Exhibit 10.3
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INSITUFORM TECHNOLOGIES, INC.
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FIRST AMENDMENT
Dated as of March 12, 2004
to
NOTE PURCHASE AGREEMENT
Dated as of April 24, 2003
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Re: $65,000,000 Senior Notes, Series 2003-A,
Due April 24, 2013
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FIRST AMENDMENT TO NOTE PURCHASE AGREEMENT
THIS FIRST AMENDMENT dated as of March 12, 2004 (the or this "First
Amendment") to the Note Purchase Agreement dated as of April 24, 2003, is
between INSITUFORM TECHNOLOGIES, INC., a Delaware corporation (the "Company"),
and each of the institutions which is a signatory to this First Amendment
(collectively, the "Noteholders").
RECITALS:
A. The Company has entered into the Note Purchase Agreement dated
as of April 24, 2003 (the "Note Agreement"), pursuant to which the Company has
issued its 5.29% Senior Notes, Series 2003-A, due April 24, 2013, in the
aggregate principal amount of $65,000,000 (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. Capitalized terms used herein shall have the respective
meanings ascribed thereto in the Note Agreement unless herein defined or the
context shall otherwise require.
D. All requirements of law have been fully complied with and all
other acts and things necessary to make this First Amendment a valid, legal and
binding instrument according to its terms for the purposes herein expressed have
been done or performed.
NOW, THEREFORE, upon the full and complete satisfaction of the
conditions precedent to the effectiveness of this First Amendment set forth in
Section 3.1 hereof, and in consideration of good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the Company and the
Noteholders do hereby agree as follows:
SECTION 1. AMENDMENTS TO NOTE AGREEMENT AND THE NOTES.
Section 1.1. Amendment to Interest Rate on the Series 2003-A Notes. (a)
Upon the Effective Date (as defined in Section 3.1 of this First Amendment), the
rate of interest payable on each outstanding Series 2003-A Note shall be changed
from 5.29% per annum to the Applicable Rate. As used in the Note Agreement and
the Notes "Applicable Rate" shall mean (i) 6.04% per annum from and after the
Effective Date to and including Xxxxx 00, 0000, (xx) 5.79% per annum from and
after April 1, 2005 to and including March 31, 2006, and (iii) 5.29% per annum
from and after April 1, 2006 to maturity.
(b) From and after the Effective Date, (i) each reference to
"5.29%" in the Note Agreement shall be deleted (except as used in the term
"Applicable Rate"), and (ii) the form of Series 2003-A Note attached as Exhibit
1 to the Note Agreement, shall be and is hereby amended in its entirety to read
as set forth in Exhibit 1 to this First Amendment.
Section 1.2. Amendment to Section 9. (Additional Financial Covenants).
Section 9 of the Note Agreement shall be and is hereby amended by the addition
of a new Section 9.8 which shall read as follows:
Section 9.8. Additional Covenants. If the Bank Credit
Agreement is amended, replaced or renewed after the Effective
Date to and including the Transition 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 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
until the Transition Date. 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 on or prior to
the Transition Date.
Section 1.3. Amendment to Section 10.2. (Limitation on Consolidated
Indebtedness). Section 10.2 of the Note Agreement shall be and is hereby amended
in its entirety to read as follows:
"Section 10.2. Limitation on Consolidated
Indebtedness. The Company will not at any time permit:
(a) the Consolidated Leverage Ratio to exceed
3.25 to 1 for the fiscal quarters ended on or prior to
September 30, 2003, 3.75 to 1 for the fiscal quarter ended
December 31, 2003, 5 to 1 for the fiscal quarter ending March
31, 2004, 6.25 to 1 for the fiscal quarter ending June 30,
2004, 6.25 to 1 for the fiscal quarter ending September 30,
2004, 4 to 1 for the fiscal quarters ending December 31, 2004
and March 31, 2005 and 3.25 to 1 for each fiscal quarter
ending thereafter; provided that in connection with any
calculation of Indebtedness for purposes of
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determining compliance with this Section 10.2, there shall be
excluded all Indebtedness of the Company and its Restricted
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 Restricted 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 Restricted 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 10.2 an amount equal to the average
aggregate amount of all Indebtedness outstanding under such
revolving credit agreement during such preceding 365-day
period; and
(b) Priority Debt to exceed $10,000,000 on or
prior to the Transition Date and 15% of Consolidated Net Worth
thereafter. In addition from and after the Effective Date to
and including the Transition 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."
Section 1.4. Amendment to Section 10.3 (Fixed Charge Coverage Ratio).
Section 10.3 of the Note Agreement shall be and is hereby amended in its
entirety to read as follows:
"Section 10.3. Fixed Charge Coverage Ratio. The
Company will not at any time permit the Fixed Charge Coverage
Ratio to be less than 2.00 to 1 for the fiscal quarters ended
on or prior to September 30, 2003, 1.25 to 1 for the fiscal
quarters ended December 31, 2003, and March 31, 2004, 1.20 to
1 for the fiscal quarters ending June 30, 2004 and September
30, 2004 and 1.70 to 1 for the fiscal quarters ending December
31, 2004 and March 31, 2005 and 2.00 to 1 for each quarter
ending thereafter."
Section 1.5. Amendment to Section 10. Section 10 of the Note Agreement
shall be and is hereby amended by the addition thereto of new covenants
immediately following Section 10.8 which shall read as follows:
"Section 10.9. Restricted Payments. From and after
the Effective Date to and including the Transition Date, the
Company will not:
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(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 10.10. Prepayment and Purchase of Notes. From
and after the Effective Date to and including the Transition
Date, the Company will not make any optional prepayment of the
Series 2003-A Notes pursuant to Section 8.2 or otherwise
prepay or purchase any Series 2003-A Notes from any holder
unless concurrently therewith, the Company shall prepay or
purchase, as the case may be, a pro rata principal amount of
the 1997 Notes.
Section 10.11. Capital Expenditures. The Company will
not make any Capital Expenditures, in the aggregate for the
period beginning January 1, 2004 to and including the
Transition Date which, net of proceeds realized by the Company
from the routine sale of fixed assets in the ordinary course
of business during such period, exceed $40,000,000; provided,
that such sales of fixed assets comply with the requirements
of Section 10.5 hereof and the proceeds therefrom are applied
in the manner described in Section 10.5(1).
Section 10.12. Acquisitions. Prior to the Transition
Date, the Company will not, and will not permit any Subsidiary
to, make any acquisition of stock or other equity interest in
any Person or all or substantially all of the assets of any
Person except for consideration which consists solely of
common stock of the Company and so long as at the time of such
acquisition and after giving effect thereto no Default or
Event of Default exists."
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Section 1.6. Amendment to Schedule B (Definitions - Addition of New
Definitions). Schedule B of the Note Agreement is hereby amended by the addition
thereto of the following new definitions which shall appear in alphabetical
order therein and which shall read as follows:
"Applicable Rate" has the meaning set forth in Section 1.1 of
the First Amendment.
"Capital Expenditure" means an expenditure for an asset that
must be depreciated or amortized under GAAP, for goodwill, or
for any asset that under GAAP must be treated as a capital
asset, including payments under Capital Leases. An expenditure
for purposes of this definition includes any deferred or
seller financed portion of the purchase price of an asset and
the original capitalized amount of a Capital Lease. Capital
Expenditures shall exclude expenditures by the Company and its
Subsidiaries for equipment related to its tunnel business
which is acquired by the Company or any Subsidiary in
connection with the performance of any construction contract
which provides for the total recovery of the purchase price of
such equipment from the customer over the life of the
contract.
"Effective Date" has the meaning set forth in Section 3.1 of
the First Amendment.
"First Amendment" means the First Amendment to this Agreement
dated as of March 12, 2004 among the Company and the holders
of the Notes.
"1997 Notes" means the Senior Notes, Series A due February 14,
2007 of the Company.
"Transition Date" means March 31, 2005; provided that if any
Default or Event of Default exists under this Agreement on
March 31, 2005, then the Transition Date shall not occur until
such time as such Default or Event of Default shall have been
waived by the requisite percentage of the holders of the
Notes.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Section 2.1. To induce the Noteholders to execute and deliver this
First Amendment, the Company represents and warrants (which representations
shall survive the execution and delivery of this First Amendment) to the
Noteholders that:
(a) this First Amendment has been duly authorized,
executed and delivered by it and this First Amendment constitutes the
legal, valid and binding obligation, contract and agreement of the
Company enforceable against it in accordance with its terms, except
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as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles
relating to or limiting creditors' rights generally;
(b) the Note Agreement and the Notes, as amended by this
First Amendment, constitute the legal, valid and binding obligations,
contracts and agreements of the Company enforceable against it in
accordance with their terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting creditors' rights
generally;
(c) the execution, delivery and performance by the
Company of this First Amendment (i) has been duly authorized by all
requisite corporate action and, if required, shareholder action, (ii)
does not require the consent or approval of any governmental or
regulatory body or agency, and (iii) will not (A) violate (1) any
provision of law, statute, rule or regulation or its certificate of
incorporation or bylaws, (2) any order of any court or any rule,
regulation or order of any other agency or government binding upon it,
or (3) any provision of any material indenture, agreement or other
instrument to which it is a party or by which its properties or assets
are or may be bound, or (B) result in a breach or constitute (alone or
with due notice or lapse of time or both) a default under any
indenture, agreement or other instrument referred to in clause
(iii)(A)(3) of this Section 2.1(c), other than any violation, breach or
default which individually or in the aggregate could not reasonably be
expected to have a Material Adverse Effect;
(d) as of the date hereof and after giving effect to this
First Amendment, no Default or Event of Default has occurred which is
continuing;
(e) the unaudited financial statements of the Company for
the fiscal year ended December 31, 2003 furnished to you do not, nor
does any written statement furnished by the Company to you in
connection with the execution and delivery of this First Agreement,
contain any untrue statement of a material fact or omit to state any
material fact necessary to make the statements contained therein not
misleading in light of the circumstances under which they were made.
There is no fact known to the Company which the Company has not
disclosed to you in writing which could reasonably be expected to have
a Material Adverse Effect; and
(f) The Company has not paid any consideration to any
holder of indebtedness of the Company in connection with the
transactions contemplated by this First Amendment, except for the legal
fees of counsel to the holders of such indebtedness and consideration
paid to the holders of the Senior Notes due February 14, 2007 which is
identical to the consideration to be paid to the holders of the Notes.
SECTION 3. CONDITIONS TO EFFECTIVENESS OF THIS FIRST AMENDMENT.
Section 3.1. This First Amendment shall become effective when each of
the following conditions has been satisfied:
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(a) executed counterparts of this First Amendment, duly
executed by the Company and the holders of at least 51% of the
outstanding principal of the Notes, shall have been delivered to the
Noteholders;
(b) executed copies of a consent to this Agreement shall
have been duly executed by the Subsidiaries which are parties to the
Subsidiary Guaranties;
(c) the representations and warranties of the Company set
forth in Section 2 hereof shall be true and correct on and with respect
to the date hereof and a certificate of a Responsible Officer
certifying the same shall have been delivered to the Noteholders;
(d) the Fourth Amendment dated as of March 12, 2004 to
the 1997 Note Purchase Agreements shall have been duly executed and
delivered by the requisite percentage of the noteholders thereunder
needed to approve such amendment and such agreement shall be in form
and substance satisfactory to each Noteholder;
(e) the Company shall have paid a fee to each Noteholder
in an amount equal to .25% of the outstanding principal amount of the
Notes held by such Noteholder;
(f) Xxxxxxxx Xxxxxx LLP, counsel for the Company, shall
have delivered a legal opinion, dated as of the effective date of this
First Amendment, in form and substance reasonably satisfactory to the
Noteholders and their special counsel to the effect that this First
Amendment constitutes the legal, valid and binding obligation of the
Company;
(g) the Company shall have delivered a copy of the
amended and restated Bank Credit Agreement which provides for a
revolving credit facility and the issuance of letters of credit for the
benefit of the Company and its Subsidiaries; and
(h) the Company shall have paid the fees, costs, expenses
and disbursements of Xxxxxxx and Xxxxxx LLP, special counsel to the
Noteholders, incurred in connection with the consummation of the
transactions contemplated by this First Amendment.
Upon receipt of all of the foregoing, this First Amendment shall become
effective. Delivery of this First Amendment to the Company, duly executed by the
holders of at least 51% of the outstanding principal amount of the Notes, shall
acknowledge satisfaction of the foregoing conditions. The date upon which this
First Amendment becomes effective is herein referred to as the "Effective Date."
The Company shall give written notice to the Noteholders of the Effective Date,
confirming the date upon which the increased interest rate referred to in
Section 1.1 hereof shall begin to accrue.
SECTION 4. MISCELLANEOUS.
Section 4.1. Automatically, and without any further action on the part
of the Company or any holder of a Note, on the Effective Date, the Notes shall
be deemed to be amended to reflect the change in interest rate set forth in
Section 1.1 of this First Amendment; provided,
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however, that if any holder of a Note elects to surrender its Note (an "Existing
Note") to the Company for cancellation and the issuance of a new note reflecting
such change in interest rate (a "New Note"), the Company shall issue a New Note
to such holder within 5 business days of receipt of the Existing Note
surrendered therefor, such New Note to be dated the date to which interest has
been paid on the Existing Note surrendered therefor and such New Note shall be
payable on the same dates as set forth in the Existing Note surrendered
therefor.
Section 4.2. The Company acknowledges and agrees that by agreeing to
the amendments of the Note Agreement set forth herein, the Noteholders shall not
be deemed to have waived any rights as on account of any Default or Event of
Default which may at any time hereafter exist under the Note Agreement, which
rights are hereby expressly reserved by the holders of the Notes.
Section 4.3. This First Amendment shall be construed in connection with
and as part of the Note Agreement, and except as modified and expressly amended
by this First Amendment, all terms, conditions and covenants contained in the
Note Agreement and the Notes are hereby ratified and shall be and remain in full
force and effect.
Section 4.4. Any and all notices, requests, certificates and other
instruments executed and delivered after the execution and delivery of this
First Amendment may refer to the Note Agreement without making specific
reference to this First Amendment but nevertheless all such references shall
include this First Amendment unless the context otherwise requires.
Section 4.5. The descriptive headings of the various Sections or parts
of this First Amendment are for convenience only and shall not affect the
meaning or construction of any of the provisions hereof.
Section 4.6. This First Amendment shall be governed by and construed in
accordance with Illinois law.
Section 4.7. The execution hereof by you shall constitute a contract
between us for the uses and purposes hereinabove set forth, and this First
Amendment may be executed in any number of counterparts, each executed
counterpart constituting an original, but all together only one agreement.
INSITUFORM TECHNOLOGIES, INC.
By /s/ XXXXXXXXX X. XXXXXX
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Name: Xxxxxxxxx X. Xxxxxx
Title: Vice President, Chief
Financial Officer and
Assistant Secretary
Accepted and agreed to as of the date first written above:
The Northwestern Mutual Life Insurance
Company
By /s/ XXXXX X. XXXXXX
-----------------------------------
Xxxxx X. Xxxxxx
Its Authorized Representative
Principal Life Insurance Company, an
Iowa corporation
By: Principal Global Investors, LLC, a
Delaware limited liability
company, its authorized signatory
By /s/
-----------------------------
Its Counsel
By /s/
-----------------------------
Its Counsel
Mellon Bank, N.A. solely in its
capacity as Custodian for the Aviva
Life -- Principal Glob Priv Structured
Settlements XXX XXX (as directed by
the Principal Global Investors, LLC),
and not in its individual capacity
(MAC & CO) -- Nominee Name
By /s/ XXXXXXXXXX XXXX
-----------------------------------
Xxxxxxxxxx Xxxx
Its Authorized Signatory
The decision to participate in the
investment, any representations made
herein by the participant, and any
actions taken hereunder by the
participant has/have been made solely
at the direction of the investment
fiduciary who has sole investment
discretion with respect to this
investment.
Xxxxxxx & Co., as nominee for Comerica
Bank & Trust, National Association,
Trustee to the Trust created by Trust
Agreement dated October 1, 2002
By /s/ XXXXXXX XXXXXX
-----------------------------------
Xxxxxxx Xxxxxx
Its Attorney In Fact Agent
(Scottish -- Lincoln)
Xxxxxxx & Co., as nominee for Comerica
Bank & Trust, National Association,
Trustee to the Trust created by Trust
Agreement dated October 1, 2002
By /s/ XXXXXXX XXXXXX
-----------------------------------
Xxxxxxx Xxxxxx
Its Attorney In Fact Agent
(Scottish -- 1 YR)
[Signature Guaranteed] Xxxxxxx & Co., as nominee for Comerica
Bank & Trust, National Association,
Trustee to the Trust created by Trust
Agreement dated October 1, 2002
By /s/ XXXXXXX XXXXXX
-----------------------------------
Xxxxxxx Xxxxxx
Its Attorney In Fact Agent
(Scottish -- 5 YR)
The Security Financial Life Insurance
Co.
By /s/ XXXXX X. XXXXXXX
-----------------------------------
Xxxxx X. Xxxxxxx
Its Vice President
Chief Investment Officer
Connecticut General Life Insurance
Company
By: CIGNA Investments, Inc.
(authorized agent)
By /s/ XXXXX X. HEIGHT
-------------------------------
Xxxxx X. Height
Its Managing Director
[FORM OF SERIES 2003-A NOTE]
INSITUFORM TECHNOLOGIES, INC.
SENIOR NOTE, SERIES 2003-A, DUE APRIL 24, 2013
No. [_______] [Date]
$[__________] [PPN 457667 A@2]
FOR VALUE RECEIVED, the undersigned, INSITUFORM TECHNOLOGIES, INC.
(herein called the "Company"), a corporation organized and existing under the
laws of the State of Delaware, hereby promises to pay to [_____________________]
or registered assigns, the principal sum of [______________] DOLLARS on April
24, 2013 with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the Applicable Rate (as defined in
the Note Purchase Agreement referred to below) from the date hereof, payable
semi-annually, on the twenty-fourth day of April and October in each year and at
maturity, commencing with the April or October next succeeding the date hereof,
until the principal hereof shall have become due and payable, and (b) to the
extent permitted by law on any overdue payment (including any overdue
prepayment) of principal, any overdue payment of interest and any overdue
payment of any Make-Whole Amount (as defined in the Note Purchase Agreement
referred to below), payable semi-annually as aforesaid (or, at the option of the
registered holder hereof, on demand), at a rate per annum from time to time
equal to the greater of (i) 2% over the Applicable Rate or (ii) 2% over the rate
of interest publicly announced by Bank of America, N.A. from time to time in
Chicago, Illinois as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with
respect to this Note are to be made in lawful money of the United States of
America at the principal office of Bank of America, N.A. in Chicago, Illinois or
at such other place as the Company shall have designated by written notice to
the holder of this Note as provided in the Note Purchase Agreement referred to
below.
This Note is one of a series of Senior Notes (herein called the
"Notes") issued pursuant to the Note Purchase Agreement, dated as of April 24,
2003 (as from time to time amended, supplemented or modified, the "Note Purchase
Agreement"), between the Company and the respective Purchasers named therein and
is entitled to the benefits thereof. Each holder of this Note will be deemed, by
its acceptance hereof, (i) to have agreed to the confidentiality provisions set
forth in Section 20 of the Note Purchase Agreement and (ii) to have made the
representation set forth in Section 6.2 of the Note Purchase Agreement.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the
EXHIBIT 1
(to First Amendment)
purpose of receiving payment and for all other purposes, and the Company will
not be affected by any notice to the contrary.
This Note is also subject to optional prepayment, in whole or from time
to time in part, at the times and on the terms specified in the Note Purchase
Agreement, but not otherwise.
Pursuant to the Guaranty Agreement dated as of April 24, 2003, certain
Subsidiaries of the Company have absolutely and unconditionally guaranteed
payment in full of the principal of, Make-Whole Amount, if any, and interest on
this Note and the performance by the Company of its obligations contained in the
Note Purchase Agreement all as more fully set forth in said Guaranty Agreement.
If an Event of Default, as defined in the Note Purchase Agreement,
occurs and is continuing, the principal of this Note may be declared or
otherwise become due and payable in the manner, at the price (including any
applicable Make-Whole Amount) and with the effect provided in the Note Purchase
Agreement.
This Note shall be construed and enforced in accordance with, and the
rights of the issuer and holder hereof shall be governed by, the law of the
State of Illinois excluding choice-of-law principles of the law of such State
that would require the application of the laws of a jurisdiction other than such
State.
INSITUFORM TECHNOLOGIES, INC.
By ___________________________________
Name: ______________________________
Title: _____________________________
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