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, 1997
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.
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3032158
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
702 Spirit 40 Park Drive
Chesterfield, Missouri 63005
- ---------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 314-530-8000
------------
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 state-ments 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 and non-
voting stock held by non-affiliates of the registrant. The
aggregate market value shall be computed by reference to the price
at which the common stock was sold, or the average bid and asked
prices of such common equity, as of a specified date within 60
days prior to the date of filing.
Aggregate market value as of March 15, 1998.....$228,062,297
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, 1998.................26,959,459 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 1998 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, 1997, 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 62 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 1993
to 1993; Director of the Company
since 1995.
Paul A. Biddelman 52 President, Hanseatic Corporation
(private investment company) since
1997, and Treasurer from prior to
1993 to 1997; Director: Celadon
Group, Inc., Electronic Retailing
Systems International, Inc.,
Premier Parks Inc., Petroleum Heat
& Power Company, Inc., Star Gas
Corporation (general partner of
Star Gas Partners, L.P.); Director
of the Company since 1988.
Name of Director Age Biographical Information
- ---------------- --- ------------------------
Stephen P. Cortinovis 48 Vice President International and
President-Europe, Emerson Electric
Co. since prior to 1993; Director
of the Company since 1997.
Anthony W. Hooper 50 President and Chief Executive
Officer of the Company since
November 1996 and Chairman of the
Board of the Company since June
1997; Senior Vice President
Marketing and Senior Vice
President-Marketing and Technology
of the Company, successively, from
November 1993 to November 1996;
President of Huyck Formex/Weavexx
Corporation (industrial textile and
process equipment manufacturer), a
subsidiary of BTR, Inc., from prior
to 1993 to November 1993; Director
of the Company since 1996.
Jerome Kalishman 70 Vice Chairman of the Board of the
Company since June 1997 and from
October 1995 to November 1996;
Chairman of the Board of the
Company from November 1996 to June
1997; Chairman and Chief Executive
Officer of IMA from prior to 1993
to 1995; Director of the Company
since 1995.
Silas Spengler 67 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 prior to 1993 to 1994;
Director of the Company since 1987.
Sheldon Weinig 70 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 1993 to
1994; Director: Aseco Corporation,
Intermagnetics General Corporation,
Name of Director Age Biographical Information
- ---------------- --- ------------------------
Kentek Information Systems, Inc.,
U.S. Cast Polymers, Inc.; Director
of the Company since 1992.
Russell B. Wight, Jr. 58 General Partner, Interstate
Properties (real estate development
and construction) since prior to
1993; Director: Vornado Realty
Trust, Alexander's, Inc.; Director
of the Company since 1992.
Alfred L. Woods 54 President, Woods Group (management
consultant) since 1995; President
and Chief Operating Officer, WSR
Corporation (holding company for
specialty retail properties) from
1990 to 1995; President, R&S/
Strauss (specialty retail store
operator) from 1969 to 1990;
Director of the Company since 1997.
The Company's directors have been designated for appointment
to the Board of Directors in accordance with the provisions of an
agreement dated July 25, 1997, as amended (the "Settlement
Agreement"), entered into by the Company with Jerome Kalishman,
Nancy F. Kalishman, The Jerome and Nancy Kalishman Family Fund,
Xanadu Investments L.P. and Robert W. Affholder (collectively, the
"Kalishman/Affholder Group"), Paul A. Biddelman, Stephen P.
Cortinovis, Anthony W. Hooper, Silas Spengler, Sheldon Weinig and
Russell B. Wight, Jr., and later joined by Alfred L. Woods. Under
the Settlement Agreement, the Kalishman/Affholder Group agreed to
end the pending proxy contest with respect to the election of
directors at the Company's 1997 annual meeting of stockholders
(the "1997 Annual Meeting") and not to engage, prior to the
Company's 1999 annual meeting of stockholders (the "1999 Annual
Meeting"), in certain activities in opposition to the Company's
management. The Company agreed, pursuant to the Settlement
Agreement, to make certain changes in the structure and
composition of the Board of Directors including: (i) reducing the
size of the Board from thirteen to eight directors, such number
increasing automatically to nine directors upon the appointment of
an additional nominee to the Board in the manner described in the
Settlement Agreement; (ii) eliminating classification of the
Board; and (iii) designating specific individuals to be nominated
by the Company until the 1999 Annual Meeting to serve on the
Board, and providing a new means for filling vacancies which may
occur on the Board.
Pursuant to the Settlement Agreement, Messrs. Affholder,
Biddelman, Cortinovis, Hooper, Kalishman, Spengler, Weinig and
Wight were nominated for election at the 1997 Annual Meeting. Mr.
Woods was designated for appointment to the Board of Directors
subsequent to the 1997 Annual Meeting in accordance with the
provisions of the Settlement Agreement. The Settlement Agreement
provides that the Company will nominate and recommend for re-
election to the Board of Directors at its 1998 annual meeting of
stockholders (the "1998 Annual Meeting") and at the 1999 Annual
Meeting the then incumbent members of the Board.
In addition, the Settlement Agreement provides that if,
during the period ending immediately prior to the 1999 Annual
Meeting, any director then in office resigns or is unable to serve
for any reason, such vacancy will be filled only with a designee
chosen by both members of the Nominating Committee of the
Company's Board of Directors, as constituted pursuant to the
Settlement Agreement, subject to specified dispute resolution
procedures and the confirmation of the Board of Directors that
such person possesses no characteristics that would disqualify him
under applicable law from service as a director, and thereafter
the Company will nominate and recommend such designee for election
to the Board of Directors.
See "Item 12. Security Ownership of Certain Beneficial Owners
and Management" below, for information concerning certain voting,
standstill and related agreements entered into by the parties to
the Settlement Agreement and "Item 11. Executive Compensation"
below, for information concerning certain additional transactions
under the Settlement Agreement, which information is incorporated
herein by reference.
For information concerning the executive officers of the
Company, see pages 13 through 14 of the Company's Annual Report on
Form 10-K for the year ended December 31, 1997 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 1997 all filing requirements applicable to
its directors, officers and ten percent holders under said section
were satisfied, except that Douglas K. Chick, a former director,
reported on a Form 4 filed less than two weeks subsequent to the
due date thereof four open market sales of Common Stock.
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, or committee of the Board, attended by such director
($500 in the case of telephonic meetings and committee meetings
held in conjunction with Board meetings), plus reimbursement of
his expenses.
In November 1997, the Company granted options under its 1992
Director Stock Option Plan (the "Director Plan") covering 14,000
shares of class A common stock, $.01 par value (the "Common
Stock"), to each of Stephen P. Cortinovis and Alfred L. Woods, and
covering 9,000 shares of Common Stock to each of Robert W.
Affholder, Paul A. Biddelman, Jerome Kalishman, Silas Spengler,
Sheldon Weinig and Russell B. Wight, Jr. All such options are
currently exercisable at a price per share equal to $8.75, the
closing price per share of Common Stock on The Nasdaq National
Market on the date of grant, and expire ten years from the date of
grant. The Company contemporaneously granted options under the
Director Plan, on the same terms, covering 49,000 shares of Common
Stock to Anthony W. Hooper, who also 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 "Executive Compensation" and "Certain
Agreements with Director and Executive Officers" below). Except
for the foregoing, no current director of the Company holds any
options granted by the Company.
Under the Settlement Agreement, the term of the arrangements
under which Jerome Kalishman became Vice Chairman of the Board in
October 1995 in connection with the Company's combination with IMA
(the "IMA Merger"), was extended for a period of one year so as to
expire on December 9, 1999, provided, that, during such additional
year Mr. Kalishman's annual salary in such position of $100,000
will not be payable but benefits and office arrangements will
continue. In November 1996, the Company had supplemented such
arrangements with Mr. Kalishman to provide that the appointment of
him as Chairman of the Board of Directors, and his service in such
position (which extended through June 1997), would, during the
period thereof, substitute for the Company's and his respective
obligations under which Mr. Kalishman became Vice Chairman of the
Board. 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 agreement). 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 agreement
terminates automatically. Upon completion of the IMA Merger and
for a period of two years thereafter, the Company was also party
to 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 at an annual fee of $150,000. 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, who
served as a director until the 1997 Annual Meeting, amended the
agreement 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
Director Plan in December 1993 covering 95,000 shares of 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 Market on such date, and (ii) an option granted under the
Director Plan in November 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 Market on such date.
As a consequence of the assumption and exchange of options
previously granted by IMA for options granted by the Company, in
October 1995 Alvin Siteman, who became a director of the Company
upon consummation of the IMA Merger and served until the 1997
Annual Meeting, 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, and in
August 1997, exercised options with respect to 23,001 shares at
exercise prices ranging from $2.61 to $4.32 per share. Mr.
Siteman's remaining options have expired without exercise.
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 (i) the Company's
chief executive officer, (ii) each of the other executive officers
whose salary and bonus exceeded $100,000 during the most recent
fiscal year, and (iii) an additional individual who would have
been among the four most highly-compensated executive officers
during the most recent fiscal year, but was not an executive
officer at the end of such 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 1997 $344,000 160,875 83,366(3) 49,000 $18,269(4)
President and Chief 1996 264,604 -- -- 150,000 14,434
Executive Officer(2) 1995 235,000 -- -- 25,000 2,405
Robert W. Affholder 1997 $250,000 -- -- 9,000 $20,718(6)
Senior Executive Vice 1996 250,000 -- -- -- 12,000
President(5) 1995 229,167 75,000 -- -- 11,531
William A. Martin 1997 $196,297 48,840 35,437(7) 15,000 $17,655(8)
Senior Vice President- 1996 186,764 -- -- -- 7,049
Chief Financial Officer 1995 175,000 -- -- 10,000 14,707
Robert L. Kelley(9) 1997 $181,714 65,120 39,181(10) 15,000 $16,349(11)
Vice President, General 1996 $106,462 -- 12,842(12) 25,000 41,934
Counsel 1995 -- -- -- -- --
Dale T. Harden 1997 $133,269 -- 15,750(12) -- $160,996(14)
Senior Vice President- 1996 117,049 65,625 -- 50,000 30,857
Chief Operating Officer 1995 -- -- -- -- --
of North American
Contracting Operations(13)
- -------------------
(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 $74,582 pursuant to the Company's relocation plan with respect to the consolidation of
facilities in Chesterfield, Missouri (the "Relocation Plan") and $8,784 in reimbursement for taxes.
See also "Certain Agreements with Directors and Executive Officers" below.
(4) Represents $6,400 in 401(k) contributions under the Company's 401(k) Profit-Sharing Plan (the
"Restated Plan"), $8,000 in profit-sharing contributions under the Restated Plan, and $3,869 in term
life insurance premiums.
(5) 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 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.
(6) Represents $6,400 in 401(k) contributions under the Restated Plan, $8,000 in profit-sharing
contributions under the Restated Plan and $6,318 in term life insurance premiums.
(7) Represents $30,885 pursuant to the Relocation Plan and $4,552 in reimbursement for taxes.
(8) Represents $6,400 in 401(k) contributions under the Restated Plan, $8,000 in profit-sharing
contributions under the Restated Plan, and $3,255 in term life insurance premiums.
(9) Mr. Kelley became an executive officer in June 1996, having joined the Company as General Counsel in
the prior month.
(10) Represents $34,961 pursuant to the Relocation Plan and $4,220 in reimbursement for taxes.
(11) Represents $6,400 in 401(k) contributions under the Restated Plan, $8,000 in profit-sharing
contributions under the Restated Plan and $1,949 in term life insurance premiums.
(12) Represents reimbursement for taxes.
(13) Mr. Harden became an executive officer in June 1996 and resigned in July 1997.
(14) Represents $4,846 in 401(k) contributions under the Restated Plan, $3,650 in term life insurance
premiums, $40,000 payment in lieu of relocation expenses, and $112,500 in severance payments.
Option Grant Table. The following table sets forth certain
information regarding options granted by the Company during the
year ended December 31, 1997 to the individuals named in the above
compensation table:
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants Potential Realizable
------------------------------------------------------- Value at Assumed
Number of Annual Rates of Stock
Securities % of Total Price Appreciation
Underlying Options Granted Exercise for Option Term(2)
Options to Employees Price Expiration --------------------
Name Granted(#) In Fiscal Year(1) ($/sh) Date 5% 10%
- ---- ---------- ---------------- -------- ---------- --------------------
Anthony W. Hooper 49,000(3) 9.9% $8.75 11/14/07 $236,382 $582,220
Robert W. Affholder 9,000(3) 1.8 8.75 11/14/07 43,417 106,938
William A. Martin 15,000(4) 3.0 8.75 11/14/07 72,362 178,231
Robert L. Kelley 15,000(4) 3.0 8.75 11/14/07 72,362 178,231
Dale T. Harden -- -- -- -- -- --
_________________________
(1) Includes options granted to employees under the Director Plan.
(2) Amounts represent hypothetical gains that could be achieved for the respective options if exercised
at the end of the option term. These gains are based on arbitrarily assumed rates of stock price
appreciation of 5% and 10% compounded annually from the date the respective options are granted to
their expiration date.
(3) Such options were granted under the Director Plan (see "Director Compensation" above) and are
currently exercisable.
(4) One-fifth of such options became exercisable on grant, with the remainder becoming exercisable in four
equal annual installments thereafter.
Aggregate Option Exercises and Year-End Option Table. The
following table sets forth certain information regarding exercises
of stock options, and stock options held as of December 31, 1997,
by the individuals named in the above compensation table:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End(#) at Year-End($)(1)
Shares Acquired Value ------------------------------ ---------------------
Name on Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- ----------- ----------- ------------- ----------- -------------
Anthony W. Hooper..... -- -- 164,750 146,250 5,600 50,400
Robert W. Affholder... -- -- 9,000 -- -- --
William A. Martin..... -- -- 33,500 14,500 -- --
Robert L. Kelley...... -- -- 15,500 24,500 -- --
Dale T. Harden........ -- -- -- -- -- --
- --------------------
(1) Calculated on the basis of the fair market value of the underlying securities at year-end, 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 (as subsequently increased) 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. In January 1998, the Board of Directors of the Company
approved, subject to approval and adoption by the stockholders of
the Company, an increase in the number of authorized shares of
Common Stock available for issuance under the Employee Plan to
1,850,000 shares, and an increase in the number of authorized
shares of Common Stock available for issuance under the Director
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 (244,393 shares of
which were covered by options outstanding at April 1, 1998).
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, provided 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 Market on the date of grant),
becoming 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,
becoming 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 subsequently granted, as
described under "Executive Compensation" above), 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. Such severance agreements have been supplemented and
superseded to the extent provided in the severance agreement
extended by the Company to Mr. Hooper in June 1997, as more fully
described below. In connection with Mr. Hooper's relocation to the
Company's new headquarters facilities in Chesterfield, Missouri,
and in addition to the amounts extended to Mr. Hooper under the
Company's Relocation Plan, in September 1997 the Company extended
a loan to Mr. Hooper in the amount of $200,000, due on the fifth
anniversary thereof or earlier in the event of cessation of
employment. Such loan accrues interest after default, at the rate
of 1% per month, and does not accrue interest prior to default
except as specified therein.
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. Such
severance agreements have been supplemented and superseded to the
extent provided in the severance agreement extended by the Company
to Mr. Martin in June 1997, as more fully described below.
In connection with the commencement of his employment as
general counsel of the Company in May 1996, the Company extended
a severance arrangement to Robert L. Kelley pursuant to which, in
the event of termination of employment by the Company without
cause within the first twelve months of employment, Mr. Kelley
would be entitled to severance equal to six months' base salary
which would be paid over the severance period. Such severance
agreements have been supplemented as provided in the severance
agreement extended by the Company to Mr. Kelley in June 1997, as
more fully described below.
The Company's arrangements with Dale T. Harden, who served as
Senior Vice President through his resignation in July 1997,
entailed severance payments to him in the amount of approximately
$112,500, continuation of his car allowance for six months after
severance and payment of the amount of approximately $55,750
(including tax reimbursements) to him in lieu of relocation
expenses after severance.
In June 1997, the Company entered into severance agreements
with, respectively, Anthony W. Hooper, William A. Martin and
Robert L. Kelley which provide that, subsequent to the occurrence
of specified events during a period of three years after the date
of such agreements, if the employment of such officer is
terminated without "cause" or such officer resigns with "good
reason" (as those terms are defined under such agreements), or
such officer resigns for any reason during a 30-day period
following the anniversary of the specified events, such officer is
entitled to the benefits set forth in the agreement. The election
of two members of the Board of Directors in October 1997 outside
of the procedures provided for under the Company's merger
agreement with IMA was one of the specified events. The benefits
to which each officer would be entitled upon severance from the
Company as aforesaid include an amount, payable within 30 days
after severance, equal to three times compensation (including base
salary and bonus, as defined, and accrued supplemental retirement
benefits) plus amounts to cover any excise taxes due, if any, and
coverage for a period of three years under the Company's welfare
plans (or equivalent coverage).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1997, the Company's
Compensation Committee consisted of: (i) for the period through
January 1997, James D. Krugman, Paul A. Biddelman, William Gorham,
Steven Roth and Alvin J. Siteman; (ii) for the period from January
1997 through the 1997 Annual Meeting, James D. Krugman, Sheldon
Weinig and Russell B. Wight, Jr.; and (iii) after the 1997 Annual
Meeting, Stephen P. Cortinovis and Robert W. Affholder (with
Alfred L. Woods joining in January 1998). In accordance with the
terms of the Settlement Agreement, Messrs. Gorham, Krugman, Roth
and Siteman executed resignations from the Board of Directors
effective at the 1997 Annual Meeting. In addition, the Company's
Employee Plan (under which executive officers who are not
directors are granted stock options) and its Director Plan (under
which executive officers who are directors are granted stock
options) were, during the year ended December 31, 1997,
administered by the entire Board of Directors which, in addition
to the foregoing directors, included Jerome Kalishman, Silas
Spengler and (until June 1997) Douglas K. Chick and (until the
effectiveness at the 1997 Annual Meeting of his resignation
pursuant to the Settlement Agreement) Brian Chandler.
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
acquired for discretionary customer accounts and an affiliate, as
described under "Item 12. Security Ownership of Certain Beneficial
Owners and Management" below. Paul Biddelman, a current director
of the Company, is President 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). In February 1997, the Company prepaid all amounts
outstanding under the Subordinated Note (including $162,917 in
accrued interest). 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.
The Company and Messrs. Chandler and Chick, both former
directors of the Company, and their affiliates have addressed the
application, if any, of certain commitments alleged by Insituform
Group Limited ("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 by a
group (the "Ringwood Group"), within the meaning of Section 13(d)
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), consisting of Messrs. Chandler and Chick and their
affiliates, 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 does not anticipate any
transactions with Messrs. Chandler and Chick and their affiliates
which might raise any issues concerning such technologies.
As principal stockholders of IGL, the members of the Ringwood
Group and Interstate Properties (a principal stockholder of the
Company, in which Mr. Wight, a current director of the Company,
and Mr. Roth, a former director, are partners), in connection with
the Company's acquisition of IGL, 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
current 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, a current 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, 1997,
such partnership was paid $317,000 under such arrangements.
Pursuant to the Settlement Agreement, the Company has
reimbursed the group including Messrs. Kalishman and Affholder for
reasonable out-of-pocket costs and expenses in connection with the
1997 Annual Meeting in the amount of $143,000.
James D. Krugman, a former director of the Company, in
addition to Howard Kailes, Secretary of the Company, are members
of the law firm of Krugman Chapnick & Grimshaw LLP. During the
year ended December 31, 1997, Krugman Chapnick & Grimshaw LLP
received fees for legal services rendered to the Company of
$664,000, together with reimbursement of out-of-pocket expenses of
$141,000. It is expected that Krugman Chapnick & Grimshaw LLP will
continue to render legal services to the Company in the future.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------
The following table sets forth certain information as of
April 1, 1998 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................... 3,102,848(2) 11.5%
702 Spirit 40 Park Drive
Chesterfield, Missouri 63005
T. Rowe Price Associates, Inc................ 2,438,825(3) 9.1
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
Russell B. Wight, Jr.
Park 80 West-Plaza Two
Saddle Brook, New Jersey 07663............ 1,695,905(5)(6)(7) 6.3
Kalmar Investments Inc.
3701 Kennett Pike
Greenville, Delaware 19807.................. 1,401,275(8) 5.2
Robert W. Affholder.......................... 1,316,858(6)(9) 4.9
Paul A. Biddelman............................ 359,877(6)(10) 1.3
Stephen P. Cortinovis........................ 14,000(11) (12)
Anthony W. Hooper........................... 185,050(13) (12)
Silas Spengler.............................. 11,000(6) (12)
Sheldon Weinig.............................. 21,099(6) (12)
Alfred L. Woods............................. 14,500(11) (12)
William A. Martin........................... 23,500(14) (12)
Robert L. Kelley............................ 17,200(15) (12)
Dale T. Harden............................... 100 (12)
Directors and Executive
Officers as a group (11 persons)............ 6,761,837(16) 24.8
- --------------------
(1) Except as otherwise indicated, as of April 1, 1998 all of such shares are
owned with sole voting and investment power.
(2) Represents: (i) 142,159 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), (iii) 82,415 shares (the "Fund Shares")
beneficially owned by Jerome Kalishman, as trustee of The Jerome and
Nancy Kalishman Family Fund, and (iv) 9,000 shares (the "Option Shares")
issuable upon exercise of stock options granted by the Company to Mr.
Kalishman and exercisable at April 1, 1998; Nancy F. Kalishman disclaims
beneficial ownership of the Fund Shares and the Option 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 2,438,825 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 9,000 shares issuable upon exercise of stock options granted by
the Company and exercisable at April 1, 1998.
(7) Includes 22,161 shares held by a foundation as to which Mr. Wight has
sole voting and investment power.
(8) In a Statement on Schedule 13G filed with the Securities and Exchange
Commission, Kalmar Investments Inc., a registered investment advisor, has
reported sole investment power with respect to such shares.
(9) Includes 3,000 shares beneficially owned by Mr. Affholder as trustee of
the Robert W. and Pamela Rae Affholder Grandchildren's Trust.
(10) 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 President 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".
(11) Includes 14,000 shares issuable upon exercise of stock options granted
by the Company and exercisable at April 1, 1998.
(12) Less than one percent.
(13) Includes 164,750 shares issuable upon exercise of stock options granted
by the Company and exercisable at April 1, 1998.
(14) Includes 15,500 shares issuable upon exercise of stock options granted
by the Company and exercisable at April 1, 1998.
(15) Includes 15,500 shares issuable upon exercise of stock options granted
by the Company and exercisable at April 1, 1998.
(16) Includes 277,750 shares issuable upon exercise of stock options granted
by the Company and exercisable at April 1, 1998 and currently exercisable
warrants held by Hanseatic.
Pursuant to the Settlement Agreement, each party thereto
other than the Company (which includes Messrs. Affholder,
Biddelman, Cortinovis, Hooper, Kalishman, Spengler, Weinig, Wight
and Woods, Xanadu Investments, LP and Mrs. Kalishman) agreed to
certain voting and standstill provisions. During the period (the
"Term") commencing on the date of the Settlement Agreement and
ending immediately prior to the 1999 Annual Meeting, each such
party will cause all shares of capital stock of the Company which
have the right to vote generally in the election of directors,
including, without limitation, shares of Common Stock
(collectively, "Voting Stock"), that are beneficially owned by
such party (i) to be present, in person or by proxy, at all
meetings of stockholders so that all such shares may be counted
for the purpose of determining if a quorum is present at such
meetings, (ii) to be voted in favor of the election of the
Company's nominees to the Board of Directors at the 1998 Annual
Meeting, and (iii) to be voted in favor of persons nominated and
recommended by the Company in any other election of directors.
In addition, during the Term, each such party: (a) shall not
directly or indirectly (except through the Company pursuant to due
authorization) solicit any proxies or consents with respect to
Voting Stock or in any way participate in any solicitation of any
proxy with respect to shares of Voting Stock or become a
participant in any election contest with respect to the Company or
request or induce or attempt to induce any other person to take
any such actions or attempt to advise, counsel or otherwise
influence in any way any person with respect to the voting of
Voting Stock; provided however that such constraint shall not
apply to actions taken in advance of the 1999 Annual Meeting with
respect to actions to be taken at the 1999 Annual Meeting,
including, without limitation, the election of directors; (b)
shall not, subject to exception (i) form, join or otherwise
participate in any "group" (within the meaning of Section 13(d)(3)
of the Exchange Act) with respect to any Voting Stock (a "13D
Group"), (ii) otherwise act in concert with any other person for
the purpose of holding or voting Voting Stock, or (iii) file any
amendment to any Schedule 13D that relates to a plan or proposal
to seek to influence control of the Company or that contains any
statement that is in any way inconsistent with the provisions of
the Settlement Agreement; provided that such constraint shall not
apply to any 13D Group formed for the purposes of conducting a
solicitation or otherwise taking action with respect to actions to
be taken at the 1999 Annual Meeting, including, without
limitation, the election of directors; (c) shall not, subject to
exception, deposit any Voting Stock in a voting trust or subject
any Voting Stock to any arrangement or agreement with respect to
the voting of such Voting Stock or other agreement having similar
effect; (d) except as expressly contemplated by the Settlement
Agreement, shall not make any proposal or bring any business
before any meeting of stockholders and, other than actions
proposed or taken at any meeting of the Board of Directors, shall
not take or seek to take any action in the name or on behalf of
the Company except pursuant to the performance of any
responsibilities attendant to any office in the Company held by
such party or pursuant to a resolution adopted by the Board of
Directors; (e) shall not call, request the call, or seek to call,
any special meeting of stockholders; and (f) shall not enter into
any discussions, negotiations, arrangements or understandings with
any other person with respect to any of the foregoing matters.
Nothing in the Settlement Agreement shall, however, prevent
any party to the Settlement Agreement from taking any of the
actions referred to in clauses (a), (b), (c) and (insofar as it
relates to clauses (a), (b) and (c)), clause (f) above, to the
extent (but solely to the extent) that such actions are taken in
response to any proposal relating to matters other than (i) the
election of directors, (ii) the election, approval or ratification
of accountants, (iii) a proposal made by a stockholder or (iv) a
proposal relating to certain employee compensation plans, that is
set forth in any preliminary or definitive proxy statement filed
by the Company with the Securities and Exchange Commission.
Pursuant to the Settlement Agreement, the parties also agreed
that, in the event that any directors other than the Company's
nominees are elected at the 1998 Annual Meeting as the result,
directly or indirectly, of a breach of the Settlement Agreement or
any failure to vote in favor of matters specified in the
Settlement Agreement, by any party or parties hereto, the voting
and standstill obligations of such breaching or non-voting party
or parties, and its affiliates as described above shall not
terminate at the time specified above but shall terminate on
December 31, 1999.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
----------------------------------------------
See "Item 11. Executive Compensation-Compensation Committee
Interlocks and Insider Participation" for information concerning
(i) a company in which Paul A. Biddelman, a director of the
Company, is an officer, which held the Company's 8.5% senior
subordinated note until prepayment in February 1997; (ii) the
Company's discussions with Brian Chandler and Douglas K. Chick,
both former directors of the Company, with respect to commitments
alleged by IGL to have been made by Mr. Chandler; (iii)
registration rights extended by the Company to, respectively, the
Ringwood Group, Interstate Properties, Robert W. Affholder, a
director of the Company, and Xanadu Investments, LP (with respect
to the general partner of which Jerome Kalishman, a director of
the Company, acts as trustee); (iv) equipment rentals paid by the
Company to a partnership in which Messrs. Kalishman and Affholder
are partners; (v) reimbursements under the Settlement Agreement by
the Company to the group including Messrs. Kalishman and
Affholder; and (vi) legal services rendered to the Company by the
firm in which James D. Krugman, a former director of the Company,
and Howard Kailes, Secretary of the Company, are partners; 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, 1998 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, 1998
- ----------------------- Executive Officer
Anthony W. Hooper and Director
s/William A. Martin Principal April 29, 1998
- ----------------------- Financial and
William A. Martin Accounting Officer
ROBERT W. AFFHOLDER* Director April 29, 1998
- -----------------------
Robert W. Affholder
PAUL A. BIDDELMAN* Director April 29, 1998
- -----------------------
Paul A. Biddelman
STEPHEN P. CORTINOVIS* Director April 29, 1998
- -----------------------
Stephen P. Cortinovis
JEROME KALISHMAN* Director April 29, 1998
- -----------------------
Jerome Kalishman
SILAS SPENGLER* Director April 29, 1998
- -----------------------
Silas Spengler
SHELDON WEINIG* Director April 29, 1998
- -----------------------
Sheldon Weinig
RUSSELL B. WIGHT, JR.* Director April 29, 1998
- -----------------------
Russell B. Wight, Jr.
ALFRED L. WOODS* Director April 29, 1998
- -----------------------
Alfred L. Woods
* By s/William A. Martin
---------------------
William A. Martin
(Attorney-in-Fact
Pursuant to Power of
Attorney on file with
the Securities and
Exchange Commission)