SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report
(Date of earliest event reported): July 15, 1998
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INSITUFORM TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-10786 13-3032158
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
702 Spirit 40 Park Drive, Chesterfield, Missouri 63005
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code (314) 530-8000
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Item 5. Other Events.
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Effective July 15, 1998, the Registrant and Anthony W. Hooper
executed an employment letter (the "Employment Letter") modifying
the terms of the Registrant's prior arrangements with respect to
Mr. Hooper's position as Chairman of the Board, President and chief
executive officer.
The Employment Letter provides for an initial annual base
salary of $400,000, in addition to bonus payments in an amount
calculated as a percentage of base salary (with reference to a
range with a center point objective of 50%, intended to provide an
opportunity of up to two times such center point). Under the
Employment Letter, and supplementing prior option grants, the
Registrant granted to Mr. Hooper an additional ten-year option
under the Registrant's 1992 Director Stock Option Plan, covering
125,000 shares of the Registrant's class A common stock, $.01 par
value (the "Common Stock"), exercisable at a per share price of
$13.50 (equal to the closing price of the Common Stock on the
Nasdaq National Market on the date of grant), becoming exercisable
with respect to 25% of the number of shares covered on the first
through fourth anniversaries, respectively, of the date of grant,
and to become immediately exercisable in the event of specified
changes-in-control of the Registrant.
Under the Employment Letter, and consistent with the
Registrant's prior arrangements with Mr. Hooper, the Registrant
also provides Mr. Hooper with a car allowance, reimbursement for
one country club membership and medical and life insurance
benefits. Either the Registrant or Mr. Hooper may terminate the
Employment Letter at any time, except that in the event Mr.
Hooper's employment is terminated by the Registrant other than for
"cause," or by Mr. Hooper for "good reason" (as defined in the
Employment Letter), the Registrant will be obligated to pay to Mr.
Hooper amounts equal to base salary plus bonus over a period of 18
months (30 months in the event following specified changes-in-
control of the Registrant), or, at Mr. Hooper's election, the
discounted value of such payments in a lump sum at termination. Mr.
Hooper's severance arrangements also include amounts to cover any
excise taxes due on such payments, and coverage under the
Registrant's welfare plans (or equivalent coverage) during the
specified severance period. Mr. Hooper has also entered into a non-
competition agreement with the Registrant expiring two years after
the termination or expiration of all services rendered by him to
the Registrant.
The Employment Letter substitutes for the severance agreement
entered into by Mr. Hooper with the Registrant in June 1997, and
the arrangements entered into by him with the Registrant in
November 1996. For additional information with respect to the
Employment Letter, reference is made to Exhibit 99 attached hereto,
which is hereby incorporated into this item.
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Item 7. Financial Statements and Exhibits.
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(c) Exhibits.
The exhibits filed as part of this Current Report on Form 8-K
are listed in the attached Index to Exhibits.<PAGE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
INSITUFORM TECHNOLOGIES, INC.
By s/Anthony W. Hooper
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Anthony W. Hooper
President
Dated: as of July 15, 1998
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INDEX TO EXHIBITS
Exhibit Description
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99 Employment Letter dated as of July 15, 1998 between
the Registrant and Anthony W. Hooper
Insituform Technologies, Inc.
702 Spirit 40 Park Drive
Chesterfield, Missouri 63005
July 15, 1998
Mr. Anthony Hooper
3 Wendover
St. Louis, Missouri 63124
Dear Tony:
This letter will confirm the offer we discussed to have you
continue to serve as the Chairman of the Board, President and chief
executive officer of Insituform Technologies, Inc. ("ITI"). The
principal terms and conditions of the offer are as follows:
1. Base Salary. The annual base salary for continuation in
the position as President and chief executive officer
will be $400,000, effective retroactively to March 1,
1998. Base salary will be reviewed on an annual basis.
2. Bonus. You will further be entitled to receive a bonus
in an amount calculated as a percentage of your Base
Salary determined by reference to: (x) a range of
percentages identified by the Board of Directors of ITI
in consultation with you based upon a center point
objective of 50% (intended to provide an opportunity of
up to two times such center point); and (y) the
accomplishment by ITI of such annual goals attendant to
such range as shall also have been determined by the
Board of Directors of ITI in consultation with you. The
foregoing annual goals will be determined as reasonable
targets given ITI's results of operations and prospects,
intended to provide you with incentives to achieve such
performance. Such entitlement shall apply, in the first
instance, to calendar 1998. The amount of your bonus, and
the criteria identified by the foregoing plan, will also
be reviewed annually.
3. Board Tenure. The Company will endeavor to continue your
tenure as Chairman of the Board and a director of ITI. As
a director you will be entitled to continued coverage by
the indemnification agreement in the form heretofore
executed by you and ITI.
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4. Stock Options. Effective on the date hereof (the "Grant
Date"), you will be awarded stock options (the "Options")
under ITI's 1992 Director Stock Option Plan (the "Plan")
for the purchase of 125,000 shares of the class A common
stock, $.01 par value (the "Common Stock"), of ITI, such
options to become exercisable with respect to 25% of such
shares on the first anniversary of the Grant Date, and
with respect to an additional 25% of such shares on,
respectively, the second, third and fourth anniversaries
of the Grant Date, such options to expire on the tenth
anniversary of the Grant Date. The exercise price per
share for the Options shall be the fair market value per
share on the Grant Date as determined under the terms of
the Plan.
The Options shall be in addition to the options to
acquire shares of Common Stock you presently hold, and:
(x) to the maximum extent permitted under the limitations
contained in the Internal Revenue Code (the "Code") and
considering your outstanding options, the Options shall
be "incentive stock options", the remainder of which
shall be non-qualified stock options. The foregoing
exercise schedule anticipates your continued employment
with ITI as set forth in the Plan, such options otherwise
to conform to the provisions of the Plan and the form of
option agreements thereunder heretofore adopted by the
Board of Directors.
In addition, the Options will provide that they become
immediately exercisable upon the occurrence of a Change
in Control (as hereinafter defined).
We further acknowledge with you that: (i) any subsequent
grant of stock options by ITI to you (which shall be
subject to action by the Board of Directors, in its sole
discretion), will become immediately exerciseable upon
the occurrence of a Change in Control; and (ii) the
agreements in evidence of the two prior grants of options
to you, each made on November 18, 1996, shall be
appropriately amended to evidence exercisabilty as
described in clause (i) immediately preceding.
5. Additional Benefits.
(a) You shall be provided with a car allowance in
the amount currently paid to you, subject to adjustment
in accordance with ITI's policy.
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(b) You will be reimbursed for country club
membership fees (extending to initiation fees or
membership share purchases, and to ongoing dues) for one
club of your choice (selected reasonably) in the St.
Louis, Missouri area.
(c) You will participate in ITI's medical insurance
and life insurance programs, including ITI's supplemental
executive life insurance and long-term disability plan as
well as the benefits provided under the Paul Revere or
any successor life and disability insurance policy or
program, and any future plans and programs implemented by
ITI for its employees generally or by the Board of
Directors of ITI for you specifically (collectively,
"Welfare Benefit Plans"), and in the ITI 401(k) Profit-
Sharing Plan and any future plans or programs
supplemental to the ITI 401(K) Profit Sharing Plan.
(d) You will receive holidays and vacations in
accordance with ITI's policy, with the understanding that
the position of President currently provides four weeks
of vacation.
6. Severance. In the event your employment is terminated by
ITI for reasons other than "cause" (as hereinafter
defined), or by you for "good reason" (as hereinafter
defined), you would be entitled to severance equal to
eighteen months' base salary and bonus (except that
termination as aforesaid following a Change In Control of
ITI subsequent to the date hereof would entitle you to
severance equal to thirty months' base salary and bonus),
which would be paid over that period; provided, however,
that, at your election, in lieu of such installments you
shall be entitled to payment in a lump sum at termination
of an amount equal to the then present value of such
installments discounted over such period by a rate per
annum equal to the prime rate at termination offered by
NationsBank N.A. plus 1%.
The amount of "base salary" as aforesaid shall be
calculated as the product obtained by multiplying (i) the
number of months of severance to which you are entitled
by (ii) your highest monthly base salary during the
twelve months prior to termination. The amount of "bonus"
as aforesaid shall be calculated as the product obtained
by multiplying (i) the number of months of severance to
which you are entitled by (ii) one-twelfth of your bonus
earned with respect to the most recently completed fiscal
year.
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Anything in this Section 6 to the contrary notwith-
standing, if a Change in Control occurs and if your
employment is terminated prior to the date on which the
Change in Control occurs, and if it is reasonably
demonstrated by you that such termination of employment
(i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change in Control
or (ii) otherwise arose in connection with or
anticipation of a Change in Control, then for all
purposes of this Section 6 the "Change in Control" shall
be deemed to have occurred immediately prior to the date
of such termination of employment.
During the period specified above in respect of which
severance payments are due (and without reference to any
election regarding lump-sum payments as aforesaid), ITI
will continue benefits to you and/or your family at least
equal to those provided immediately prior to termination
under ITI's Welfare Benefit Plans and similar welfare
benefit plans and programs maintained by ITI, and will
continue your car allowance then in effect; provided,
however, that such benefits and allowance shall terminate
upon your employment in another full-time position.
For purposes hereof:
(x) "cause" shall be defined as:
(i) your willful and continued failure to
perform substantially the duties with the
Company or any of its Affiliates (as
hereinafter defined) (other than such failure
resulting from incapacity due to physical or
mental illness), after a written demand for
substantial performance is delivered to you by
the Board of Directors which specifically
identifies the manner in which the Board of
Directors believes that you have not
substantially performed your duties; or
(ii) your willful engaging in illegal
conduct or gross misconduct which is
materially and demonstrably injurious to the
Company, whether or not subsequently
discontinued or corrected; or
(iii) conviction of a crime other than
misdemeanor traffic offenses or commission of
an act of moral turpitude; or
(iv) inability to report for work for a
period of four months or greater.<PAGE>
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For purposes hereof, no act or failure to act, on your
part, shall be considered "willful" unless it is done, or
omitted to be done, by you in bad faith or without
reasonable belief that your action or omission was in the
best interests of ITI. The cessation of employment shall
not be deemed to be for "cause" unless and until there
shall have been delivered to you a copy of a resolution
duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board of
Directors, finding that, in the good faith opinion of the
Board of Directors, you are guilty of the conduct
described;
(y) "good reason" shall be defined as the assignment
to you by ITI of duties inconsistent with the position of
Chairman of the Board, President and chief executive
officer of ITI (including status, offices, titles and
reporting requirements), or any authority, duties or
responsibilities not at least commensurate in all
material respects with the most significant of those
exercised or assigned to you during the 120-day period
prior to the date hereof, or any other action by ITI
which results in a diminution in such position,
authority, duties or responsibilities (excluding any
isolated, insubstantial and inadvertent action by ITI not
taken in bad faith and which is remedied by ITI promptly
after receipt of notice thereof from you); and
(z) "Change in Control" shall be defined as:
(i) the acquisition by any "person" or "group" (as
defined pursuant to Section 13(d) under the Securities
Exchange Act of 1934) of "beneficial ownership" (as
defined in Rule 13d-3 under said Act) of in excess of 50%
of the combined voting power of the outstanding voting
securities (the "Voting Securities") of ITI entitled to
vote generally in the election of directors; and/or
(ii) the replacement of 50% or more of the members of
ITI's Board of Directors (excluding, for purposes of such
calculation, the Chairman of the Board) over a one-year
period from the directors who constituted such Board at
the beginning of such period, where such replacement
shall not have been approved by a vote including at least
a majority of the directors who were members of the Board
at the beginning of such one-year period or whose
election as members of the Board was previously so
approved; and/or
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(iii) consummation of a merger, statutory share exchange
or consolidation involving ITI or sale or other
disposition of all or substantially all of the assets of
ITI, unless following such transaction: (x) all or
substantially all of the individuals and entities who
were the "beneficial owners" (as hereinabove defined),
respectively, of the outstanding Voting Securities
immediately prior to such transaction "beneficially
owned", directly or indirectly, more than 50% of the
combined voting power of the then outstanding Voting
Securities of the corporation resulting from such
transaction in substantially the same proportion as their
ownership immediately prior to such transaction of the
outstanding Voting Securities of ITI, (y) no "person" or
"group" (as hereinabove defined) "beneficially owns",
directly or indirectly, 20% or more of the combined
voting power of the then outstanding Voting Securities of
such corporation except to the extent that such ownership
existed prior to such transaction and (z) at least a
majority of the members of the board of directors
resulting from such transaction were members of ITI's
Board of Directors immediately prior to such transaction
or were nominated by at least a majority of the members
of ITI's Board of Directors at the time of the execution
of the initial agreement for such transaction, or by the
action of ITI's Board of Directors providing for such
transaction; and/or
(iv) approval by the stockholders of ITI of a complete
liquidation or dissolution of ITI.
7. Certain Additional Payments.
(a) Except as set forth below, in the event it
shall be determined that any payment to you under Section
6 (collectively, the "Payments") would be subject to any
excise tax imposed by Section 4999 of the Internal
Revenue Code of 1986, as amended, and any interest or
penalties incurred by you with respect to such excise tax
(collectively, "Excise Tax"), then you shall be entitled
to receive an additional payment (a "Gross-Up Payment")
in an amount such that after payment by you of all taxes,
including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto), and
Excise Tax imposed upon the Gross-Up Payment, you retain
an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing
provisions of this Section 7, if it shall be determined
that you are entitled to a Gross-Up Payment, but that the
Payments do not exceed 110% of the greatest amount that
could be paid to you such that the receipt of Payments
would not give rise to any Excise Tax, then no Gross-Up<PAGE>
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Payment shall be made to you and the Payments, in the
aggregate, shall be reduced to such greatest amount.
(b) All determinations required to be made under
this Section 7 shall be made by ITI's independent
auditors, who shall provide detailed supporting
calculations both to ITI and you within 15 business days
of the receipt of notice from you that there has been a
Payment, or such earlier time as is requested by ITI. All
fees and expenses of the accounting firm acting hereunder
shall be borne solely by ITI. Any Gross-Up Payment, as
determined pursuant to this Section 7, shall be paid by
ITI to you within five days of the receipt of the
accounting firm's determination.
(c) You shall promptly notify ITI in writing of any
claim by the Internal Revenue Service that, if success-
ful, would require the payment by ITI of the Gross-Up
Payment. If ITI notifies you in writing prior to the
expiration of 30 days after receipt of such notice that
it desires to contest such claim, you shall: (A) give ITI
any information reasonably requested by ITI relating to
such claim, and (B) take such action in connection with
contesting such claim as ITI shall reasonably request in
writing from time to time, including, without limitation,
accepting legal representation with respect to such claim
by an attorney reasonably selected by ITI, provided,
however, that ITI shall bear and pay directly all costs
and expenses (including additional interest and
penalties) incurred in connection with such contest.
Without limitation on the foregoing provisions of this
Section 7, ITI shall control all proceedings taken in
connection with such contest.
8. Secrecy; Non-Competition. You hereby acknowledge and
agree that you have previously entered into a Non-
Disclosure and Non-Competition Agreement dated January
27, 1994 (the "Secrecy Agreement") with ITI, the terms of
which are hereby incorporated by this reference herein
and deemed to be a part of this letter. Without limiting
the provisions thereof (except for paragraph 3 thereof,
the provisions of which are hereby superseded by this
Section 8), you hereby agree that, for a period expiring
two years after the termination or expiration of all
services rendered by you to ITI or any of its Affiliates,
whether as employee, director, consultant or otherwise,
unless any such termination shall be effectuated by ITI
or any Affiliate without "cause" (as hereinabove defined)
or by you with "good reason" (as hereinabove defined),
you will not, directly or indirectly, engage in the
business of rehabilitating, lining, relining, coating,<PAGE>
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constructing or reconstructing pipelines, sewers,
conduits or passageways (the "Services") anywhere in the
world, or otherwise engage in Prohibited Competition (as
hereinafter defined). You agree and acknowledge that it
is contemplated that ITI will continue to seek and obtain
work in the United States and internationally and
acknowledge that ITI's business presently involves
operations in the United States and internationally.
Accordingly, you agree that the foregoing geographic
scope is reasonable in light of current and presently
anticipated operations of ITI.
For purposes of this Section 8, "Prohibited Competition"
shall include, but not be limited to, acting as
consultant, advisor, independent contractor, officer,
manager, employee, principal, agent, director or trustee
of any corporation, partnership, association or agent or
agency, or directly or indirectly owning more than one
percent of the outstanding capital stock of any
corporation, or being a member or employee of any
partnership or any owner or employee of any other
business, any of which is engaged in providing any of the
Services. "Prohibited Competition" also shall include (in
addition to the foregoing):
(i) accepting employment with a customer of ITI or
of its Affiliates with the intent or purpose of
transferring defined business performed by ITI or its
Affiliates to a department, division or affiliate of the
customer;
(ii) requesting or advising any of the customers,
suppliers, or other business contacts of ITI or its
Affiliates to withdraw, curtail or cancel their business
with ITI or its Affiliates; or
(iii) causing or inducing, or attempting to cause
or induce, either directly or indirectly, any employees,
sales representatives, consultants or other personnel of
ITI or its Affiliates to terminate their relationships
or employment or breach their agreements with ITI or its
Affiliates, whether for the purpose of accepting
employment with you or any other person, firm,
association or corporation with which you are associated,
or otherwise.
As used herein, "Affiliate" shall mean any entity
directly or indirectly controlled by ITI.
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You recognize that the breach of any of your obligations
under this Section 8 may give rise to irreparable injury
to ITI or its Affiliates inadequately compensable in
damages and that, accordingly, ITI or any of its
Affiliates may seek injunctive relief against the breach
or threatened breach of the within undertaking, in
addition to other remedies at law or in equity which may
be available. You acknowledge that compliance with your
obligations under this Section 8 will not impair your
ability to earn a livelihood.
If any restriction set forth in this Section 8 is found
by any court of competent jurisdiction to be
unenforceable because it extends for too long a period of
time or over too great range of activities or in too
broad a geographic area, it shall be interpreted and
amended automatically to extend only over the maximum
period of time, range of activities or geographic area as
to which it may be enforceable to protect the interests
of ITI and its Affiliates.
9. Integration. The terms hereof contain the entire
agreement of the parties hereto with respect to the
subject matter hereof, and supersede any and all prior
understandings, commitments and agreements with respect
thereto. Without limiting the generality of the
foregoing, the terms hereof supersede in all respects:
(i) the letter agreement dated November 18, 1996 between
the parties hereto, (ii) the Severance Agreement dated
June 19, 1997 between the parties hereto, and (iii)
paragraph 3 of the Secrecy Agreement, each of which is in
all respects terminated.
10. Successors.
(a) The terms hereof are personal to you and
without the prior written consent of ITI shall not be
assignable by you otherwise than by will or the laws of
descent and distribution. The terms hereof shall inure to
the benefit of and be enforceable by your legal
representatives.
(b) The terms hereof shall inure to the benefit of
and be binding upon ITI and its successors and assigns.
(c) ITI will require any successor (whether direct
or indirect, by purchase, merger, consolidation or other-
wise) to all or substantially all of the business and/or
assets of ITI to assume expressly and agree to perform
the terms hereof in the same manner and to the same
extent that ITI would be required to perform them if no
such succession had taken place. As used herein, "ITI"<PAGE>
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shall mean ITI as hereinbefore defined and any successor
to its business and/or assets as aforesaid which assumes
and agrees to perform the terms hereof by operation of
law, or otherwise.
If the above accurately reflects our understandings and
agreement, please sign the copy of this letter where indicated and
send such copy back to me acknowledging your acceptance of the
terms hereof.
Very truly yours,
INSITUFORM TECHNOLOGIES, INC.
By s/Stephen Cortinovis
Accepted and Agreed this ----------------------------
15th day of July, 1998 Stephen Cortinovis
Chairman, Compensation
Committee
s/Anthony W. Hooper
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Anthony W. Hooper
