<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission file
December 31, 1994 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.)
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
------------
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 each 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. / /
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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, 1995 ........ $130,979,172
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, 1995 .............. 14,351,755 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 1995 Annual
Meeting of Stockholders-Part III.
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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, 1994, 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
- ---------------- --- ------------------------
Paul A. Biddelman 49 Treasurer, Hanseatic Corporation (private
investment company) since 1992; Managing
Director, Clements Taee Biddelman
Incorporated (financial advisors) from 1991
to 1992; Managing Director, Corporate Finance
Department, Drexel Burnham Lambert
Incorporated from 1982 to 1990;* Director:
Celadon Group, Inc., Electronic Retailing
Systems International, Inc., Premier Parks
Inc., Petroleum Heat & Power Company, Inc.;
Director of the Company since 1988.
- ------------------
* In February 1990, The Drexel Burnham Lambert Group, Inc., the holding
company of Drexel Burnham Lambert Incorporated, filed for protection under
Chapter XI of the federal bankruptcy laws.
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Name of Director Age Biographical Information
- ---------------- --- ------------------------
Brian Chandler 69 Private investor since prior to 1990;
consultant to the Company from prior to 1990
to 1994; Director of the Company since 1987.
Douglas K. Chick 71 Private investor since prior to 1990;
consultant to the Company from 1991 to 1994;
Director of the Company since 1990.
William Gorham 64 President, The Urban Institute (government
policy research) since prior to 1990;
Director of the Company since 1992.
James D. Krugman 46 Partner, Krugman, Chapnick & Grimshaw
(attorneys) since prior to 1990; Chairman of
the Board since 1988 and Chief Executive
Officer of the Company from April to October
1990 and from April to June 1989; Director:
Hayward Industries, Inc. and Meadox Medicals,
Inc.; Director of the Company since 1987.
Jean-Paul Richard 52 President and Chief Executive Officer of the
Company since 1993; Chief Executive of
Massey-Ferguson Group of Varity Corporation
from 1992 to 1993, and Senior Vice
President-Corporate Development of Varity
from 1991 to 1992; Executive Vice President
of Asea Brown Boveri, Inc., a subsidiary of
Asea Brown Boveri, from 1990 to 1991;
Director: AGCO Corporation; Director of the
Company since 1994.
Steven Roth 53 General Partner, Interstate Properties (real
estate development and construction) since
prior to 1990; Chairman and Chief Executive
Officer, Vornado Realty Trust (real
4
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Name of Director Age Biographical Information
- ---------------- --- -------------------------
estate operating company) since 1990; Chief
Executive Officer of Alexander's, Inc. since
March 1995; Director: Vornado Realty Trust,
Alexander's, Inc.; Director of the Company
since 1992.
Silas Spengler 64 Principal, Sullivan Associates, Inc. (board
of directors search firm) since 1994;
Partner, Reid & Priest (attorneys) from 1992
to 1994; Partner, Spengler Carlson Gubar
Brodsky & Frischling (attorneys) from prior
to 1990 to 1992; Director of the Company
since 1987.
Sheldon Weinig 67 Consultant, Sony Engineering and
Manufacturing of America since 1994, and Vice
Chairman from 1990 to 1994; Director: Aseco
Corporation, Unique Mobility, Inc.,
Intermagnetics General Corporation; Director
of the Company since 1992.
Russell B. Wight, Jr. 55 General Partner, Interstate Properties (real
estate development and construction) since
prior to 1990; Director: Vornado Realty
Trust; 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: (x) 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; (y) 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; and (z) to provide for the
appointment of directors and the filling of vacancies as contemplated by the
agreement dated July 3, 1992, as amended September 1, 1992 (the "IGL Acquisition
Agreement"), among the Company, INA Acquisition Corp. (the Company's
wholly-owned subsidiary), and IGL. Upon consummation of the IGL Acquisition, the
Board of Directors of the Company was reconstituted to include: Messrs.
Spengler, Gorham and Weinig, for a term initially expiring
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at the 1993 annual meeting of stockholders of the Company ("Class I Directors");
Messrs. Chick, Biddelman and Roth, for a term initially expiring at the 1994
annual meeting of stockholders of the Company ("Class II Directors"); and
Messrs, Chandler, Krugman and Wight, for a term initially expiring at the
1995 annual meeting of stockholders of the Company ("Class III Directors").
Messrs. Spengler, Chick, Biddelman, Chandler and Krugman were designated by the
Company, and Messrs. Gorham, Weinig, Roth and Wight were designated by IGL. The
Company has further agreed that during the period from the consummation of the
IGL Acquisition to the sixth anniversary thereof (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; and that, 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 March 1994, in connection with the commencement of Mr. Richard's
employment as President and Chief Executive Officer of the Company, the Board of
Directors completed action to amend the By-laws of the Company to increase the
size of the Board from nine to ten, and to appoint Mr. Richard as a Class III
Director, to fill the vacancy created by the increase in the size of the Board.
For information concerning the executive officers of the Company, see pages
24 and 25 of the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 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.
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 1994 all filing requirements applicable to its
directors, officers and ten percent holders under said section were satisfied,
except that Interstate Properties, a New Jersey general partnership
("Interstate"), and each of its three general partners, Steven Roth, Russell B.
Wight, Jr. and David Mandelbaum, filed a report on Form 4 subsequent to the due
date thereof, disclosing one transaction consisting of the open market purchase
by Interstate of 4,000 shares of class A common, $.01 par value (the "Common
Stock"), of the Company.
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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.
James D. Krugman, Chairman of the Board of the Company, holds an option
granted under the Company's 1992 Director Stock Option Plan (the "Director
Plan") on December 13, 1993 covering 95,000 shares of Common Stock, exercisable
at a per share price of $14.50, the closing price of the Common Stock on the
NASDAQ National Stock Market on such date. As a consequence of the exchange of
options previously granted by IGL for options granted by the Company (see
"Stock Plans" below), on December 9, 1992 William Gorham, Sheldon Weinig and
Russell B. Wight, Jr., who became directors of the Company upon consummation of
the IGL Acquisition, were granted options covering 57,720 shares, 22,200 shares
and 16,650 shares of Common Stock, respectively, at exercise prices ranging
from $6.53 to $13.74 per share, calculated in accordance with the provisions of
the IGL Acquisition Agreement. In January 1995, Mr. Weinig exercised options
covering 5,550 shares at an exercise price of $6.53 per share. In July 1993,
options covering 23,310 shares of Common Stock were granted by the Company to
William Gorham in replacement of options then expiring covering the same number
of shares, at the exercise price per share under the prior options of $9.68.
Except as aforesaid, no current director of the Company holds any options
granted by the Company under any stock option plan. Mr. Richard holds additional
options granted in connection with his acceptance of employment with the
Company. For information with respect to such options and other agreements
entered into by the Company and certain directors, see "Certain Agreements with
Directors and Executive Officers" below.
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 whose salary and bonus
exceeded $100,000 during the most recent fiscal year:
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<TABLE>
SUMMARY COMPENSATION TABLE
<CAPTION>
Long Term
Compensation
Annual Compensation ------------
------------------------------------------ Securities
Name and Other Underlying All Other
Principal Position Year Salary Bonus Compensation(1) Options(#) Compensation
- ------------------ ---- ------ ----- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Jean-Paul Richard 1994 $400,000 $264,000 -- -- $ 83,405(3)
President and Chief 1993 35,386 236,250(4) -- 300,000 5,613
Executive Officer(2) 1992 -- -- -- -- --
William A. Martin 1994 165,334 51,709 -- 8,000 15,623(5)
Senior Vice President- 1993 155,807 15,800 -- 15,000 14,759
Chief Financial Officer 1992 126,627 40,000 -- -- 12,227
R. William Pittman 1994 230,000 -- -- 12,000 24,217(7)
Senior Vice President- 1993 49,539 50,000(4) -- 75,000 5,039
Operations(6) 1992 -- -- -- -- --
Anthony W. Hooper 1994 220,000 100,100 53,968 12,000 80,730(9)
Senior Vice President- 1993 17,770 -- -- 75,000 2,315
Marketing(8) 1992 -- -- -- -- --
Raymond P. Toth 1994 110,000 40,040 16,353 8,000 53,286(11)
Vice President-Human 1993 -- -- -- -- --
Resources(10) 1992 -- -- -- -- --
<FN>
- ------------------
(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. Includes 1994 reimbursement for taxes for Messrs. Hooper and Toth
in the respective amounts of $43,509 and $16,353.
(2) Mr. Richard joined the Company in November 1993.
(3) Represents $79,006 in relocation expense and $4,399 in term life insurance
premiums.
(4) Represents amounts in lieu of bonus from former employer.
(5) Represents $12,465 in profit-sharing contributions under the Company's
401(k) Profit-Sharing Plan (the "Restated Plan"), $400 in 401(k)
contributions under such plan and $2,758 in term life insurance premiums.
(6) Mr. Pittman joined the Company in October 1993.
(7) Represents $20,497 in relocation expense, $400 in 401(k) contributions
under the Restated Plan and $3,320 in term life insurance premiums.
(8) Mr. Hooper joined the Company in November 1993.
(9) Represents $78,779 in relocation expense, $400 in 401(k) contributions
under the Restated Plan and $1,551 in term life insurance premiums.
(10) Mr. Toth joined the Company in February 1994.
(11) Represents $51,778 in relocation expense and $1,508 in term life insurance
premiums.
</FN>
</TABLE>
For information with respect to compensation to James D. Krugman, Chairman
of the Board of the Company, see "Director Compensation" above and "Certain
Agreements with Directors and Executive Officers" below.
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Option Grant Table. The following table sets forth certain information
regarding options granted by the Company during the year ended December 31, 1994
to the individuals named in the above compensation table:
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Individual Grants
------------------------------------------------------- Potential Realizable
Number of Value of Assumed
Securities % of Total Annual Rates of Stock
Underlying Options Granted Exercise Price Appreciation
Options to Employees Price Expiration for Option Term(1)
Name Granted(#) In Fiscal Year ($/sh) Date 5% 10%
- ---- ---------- ---------------- -------- ---------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Jean-Paul Richard -- -- -- -- -- --
William A. Martin 8,000 4.3% $13.31 04/01/99 $12,214 $43,297
R. William Pittman 12,000 6.4 13.31 04/01/99 18,321 64,496
Anthony W. Hooper 12,000 6.4 13.31 04/01/99 18,321 64,496
Raymond P. Toth 8,000 4.3 13.31 04/01/99 12,214 43,297
<FN>
- -------------------------
(1) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on arbitrarily assumed rates of stock price appreciation of 5%
and 10% compounded annually from the date the respective options are
granted to their expiration date.
</FN>
</TABLE>
Aggregate Option Exercises and Year-End Option Table. The following table
sets forth certain information regarding exercises of stock options, and stock
options held as of December 31, 1994, by the individuals named in the above
compensation table:
<TABLE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-Money Options
Options at Fiscal Year-End(#) at Year-End(1)
Shares Acquired Value ------------------------------ ---------------------
Name on Exercise (#) Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jean-Paul Richard..... -- $ -- 50,000 250,000 $ -- $ --
William A. Martin..... 1,750 15,531 19,500 13,500 -- --
R. William Pittman.... -- -- 53,000 34,000 -- --
Anthony W. Hooper..... -- -- 28,000 59,000 -- --
Raymond P. Toth....... -- -- 2,000 6,000 -- --
<FN>
- ---------------------
(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.
</FN>
</TABLE>
STOCK PLANS
Under the Company's 1983 Stock Option Plan (the "Prior Plan"), there were
outstanding options for 38,728 shares of Common Stock as
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of April 1, 1995. No further options may be granted under the Prior Plan.
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.
The Employee Plan is administered by the Compensation Committee of the
Board of Directors, and the Director Plan is administered by the Director Stock
Option Committee of the Board of Directors. Each such committee, with respect to
the plan that it administers, 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
Compensation Committee may authorize another committee of the Board of Directors
constituted for such purpose to allocate options approved in the aggregate by
the Compensation Committee 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 December 1992, the stockholders of the Company approved the INA
Acquisition Corp. Share Option Plan previously adopted by the Board of Directors
and sole stockholder of INA Acquisition Corp. In connection with the
consummation of the IGL Acquisition, options (the "Substitute IGL Options")
covering an aggregate of 562,938 shares of Common Stock (353,612 shares of which
were covered by options outstanding at April 1, 1995), granted pursuant to such
plan in substitution for options (the "IGL Options") outstanding prior to the
IGL Acquisition to acquire Ordinary Shares of IGL, became exercisable. Each
Substitute IGL Option covers the number of shares of Common Stock that would
have been received in the IGL Acquisition had the underlying IGL Option been
exercised for Ordinary Shares in accordance with the terms of such option
immediately prior to the IGL Acquisition (subsequent to vesting thereof
pursuant to the IGL Acquisition Agreement), at a price per share equal to: (x)
the exercise price per share in effect on such
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date times the number of Ordinary Shares previously covered by such IGL Option,
divided by (y) the number of shares of Common Stock covered by such Substitute
IGL Option. The Company caused the adoption of such plan solely in order to
implement the provisions of the IGL Acquisition Agreement, and INA Acquisition
Corp. will not grant any additional options under such plan.
See "Certain Agreements with Directors and Executive Officers" below for a
description of additional options granted to Mr. Richard in connection with his
acceptance of employment with the Company.
CERTAIN AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS
The Company and James D. Krugman, Chairman of the Board of the Company are
parties to an employment agreement which became effective on December 9, 1992
upon the closing of the IGL Acquisition. Such agreement provides that Mr.
Krugman will serve as Chairman of the Board of the Company until the later of
(i) the sixth anniversary of such closing or (ii) the date of the sixth annual
meeting of stockholders of the Company following July 3, 1992 or until such
other date as Mr. Krugman's employment terminates pursuant to such agreement, at
an annual salary 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.
The Company's arrangements with Jean-Paul Richard, under which Mr. Richard
became President and Chief Executive Officer in November 1993, in addition to
base salary provide 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, which the Company will register under the Securities Act of 1933,
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 will vest and become exercisable through the option term with respect to the
remainder of such shares on the third anniversary thereof, except that in the
event of: (i) the termination of Mr. Richard's employment without cause, the
option will vest with respect to a share of the portion not then vested
calculated pro-rated on the basis of the proportion that the period of service
bears to three years, and (ii) the election of a Board of Directors other than
pursuant to the IGL
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Acquisition Agreement while Mr. Richard remains employed, the option will become
fully-vested.
The Company also agreed to reimburse Mr. Richard for specified reasonable
relocation costs, and to provide a $700 per month car allowance, reimbursement
for country club membership fees and health insurance benefits. The Company's
arrangements with Mr. Richard provide that in the event Mr. Richard's employment
with the Company is terminated other than for cause, the Company will be
obligated to pay severance to Mr. Richard in an amount equal to two years' base
salary.
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 R. William Pittman, under which Mr. Pittman
became Senior Vice President-Operations in October 1993, in addition to base
salary provide for bonus payments in an amount up to $100,000 per annum, based
upon performance criteria. The Company's arrangements with Mr. Pittman provided
for the Company to reimburse Mr. Pittman for reasonable relocation costs, and to
provide a $750 per month car allowance, reimbursement for one country club
membership and medical and life insurance benefits. In the event Mr. Pittman's
employment is terminated by the Company other than for cause, the Company would
be obligated to pay to him amounts equal to twelve months' base salary.
The Company's arrangements with Anthony W. Hooper, under which Mr. Hooper
became Senior Vice President-Marketing in November 1993, in addition to base
salary provide for bonus payments in an amount up to $110,000 per annum based on
performance criteria. The Company's arrangements with Mr. Hooper provided for
the Company to reimburse Mr. Hooper for reasonable relocation costs, and to
provide a $700 per month car allowance, reimbursement for one country club
membership and medical and life insurance benefits. In connection with his
relocation to Memphis, the Company extended an interest-free bridge loan in the
amount of $230,000 to Mr. Hooper, which was repaid in August 1994. In the event
Mr. Hooper's employment is terminated by the Company other than for cause, the
Company would be obligated to pay to him amounts equal to twelve months' base
salary.
The Company's arrangements with Raymond P. Toth, under which Mr. Toth
became Vice President-Human Resources in February 1994, in addition to base
salary provide for bonus payments in an amount up to 40% of base salary per
annum, based upon performance criteria. The Company's arrangements with Mr. Toth
also provided for the Company to reimburse Mr. Toth for reasonable relocation
costs, and to provide medical and life insurance benefits. In connection with
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his relocation to Memphis, the Company extended an interest-free bridge loan in
the amount of $110,000 to Mr. Toth, which was repaid in October 1994.
The Company had consulting arrangements with Brian Chandler and Douglas K.
Chick through December 1994, pursuant to which the Company remunerated each in
the amount of $5,000 per month, in exchange for consultation in connection with
development of the European market for the NuPipe(registered trademark) Process,
the Company's second trenchless pipeline rehabilitation process. Each of Messrs.
Chandler and Chick is a director of the Company and a member of a group (the
"Ringwood Group"), within the meaning of Section 13(d) of the Securities
Exchange Act of 1934, which holds in excess of 5% of the outstanding Common
Stock. The Company's arrangements with Messrs. Chandler and Chick, respectively,
were terminable at will by either the Company or the consultant, and provided
for devotion by Messrs. Chandler and Chick, respectively, of such business time
as would be required by the Company and reimbursement by the Company of
out-of-pocket expenses incurred in connection with provision of such consulting
services. Such arrangements were terminated by the Company in December 1994.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1994, the members of the Company's
Compensation Committee were James D. Krugman, Paul Biddelman, William Gorham and
Steven Roth. Mr. Krugman is Chairman of the Board of the Company, and formerly
held the position of Chief Executive Officer. Mr. Krugman is a partner of the
law firm of Krugman, Chapnick & Grimshaw, which rendered legal services to the
Company during the last fiscal year and will continue to render legal services
to the Company in the future. Mr. Biddelman is Treasurer of Hanseatic
Corporation, which holds the Company's 8.5% senior subordinated note in the
principal amount of $5,000,000. See "Item 13. Certain Relationships and Related
Transactions," which information is incorporated by reference in response to
this item.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
--------------------------------
The following table sets forth certain information as of April 1, 1995 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:
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<TABLE>
<CAPTION>
Number of Shares
of Common Stock Percent
Beneficial Owner Beneficially Owned(1) of Class
---------------- --------------------- --------
<S> <C> <C>
Group comprised of Parkwood Limited,
as trustee of the Anthony Basmadjian
"P" Settlement, Brian Chandler,
Ringwood Limited, Barford Limited,
as trustee of the Anthony Basmadjian
Settlement, and Douglas K. Chick............. 1,514,773(2) 10.6%
Parkwood Limited, as trustee of the
Anthony Basmadjian "P" Settlement,
c/o Century House
Richmond Road
Hamilton, Bermuda(3)....................... 880,641 6.1
Brian Chandler
8933 St. Gallen 60
Steiermark, Austria(4)..................... 634,132 4.4
Ringwood Limited
Century House
Richmond Road
Hamilton, Bermuda(4)....................... 461,391 3.2
Barford Limited, as trustee of
the Anthony Basmadjian Settlement
LeGrand Dixcart
Sark, Channel Islands(4)(5)................ 461,391 3.2
Douglas K. Chick
Bays Hill Cottage
Barnett Lane
Elstree, Hertfordshire
United Kingdom(3)(4)(5)................... 1,342,032 9.4
Interstate Properties
Park 80 West-Plaza Two
Saddle Brook, New Jersey 07663(6)........... 1,660,072 11.6
David Mandelbaum
80 Main Street
West Orange, New Jersey 07052............. 1,660,072(7) 11.6
Steven Roth
Park 80 West-Plaza Two
Saddle Brook, New Jersey 07663............ 1,670,072(7) 11.6
Russell B. Wight, Jr.
Park 80 West-Plaza Two
Saddle Brook, New Jersey 07663............ 1,681,394(7)(8) 11.7
T. Rowe Price Associates, Inc................ 1,407,400(9) 9.8
100 East Pratt Street
Baltimore, Maryland 21202
Harbor Capital Management Co., Inc........... 754,500(10) 5.3
125 High Street
Boston, Massachusetts 02110
Paul A. Biddelman............................ 380,877(11) 2.6
William Gorham............................... 62,545(13) (12)
James D. Krugman............................. 131,164(14) (12)
Silas Spengler............................... 2,000 (12)
</TABLE>
14
<PAGE> 15
<TABLE>
<S> <C> <C>
Sheldon Weinig............................... 28,749(15) (12)
Jean-Paul Richard............................ 60,900(16) (12)
William A. Martin............................ 30,625(17) (12)
R. William Pittman........................... 56,000(18) (12)
Anthony W. Hooper............................ 46,300(19) (12)
Raymond P. Toth.............................. 4,000(18) (12)
Directors and Executive
Officers as a group (14 persons)............ 3,992,766(20) 26.6%
<FN>
- --------------------
(1) Except as otherwise indicated, as of April 1, 1995 all of such shares are
owned with sole voting and investment power.
(2) Represents: (i) 172,741 shares beneficially owned by Mr. Chandler; (ii)
880,641 shares beneficially owned by Parkwood Limited, as trustee of the
Anthony Basmadjian "P" Settlement ("Parkwood"), with shared voting and
investment power with Mr. Chick (see footnote (3)); (iii) 461,391 shares
beneficially owned by Ringwood Limited ("Ringwood") with shared voting and
investment power with Mr. Chandler, Barford Limited, as trustee of the
Anthony Basmadjian Settlement ("Barford"), and Mr. Chick (see footnotes (4)
and (5)).
(3) In a Statement on Schedule 13D, as amended (the "Ringwood Schedule 13D"),
filed with the Securities and Commission by the Ringwood Group and its
members, Parkwood and Mr. Chick have reported that the 880,641 shares of
Common Stock beneficially owned by Parkwood are held with shared voting and
investment power with Mr. Chick under an oral agreement under which
Parkwood will not vote or dispose of any securities of the Company without
the written approval of Mr. Chick having first been obtained. Parkwood and
Mr. Chick have also reported that the settlor of the Anthony Basmadjian "P"
Settlement, as to which Parkwood acts as trustee, has expressed his wishes
to the effect that the powers of the 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
Parkwood with respect to the securities of the Company held by Parkwood as
trustee of such settlement, but, under governing law, no right to enforce
such settlement so as to override or compel the trustee or the councillors
who nominate beneficiaries of the settlement in the exercise of a trust
power or discretion in a particular manner.
(4) In the Ringwood Schedule 13D, the Ringwood Group has reported that Ringwood
is a holding company whose stockholders are Mr. Chandler and Barford, and
that the 461,391 shares of Common Stock beneficially owned by Ringwood are
held with shared voting and investment power with Mr. Chandler and Barford
and, as a result of the arrangements described under footnote (5), Mr.
Chick.
(5) In the Ringwood Schedule 13D, Barford and Mr. Chick have reported that any
securities of the Company that may become beneficially owned by Barford
will be held with shared voting and investment power with Mr. Chick under
an oral agreement under which Barford will not vote or dispose of any
securities of the Company without the written approval of Mr. Chick having
first been obtained. Barford and Mr. Chick have also reported that the
settlor of the Anthony Basmadjian Settlement, as to which Barford acts as
trustee, has expressed his wishes to the effect that the powers of the
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 with respect to any securities of the
Company that may become held by Barford as trustee of such settlement, but,
under governing law, no right to enforce such settlement so as to override
or compel the trustee or the councillors who nominate beneficiaries of the
settlement in the exercise of a trust power or discretion in a particular
manner.
15
<PAGE> 16
(6) In a Statement on Schedule 13D filed with the Securities and Exchange
Commission by Interstate Properties and its partners, such parties has
reported that Interstate Properties is a general partnership consisting of
David Mandelbaum, Steven Roth and Russell B. Wight, Jr.
(7) Includes 1,660,072 shares beneficially owned by Interstate Properties.
(8) Includes 16,650 shares issuable upon exercise of stock options granted by
the Company and exercisable at April 1, 1995.
(9) Includes 961,200 shares beneficially owned by T. Rowe Price New Horizons
Fund, Inc. (the "Fund"), a registered investment company. In a Statement on
Schedule 13G 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 1,407,400 shares, and that Associates and the Fund have sole voting
power over, respectively, 112,000 shares and 961,200 shares.
(10) In a Statement on Schedule 13G filed with the Securities and Exchange
Commission, Harbor Capital Management Co., Inc., a registered investment
advisor, has reported that it has shared voting and investment power over
such shares.
(11) Includes 350,877 shares issuable pursuant to currently exercisable warrants
granted by the Company to Hanseatic Corporation ("Hanseatic") and held for
discretionary customer accounts. 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 13. Certain Relationships and
Related Transactions."
(12) Less than one percent.
(13) Includes 57,720 shares issuable upon exercise of stock options granted by
the Company and exercisable at April 1, 1995.
(14) Includes 47,500 shares issuable upon exercise of stock options granted by
the Company and exercisable at April 1, 1995, 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.
(15) Includes 16,650 shares issuable upon exercise of stock options granted by
the Company and exercisable at April 1, 1995.
(16) Includes 50,000 shares issuable upon exercise of stock options granted by
the Company and exercisable at April 1, 1995.
(17) Includes 25,250 shares issuable upon exercise of stock options granted by
the Company and exercisable at April 1, 1995.
(18) Represents shares issuable upon exercise of stock options granted by the
Company and exercisable at April 1, 1995.
(19) Includes 31,000 shares issuable upon stock options granted by the Company
and exercisable at April 1, 1995.
(20) Includes 655,647 shares issuable upon exercise of stock options granted by
the Company and exercisable at April 1, 1995 and currently exercisable
warrants held by Hanseatic.
</FN>
</TABLE>
16
<PAGE> 17
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, Parkwood, Ringwood, and Brian
Chandler and Douglas K. Chick 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"). Parkwood and
Messrs. Chandler and Chick, together with Ringwood and Barford, are members of
the Ringwood Group, and Messrs. Chandler and Chick are directors of the
Company. The Non-Recourse Note bears 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
is due July 3, 1995. 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 of Common Stock on a
share-for-share basis). During the year ended December 31, 1994, Ringwood paid
to the Company $352,892 in interest on the Non-Recourse Note.
As principal stockholders of IGL, the members of the Ringwood Group and
Interstate Properties (each, a "Registration Rights Stockholder"), in connection
with the IGL Acquisition, received certain registration rights covering the
shares of Common Stock issued in exchange for their Ordinary Shares, and all
other shares of Common Stock held by them. Such agreement terminates in May
1999. Under such agreement, a Registration Rights 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 Registration Rights Stockholder is entitled to three demand registrations)
of no less than 500,000 shares of Common Stock. In addition, the Registration
Rights 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.
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 $5,000,000 (the "Subordinated
Note"), and related warrants exercisable with respect to 350,877 unregistered
shares of Common
17
<PAGE> 18
Stock, to Hanseatic Corporation. Paul Biddelman, a director of the Company, is
Treasurer of Hanseatic. The Subordinated Note requires quarterly payments of
interest at 8.5% per annum and installments of principal in the amount of
$1,000,000 on each of the fifth through eighth anniversary dates of closing,
with the entire remaining principal due nine years after closing. The
Subordinated Note is subordinated to bank and other institutional financing, and
purchase money debt incurred in connection with acquisitions of businesses, is
prepayable at the option of the Company after the second anniversary of closing,
at premiums until the fifth anniversary of closing ranging from 3% to 1% of the
amount prepaid, and is subject to defeasance at any time while prepayment is not
permitted in the event the Company deposits cash or government securities
sufficient to service payments under the note. During the year ended December
31, 1994, the Company paid to Hanseatic $425,000 in interest on the Subordinated
Note. The warrants are 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.
James D. Krugman, Chairman of the Board of the Company and Howard Kailes,
Secretary of the Company, are members of the law firm of Krugman, Chapnick &
Grimshaw. During the year ended December 31, 1994, Krugman, Chapnick & Grimshaw
received fees for legal services rendered to the Company of $755,000, together
with reimbursement of out-of-pocket expenses of $161,745. It is expected that
Krugman, Chapnick & Grimshaw will continue to render legal services to the
Company in the future.
18
<PAGE> 19
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 26, 1995 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
- --------- ------ ----
JEAN-PAUL RICHARD* Principal Executive April 26, 1995
- ----------------------- Officer and Director
Jean-Paul Richard
/s/ WILLIAM A. MARTIN Principal Financial April 26, 1995
- ----------------------- and Accounting Officer
William A. Martin
PAUL A. BIDDELMAN* Director April 26, 1995
- -----------------------
Paul A. Biddelman
BRIAN CHANDLER* Director April 26, 1995
- -----------------------
Brian Chandler
DOUGLAS K. CHICK* Director April 26, 1995
- -----------------------
Douglas K. Chick
19
<PAGE> 20
WILLIAM GORHAM* Director April 26, 1995
- -----------------------
William Gorham
JAMES D. KRUGMAN* Director April 26, 1995
- -----------------------
James D. Krugman
STEVEN ROTH* Director April 26, 1995
- -----------------------
Steven Roth
SILAS SPENGLER* Director April 26, 1995
- -----------------------
Silas Spengler
SHELDON WEINIG* Director April 26, 1995
- -----------------------
Sheldon Weinig
RUSSELL B. WIGHT, JR.* Director April 26, 1995
- -----------------------
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)
20
