UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ---------- to ----------
Commission file number 0-10786
INSITUFORM TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 13-3032158
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1770 Kirby Parkway, Suite 300
Memphis, Tennessee 38138
- ---------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 901-759-7473
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Securities registered pursuant to Section 12(b) of the Act: None
----
Securities registered pursuant to Section 12(g) of the Act:
Class A Common Stock, $.01 par value
------------------------------------
(Title of class)
Indicate by a check mark whether the registrant (1) has
filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period as the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K (Section 229.405 of
this chapter) is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of
this Form 10-K or any amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock
held by non-affiliates of the registrant. The aggregate market
value shall be computed by reference to the price at which the
stock was sold, as of a specified date within 60 days prior to
the date of filing.
Aggregate market value as of March 15, 1997.....$116,968,123
Indicate the number of shares outstanding of each of
the registrant's classes of common stock as of the latest
practicable date.
Class A Common Stock, $.01 par value,
as of March 15, 1997.................26,915,752 shares
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the documents, all or portions of which are
incorporated by reference herein, and the part of the Form 10-K
into which the document is incorporated: Proxy Statement to be
filed with respect to the 1997 Annual Meeting of Stockholders-
Part III.
AMENDMENT NO. 1
The undersigned hereby amends the following items, financial
statements, exhibits or other portions of its Annual Report on
Form 10-K for the fiscal year ended December 31, 1996, as set
forth in the pages attached hereto:
Item 10. Directors and Executive Officers of the
Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial
Owners and Management
Item 13. Certain Relationships and Related
Transactions
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
--------------------------------------------------
Certain biographical information concerning the directors of
Insituform Technologies, Inc. (the "Company") is set forth below.
Such information was furnished by them to the Company.
Name of Director Age Biographical Information
- ---------------- --- ------------------------
Robert W. Affholder 61 Senior Executive Vice President of
the Company since August 1996;
Senior Vice President-Chief
Operating Officer of North
American Contracting Operations of
the Company from October 1995 to
August 1996; Vice Chairman,
Insituform Mid-America, Inc.
("IMA"), from 1993 to 1995;
President of IMA from 1994 to 1995
and from prior to 1992 to 1993;
Director of the Company since
1995.
Paul A. Biddelman 51 Treasurer, Hanseatic Corporation
(private investment company) since
1992; Managing Director, Clements
Taee Biddelman Incorporated
(financial advisors) from 1991 to
1992; Director: Celadon Group,
Inc., Electronic Retailing Systems
International, Inc., Premier Parks
Inc., Petroleum Heat & Power
Company, Inc., Oppenheimer Group,
Name of Director Age Biographical Information
- ---------------- --- ------------------------
Inc., Star Gas Corporation
(general partner of Star Gas
Partners, L.P.); Director of the
Company since 1988.
Brian Chandler 71 Private investor since prior to
1992; consultant to the Company
from prior to 1992 to 1994;
Director of the Company since
1987.
Douglas K. Chick 73 Private investor since prior to
1992; consultant to the Company
from 1991 to 1994; Director of the
Company since 1990.
William Gorham 66 President, The Urban Institute
(government policy research) since
prior to 1992; Director of the
Company since 1992.
Anthony W. Hooper 49 President and Chief Executive
Officer of the Company since
November 1996; successively,
Senior Vice President Marketing
and Senior Vice President-
Marketing and Technology of the
Company from 1993 to November
1996; President of Huyck
Formex/Weavexx Corporation
(industrial textile and process
equipment manufacturer), a
subsidiary of BTR, Inc., from 1992
to November 1993; Director of the
Company since 1996.
Jerome Kalishman 69 Chairman of the Board of the
Company since November 1996; Vice
Chairman of the Board of the
Company from October 1995 to
November 1996; Chairman and Chief
Executive Officer of IMA from
prior to 1992 to 1995; Director of
the Company since 1995.
Name of Director Age Biographical Information
- ----------------- --- ------------------------
James D. Krugman 48 Partner, Krugman, Chapnick &
Grimshaw (attorneys) since prior
to 1992; Chairman of the Board of
the Company from 1988 to November
1996; Director: Hayward
Industries, Inc.; Director of the
Company since 1987.
Steven Roth 55 General Partner, Interstate
Properties (real estate
development and construction)
since prior to 1992; Chairman and
Chief Executive Officer, Vornado
Realty Trust (real estate
operating company) since 1990;
Chief Executive Officer of
Alexander's, Inc. since 1995;
Director: Vornado Realty Trust,
Alexander's, Inc.; Director of the
Company since 1992.
Alvin J. Siteman 69 Chairman of the Board of Mark
Twain Bancshares, Inc. since prior
to 1992; President of Flash Oil
Corporation, Site Oil Corporation,
Site Oil Company of Missouri and
The Siteman Organization (oil and
real estate) since prior to 1992;
Director of the Company since
1995.
Silas Spengler 66 Managing Director, Webb Johnson
Associates, Inc. (executive
recruiter) since January 1997;
Principal, Sullivan Associates,
Inc. (board of directors search
firm) from 1994 until 1997;
Partner, Reid & Priest (attorneys)
from 1992 to 1994; Partner,
Spengler Carlson Gubar Brodsky &
Frischling (attorneys) through
1992; Director of the Company
since 1987.
Name of Director Age Biographical Information
- ----------------- --- ------------------------
Sheldon Weinig 69 Adjunct Professor at Columbia
University since 1994 and at State
University of New York, Stony
Brook, since 1993; Consultant,
Sony Engineering and Manufacturing
of America from 1994 to 1996, and
Vice Chairman from prior to 1992
to 1994; Director: Aseco
Corporation, Intermagnetics
General Corporation; Director of
the Company since 1992.
Russell B. Wight, Jr. 57 General Partner, Interstate
Properties (real estate
development and construction)
since prior to 1992; Director:
Vornado Realty Trust, Alexander's,
Inc.; Director of the Company
since 1992.
In December 1992, in connection with the Company's
acquisition (the "IGL Acquisition") of Insituform Group Limited
("IGL"), the Company's certificate of incorporation was amended
so as to divide the Board of Directors of the Company into three
classes, as equal in size as possible, having staggered three-
year terms, with the term of one class expiring each year, and to
fix the number of directors of the Company at not less than six
nor more than 15, the exact number to be specified in the By-laws
of the Company.
In October 1995, in connection with the transaction pursuant
to which the Company's wholly-owned subsidiary, ITI Acquisition
Corp. ("ITI Sub"), merged into and with IMA so that IMA became a
wholly-owned subsidiary of the Company (the "IMA Merger"), the
Company's certificate of incorporation was further amended to
replace certain other terms added in connection with the IGL
Acquisition and provide for the appointment of directors and
filling of vacancies on the Board as contemplated by the
Agreement and Plan of Merger dated as of May 23, 1995 among the
Company, ITI Sub and IMA (the "IMA Merger Agreement"). Pursuant
to the IMA Merger Agreement, the Board of Directors includes:
Messrs. Affholder, Biddelman, Chick and Roth, for a term expiring
at the 1997 annual meeting of stockholders of the Company ("Class
II Directors"); Messrs. Chandler, Kalishman, Krugman and Wight
for a term expiring at the 1998 annual meeting of stockholders of
the Company ("Class III Directors") and Messrs. Gorham, Siteman,
Spengler and Weinig, for a term expiring at the 1999 annual
meeting of stockholders of the Company ("Class I Directors").
Such directors are grouped as follows: (i) Messrs. Biddelman,
Chandler, Chick, Krugman and Spengler constitute the "INA Group";
(ii) Messrs. Gorham, Roth, Weinig and Wight constitute the "IGL
Group"; and (iii) Messrs. Affholder, Kalishman and Siteman
constitute the "IMA Group". The members of the INA Group and the
IGL Group were directors of the Company prior to the IMA Merger,
and the IMA Group was designated for appointment by IMA. The
Company has further agreed that during the period from the
consummation of the IMA Merger until December 9, 1998 (the
"Term"), the Company will nominate and recommend for re-election
to its 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 will be filled with a
designee chosen by the remaining members of that director's
group, and thereafter the Company will nominate and recommend
such designee for election to the Board of Directors of the
Company.
In November 1996, Mr. Hooper was appointed to the vacancy on
the Board created by the resignation of Jean-Paul Richard, who
had served as a Class III Director but was not designated as part
of any director's group as aforesaid.
For information concerning the executive officers of the
Company, see pages 24 through 26 of the Company's Annual Report
on Form 10-K for the year ended December 31, 1996 as originally
filed, under the caption "Item 1. Business-Executive Officers",
which information is incorporated herein by reference.
No family relationship exists between any of the directors
or executive officers of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of copies of reports received by
it pursuant to Section 16(a) of the Securities Exchange Act of
1934, and the written representations of its incumbent directors
and officers, and holders of more than ten percent of any
registered class of the Company's equity securities, the Company
believes that during 1996 all filing requirements applicable to
its directors, officers and ten percent holders under said
section were satisfied, except that Mr. Gorham reported on a Form
5 filed subsequent to the due date thereof one open market sale
of 5,750 shares of Common Stock required to have been reported
earlier on Form 4.
ITEM 11. EXECUTIVE COMPENSATION
----------------------
DIRECTOR COMPENSATION
Each director of the Company who is not an operating officer
of the Company is entitled to receive compensation in the amount
of $12,000 per annum and $1,000 per meeting of the Board of
Directors attended by such director, plus reimbursement of his
expenses.
In November 1996, the Company supplemented its prior
arrangements with Jerome Kalishman to provide that the
appointment of him as Chairman of the Board of Directors, and his
service in such position, would, during the period thereof,
substitute for the Company's and his respective obligations
undertaken in October 1995 in connection with the IMA Merger,
under which Mr. Kalishman became Vice Chairman of the Board for
a term expiring on December 9, 1998 at an annual salary of
$100,000. Upon completion of the IMA Merger, the Company also
entered into a consulting agreement with Mr. Kalishman pursuant
to which the Company engaged Mr. Kalishman as a consultant in
connection with the business of the Company for a two year term
at an annual fee of $150,000. Such agreements are terminable by
Mr. Kalishman at any time upon at least 60 days' written notice,
and are terminable by the Company upon the failure of Mr.
Kalishman to perform his duties thereunder owing to illness or
other incapacity, if such failure continues for a period of six
months, or for other cause (as defined in such agreements). Mr.
Kalishman's arrangements with the Company include health
insurance benefits and use of an automobile. In the event of Mr.
Kalishman's death, such agreements terminate automatically. Mr.
Kalishman has also entered into a non-competition agreement with
the Company extending from the completion of the IMA Merger until
the later of five years thereafter or two years after all service
to the Company has ended.
In November 1996, the Company and James D. Krugman amended
the agreement, which became effective on December 9, 1992 upon
the closing of the IGL Acquisition, pursuant to which Mr. Krugman
served as Chairman of the Board, so as to provide that the
Company would thereafter engage Mr. Krugman as consultant to the
Company through November 1999. Under the amended arrangements,
Mr. Krugman is paid annual amounts, through December 1998, of
$100,000. In the event of Mr. Krugman's death, the agreement
terminates automatically. Mr. Krugman may cancel the agreement at
any time upon 60 days' written notice delivered to the Company,
and the Company may terminate the agreement upon the failure of
Mr. Krugman to perform his duties thereunder owing to illness or
other incapacity, if such failure continues for a period of more
than six months, or if Mr. Krugman commits any act in bad faith
and to the material detriment of the Company or is convicted of
a felony.
Mr. Krugman also holds: (i) an option granted under the
Company's 1992 Director Stock Option Plan (the "Director Plan")
on December 13, 1993 covering 95,000 shares of the Company's
class A common stock, $.01 par value ("Common Stock"),
exercisable for five years after grant at a per share price of
$14.50, the closing price of the Common Stock on the NASDAQ
National Stock Market on such date, and (ii) an option granted
under the Director Plan on November 18, 1996 covering 100,000
shares of Common Stock, exercisable for three years after grant
at a per share price of $7.19, the closing price of the Common
Stock on the NASDAQ National Stock Market on such date.
As a consequence of the assumption and exchange of options
previously granted by IMA for options granted by the Company, on
October 25, 1995 Alvin Siteman, who became a director of the
Company upon consummation of the IMA Merger, held options
covering 38,335 shares, at exercise prices ranging from $2.61 to
$9.79 per share, calculated in accordance with the terms of the
IMA Merger (see "Stock Plans" below). In January 1997, Mr.
Siteman exercised options with respect to 7,667 shares, at an
exercise price of $5.22.
Anthony W. Hooper holds options covering 150,000 shares
granted under the Director Plan in November 1996 in connection
with his appointment as President of the Company and a director,
in addition to options previously granted to him as an executive
officer (see "Certain Agreements with Executive Officers" below).
Except as aforesaid, no current director of the Company holds any
options granted by the Company.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth
certain information with respect to compensation for each of the
Company's last three completed fiscal years of the Company's
Chief Executive Officer and each of the four other most highly-
compensated executive officers during the most recent fiscal
year:
SUMMARY COMPENSATION TABLE
Long Term
Compensation
Annual Compensation ------------
------------------------------------------ Securities
Name and Other Com- Underlying All Other
Principal Position Year Salary Bonus pensation(1) Options(#) Compensation
- ------------------ ---- ------ ----- --------------- ------------ ------------
Anthony W. Hooper 1996 $264,604 -- -- 150,000 $ 14,434(3)
President and Chief 1995 235,000 -- -- 25,000 2,405
Executive Officer(2) 1994 220,000 $100,100 $53,968(4) 12,000 80,730
Jean-Paul Richard 1996 400,619 -- -- -- 9,398(6)
President and Chief 1995 400,000 -- -- 100,000 12,542
Executive Officer (5) 1994 400,000 264,000 -- -- 83,405
Robert W. Affholder 1996 250,000 -- -- -- 12,000(8)
Senior Executive Vice 1995 229,167 75,000 -- -- 11,531
President(7) 1994 225,000 -- -- -- 3,509
William A. Martin 1996 186,764 -- -- -- 7,049(9)
Senior Vice President- 1995 175,000 -- -- 10,000 14,707
Chief Financial Officer 1994 165,334 51,709 -- 8,000 15,623
Dale T. Harden 1996 117,049 -- -- 50,000 30,857(11)
Senior Vice President- 1995 -- -- -- -- --
Chief Operating Officer 1994 -- -- -- -- --
of North American Con-
tracting Operations(10)
Raymond Toth 1996 139,853 -- -- -- 12,973(13)
Vice President-Human 1995 126,353 -- -- 8,000 5,113
Resources(12) 1994 110,000 40,040 16,353(14) 8,000 53,286
- ------------------
(1) Excludes perquisites and other personal benefits unless the aggregate amount of such compensation
exceeds the lesser of either $50,000 or 10% of the total of annual salary and bonus reported for
the named executive officer.
(2) Mr. Hooper became President and Chief Executive Officer in November 1996, prior to which he was the
Company's Senior Vice President-Marketing and Technology.
(3) Represents $6,000 in 401(k) contributions under the Company's 401(k) Profit-Sharing Plan (the
"Restated Plan"), $6,000 in profit-sharing contributions under the Restated Plan, and $2,434 in term
life insurance premiums.
(4) Includes reimbursement for taxes in the amount of $43,509.
(5) Mr. Richard resigned from the Company in November 1996.
(6) Represents $6,000 in 401(k) contributions under the Restated Plan and $3,398 in term life insurance
premiums.
(7) Mr. Affholder became an executive officer of the Company in October 1995 in connection with the IMA
Merger. Prior to that time he served as Vice Chairman of IMA. Amounts shown for 1994 represent
compensation from IMA, and amounts shown for 1995 include compensation from IMA and amounts paid
pursuant to the agreements entered into by the Company with Mr. Affholder effective upon completion
of the IMA Merger. See "Certain Agreements with Executive Officers" below.
(8) Represents $6,000 in 401(k) contributions under the Restated Plan, and $6,000 in profit-sharing
contributions under the Restated Plan.
(9) Represents $6,000 in 401(k) contributions under such plan, $6,000 in profit-sharing contributions
under the Restated Plan, and $5,049 in term life insurance premiums.
(10) Mr. Harden became an executive officer in June 1996.
(11) Represents $24,653 in relocation expenses, $4,404 in 401(k) contributions under the Restated Plan,
and $1,800 in term life insurance premiums.
(12) Mr. Toth became an executive officer of the Company in February 1994.
(13) Represents $5,660 in 401(k) contributions under the Restated Plan, $5,660 in profit-sharing
contributions under the Restated Plan, and $1,653 in term life insurance premiums.
(14) Represents reimbursement for taxes.
Option Grant Table. The following table sets forth certain
information regarding options granted by the Company during the
year ended December 31, 1996 to the individuals named in the
above compensation table:
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants Potential Realizable
------------------------------------------------------- Value at Assumed
Number of Annual Rates of Stock
Securities % of Total Price Appreciation
Underlying Options Granted Exercise for Option Term(1)
Options to Employees Price Expiration --------------------
Name Granted(#) In Fiscal Year ($/sh) Date 5% 10%
- ---- ---------- ---------------- -------- ---------- --------------------
Anthony W. Hooper 100,000(2) 30.8% $ 7.19 11/18/01 $198,646 $438,957
50,000(3) 15.4 15.00 11/18/02 255,072 578,671
Jean-Paul Richard -- -- -- -- -- --
Robert W. Affholder -- -- -- -- -- --
William A. Martin -- -- -- -- -- --
Dale T. Harden 50,000(4) 15.4 9.13 06/03/01 126,123 278,698
Raymond Toth -- -- -- -- -- --
_________________________
(1) Amounts represent hypothetical gains that could be achieved for the respective options if exercised
at the end of the option term. These gains are based on arbitrarily assumed rates of stock price
appreciation of 5% and 10% compounded annually from the date the respective options are granted to
their expiration date.
(2) Ten percent of such option becomes exercisable on the first anniversary of grant, twenty percent
thereof on the second anniversary of grant, thirty percent thereof on the third anniversary of grant
and forty percent thereof on the fourth anniversary of grant.
(3) Ten percent of such option becomes exercisable on the second anniversary of grant, twenty percent
on the third anniversary thereof, thirty percent on the fourth anniversary thereof and forty percent
on the fifth anniversary thereof.
(4) One quarter of such option became exercisable upon grant, with the remainder becoming exercisable
in three equal annual installments thereafter.
/TABLE
Aggregate Option Exercises and Year-End Option Table. The
following table sets forth certain information regarding
exercises of stock options, and stock options held as of December
31, 1996, by the individuals named in the above compensation
table:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End(#) at Year-End($)(1)
Shares Acquired Value ------------------------------ ---------------------
Name on Exercise (#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- -------------- ----------- ------------- ----------- -------------
Anthony W. Hooper..... -- -- 96,500 165,500 -- 18,500
Jean-Paul Richard..... -- -- 300,000 -- -- --
Robert W. Affholder... -- -- -- -- -- --
William A. Martin..... -- -- 26,000 7,000 -- --
Dale T. Harden........ -- -- 12,500 37,500 -- --
Raymond Toth......... -- -- 10,000 6,000 -- --
- --------------------
(1) Calculated on the basis of the fair market value of the underlying securities at the exercise date or at year-end, as
the case may be, minus the exercise price.
STOCK PLANS
In June 1992, the stockholders of the Company approved the
Company's 1992 Employee Stock Option Plan (the "Employee Plan"),
under which options to purchase an aggregate of 500,000 shares of
Common Stock (as subsequently increased) were subject to grants
to key employees who are not directors (including executive
officers), and the Director Plan, under which options to purchase
an aggregate of 500,000 shares of Common Stock may be granted to
directors of the Company (including executive officers), as
previously adopted by the Board of Directors. In June 1994, the
stockholders of the Company approved an increase in the number of
authorized shares of Common Stock available for issuance under
the Employee Plan to 1,000,000 shares.
Both the Employee Plan and the Director Plan are, since
November 1996, administered by the Board of Directors, which is
empowered to determine the persons who are to receive options,
the number of shares to be subject to each option and whether
such options will be incentive stock options or non-qualified
stock options. Pursuant to amendments to the Employee Plan
adopted in April 1994, the Board of Directors may authorize a
committee of the Board constituted for such purpose to allocate
options approved in the aggregate by the Board of Directors among
employees who are not officers. The exercise price of an option
under either the Employee Plan or the Director Plan may not be
less than the lesser of the fair market value of the Common Stock
on the date of grant of the option, or the tangible book value
per share of Common Stock as of the end of the fiscal quarter of
the Company immediately preceding the grant, provided that no
incentive stock option may be granted at an option price which is
less than the market value per share of the Common Stock on the
date of grant.
In October 1995, in connection with the consummation of the
IMA Merger, the Company assumed options (the "IMA Options")
previously granted under the Insituform Mid-America, Inc. Stock
Option Plan upon the same terms and conditions as contained under
such plan, except that: (i) each IMA Option became exercisable
for that number of shares of the Company's Common Stock into
which the number of shares of IMA Class A Common Stock subject to
such option immediately prior to the IMA Merger would have been
convertible in such transaction if such shares had been
outstanding, and (ii) the option price per share of the Company's
Common Stock was adjusted to an amount obtained by dividing (x)
the exercise price per share in effect on such date times the
number of shares of IMA Class A Common Stock previously covered
by such IMA Option, by (y) the number of shares of the Company's
Common Stock covered by such option as so assumed. As a result of
such arrangements, the Company assumed options covering an
aggregate of 449,236 shares of Common Stock 384,109 shares of
which were covered by options outstanding at April 1, 1997).
CERTAIN AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS
The Company's arrangements with Anthony W. Hooper, under
which Mr. Hooper became President and Chief Executive Officer in
November 1996, provide for an initial annual base salary of
$325,000, in addition to bonus payments in an amount up to 50% of
base salary. Under such arrangements, and upon appointment of Mr.
Hooper to the Company's Board of Directors, the Company granted
to Mr. Hooper: (x) a five-year option under the Director Plan,
covering 100,000 shares of Common Stock exercisable at a per
share price of $7.19 (equal to the closing price of the Common
Stock, as quoted on the Nasdaq National Stock Market on the date
of grant), which becomes exercisable with respect to 10%, 20%,
30% and 40% of the number of shares covered on the first through
fourth anniversaries, respectively, of the date of grant, and (y)
an additional six-year option under such plan, covering 50,000
shares of Common Stock exercisable at a per share price of
$15.00, which becomes exercisable with respect to 10%, 20%, 30%
and 40% of the number of shares covered on the second through
fifth anniversaries, respectively, of the date of grant. Such
options are in addition to options theretofore granted to Mr.
Hooper as an executive officer of the Company, and become
immediately exercisable in the event of specified changes in
control of the Company.
Under such arrangements, and consistent with the Company's
prior arrangements with Mr. Hooper under which he became an
executive officer in November 1993, the Company also provides Mr.
Hooper with a car allowance, reimbursement for one country club
membership and medical and life insurance benefits. Consistent
with the prior arrangements, in the event Mr. Hooper's employment
is terminated by the Company other than for cause, the Company
would be obligated to pay him amounts equal to twelve months base
salary.
The Company's prior arrangements with Jean-Paul Richard,
under which Mr. Richard became President and Chief Executive
Officer in November 1993 and served until his resignation in
November 1996, in addition to base salary provided for bonus
payments in an amount per annum up to 75% of base salary,
conditioned on fulfilling performance criteria. As an inducement
to his accepting employment with the Company, the Board of
Directors authorized the grant to Mr. Richard of a five-year
option covering 300,000 shares of Common Stock, issuable upon
exercise of such option at a per share price of $16.25 (equal to
the closing price of the Common Stock as quoted on the NASDAQ
National Stock Market on the date of grant). Such option vested
and became exercisable through the option term with respect to
50,000 shares upon commencement of employment, and with respect
to the remainder of such shares in October 1995 upon consummation
of the IMA Merger and the election of a Board of Directors of the
Company other than pursuant to the terms of the IGL Acquisition.
The Company's arrangements with Mr. Richard provided that in the
event Mr. Richard's employment with the Company was terminated
other than for cause, the Company would be obligated to pay
severance to Mr. Richard in an amount equal to two years' base
salary.
The Company's arrangements with Robert W. Affholder, entered
into in October 1995 in connection with the IMA Merger, provided
for Mr. Affholder initially to serve as Senior Vice President-
Chief Operating Officer of North American Contracting Operations
of the Company, and currently as Senior Executive Vice President,
over a term of three years at an annual salary of $250,000. In
the event of Mr. Affholder's death, such arrangements terminate
automatically, and are terminable by the Company upon the failure
of Mr. Affholder to perform his duties thereunder owing to
illness or other incapacity, if such illness continues for a
period of six months, or for other cause (as defined in such
agreement). Mr. Affholder's arrangements with the Company entitle
him to participate in medical and other employee benefit plans
and to the use of an automobile. Mr. Affholder has also entered
into a non-competition agreement with the Company extending from
the completion of the IMA Merger until the later of five years
thereafter or two years after all service to the Company has
ended.
In connection with the commencement of his employment as
chief financial officer of the Company, the Company extended a
severance arrangement to William A. Martin pursuant to which, in
the event of termination of employment by the Company without
cause, the Company will deliver six months' prior notice thereof
plus payments equal in amount to six months' base salary.
The Company's arrangements with Dale T. Harden, in
connection with his employment as Senior Vice President in June
1996, provide for an initial annual base salary of $215,000 with
a guaranteed bonus opportunity for 1995 equal to 50% of base
salary (pro rated over the period of employment during such year)
and subject to a maximum of 75% of base salary in subsequent
years. Under such arrangements, the Company also granted to Mr.
Harden a five-year option under the Employee Plan covering 50,000
shares of Common Stock, exercisable at a per share price of $9.13
(equal to the closing price of the Common Stock as quoted on the
Nasdaq National Stock Market on the date of grant). The Company's
arrangements with Mr. Harden provide for the Company to extend
relocation assistance to him, together with a car allowance, a
social club membership and customary welfare benefits.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1996, the Company's
Compensation Committee consisted of James D. Krugman, Paul
Biddelman, William Gorham, Steven Roth and Alvin J. Siteman.
James D. Krugman, in addition to Howard Kailes, Secretary of
the Company, are members of the law firm of Krugman, Chapnick &
Grimshaw. During the year ended December 31, 1996, Krugman,
Chapnick & Grimshaw received fees for legal services rendered to
the Company of $815,000, together with reimbursement of
out-of-pocket expenses of $151,000. It is expected that Krugman,
Chapnick & Grimshaw will continue to render legal services to the
Company in the future.
In order to finance a portion of the purchase price for its
acquisition of Insituform Midwest, Inc., in July 1993 the Company
sold its 8.5% senior subordinated note in the principal amount of
$5 million (the "Subordinated Note"), and related warrants
exercisable with respect to 350,877 unregistered shares of Common
Stock, to Hanseatic Corporation ("Hanseatic"), which Hanseatic
holds for discretionary customer accounts and an affiliate, as
described under "Item 12. Security Ownership of Certain
Beneficial Owners and Management." Paul Biddelman is Treasurer of
Hanseatic. Prior to its prepayment in February 1997, the
Subordinated Note required quarterly payments of interest at 8.5%
per annum and installments of principal in the amount of $1
million on each of the fifth through eighth anniversary dates of
closing, with the entire remaining principal due nine years after
closing. The Subordinated Note was subordinated to bank and other
institutional financing, and purchase money debt incurred in
connection with acquisitions of businesses, and was prepayable at
the option of the Company, at premiums until the fifth
anniversary of closing ranging from 3% to 1% of the amount
prepaid ($100,000 paid upon prepayment in February 1997). During
the year ended December 31, 1996, the Company paid to Hanseatic
$425,000 in interest on the Subordinated Note. In February 1997,
the Company prepaid all amounts outstanding under the
Subordinated Note. The warrants remain exercisable, at the
election of the holder, through July 26, 1998, at a price per
share of Common Stock of $14.25, and such shares are entitled to
demand and incidental registration rights.
Steven Roth is a member of a partnership which holds certain
registration rights extended by the Company. See "Item 13.
Certain Relationships and Related Transactions," which
information is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------
The following table sets forth certain information as of
April 1, 1997 with respect to the number of shares of Common
Stock owned by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common
Stock, (ii) each director of the Company who owned beneficially
any shares of Common Stock, (iii) each executive officer of the
Company named in the summary compensation table under "Item 11.
Executive Compensation," and (iv) all directors and executive
officers of the Company as a group:
Number of Shares
of Common Stock Percent
Beneficial Owner Beneficially Owned(1) of Class
---------------- --------------------- --------
Jerome and Nancy F. Kalishman................... 3,097,848(2) 11.5%
17988 Edison Avenue
Chesterfield, Missouri 63005
T. Rowe Price Associates, Inc................ 2,667,825(3) 9.9
100 East Pratt Street
Baltimore, Maryland 21202
Interstate Properties
Park 80 West-Plaza Two
Saddle Brook, New Jersey 07663(4)........... 1,660,072 6.2
David Mandelbaum
80 Main Street
West Orange, New Jersey 07052............. 1,660,072(5) 6.2
Steven Roth
Park 80 West-Plaza Two
Saddle Brook, New Jersey 07663............ 1,670,072(5) 6.2
Number of Shares
of Common Stock Percent
Beneficial Owner Beneficially Owned(1) of Class
---------------- --------------------- --------
Russell B. Wight, Jr.
Park 80 West-Plaza Two
Saddle Brook, New Jersey 07663............ 1,664,744(5) 6.2
Robert W. Affholder.......................... 1,307,858(6) 4.9
Paul A. Biddelman............................ 380,877(7) 1.4
Brian Chandler(8)............................ 183,590 (9)
Douglas K. Chick(8)(10)...................... 964,231 3.6
William Gorham.............................. 9,425(11) (9)
James D. Krugman............................ 278,664(12) 1.0
Alvin J. Siteman............................ 246,190(13) (9)
Silas Spengler.............................. 2,000 (9)
Sheldon Weinig.............................. 12,099 (9)
Anthony W. Hooper........................... 114,800(14) (9)
Jean-Paul Richard........................... 310,000(15) 1.1
William A. Martin........................... 28,000(16) (9)
Dale T. Harden.............................. 12,500(16) (9)
Raymond Toth............................... 12,000(16) (9)
Directors and Executive
Officers as a group (19 persons)............ 8,236,755(17) 29.7
- --------------------
(1) Except as otherwise indicated, as of April 1, 1997 all of such shares are owned with
sole voting and investment power.
(2) Represents: (i) 146,159 shares beneficially owned by Jerome and Nancy F. Kalishman
as tenants by the entirety, (ii) 2,869,274 shares beneficially owned by Xanadu
Investments, L.P. (the general partners of which are The Jerome Kalishman Revocable
Trust, as to which Jerome Kalishman acts as trustee, and The Nancy F. Kalishman
Revocable Trust, as to which Nancy F. Kalishman acts as trustee), and (iii) 82,415
shares (the "Fund Shares") beneficially owned by Jerome Kalishman, as trustee of The
Jerome and Nancy Kalishman Family Fund; Nancy F. Kalishman disclaims beneficial
ownership of the Fund Shares. Excludes: (i) 302,463 shares beneficially owned with
sole voting and investment power by John Kalishman, (ii) 302,463 shares beneficially
owned with sole voting and investment power by James Kalishman, (iii) 302,462 shares
beneficially owned with sole voting and investment power by Susan Kalishman, (iv)
302,463 shares beneficially owned with sole voting and investment power by Thomas
Kalishman and (v) 115,000 shares held by The Jerome and Nancy F. Kalishman
Irrevocable Grandchildren's Trust, as to which John, James, Susan and Thomas
Kalishman (all of whom are children of Jerome and Nancy F. Kalishman) act as co-
trustees and have shared voting and investment power; Jerome and Nancy F. Kalishman
disclaim beneficial ownership of such shares.
(3) Includes 1,087,125 shares beneficially owned by T. Rowe Price New Horizons Fund, Inc.
(the "Fund"), a registered investment company. In a Statement on Schedule 13G, as
amended, filed with the Securities and Exchange Commission, T. Rowe Price Associates,
Inc. ("Associates"), a registered investment advisor, and the Fund have reported that
Associates has sole investment power over all such 2,662,825 shares, and that
Associates and the Fund have sole voting power over, respectively, 355,700 shares
and 1,087,125 shares.
(4) In a Statement on Schedule 13D filed with the Securities and Exchange Commission by
Interstate Properties and its partners, such parties have reported that Interstate
Properties is a general partnership consisting of David Mandelbaum, Steven Roth and
Russell B. Wight, Jr.
(5) Includes 1,660,072 shares beneficially owned by Interstate Properties.
(6) Includes 3,000 shares beneficially owned by Mr. Affholder as trustee of the Robert
W. and Pamela Rae Affholder Grandchildren's Trust.
(7) Includes 350,877 shares issuable pursuant to currently exercisable warrants granted
by the Company to Hanseatic and held for discretionary customer accounts and for an
affiliate in which Hanseatic is the indirect managing member. Mr. Biddelman is
Treasurer of Hanseatic and, accordingly, would hold shared voting and investment
power in the event of exercise of such warrants. See "Item 11. Executive
Compensation-Compensation Committee Interlocks and Insider Participation".
(8) Includes 183,590 shares of Common Stock beneficially owned by Ringwood Limited
("Ringwood"), a holding company whose shareholders are Mr. Chandler and Barford
Limited, as trustee of the Anthony Basmadjian Settlement ("Barford"), and held with
shared voting and investment power with Mr. Chandler, Barford and, as a result of
the arrangements described under footnote (10), Mr. Chick.
(9) Less than one percent.
(10)Represents 183,590 shares of Common Stock beneficially owned by Ringwood Limited,
in which Barford is a shareholder (see footnote(8)), and 780,641 shares of Common
Stock beneficially owned by Parkwood Limited, as trustee of the Anthony Basmadjian
"P" Settlement ("Parkwood"). The shares beneficially owned by Barford and Parkwood
are held with shared voting and investment power with Mr. Chick under oral agreements
pursuant to which Barford and Parkwood, respectively, will not vote or dispose of
any securities of the Company without the written approval of Mr. Chick having first
been obtained. Such parties have reported that the settlor of the settlements as
to which Barford and Parkwood, respectively, act as trustees has further expressed
his wishes to the effect that the powers of trustee be exercised in consultation with
Mr. Chick with due regard to any suggestions made, and that, accordingly, Mr. Chick
has an informal ability to influence decisions of Barford and Parkwood, respectively,
regarding securities of the Company held by them as trustees, but, under governing
law, no right to enforce such settlements, respectively, so as to override or compel
the trustees or the councillors who nominate beneficiaries in the exercise of a trust
power or discretion in a particular manner.
(11)Represents 9,425 shares jointly owned with Gail Gorham, Mr. Gorham's wife.
(12)Includes 195,000 shares issuable upon exercise of stock options granted by the
Company and exercisable at April 1, 1997, 40,364 shares held by a general partnership
whose managing partner is James D. Krugman and 33,300 shares, as to which Mr. Krugman
holds shared voting and investment power, held by a general partnership in which
Mr. Krugman's mother has an interest.
(13)Represents: (i) 210,348 shares held by Mr. Siteman as trustee of the Alvin J. Siteman
Revocable Trust; (ii) 5,174 shares held by Mr. Siteman as trustee of trusts for the
benefit of members of his immediate family; and (iii) 30,668 shares issuable upon
exercise of stock options granted by the Company and exercisable at April 1, 1997.
(14)Includes 99,500 shares issuable upon exercise of stock options granted by the Company
and exercisable at April 1, 1997.
(15)Includes 300,000 shares issuable upon exercise of stock options granted by the
Company and exercisable at April 1, 1997.
(16)Represents shares issuable upon exercise of stock options granted by the Company and
exercisable at April 1, 1997.
(17)Includes 816,461 shares issuable upon exercise of stock options granted by the
Company and exercisable at April 1, 1997 and currently exercisable warrants held by
Hanseatic.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
In connection with the IGL Acquisition, and so as to enable
the IGL Acquisition to qualify as a pooling-of-interests under
United States generally accepted accounting principles, the
Company, Brian Chandler, Douglas K. Chick, Parkwood and Ringwood
entered into an agreement dated July 3, 1992 pursuant to which a
prior pledge agreement extended by Messrs. Chandler and Chick and
Parkwood, covering Ordinary Shares of IGL and securing a
promissory note from Mr. Chandler and Parkwood to the Company
were, together with Mr. Chick's guaranty of such note, cancelled,
and in exchange Messrs. Chick and Chandler and Ringwood executed
and delivered to the Company a substitute stock pledge agreement
(the "New Pledge Agreement"), and Ringwood executed and delivered
to the Company a secured non-recourse promissory note in the
initial principal amount of $3,623,842.40 (the "Non-Recourse
Note"). Messrs. Chandler and Chick are both directors of the
Company and, together with Parkwood, Ringwood and Barford, are
members of a group (the "Ringwood Group"), within the meaning of
Section 13(d) of the Securities Exchange Act of 1934, which,
during the year ended December 31, 1996, previously held in
excess of 5% of the outstanding Common Stock.
The Non-Recourse Note bore interest at a rate per annum
equal to 2-1/2% above the prime rate from time to time in effect
at Citibank, N.A. and was originally due July 3, 1995. In May
1995, the maturity date was extended by one year to July 3, 1996
(the "Maturity Date"), and in December 1995 the interest payment
otherwise due in January 1996 was postponed to be due on a date
(the "Extension Date") no later than 30 days after the date of
first publication of the Company's operating results covering at
least a 30-day period after consummation of the IMA Merger.
Pursuant to the New Pledge Agreement, and as security for the
Non-Recourse Note, Ringwood and Messrs. Chick and Chandler
pledged to the Company 255,801 shares of class B common stock,
$.01 par value, of the Company beneficially owned by them (which,
in connection with the IGL Acquisition and in accordance with
their terms, were converted into shares (the "Pledged Shares") of
Common Stock on a share-for-share basis). At the Extension Date,
Ringwood had defaulted in the payment to the Company of its
interest payment postponed as aforesaid, and on the Maturity Date
had defaulted in payment of the principal amount of the Non-
Recourse Note. Effective in August 1996, the Company foreclosed
on the Pledged Shares in full satisfaction of the obligation of
Ringwood and Messrs. Chandler and Chick under the Non-Recourse
Note and the New Pledge Agreement.
In December 1995, in exchange for payment in the amount of
$250,000, the Company obtained an option from Sound Pipe Limited
("SPL"), a company affiliated with Messrs. Chandler and Chick,
for a three-month period to evaluate certain pipe rehabilitation
technologies developed by SPL and, at the election of the
Company, to negotiate a license agreement from SPL providing for
the commercialization of such technologies by the Company. SPL,
as guaranteed by Messrs. Chandler and Chick, further agreed that,
in the event the Company elected not to pursue such transaction,
such payment would be refunded to the Company. The Company
elected not to pursue any such license and, accordingly, in March
1996, SPL returned such amount to the Company. Later in 1996 and
again in early 1997, SPL again approached the Company to discuss
any potential interest in SPL's technology. The Company again
declined any interest. As a result of the Company's election not
to pursue any such license, there is no guarantee that this
technology will not be licensed to competitors or potential
competitors of the Company.
The Company and Messrs. Chandler and Chick and their
affiliates have addressed the application, if any, of certain
commitments alleged by IGL (which was acquired by the Company in
1992) to have been made by Mr. Chandler in 1983 requiring him,
through November 1993, to offer free of cost to IGL any new
ideas, inventions and technology for which Mr. Chandler was
responsible. Mr. Chandler had previously taken the position, in
a Statement on Schedule 13D filed in 1989 with respect to
shareholdings in IGL by the Ringwood Group, that such commitments
are not enforceable. The Company has acknowledged Mr. Chandler's
position, but has not formally agreed or disagreed with it. The
Company will submit any definitive arrangements regarding
transactions with Messrs. Chandler and Chick and their affiliates
for review and approval by a majority of the disinterested
members of the Company's Board of Directors, which will include
consideration of any legal issues concerning such technologies.
There can be no assurance that the Company would have access to
any technology developed by Messrs. Chandler and Chick and their
affiliates on favorable terms or at all, or would be in a
position to prevent the conduct of potentially competing
activities utilizing such developments.
As principal stockholders of IGL, the members of the
Ringwood Group and Interstate Properties, in connection with the
IGL Acquisition, received certain registration rights covering
the shares of Common Stock issued in exchange for their Ordinary
Shares of IGL, and all other shares of Common Stock held by them.
Such agreement terminates in December 1998. Under such agreement,
a stockholder may demand registration under the Securities Act of
1933 on one occasion (unless the Company is entitled to use a
registration statement on Form S-3, in which case each
stockholder is entitled to three demand registrations) of no less
than 500,000 shares of Common Stock. In addition, the
stockholders are entitled to incidental registration rights,
during the term of such agreement, with respect to the shares of
Common Stock beneficially owned by them.
As principal stockholders of IMA, Robert W. Affholder, a
director of the Company, and Xanadu Investments, L.P. (the
general partners of which are The Jerome Kalishman Revocable
Trust, as to which Jerome Kalishman, Chairman of the Board and a
director of the Company, acts as trustee, and The Nancy F.
Kalishman Revocable Trust, as to which Nancy F. Kalishman acts as
trustee), in connection with the IMA Merger, received certain
registration rights covering the shares of Common Stock issued in
exchange for the class A common stock, $.01 par value, of IMA
held by them. Such agreement terminates in December 1998. Under
such agreement a stockholder may demand registration under the
Securities Act of 1933 on one occasion (unless the Company is
entitled to use a registration statement on Form S-3, in which
case each stockholder is entitled to three demand registrations)
of no less than 500,000 shares of Common Stock. In addition, the
stockholders are entitled to incidental registration rights,
during the term of such agreement, with respect to the shares of
Common Stock beneficially owned by them.
A subsidiary of the Company is party to a tunnelling
equipment lease agreement with A-Y-K-E Partnership, in which
Messrs. Kalishman and Affholder are partners. Such agreement
covers equipment held by such partnership for lease both to the
Company's subsidiary and other parties, as available, and is
terminable upon 30 days prior notice by either such partnership
or the Company's subsidiary. During the year ended December 31,
1996, such partnership was paid $384,575 under such arrangements,
$29,050 of which was attributable to equipment overhaul invoiced
on a cost pass-through basis.
See "Item 11. Executive Compensation-Compensation Committee
Interlocks and Insider Participation" for information concerning
legal services rendered to the Company by the firm in which James
D. Krugman, a director of the Company, and Howard Kailes,
Secretary of the Company, are members, and concerning a company
in which Paul A. Biddelman, a director of the Company, is
treasurer, which held the Company's 8.5% senior subordinated note
until prepayment in February 1997, which information is
incorporated by reference in response to this item.
SIGNATURES
----------
In accordance with Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this amendment
to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: April 29, 1997 INSITUFORM TECHNOLOGIES, INC.
By s/William A. Martin
---------------------------------
William A. Martin
Senior Vice President
Pursuant to the requirements of the Securities Exchange Act of
1934, this amendment has been signed below by the following persons
on behalf of the registrant and in the capacities and on the dates
indicated:
Signature Title Date
- --------- ------ ----
ANTHONY W. HOOPER * Principal April 29, 1997
- ----------------------- Executive Officer
Anthony W. Hooper and Director
s/William A. Martin Principal April 29, 1997
- ----------------------- Financial and
William A. Martin Accounting Officer
ROBERT W. AFFHOLDER* Director April 29, 1997
- -----------------------
Robert W. Affholder
PAUL A. BIDDELMAN* Director April 29, 1997
- -----------------------
Paul A. Biddelman
BRIAN CHANDLER* Director April 29, 1997
- -----------------------
Brian Chandler
DOUGLAS K. CHICK* Director April 29, 1997
- -----------------------
Douglas K. Chick
WILLIAM GORHAM* Director April 29, 1997
- -----------------------
William Gorham
JEROME KALISHMAN* Director April 29, 1997
- -----------------------
Jerome Kalishman
JAMES D. KRUGMAN* Director April 29, 1997
- -----------------------
James D. Krugman
STEVEN ROTH* Director April 29, 1997
- -----------------------
Steven Roth
ALVIN J. SITEMAN* Director April 29, 1997
- -----------------------
Alvin J. Siteman
SILAS SPENGLER* Director April 29, 1997
- -----------------------
Silas Spengler
SHELDON WEINIG* Director April 29, 1997
- -----------------------
Sheldon Weinig
RUSSELL B. WIGHT, JR.* Director April 29, 1997
- -----------------------
Russell B. Wight, Jr.
* By s/William A. Martin
---------------------
William A. Martin
(Attorney-in-Fact
Pursuant to Power of
Attorney on file with
the Securities and
Exchange Commission)