER OF DEFAULTS.
Section
1.1. Waiver of Defaults (Fixed Charge Coverage Ratio). The
Company
has notified the Noteholders that the
Company has violated the minimum Fixed
Charge Coverage Ratio required to be
maintained under Section 10.2 of the Note
Agreement for the fiscal quarter ended
December 31, 2004. The Noteholders hereby
waive the Event of Default arising under
the Note Agreement on account of the
Company's violation of the financial
covenant described above for the fiscal
quarter ended December 31, 2004.
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Section
1.2. Waiver of Defaults and Consent (Acquisitions). The Company
has notified the Noteholders that
Insituform Technologies Limited, a foreign
Subsidiary of the Company organized in
England and Wales ("ITL"), entered into a
joint venture arrangement with
Environmental Techniques Limited, a Northern
Ireland company ("ETL"), during the fiscal
year ended 2004, pursuant to which
ITL and ETL formed a new company in
Northern Ireland called Insituform
Environmental Techniques Limited ("IETL"),
in connection with which ITL has
subscribed to purchase 499 shares of the
authorized share capital (the
"Subscribed Joint Venture Shares")
(comprised of a total of 1000 ordinary
shares) of IETL for an amount equal to
(pound)499 (approximately equivalent to
U.S. $1,000). The Noteholders hereby waive
compliance with Section 10.11 of the
Note Agreement to the extent necessary to
waive any Event of Default arising
under the Note Agreement on account of the
Subscribed Joint Venture Shares and
hereby consent to the purchase by ITL of
the Subscribed Joint Venture Shares.
Section
1.3. Limited Waivers; Reservation of Rights. The Company
acknowledges and agrees that the waivers
granted in this Section 1 are specific
in intent and are valid only for the
specific purpose for which they are being
given, are waivers the events described in
Sections 1.1 and 1.2 hereof only,
shall not in any way obligate the
Noteholders to agree to any additional waivers
of the provisions of the Note Agreement,
including but not limited to Section
10.2, Section 10.11, Section 11(c) and
Section 11(d) and shall not in any way be
deemed to constitute or operate as a waiver
of any Noteholder's right under the
Note Agreement to exercise remedies
resulting from (i) existing and/or
continuing Defaults or Events of Default of
which such Noteholder is not
actually aware or (ii) other future
Defaults or Events of Default, whether or
not of a similar nature and whether or not
known to any Noteholder.
SECTION 2. AMENDMENTS TO NOTE AGREEMENT AND
THE NOTES.
Section
2.1. Amendment to Interest Rate on the Series A Notes. Upon the
Effective Date (as defined in Section 4.1
of this Fifth Amendment), the rate of
interest payable on each outstanding Note
shall be changed from 8.63% per annum
to 8.88% per annum. As used in the Note
Agreement and the Notes "Applicable
Rate" shall mean (i) 8.63% for the period
commencing August 14, 2004 to but not
including the Effective Date and (ii) 8.88%
from and after the Effective Date.
Section
2.2. Amendment to Section 8.5 (Maturity; Surrender; etc.).
Section
8.5 of the Note Agreement shall be and is
hereby amended by deleting the
reference to "Section 8" therein and
substituting in lieu thereof a reference to
"Section 8 or Section 10.7(b)".
Section
2.3. Amendment to Section 9 (Additional Financial Covenants).
Section 9.9 of the Note Agreement shall be
and is hereby amended in its entirety
to read as follows:
"Section 9.9. Additional Covenants. If the Bank Credit
Agreement is amended, replaced or renewed after the Effective
Date
in a manner which makes the financial covenants set forth
therein
more restrictive on the Company and its Subsidiaries than the
financial covenants contained in Section 10 of this Agreement or
to
add additional financial covenants or to make the existing
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Bank Credit Agreement covenants more restrictive than the
financial
covenants in the Bank Credit Agreement on the Effective Date,
then
such more restrictive financial covenants and any related
definitions (the "Additional Financial Covenants") shall
automatically be deemed to be incorporated into SECTION 7.2(a)
and
SECTION 10 of this Agreement by reference and SECTION 11(c) shall
be
deemed to be amended to include such Additional Financial
Covenants
from the time such Additional Financial Covenants become
binding
upon the Company. No amendment or modification of the
Additional
Financial Covenants shall result in any change in the covenants
expressly set forth in Section 10 which shall at all times remain
in
effect. Promptly but in no event more than 5 Business Days
following
the execution of any new Bank Credit Agreement, or any amendment
to
the Bank Credit Agreement, the Company shall furnish each holder
of
the Notes with a copy of such agreement. In no event shall the
Company or any Subsidiary provide any collateral or other
security
to secure Indebtedness under the Bank Credit Agreement."
Section
2.4. Amendment to Section 10.1 (Consolidated Net Worth).
Section
10.1 of the Note Agreement shall be and is
hereby amended in its entirety to
read as follows:
"Section 10.1. Consolidated Net Worth. The Company will not,
at any time, permit Consolidated Net Worth to be less than the
sum
of (i) $260,000,000 plus (ii) 50% of Consolidated Net Income
(if
positive) on a cumulative basis for each fiscal quarter ending
after
December 31, 2004."
Section
2.5. Amendment to Section 10.2 (Fixed Charge Coverage Ratio).
Section 10.2 of the Note Agreement shall be
and is hereby amended in its
entirety to read as follows:
"Section 10.2. Fixed Charge Coverage Ratio. The Company will
not at any time permit the Fixed Charge Coverage Ratio to be
less
than 1.25 to 1.0 for the fiscal quarters ending March 31, 2005
and
June 30, 2005, 1.50 to 1.0 for the fiscal quarter ending
September
30, 2005, 1.75 to 1.0 for the fiscal quarter ending December
31,
2005, 2.0 to 1.0 for each of the fiscal quarters ending March
31,
2006 and June 30, 2006, 2.25 to 1.0 for each of the fiscal
quarters
ending
September 30, 2006 and December 31, 2006, and 2.5 to 1.0 for
each fiscal quarter ending thereafter."
Section
2.6. Amendment to Section 10.3. (Limitation on Consolidated
Indebtedness). Section 10.3 of the Note
Agreement shall be and is hereby amended
in its entirety to read as follows:
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"Section 10.3. Limitation on Consolidated Indebtedness. The
Company will not at any time permit (i) the Consolidated
Leverage
Ratio to exceed 4.25 to 1.0 for the fiscal quarter ending March
31,
2005, 4.0 for the fiscal quarters ending June 30, 2005 and
September
30, 2005, and 3.0 to 1.0 for each fiscal quarter ending
thereafter;
and (ii) the ratio of Consolidated Total Indebtedness to
Consolidated Total Capitalization to exceed 0.45 to 1.0;
provided
that in connection with any calculation of Indebtedness for
purposes
of determining compliance with this SECTION 10.3, there shall
be
excluded all Indebtedness of the Company and its Subsidiaries
outstanding under any revolving credit agreement between the
Company
and a committed bank or banks if, during the 365-day period
immediately preceding the date of any such calculation of
Indebtedness, there shall have been a period of at least 60
consecutive days on each day of which Indebtedness of the
Company
and its Subsidiaries outstanding under such revolving credit
agreement is equal to zero by virtue, and solely by virtue, of
such
Indebtedness having been paid from general corporate funds of
the
Company and not from funds borrowed by the Company or any
Subsidiary
pursuant to any other revolving credit agreement for the purpose
of
paying such Indebtedness. If there shall not have been such 60
consecutive day period on each day of which such Indebtedness
was
equal to zero, then and in such event there shall be included
in
such calculation of Indebtedness for purposes of this SECTION
10.3
an amount equal to the average aggregate amount of all
Indebtedness
outstanding under such revolving credit agreement during such
preceding 365-day period."
Section
2.7. Amendment to Section 10.4 (Priority Debt). Section 10.4 of
the Note Agreement shall be and is hereby
amended in its entirety to read as
follows:
"Section 10.4. Priority Debt. The Company will not, and will
not permit any Subsidiary to, create, issue, assume, guarantee
or
otherwise incur or in any manner become liable in respect of
any
Priority Debt unless at the time of creation, issuance,
assumption,
guarantee or incurrence thereof and after giving effect thereto
and
to the application of the proceeds thereof: (a) no Specified
Default
or Event of Default would exist and (b) the aggregate amount of
all
Priority Debt would not exceed $7,500,000 at any time. In
addition
from and after the Effective Date, no Priority Debt shall be
incurred except by foreign Subsidiaries of the Company under
agreements for which the Company shall have no liability except
pursuant to an unsecured Guaranty of such Subsidiary
obligation.
Any Person which becomes a Subsidiary after the date of this
Agreement, shall, for all purposes of this SECTION 10.4, be
deemed
to have created, issued, assumed, guaranteed or incurred,
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at the time it becomes a Subsidiary, all Priority Debt of such
Person existing immediately after it becomes a Subsidiary."
Section
2.8. Amendment to Section 10.6 (Restricted Payments). Section
10.6
of the Note Agreement shall be and is
hereby amended in its entirety to read as
follows:
"Section 10.6. Restricted Payments. The Company will not:
(1) declare or pay any dividends, either in cash or property,
on any shares of its capital stock of any class (except dividends
or
other distributions payable solely in shares of common stock of
the
Company),
(2) directly or indirectly, or through any Subsidiary or
through any Affiliate of the Company, purchase, redeem or retire
any
shares of its capital stock of any class or any warrants, rights
or
options to purchase or acquire any shares of its capital stock
(other than in exchange for or out of the net cash proceeds to
the
Company from the substantially concurrent issue or sale of shares
of
common stock of the Company or warrants, rights or options to
purchase or acquire any shares of its common stock), or
(3) make any other payment or distribution, either directly or
indirectly or through any Subsidiary, in respect of its capital
stock."
Section
2.9. Amendment to Section 10.7 (Mergers, Consolidations and
Sales
of Assets).
(a)
Section 10.7(b)(iii)(1) of the Note Agreement shall be and is
hereby
amended by deleting the reference to the
phrase "25% of Consolidated Total
Assets, determined as set forth in the
Company's most recently filed Form 10-K"
therein and substituting in lieu thereof a
reference to "$20,000,000".
(b)
Section 10.7(b)(y)(C) of the Note Agreement shall be and is
hereby
amended in its entirety to read as
follows:
"(C) to prepay or retire Senior Indebtedness of the Company
and/or its Subsidiaries; provided that the Company (i) shall
offer
to prepay each outstanding Note in a principal amount which
equals
the Ratable Portion for such Note, and (ii) any such prepayment
of
the Notes shall be made at par, together with accrued interest
and
the applicable Make-Whole Amount or other premium to the date
of
such prepayment, and".
(c) The
last paragraph of Section 10.7 of the Note Agreement shall be
and
is hereby amended by the addition thereto
of a new sentence at the end thereof
to read as follows:
"If any holder of Senior Indebtedness elects not to accept such
offer of prepayment, then, only for purposes of such application
of
an amount equal to such Net Proceeds for the prepayment of
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Senior Indebtedness, the Company nevertheless will be deemed on
such
particular occasion to have paid Senior Indebtedness in an
amount
equal to the Ratable Portion of such Senior Indebtedness."
Section
2.9. Amendment to Section 10.9 (Prepayment and Purchase of
Notes).
Section 10.10 of the Note Agreement shall
be and is hereby amended in its
entirety to read as follows:
"Section 10.9. Prepayment and Purchase of Notes. Except as
provided in SECTION 8.1 of this Agreement, so long as any 2003
Note
shall be outstanding, the Company will not make any optional
prepayment of the Notes pursuant to SECTION 8.2 or otherwise
prepay
or purchase
