<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant / /
Filed by a Party other than the Registrant / x /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
INSITUFORM TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Krugman, Chapnick & Grimshaw
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
Set forth the amount on which the filing fee is calculated and state how
it was determined.
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
------------------------------------------------------------------------
<PAGE> 2
INSITUFORM TECHNOLOGIES, INC.
------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 4, 1996
------------------------------
Memphis, Tennessee
May 3, 1996
TO THE HOLDERS OF COMMON STOCK
OF INSITUFORM TECHNOLOGIES, INC.:
The Annual Meeting of the Stockholders of Insituform Technologies, Inc.
(the "Company") will be held at The New York Marriott East Side Hotel, 525
Lexington Avenue, New York, New York on Tuesday, June 4, 1996, at 10:00 A.M.,
local time, for the following purposes, as more fully described in the
accompanying Proxy Statement:
(1) To elect four Class I Directors of the Company for the ensuing
three year term and until their respective successors are elected and have
qualified; and
(2) To transact such other business as may properly come before the
Meeting or any adjournment or adjournments thereof.
The close of business on April 22, 1996 has been fixed by the Board of
Directors as the record date for the determination of stockholders entitled to
notice of, and to vote at, the Meeting.
By Order of the Board of Directors
HOWARD KAILES
Secretary
You are cordially invited to attend the Meeting in person. If you do not
expect to, please mark, sign and date the enclosed form of Proxy and mail in the
enclosed return envelope, which requires no postage if mailed in the United
States, so that your vote can be recorded.
<PAGE> 3
PROXY STATEMENT
This Proxy Statement, which will be mailed on or about May 3, 1996 to the
persons entitled to receive the accompanying Notice of Annual Meeting of
Stockholders, is provided in connection with the solicitation of proxies on
behalf of the Board of Directors of Insituform Technologies, Inc. for use at the
Annual Meeting of Stockholders (the "Meeting") of the Company to be held on June
4, 1996 and at any adjournment or adjournments thereof, for the purposes set
forth in such Notice. The Company's executive office is located at 1770 Kirby
Parkway, Suite 300, Memphis, Tennessee 38138.
At the close of business on April 22, 1996, the record date stated in the
accompanying Notice, the Company had 27,150,946 outstanding shares of class A
common stock, $.01 par value (the "Common Stock"), each of which is entitled to
one vote with respect to each matter to be voted on at the Meeting. The Company
has no class or series of voting stock outstanding other than the Common Stock.
A majority of the issued and outstanding shares of Common Stock present in
person or by proxy will constitute a quorum for the transaction of business at
the Meeting. Directors are elected by a plurality vote.
Abstentions and broker non-votes (as hereinafter defined) are counted as
present for the purpose of determining the presence or absence of a quorum for
the transaction of business. For the purpose of determining the vote required
for approval of matters to be voted on at the Meeting, shares held by
stockholders who abstain from voting will be treated as being "present" and
"entitled to vote" on the matter and, thus, an abstention has the same legal
effect as a vote against the matter. However, in the case of a broker non-vote
or where a stockholder withholds authority from his proxy to vote the proxy as
to a particular matter, such shares will not be treated as "present" and
"entitled to vote" on the matter. Accordingly, a broker non-vote or the
withholding of a proxy's authority will have no effect on the outcome of the
vote on the matter. A "broker non-vote" refers to shares represented at the
meeting in person or by proxy by a broker or nominee where such broker or
nominee (i) has not received voting instructions on a particular matter from the
beneficial owner or persons entitled to vote; and (ii) the broker or nominee
does not have the discretionary voting power on such matter.
2
<PAGE> 4
I. ELECTION OF DIRECTORS
At the Meeting, stockholders will elect four directors denominated as Class
I directors. This is in accord with the Company's certificate of incorporation
which provides for the division of its Board of Directors into three classes
with the term of office of the Class I directors expiring at the Meeting. Class
II and Class III directors will be elected at the Annual Meeting of Stockholders
of the Company to be held in 1997 and 1998, respectively. After the expiration
of the term of each class, the stockholders will elect directors in each class
to serve for a term of three years.
Accordingly, four Class I directors will be elected at the Meeting, each to
serve for three years and until a successor has been elected and has qualified.
It is the intention of each of the persons named in the accompanying form of
proxy to vote the shares represented thereby in favor of the four Class I
nominees listed in the following table, unless otherwise instructed in such
proxy. Each such nominee is presently serving as a director of the Company. The
Company's Board of Directors has no reason to believe that any of the nominees
listed in the following table will be unable or will decline to serve. In case
any of the nominees is unable or declines to serve the persons named in the
accompanying form of proxy will vote the shares represented by such proxy for
another person duly nominated by the Company's Board of Directors in such
nominee's stead or, if no other person is so nominated, to vote such shares only
for the remaining nominees.
CERTAIN INFORMATION CONCERNING NOMINEES AND DIRECTORS
Certain information concerning the four nominees for election as Class I
directors, and the other current directors of the Company, is set forth below.
Such information was furnished by them to the Company:
Nominees for Election:
WILLIAM GORHAM (Class I director), age 65; President, The Urban
Institute (government policy research) since prior to 1991; Director of the
Company since 1992.
ALVIN J. SITEMAN (Class I director), age 68; Chairman of the Board of
Mark Twain Bancshares, Inc. since prior to 1991; President of Flash Oil
Corporation, Site Oil Corporation, Site Oil Company of Missouri and The
Siteman Organization (oil and real estate) since prior to 1991; Director of
the Company since 1995.
SILAS SPENGLER (Class I director), age 65; 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 1991 to 1992; Director of
the Company since 1987.
SHELDON WEINIG (Class I director), age 68; 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 1991 to 1994;
Director: Aseco Corporation, Intermagnetics General Corporation; Director
of the Company since 1992.
Other Directors Whose Term of Office Will Continue After the Meeting:
ROBERT W. AFFHOLDER (Class II director), age 60; Senior Vice
President-Chief Operating Officer of North American Contracting Operations
of the Company since October 1995; Vice Chairman, Insituform Mid-America,
Inc. ("IMA"), from 1993 to 1995; President of IMA from 1994 to 1995 and
from prior to 1991 to 1993; Director of the Company since 1995.
PAUL A. BIDDELMAN (Class II director), age 50; Treasurer, Hanseatic
Corporation (private investment company) since 1992; Managing Director,
Clements Taee Biddelman Incorporated (financial advisors) from 1991 to
1992; Director: Celadon Group, Inc., Electronic Retailing Systems
International, Inc., Premier Parks Inc., Petroleum Heat & Power Company,
Inc., TLC Beatrice International Holdings, Inc., Oppenheimer Group, Inc.,
Star Gas Corporation (general partner of Star Gas Partners, L.P.); Director
of the Company since 1988.
3
<PAGE> 5
BRIAN CHANDLER (Class III director), age 70; Private investor since
prior to 1991; consultant to the Company from prior to 1991 to 1994;
Director of the Company since 1987.
DOUGLAS K. CHICK (Class II director), age 72; Private investor since
prior to 1991; consultant to the Company from 1991 to 1994; Director of the
Company since 1990.
JEROME KALISHMAN (Class III director), age 68; Vice Chairman of the
Board of the Company since October 1995; Chairman and Chief Executive
Officer of IMA from prior to 1991 to 1995; Director of the Company since
1995.
JAMES D. KRUGMAN (Class III director), age 47; Partner, Krugman,
Chapnick & Grimshaw (attorneys) since prior to 1991; Chairman of the Board
of the Company since 1988; Director: Hayward Industries, Inc.; Director of
the Company since 1987.
JEAN-PAUL RICHARD (Class III director), age 53; 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, Thomas & Betts
Corporation; Director of the Company since 1994.
STEVEN ROTH (Class II director), age 54; General Partner, Interstate
Properties (real estate development and construction) since prior to 1991;
Chairman and Chief Executive Officer, Vornado Realty Trust (real 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.
RUSSELL B. WIGHT, JR. (Class III director), age 56; 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 so as to divide the Board of Directors of the Company
into three classes, as equal in size as possible, having staggered three-year
terms, with the term of one class expiring each year, and to fix the number of
directors of the Company at not less than six nor more than 15, the exact number
to be specified in the By-laws of the Company.
In October 1995, in connection with the transaction pursuant to which the
Company's wholly-owned subsidiary, ITI Acquisition Corp. ("ITI Sub"), merged
into and with IMA so that IMA became a wholly-owned subsidiary of the Company
(the "IMA Merger"), the Company's certificate of incorporation was further
amended to replace certain other terms added in connection with the IGL
Acquisition and provide for the appointment of directors and filling of
vacancies on the Board as contemplated by the Agreement and Plan of Merger dated
as of May 23, 1995 among the Company, ITI Sub and IMA. Upon consummation of the
IMA Merger, the Board of Directors was expanded to include: Messrs. Gorham,
Siteman, Spengler and Weinig, for a term expiring at the 1996 annual meeting of
stockholders of the Company ("Class I Directors"); Messrs. Affholder, Biddelman,
Chick and Roth, for a term expiring at the 1997 annual meeting of stockholders
of the Company ("Class II Directors"); and Messrs. Chandler, Kalishman, Krugman,
Richard and Wight for a term expiring at the 1998 annual meeting of stockholders
of the Company ("Class III Directors"). Other than Mr. Richard, the directors
are grouped as follows: (i) Messrs. Biddelman, Chandler, Chick, Krugman and
Spengler constitute the "INA Group"; (ii) Messrs. Gorham, Roth, Weinig and Wight
constitute the "IGL Group"; and (iii) Messrs. Affholder, Kalishman and Siteman
constitute the "IMA Group". The INA Group and the IGL Group, together with Mr.
Richard, comprised the Board of Directors of the Company prior to the IMA
Merger, and the IMA Group was designated for appointment by IMA. The Company has
further agreed that during the period from the consummation of the IMA Merger
until December 9, 1998 (the "Term"), the Company will nominate and recommend for
re-election to its Board of Directors, upon expiration of their terms, the Class
I Directors, the Class II Directors and the Class III Directors. If, during the
Term, any director resigns or is unable to serve for any reason, such vacancy
will be
4
<PAGE> 6
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.
No family relationship exists between any of the directors or executive
officers of the Company.
BOARD MEETINGS AND COMMITTEES
During the year ended December 31, 1995, the Board of Directors of the
Company held eight meetings, and took action by unanimous written consent on six
occasions. No current director attended fewer than 75% of the aggregate number
of meetings of the Board of Directors of the Company and meetings of committees
of the board on which such person served which were held during the period that
he served.
During the year ended December 31, 1995, the members of the Audit Committee
of the Board of Directors of the Company were Silas Spengler, Sheldon Weinig
and, after the consummation of the IMA Merger, Jerome Kalishman. The Audit
Committee is responsible for overseeing that management fulfills its
responsibilities in connection with the preparation of the consolidated
financial statements of the Company and its subsidiaries. The committee's
functions include making recommendations to the board regarding the engaging and
discharging of the Company's independent auditors, reviewing with the
independent auditors the plan and the results of the auditing engagement,
reviewing the scope and results of the Company's procedures for internal
auditing, approving the professional services provided by the independent
auditors, reviewing the independence of the independent auditors, and reviewing
the adequacy of the Company's system of internal accounting controls. During the
year ended December 31, 1995, the Audit Committee held one meeting.
During the year ended December 31, 1995, the members of the Compensation
Committee of the Board of Directors of the Company were Paul A. Biddelman,
William Gorham, James D. Krugman, Steven Roth and, after the consummation of the
IMA Merger, Alvin J. Siteman. The functions of the Compensation Committee
include making recommendations to the Board of Directors of the Company
regarding the salaries, bonuses, fringe benefits or compensation of any kind for
the officers and directors of the Company. The Compensation Committee is also
responsible for the administration of the Company's 1983 Stock Option Plan
(under which no further options may be granted), options assumed by the Company
under the Insituform Mid-America, Inc. Stock Option Plan and the Company's 1992
Employee Stock Option Plan, and determines the eligible persons who are to
receive options under the last such plan, the number of shares to be subject to
each option and the other terms and conditions upon which options under such
plan are granted and made exercisable. During the year ended December 31, 1995,
the Compensation Committee held one meeting and took action by unanimous written
consent on one occasion.
During the year ended December 31, 1995, the members of the Director Stock
Option Committee of the Board of Directors of the Company were Brian Chandler
and Douglas K. Chick. The Director Stock Option Committee administers the 1992
Director Stock Option Plan and determines the eligible persons who are to
receive options, the number of shares to be subject to each option and the other
terms and conditions upon which options under such plan are granted and made
exercisable. During the year ended December 31, 1995, the Director Stock Option
Committee held one meeting.
The Company has not appointed a nominating committee of its Board of
Directors.
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.
5
<PAGE> 7
As a consequence of the exchange of options previously granted by IGL for
options granted by the Company, 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 terms of the IGL Acquisition. In January 1995, Mr. Weinig exercised
options covering 5,550 shares at an exercise price of $6.53 per share, at which
time options covering 5,550 shares and 11,100 shares held by, respectively,
Messrs. Gorham and Wight expired. 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, which were exercised by Mr. Gorham
in June and July 1995. Options covering 28,860 shares, 16,650 shares and 5,550
shares held by, respectively, Messrs. Gorham, Weinig and Wight expired in
December 1995.
As a consequence of the assumption and exchange of options previously
granted by IMA for options granted by the Company, on October 25, 1995 Alvin
Siteman, who became a director of the Company upon consummation of the IMA
Merger, held options covering 38,335 shares, at exercise prices ranging from
$3.00 to $9.79 per share, calculated in accordance with the terms of the IMA
Merger (see "Stock Plans" below).
Mr. Richard holds options covering 300,000 shares (see "Certain Agreements
with Directors and Executive Officers" below), granted in connection with his
acceptance of employment with the Company in 1993, and covering 100,000 shares,
granted in 1995 under the Director Plan (see "Executive Compensation" below).
Except as aforesaid, no current director of the Company holds any options
granted by the Company. For information with respect to other agreements entered
into by the Company and certain directors, see "Certain Agreements with
Directors and Executive Officers" below.
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<PAGE> 8
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth certain
information with respect to compensation for each of the Company's last three
completed fiscal years of the Company's Chief Executive Officer and each of the
four other most highly-compensated executive officers during the most recent
fiscal year:
SUMMARY COMPENSATION TABLE
<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 1995 $400,000 -- -- 100,000 $ 12,542(3)
President and Chief 1994 400,000 $264,000 -- -- 83,405
Executive Officer(2) 1993 35,386 236,250(4) -- 300,000 5,613
Jerome Kalishman 1995 214,583 75,000 -- -- 19,972(6)
Vice Chairman of the 1994 225,000 -- -- -- 4,319
Board(5) 1993 225,000 37,500 -- -- 8,260
Robert W. Affholder 1995 229,167 75,000 -- -- 11,531(8)
Senior Vice President -- 1994 225,000 -- -- -- 3,509
Chief Operating Officer 1993 225,000 37,500 -- -- 7,450
of North American
Contracting Operations(7)
Anthony W. Hooper 1995 235,000 -- -- 25,000 2,405(11)
Senior Vice President -- 1994 220,000 100,100 $53,968(10) 12,000 80,730
Marketing and Technology(9) 1993 17,770 -- -- 75,000
William A. Martin 1995 175,000 -- -- 10,000 14,767(12)
Senior Vice President -- 1994 165,334 51,709 -- 8,000 15,623
Chief Financial Officer 1993 155,807 15,800 -- 15,000 14,759
</TABLE>
- ---------------
(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. Richard joined the Company in November 1993.
(3) Represents $8,412 in relocation expenses, $400 in 401(k) contributions
under the Company's 401(k) Profit-Sharing Plan (the "Restated Plan") and
$3,730 in term life insurance premiums.
(4) Represents amounts in lieu of bonus from former employer.
(5) Mr. Kalishman became Vice Chairman of the Board of the Company in 1995 in
connection with the IMA Merger. Prior to that time he served as Chairman
and Chief Executive Officer of IMA. Amounts shown for 1993 and 1994
represent compensation from IMA, and amounts shown for 1995 include
compensation from IMA and amounts paid pursuant to the agreements entered
into by the Company with Mr. Kalishman effective upon completion of the IMA
Merger. See "Certain Agreements with Directors and Executive Officers"
below.
(6) Represents $15,064 in consulting fees, $3,048 in contributions under IMA's
profit-sharing plan and $1,260 in term life insurance premiums.
(7) Mr. Affholder became Senior Vice President -- Chief Operating Officer of
North American Contracting Operations 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 1993 and 1994 represent compensation
from IMA, and amounts shown for 1995 include compensation from IMA and
amounts paid pursuant to
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<PAGE> 9
the agreements entered into by the Company with Mr. Affholder effective
upon completion of the IMA Merger. See "Certain Agreements with Directors
and Executive Officers" below.
(8) Represents $7,433 in 401(k) contributions by IMA, $3,648 in contributions
under IMA's profit-sharing plan and $450 in term life insurance premiums.
(9) Mr. Hooper joined the Company in November 1993.
(10) Includes 1994 reimbursement for taxes in the amount of $43,509.
(11) Represents $400 in 401(k) contributions under the Restated Plan and $2,005
in term life insurance premiums.
(12) Represents $12,000 in profit-sharing contributions under the Restated Plan,
$400 in 401(k) contributions under such plan and $2,367 in term life
insurance premiums.
Option Grant Table. The following table sets forth certain information
regarding options granted by the Company during the year ended December 31, 1995
to the individuals named in the above compensation table:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realizable
Individual Grants Value at Assumed
------------------------------------------------------------ Annual Rates of
Number of Stock
Securities % of Total Price Appreciation
Underlying Options Granted Exercise for Option Term(2)
Options to Employees Price Expiration ---------------------
Name Granted(#) In Fiscal Year(1) ($/sh) Date 5% 10%
- --------------------- ---------- ----------------- -------- ---------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Jean-Paul Richard.... 100,000 25.1% $11.50 12/01/00 $317,724 $702,087
Jerome Kalishman..... -- -- -- -- -- --
Robert W. Affholder.. -- -- -- -- -- --
Anthony W. Hooper.... 25,000 6.3 12.00 11/28/00 82,884 183,153
William A. Martin.... 10,000 2.5 12.00 11/28/00 33,154 73,261
</TABLE>
- ---------------
(1) Based upon (i) the number of shares issuable upon exercise of options
granted by the Company (exclusive of options granted pursuant to the
Insituform Mid-America, Inc. Stock Option Plan [the "IMA Plan"] and assumed
by the Company pursuant to the IMA Merger), plus (ii) the number of shares
issuable upon exercise of options granted under the IMA Plan during such
year multiplied by 1.15 (the number of shares of the Company's Common Stock
into which each share of IMA class A common stock, $.01 par value [the "IMA
Class A Common Stock"], was convertible in the IMA Merger).
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on arbitrarily assumed rates of stock price appreciation of 5% and
10% compounded annually from the date the respective options are granted to
their expiration date.
8
<PAGE> 10
Aggregate Option Exercises and Year-End Option Table. The following table
sets forth certain information regarding exercises of stock options, and stock
options held as of December 31, 1995, by the individuals named in the above
compensation table:
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR-END(#) AT YEAR-END(1)
ACQUIRED ON VALUE --------------------------- ---------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jean-Paul Richard........... -- -- 325,000 75,000 $ 1,563 $ 4,688
Jerome Kalishman............ -- -- -- -- -- --
Robert W. Affholder......... -- -- -- -- -- --
Anthony W. Hooper........... -- -- 62,250 49,750 -- --
William A. Martin........... -- -- 27,750 15,250 -- --
</TABLE>
- ---------------
(1) Calculated on the basis of the fair market value of the underlying
securities at year-end, minus the exercise price.
STOCK PLANS
Under the Company's 1983 Stock Option Plan (the "Prior Plan"), there were
outstanding options for 30,076 shares of Common Stock as of April 1, 1996. 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 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
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<PAGE> 11
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 (444,000 shares
of which were covered by options outstanding at April 1, 1996).
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 Jerome Kalishman, under which Mr. Kalishman
became Vice Chairman of the Board of Directors in October 1995 in connection
with the IMA Merger, provides for a term expiring on December 9, 1998 and an
annual salary of $100,000. The Company also entered into a consulting agreement
with Mr. Kalishman pursuant to which the Company engaged Mr. Kalishman as a
consultant in connection with the business of the Company for a two year term at
an annual fee of $150,000. Such agreements are terminable by Mr. Kalishman at
any time upon at least 60 days' written notice, and are terminable by the
Company upon the failure of Mr. Kalishman to perform his duties thereunder owing
to illness or other incapacity, if such failure continues for a period of six
months, or for other cause (as defined in such agreements). Mr. Kalishman's
arrangements with the Company include health insurance benefits and use of an
automobile. In the event of Mr. Kalishman's death, such agreements terminate
automatically. Mr. Kalishman has also entered into a non-competition agreement
with the Company extending from the completion of the IMA Merger until the later
of five years thereafter or two years after all service to the Company has
ended.
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 with respect to the remainder of such shares in October 1995 upon
consummation of the IMA Merger and the election of a Board of Directors of the
Company other than pursuant to the terms of the IGL Acquisition.
The Company 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.
The Company's arrangements with Robert W. Affholder, entered into in
October 1995 in connection with the IMA Merger, provide for Mr. Affholder
initially to serve as Senior Vice President -- Chief Operating Officer of North
American Contracting Operations of the Company, and thereafter in such other
executive staff position as may be designated by the Company, 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
10
<PAGE> 12
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.
The Company's arrangements with Anthony W. Hooper, under which Mr. Hooper
became an executive officer 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.
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.
11
<PAGE> 13
PERFORMANCE GRAPH
The following performance graph compares the total stockholder return on
the Company's Common Stock to the S&P 500 Index and two Composite Peer Group
Indexes for the past five years. The first Composite Peer Group Index (the "New
Composite Peer Group Index") is comprised of Insituform East Incorporated, Roto
Rooter, Inc., Utilix Corporation, Michael Baker Corporation, Bannister
Foundation, Inc., Granite Construction, Inc., The LE Meyers Co. Group and J. Ray
McDermott, S.A. (weighted by market capitalization). The second Composite Peer
Group Index (the "Old Composite Composite Peer Group Index") consists solely of
Insituform East Incorporated, Roto Rooter, Inc. and Utilix Corporation (weighted
by market capitalization), which, together with IMA and Enviroq Corporation
(both of which were acquired by the Company as a result of the IMA Merger),
constituted the Company's Composite Peer Group Index for the immediately
preceding year. The Company believes that the greater number of companies in the
New Composite Peer Group Index provides a more meaningful basis of comparison.
The graph assumes that $100 was invested in the Company's Common Stock and each
Index on December 31, 1990 and that all dividends were reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
<TABLE>
<CAPTION>
INSITUFORM NEW COM- OLD COMPOSITE
MEASUREMENT PERIOD TECHNOLOGIES S&P 500 IN- POSITE PEER PEER GROUP
(FISCAL YEAR COVERED) INC. DEX GROUP INDEX INDEX
<S> <C> <C> <C> <C>
1990 100.00 100.00 100.00 100.00
1991 548.30 126.30 147.90 133.10
1992 703.40 131.90 143.40 132.90
1993 337.90 141.30 112.80 122.00
1994 320.70 139.10 95.50 92.70
1995 320.70 186.50 139.40 109.40
</TABLE>
Notwithstanding anything set forth in any of the Company's previous filings
under the Securities Act of 1933 or the Securities Exchange Act 1934 which might
incorporate future filings, including this Proxy Statement, in whole or in part,
the preceding performance graph and the report that follows shall not be deemed
incorporated by reference into any such filings.
REPORT OF THE COMPENSATION COMMITTEE AND THE
DIRECTOR STOCK OPTION COMMITTEE
The Compensation Committee is composed of the Chairman of the Board of the
Company and four additional directors who are not executive officers of the
Company. The Compensation Committee of the Board of Directors of the Company
makes recommendations to the Board of Directors of the Company regarding the
compensation arrangements for executive officers of the Company, including the
Company's
12
<PAGE> 14
Chief Executive Officer, and administers the Company's stock-based employee
compensation plans. Since the Company's Employee Plan, under which stock-based
compensation is granted to employees, does not permit participation of employees
who are directors of the Company, stock option grants to those executive
officers who are directors (including the Company's Chief Executive Officer) are
determined by the Company's Director Stock Option Committee.
The objectives of the Committees in formulating the Company's executive
compensation program are: (i) to offer levels of compensation which are
competitive with those offered by other companies in similar businesses; (ii) to
compensate executives based on each executive's level of responsibility and
contribution to the Company's business goals; (iii) to link compensation with
the Company's financial performance; and (iv) to align the interests of the
Company's executives with the interests of the Company's stockholders.
During the fiscal year ended December 31, 1995, the achievement of the
foregoing objectives was directed to support the consolidation of the operations
of the Company, both in anticipation of and following the consummation of the
IMA Merger in October 1995. Pursuant to the terms of the IMA Merger, Jerome
Kalishman, the Chairman of the Board and Chief Executive Officer of IMA, became
Vice Chairman of the Board of the Company and entered into an agreement
governing his services and compensation in such position in addition to a
consulting agreement, and Robert W. Affholder, the Vice Chairman of the Board of
IMA, became Senior Vice President -- Chief Operating Officer of North American
Contracting Operations of the Company and entered into an employment agreement
governing such position and attendant compensation. Both Messrs. Kalishman and
Affholder are principal stockholders of the Company. In order to augment the
Company's executive management, effective at closing of the IMA Merger Joseph F.
Olson, the Vice President -- Finance and Administration of IMA, became Vice
President -- Controller of North American Contracting Operations of the Company
and F. Thomas Driver, the Vice President -- Product Development/Manufacturing of
IMA, became Vice President-Technical Sales of the Company.
The compensation program for the Company's executives, including its Chief
Executive Officer, consists of: (i) base salary; (ii) bonuses; and (iii) stock
options. Since the majority of the Company's executive management has been
engaged during the three most recent fiscal years, compensation has in large
part resulted from arrangements negotiated in connection with the initial
engagement of such managers, respectively, or in connection with the IMA Merger.
(i) Base Salary. The Compensation Committee determines executive base
salaries by level of responsibility, individual performances and the Company's
performance, as well as by the need to provide a competitive package that allows
the Company to retain key executives. At the commencement of each year, the
Chief Executive Officer, in consultation with key executives, establishes
individual performance objectives for the ensuing year. After reviewing
individual and Company performance and available information on salaries at
other companies of similar size (with particular focus on other
construction-based operations), the Chief Executive Officer makes
recommendations to the Compensation Committee concerning the base salaries of
executive officers. The Compensation Committee reviews and, with any changes it
deems appropriate, approves these recommendations for submission to the Board of
Directors. Using the same review process, the Compensation Committee makes
decisions pertaining to the Chief Executive Officer. During the year ended
December 31, 1995, remuneration as Chief Executive Officer to Mr. Richard
continued at $400,000 per annum, the level established in connection with the
commencement of his employment in November 1993.
(ii) Cash Bonuses. Under historical guidelines designed to motivate and
reward key management personnel through the award of cash bonuses, key employees
who report to the Chief Executive Officer are eligible for bonuses of up to
approximately 50% of base salary. Direct reports to the senior executive staff
are eligible for bonuses of up to approximately 35% of base salary. Such
guidelines provide for an award of cash bonuses based on the achievement of
corporate goals recommended by senior executive management and approved by the
Board of Directors (which in the most recently completed year were weighted in
the Company's program to account for approximately 70% of overall quantitative
criteria), individual objectives established for executive management by the
Compensation Committee in discussions with the chief executive officer (which in
the most recently completed year were weighted in the Company's program to
13
<PAGE> 15
account for approximately 30% of overall quantitative criteria), and an
evaluation of executive management by the Compensation Committee. In connection
with its hiring efforts, the Company has also extended bonus arrangements to
executives retained during its three most recent fiscal years, entitling such
executives to bonuses ranging up to 75% of base salary in the case of Mr.
Richard.
(iii) Stock Options. The primary purpose of the Company's stock option
program is to align the interests of the Company's executive officers more
closely with the interests of the Company's stockholders by offering the
executives an opportunity to benefit from increases in the market price of the
Common Stock. The Company's stock option program provides long-term incentives
that have enabled the Company to attract and retain key employees by encouraging
their ownership of the Company Common Stock. In connection with attracting new
executive management, the Compensation Committee has typically authorized the
grant of options effective upon commencement of employment.
The Company's current executive officers, collectively, hold options under
the Prior Plan (which, except for options then outstanding, terminated after the
Company's 1992 Annual Meeting of Stockholders) and the Employee Plan, and
options granted under the IMA Stock Option Plan and assumed by the Company, all
of which are administered by the Compensation Committee, and options under the
Director Plan, which is administered by the Director Stock Option Committee. In
addition, Mr. Richard, in connection with his acceptance of employment in 1993
was granted options covering 300,000 shares of Common Stock. During the year
ended December 31, 1994, the Compensation Committee, pursuant to amendments to
the continuing Employee Plan, authorized a committee of the board to grant
options to employees who were not officers, within limits defined by the
Compensation Committee, while retaining authority to effectuate option grants to
eligible officers. In defining the limits of option grants and in selecting
individual officers for options under the Employee Plan, and determining the
terms thereof, the Compensation Committee may take into consideration any
factors it deems relevant, including present and potential contributions to the
success of the Company.
During the year ended December 31, 1995, the Compensation Committee
authorized option grants to officers named in the Summary Compensation Table
under "Executive Compensation" above covering 35,000 shares of Common Stock,
representing options with respect to approximately 9% of the Common Stock
covered by options granted that year under all plans (exclusive of options
assumed in the IMA Merger but not granted in such year). In addition, during
such year, the Director Stock Option Committee authorized an option grant to Mr.
Richard covering 100,000 shares of Common Stock, representing options with
respect to approximately 25% of the Common Stock covered by options granted that
year under all plans (exclusive of options assumed in the IMA Merger but not
granted in such year).
------------------------
Section 162(m) ("Section 162") of the Internal Revenue Code of 1986, as
amended (the "Code"), generally limits federal income tax deductions for
compensation paid after 1993 to the chief executive officer and the four other
most highly compensated officers of the Company to $1 million per year, but
contains an exception for performance-based compensation that satisfies certain
conditions. The Company has not adopted an absolute policy regarding Section 162
and is currently studying the implications of Section 162 on its compensation
programs. In making compensation decisions, the Company will consider the net
cost of compensation to it and whether it is practicable and consistent with
other compensation objectives to qualify the Company's incentive compensation
under the applicable exemption of Section 162. The Company anticipates that
deductibility of compensation payments will be one among a number of factors
used in ascertaining appropriate levels or modes of compensation, and that the
Company will make its compensation decision based upon an overall determination
of what it believes to be in the best interests of its stockholders.
<TABLE>
<CAPTION>
Director Stock
Compensation Committee Option Committee
<S> <C>
James D. Krugman Brian Chandler
Paul A. Biddelman Douglas K. Chick
William Gorham
Steven Roth
Alvin J. Siteman
</TABLE>
14
<PAGE> 16
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1995, the Company's Compensation
Committee consisted of James D. Krugman, Paul Biddelman, William Gorham, Steven
Roth and, after the consummation of the IMA Merger, Alvin J. Siteman. Mr.
Krugman is Chairman of the Board of the Company. The Company's Director Plan,
under which executive officers (including the Company's Chief Executive Officer)
who are also directors are entitled to receive option grants is administered by
the Director Stock Option Committee, which during such year consisted of Brian
Chandler and Douglas K. Chick.
In connection with the IGL Acquisition, and so as to enable the IGL
Acquisition to qualify as a pooling-of interests under United States generally
accepted accounting principles, the Company, Brian Chandler, Douglas K. Chick,
Parkwood Limited, as trustee of the Anthony Basmadjian "P" Settlement
("Parkwood"), and Ringwood Limited ("Ringwood"), entered into an agreement dated
July 3, 1992 pursuant to which a prior pledge agreement extended by Messrs.
Chandler and Chick and Parkwood, covering Ordinary Shares of IGL and securing a
promissory note from Mr. Chandler and Parkwood to the Company were, together
with Mr. Chick's guaranty of such note, cancelled, and in exchange Messrs. Chick
and Chandler and Ringwood executed and delivered to the Company a substitute
stock pledge agreement (the "New Pledge Agreement"), and Ringwood executed and
delivered to the Company a secured non-recourse promissory note in the initial
principal amount of $3,623,842.40 (the "Non-Recourse Note"). Messrs. Chandler
and Chick, together with Parkwood, Ringwood and Barford Limited, as trustee of
the Anthony Basmadjian Settlement ("Barford"), are members of a group (the
"Ringwood Group"), within the meaning of Section 13(d) of the Securities
Exchange Act of 1934, holding in excess of 5% of the outstanding Common Stock.
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 was
originally due July 3, 1995. In May 1995, the maturity date was extended by one
year, and in December 1995 the interest payment otherwise due in January 1996
was postponed to be due on a date (the "Extension Date") no later than 30 days
after the date of first publication of the Company's operating results covering
at least a 30-day period after consummation of the IMA Merger. Pursuant to the
New Pledge Agreement, and as security for the NonRecourse 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, 1995, Ringwood paid to the Company $205,000 in interest
on the Non-Recourse Note. At the Extension Date, Ringwood had defaulted in the
payment to the Company of its interest payment postponed as aforesaid. Ringwood,
together with Messrs. Chandler and Chick, have proposed that the Company extend
the maturity of the loan (in which event such interest would be brought
current). The Board of Directors of the Company has not reached a determination
with respect to such proposal or whether to assert the Company's rights to
foreclose on a portion of such collateral in order to satisfy such defaulted
payment, and has approved an independent committee of the Board in order to
evaluate and recommend for action by a disinterested majority of the Board
action regarding any such extension and the terms thereof.
In December 1995, in exchange for payment in the amount of $250,000, the
Company obtained an option from Sound Pipe Limited ("SPL"), a company affiliated
with Messrs. Chandler and Chick, for a three-month period to evaluate certain
pipe rehabilitation technologies developed by SPL and, at the election of the
Company, to negotiate a license agreement from SPL providing for the
commercialization of such technologies by the Company. SPL, as guaranteed by
Messrs. Chandler and Chick, further agreed that, in the event the Company
elected not to pursue such transaction, such payment would be refunded to the
Company. The Company elected not to pursue any such license and, accordingly,
SPL has returned such amount to the Company.
The Company and Messrs. Chandler and Chick and their affiliates have
addressed the application, if any, of certain commitments alleged by IGL (which
was acquired by the Company in 1992) to have been made by Mr. Chandler in 1983
requiring him, through November 1993, to offer free of cost to IGL any new
ideas, inventions and technology for which Mr. Chandler was responsible. Mr.
Chandler had previously taken the position, in a Statement on Schedule 13D filed
in 1989 with respect to shareholdings in IGL by the Ringwood
15
<PAGE> 17
Group, that such commitments are not enforceable. The Company has acknowledged
Mr. Chandler's position, but has not formally agreed or disagreed with it. The
Company will submit any definitive arrangements regarding transactions with
Messrs. Chandler and Chick and their affiliates for review and approval by a
majority of the disinterested members of the Company's Board of Directors, which
will include consideration of any legal issues concerning such technologies.
There can be no assurance that the Company would have access to any technology
developed by Messrs. Chandler and Chick and their affiliates on favorable terms
or at all, or would be in a position to prevent the conduct of potentially
competing activities utilizing such developments.
In order to finance a portion of the purchase price for its acquisition of
Insituform Midwest, Inc., in July 1993 the Company sold its 8.5% senior
subordinated note in the principal amount of $5 million (the "Subordinated
Note"), and related warrants exercisable with respect to 350,877 unregistered
shares of Common Stock, to Hanseatic Corporation ("Hanseatic"), which Hanseatic
holds for discretionary customer accounts and an affiliate, as described under
"Information Concerning Certain Stockholders." Paul Biddelman 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 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 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, at premiums until the fifth anniversary of closing ranging from 3% to
1% of the amount prepaid. During the year ended December 31, 1995, 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.
Mr. Siteman is the largest shareholder and Chairman of the Board of the
parent of Mark Twain Bank. Upon consummation of the IMA Merger and the
re-financing of such amounts, the portion of the outstanding principal under
IMA's term loan facility held by such bank, established in April 1995, was
$4,749,000, and the portion of the outstanding principal under IMA's credit line
held by such bank was $5,548,000. During the year ended December 31, 1995, IMA
paid interest in the amount of $598,000 to Mark Twain Bank.
James D. Krugman, Chairman of the Board of the Company, in addition to
Howard Kailes, Secretary of the Company, are members of the law firm of Krugman,
Chapnick & Grimshaw. During the year ended December 31, 1995, Krugman, Chapnick
& Grimshaw received fees for legal services rendered to the Company, including
in connection with the IMA Merger, of $1,766,000, together with reimbursement of
out-of-pocket expenses of $247,577. It is expected that Krugman, Chapnick &
Grimshaw will continue to render legal services to the Company in the future.
Steven Roth is a member of a partnership which, in addition to the members
of the Ringwood Group (including Messrs. Chandler and Chick), holds certain
registration rights extended by the Company. See "Other Information Concerning
Nominees for Director, Directors, Officers, and Stockholders" below.
INFORMATION CONCERNING CERTAIN STOCKHOLDERS
The following table sets forth certain information as of April 1, 1996 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 "Executive Compensation" above, and (iv) all
nominees for director, directors and executive officers of the Company as a
group:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
--------------------------------------------------------- --------------------- --------
<S> <C> <C>
Jerome and Nancy Kalishman
17988 Edison Avenue
Chesterfield, Missouri 63005........................... 3,221,137(2) 11.9%
</TABLE>
16
<PAGE> 18
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
--------------------------------------------------------- --------- ----
<S> <C> <C>
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202.............................. 2,226,765(3) 8.2%
Interstate Properties
Park 80 West-Plaza Two
Saddle Brook, New Jersey 07663(4)...................... 1,660,072 6.1
David Mandelbaum
80 Main Street
West Orange, New Jersey 07052..................... 1,660,072(5) 6.1
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.................... 1,664,744(5) 6.1
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................................... 1,442,032(6) 5.3
Parkwood Limited, as trustee of the
Anthony Basmadjian "P" Settlement
c/o Century House
Richmond Road
Hamilton, Bermuda(7).............................. 880,641 3.2
Brian Chandler
8933 St. Gallen 60
Steiermark, Austria(8)............................ 561,391 2.1
Ringwood Limited
Century House
Richmond Road
Hamilton, Bermuda(8).............................. 461,391 1.7
Barford Limited, as trustee of the
Anthony Basmadjian Settlement
LeGrand Dixcart
Sark, Channel Islands(8)(9)....................... 461,391 1.7
Douglas K. Chick
Bays Hill Cottage
Barnett Lane
Elstree, Hertfordshire
United Kingdom(7)(8)(9)........................... 1,342,032 4.9
Robert W. Affholder...................................... 1,307,858(10) 4.8
Paul A. Biddelman........................................ 380,877(11) 1.4
William Gorham........................................... 15,175(12) (13)
James D. Krugman......................................... 154,914(14) (13)
Alvin J. Siteman......................................... 198,690(15) (13)
Silas Spengler........................................... 2,000 (13)
Sheldon Weinig........................................... 12,099 (13)
Jean-Paul Richard........................................ 335,000(16) 1.2
</TABLE>
17
<PAGE> 19
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
--------------------------------------------------------- --------- ----
<S> <C> <C>
William A. Martin........................................ 38,875(17) (13)
Anthony W. Hooper........................................ 79,843(18) (13)
Nominees for Director, Directors and Executive Officers
as a group (18 persons)................................ 9,394,403(19) 33.4%
</TABLE>
- ---------------
(1) Except as otherwise indicated, as of April 1, 1996 all of such shares are
owned with sole voting and investment power.
(2) Represents: (i) 154,448 shares beneficially owned by Mr. and Mrs. 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 Mr. Kalishman acts as trustee, and
The Nancy F. Kalishman Revocable Trust, as to which Mrs. Kalishman acts as
trustee); (iii) 82,415 shares (the "Fund Shares") beneficially owned by Mr.
Kalishman, as trustee of The Jerome and Nancy Kalishman Family Fund; and
(iv) 115,000 shares (the "Trust Shares") beneficially owned by Mr.
Kalishman, as trustee of The Jerome and Nancy Kalishman Irrevocable
Grandchildren's Trust. Mrs. Kalishman disclaims beneficial ownership of the
Fund Shares and the Trust 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 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 2,226,765 shares, and that Associates and the Fund have sole voting
power over, respectively, 130,700 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 has
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) Represents: (i) 100,000 shares beneficially owned by Mr. Chandler; (ii)
880,641 shares beneficially owned by Parkwood with shared voting and
investment power with Mr. Chick (see footnote (7)); (iii) 461,391 shares
beneficially owned by Ringwood with shared voting and investment power with
Mr. Chandler, Barford and Mr. Chick (see footnotes (8) and (9)).
(7) 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.
(8) 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 (9), Mr.
Chick.
(9) 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
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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.
(10) Includes 3,000 shares beneficially owned by Mr. Affholder as trustee of the
Robert W. and Pamela Rae Affholder Grandchildren's Trust.
(11) Includes 350,877 shares issuable pursuant to currently exercisable warrants
granted by the Company to Hanseatic and held for discretionary customer
accounts and for an affiliate in which Hanseatic is the indirect managing
member. Mr. Biddelman is Treasurer of Hanseatic and, accordingly, would
hold shared voting and investment power in the event of exercise of such
warrants. See "Compensation Committee Interlocks and Insider Participation
above".
(12) Represents 9,425 shares jointly owned with Gail Gorham, Mr. Gorham's wife,
and 5,750 shares held by an employee benefit plan on behalf of Mr. Gorham.
(13) Less than one percent.
(14) Includes 71,250 shares issuable upon exercise of stock options granted by
the Company and exercisable at April 1, 1996, 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) Represents: (i) 155,181 shares held by Mr. Siteman as trustee of the Alvin
J. Siteman Revocable Trust; (ii) 5,174 shares held by Mr. Siteman as
trustee of trusts for the benefit of members of his immediately family; and
(iii) 38,335 shares issuable upon exercise of stock options granted by the
Company and exercisable at April 1, 1996.
(16) Includes 325,000 shares issuable upon exercise of stock options granted by
the Company and exercisable at April 1, 1996.
(17) Includes 33,500 shares issuable upon exercise of stock options granted by
the Company and exercisable at April 1, 1996.
(18) Includes 64,543 shares issuable upon stock options granted by the Company
and exercisable at April 1, 1996.
(19) Includes 973,871 shares issuable upon exercise of stock options granted by
the Company and exercisable at April 1, 1996 and currently exercisable
warrants held by Hanseatic.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
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 1995 all filing requirements applicable to its
directors, officers and ten percent holders under said section were satisfied,
except that William Gorham filed one report on Form 4 subsequent to the due date
thereof disclosing eight sales aggregating 20,000 shares of Common Stock.
OTHER INFORMATION CONCERNING NOMINEES FOR DIRECTOR, DIRECTORS, OFFICERS AND
STOCKHOLDERS
A subsidiary of the Company is party to a tunnelling equipment lease
agreement with A-Y-K-E Partnership, in which Jerome Kalishman, Vice Chairman of
the Board of the Company, and Robert W. Affholder, a director of the Company and
its Senior Vice President -- Chief Operating Officer of North
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<PAGE> 21
American Contracting Operations, 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,
1995, such partnership was paid $738,915 under such arrangements, $486,250 of
which was attributable to equipment overhaul invoiced on a cost pass-through
basis.
As principal stockholders of IMA, Mr. Affholder and Xanadu Investments,
L.P. (the general partners of which are The Jerome Kalishman Revocable Trust, as
to which Mr. Kalishman acts as trustee, and The Nancy Kalishman Revocable Trust,
as to which Mrs. 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 IMA Class A 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 IGL, the members of the Ringwood Group and
Interstate Properties, in connection with the IGL Acquisition, received certain
registration rights covering the shares of Common Stock issued in exchange for
their Ordinary Shares of IGL, and all other shares of Common Stock held by them.
Such agreement terminates in December 1998. Under such agreement, a stockholder
may demand registration under the Securities Act of 1933 on one occasion (unless
the Company is entitled to use a registration statement on Form S-3, in which
case each stockholder is entitled to three demand registrations) of no less than
500,000 shares of Common Stock. In addition, the stockholders are entitled to
incidental registration rights, during the term of such agreement, with respect
to the shares of Common Stock beneficially owned by them.
See "Compensation Committee Interlocks and Insider Participation" above for
information concerning the indebtedness of Ringwood to the Company, and the
related pledge by Ringwood, Brian Chandler and Douglas K. Chick, and the option
to acquire certain technologies granted by an affiliate of Messrs. Chandler and
Chick to the Company, which has expired without exercise.
In addition, see "Compensation Committee Interlocks and Insider
Participation" above for information concerning a company in which Paul A.
Biddelman, a director of the Company, is treasurer, which holds the Company's
8.5% senior subordinated note; concerning a bank, in whose parent Alvin J.
Siteman, a director of the Company, is Chairman and principal shareholder, which
had extended financing to IMA; and concerning legal services rendered to the
Company by the firm in which James D. Krugman, Chairman of the Board of the
Company, and Howard Kailes, Secretary of the Company, are members.
II. RELATIONSHIP WITH INDEPENDENT AUDITORS
BDO Seidman, LLP, independent certified public accountants, has audited the
consolidated financial statements of the Company for the fiscal year ended
December 31, 1995. The Audit Committee, has not yet selected independent
certified public accountants for the current fiscal year, which ends on December
31, 1996. The Audit Committee will make its recommendations to the Company's
Board of Directors as to independent certified public accountants later in the
year, at which time such accountants for the current fiscal year will be
selected.
One or more representatives of BDO Seidman, LLP will attend the Meeting,
will have an opportunity to make a statement and will respond to appropriate
questions from stockholders.
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III. OTHER MATTERS
The Board of Directors of the Company does not know of any other matters
which may be brought before the Meeting. However, if any such other matters are
properly presented for action, it is the intention of the persons named in the
accompanying form of proxy to vote the shares represented thereby in accordance
with their judgment on such matters.
IV. MISCELLANEOUS
If the accompanying form of proxy is executed and returned, the shares
represented thereby will be voted in accordance with the terms of the proxy,
unless the proxy is revoked. If no directions are indicated in such proxy, the
shares represented thereby will be voted FOR in the election of the directors,
in favor of the Class I nominees proposed by the Board of Directors. Any proxy
may be revoked at any time before it is exercised by giving written notice to
the Secretary of the Company prior to the actual vote at the Meeting. The
casting of a later dated ballot or proxy at the Meeting by a stockholder who may
theretofore have given a proxy will have the effect of revoking the initial
proxy.
All costs relating to the solicitation of proxies will be borne by the
Company. Proxies may be solicited by officers, directors and regular employees
of the Company and its subsidiaries personally, by mail or by telephone or
telegraph, and the Company may pay brokers and other persons holding shares of
stock in their names or those of their nominees for the reasonable expenses in
sending soliciting material to their principals.
It is important that proxies be returned promptly. Stockholders who do not
expect to attend the Meeting in person are urged to mark, sign and date the
accompanying form of proxy and mail it in the enclosed return envelope, which
requires no postage if mailed in the United States, so that their votes can be
recorded.
STOCKHOLDER PROPOSALS
Stockholder proposals intended to be presented at the 1997 Annual Meeting
of Stockholders of the Company must be received by the Company by January 3,
1997 in order to be considered for inclusion in the Company's Proxy Statement
relating to such Meeting.
HOWARD KAILES
Secretary
Memphis, Tennessee
May 3, 1996
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<PAGE> 23
INSITUFORM TECHNOLOGIES, INC.
CLASS A COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby (1) acknowledges receipt of the notice of the
P Annual Meeting of Stockholders of Insituform Technologies, Inc. (the
"Company") to be held at The New York Marriott East Side Hotel, 525
R Lexington Avenue, New York, New York on Tuesday, June 4, 1996 at 10:00 A.M.,
local time, and the Proxy Statement in connection therewith and (2) appoints
O James D. Krugman, Russell B. Wight, Jr. and Jean-Paul Richard and each
of them his proxies with full power of substitution, for and in the name,
X place and stead of the undersigned, to vote and act with respect to all of
the shares of Class A Common Stock, $.01 par value, of the Company standing
Y in the name of the undersigned or with respect to which the undersigned is
entitled to vote and act, at the meeting and at any adjournment thereof, and
the undersigned directs that this proxy be voted as follows:
(Continued and to be signed on reverse side)
------ PLEASE MARK YOUR
A X VOTES AS IN THIS
------ EXAMPLE.
(a) Election of Class 1 Directors:
/ / FOR all Class 1 nominees
listed at right (except
as marked to the contrary below)
/ / WITHHOLD AUTHORITY
to vote for all nominees
listed at right
(INSTRUCTIONS: To withhold authority to vote for any individual nominee as a
Class 1 Director, write that nominee's name in the space provided below.
- -----------------------------------------
NOMINEES: WILLIAM GORHAM
ALVIN J. SITEMAN
SILAS SPENGLER
SHELDON WEINIG
(b) in the discretion of the proxies on any other matter that may properly come
before the meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS SPECIFIED HEREON. IF NO SPECIFICATION IS MADE,
THIS PROXY WILL BE VOTED FOR THE MATTERS SPECIFICALLY REFERRED TO ON THIS PROXY
CARD.
If more than one of the proxies named above shall be present in person or by
substitute at the meeting or any adjournment thereof, all of the proxies so
present and voting, either in person or by substitute, shall exercise all of
the proxies hereby given.
The undersigned hereby revokes any proxy or proxies heretofore given to vote
upon or act with respect to such stock and hereby ratifies and confirms all
that the proxies so present and voting, their substitutes or any of them, may
lawfully do by virtue hereof.
PLEASE DATE, SIGN AND MAIL THIS PROXY CARD
IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED.
SIGNATURE DATED: DATED:
--------------------- ------- --------------------- -------
SIGNATURE IF HELD
JOINTLY
NOTE: Please date this proxy and sign your name exactly as it appears herein.
Where there is more than one owner, each should sign. When signing as an
attorney, administrator, executor, guardian or trustee, please add your title
as such. If executed by a corporation, the proxy should be signed by a duly
authorized officer.
