<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 [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(3)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
INSITUFORM TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
<TABLE>
<C> <S>
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) 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:
------------------------------------------------------------
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:
------------------------------------------------------------
</TABLE>
<PAGE> 2
INSITUFORM TECHNOLOGIES, INC.
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 25, 2000
------------------------
Chesterfield, Missouri
April 17, 2000
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 Doubletree Hotel, 16625 Swingley Ridge Road,
Chesterfield, Missouri, on Thursday, May 25, 2000, at 10:00 A.M., local time,
for the following purposes, as more fully described in the accompanying Proxy
Statement:
(1) To elect nine directors of the Company, each to serve for the
ensuing year and until their respective successors are elected and have
qualified;
(2) To consider and take action upon a proposal to approve and adopt
an amendment, heretofore approved by the Board of Directors, to the
Company's Restated Certificate of Incorporation to increase the number of
authorized shares of the Common Stock of the Company from 40,000,000 shares
to 60,000,000 shares;
(3) To consider and take action upon a proposal to approve and adopt
an amendment, heretofore approved by the Board of Directors, to the
Company's 1992 Employee Stock Option Plan in order to increase the number
of shares issuable pursuant to the exercise of options granted under said
plan from 1,850,000 to 2,850,000 shares of Common Stock of the Company;
(4) To consider and take action upon a proposal to approve and adopt
an amendment, heretofore approved by the Board of Directors, to the
Company's 1992 Director Stock Option Plan in order to increase the number
of shares issuable pursuant to the exercise of options granted under said
plan from 1,000,000 to 1,500,000 shares of the Common Stock of the Company;
and
(5) To transact such other business as may properly come before the
Meeting or any adjournment or adjournments thereof.
The close of business on April 6, 2000 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 April 17, 2000 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
2000 Annual Meeting of Stockholders (the "Meeting") of the Company to be held on
May 25, 2000 and at any adjournment or adjournments thereof, for the purposes
set forth in such Notice. The Company's executive office is located at 702
Spirit 40 Park Drive, Chesterfield, Missouri 63005.
At the close of business on April 6, 2000, the record date stated in the
accompanying Notice, the Company had 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. The affirmative vote of
holders of a majority of the issued and outstanding shares of Common Stock is
required to approve the proposal to approve and adopt the amendment to the
Restated Certificate of Incorporation of the Company to increase the number of
authorized shares of Common Stock. Neither the proposed amendment to the
Company's employee stock option plan, nor the proposed amendment to the
Company's director stock option plan, will be made effective until it is
approved and adopted by the holders of a majority of shares of Common Stock
present in person or represented by proxy and entitled to vote at the Meeting.
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, broker non-votes will have the
same effect as a vote at the Meeting against approval of the proposal to approve
and adopt the amendment to the Restated Certificate of Incorporation of the
Company to increase the number of authorized shares of Common Stock. In the
election of directors, and in the determination of whether to approve and adopt
the amendments to the Company's employee stock option plan and its director
stock option plan, respectively, 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.
I. ELECTION OF DIRECTORS
At the Meeting, stockholders will elect nine directors each to serve a term
of one year 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 nine 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.
<PAGE> 4
CERTAIN INFORMATION CONCERNING NOMINEES AND DIRECTORS
Certain information concerning the nominees for election as directors is
set forth below. Such information was furnished by them to the Company:
ROBERT W. AFFHOLDER, age 64; Senior Executive Vice President of the
Company since 1996; Senior Vice President -- Chief Operating Officer of
North American Contracting Operations of the Company from 1995 to 1996;
Vice Chairman and President, Insituform Mid-America, Inc. ("IMA"), from
prior to 1995 until 1995; Director of the Company since 1995.
PAUL A. BIDDELMAN, age 54; President, Hanseatic Corporation (private
investment company) since 1997, and Treasurer from prior to 1995 to 1997;
Director: Celadon Group, Inc., Premier Parks Inc., Star Gas LLC (general
partner of Star Gas Partners, L.P.); Director of the Company since 1988.
STEPHEN P. CORTINOVIS, age 50; Vice President International and
President -- Europe, Emerson Electric Co. since prior to 1995; Director of
the Company since 1997.
JUANITA H. HINSHAW, age 55; Senior Vice President and Chief Financial
Officer of Graybar Electric Company (electrical and communications
distributor) effective May 2000; Chief Financial Officer, Highlights of
Ophthalmology International, Inc. (publishing company) since 1999; Vice
President and Treasurer, Monsanto Company from prior to 1995 to 1999;
Director of the Company since February 2000.
ANTHONY W. HOOPER, age 52; Chairman of the Board of the Company since
1997 and President and Chief Executive Officer of the Company since 1996;
Senior Vice President -- Marketing and Technology of the Company from prior
to 1995 to 1996; Director of the Company since 1996.
THOMAS N. KALISHMAN, age 36; Chairman and Chief Executive Officer of
Maverix.net, Inc. (telecommunications company) since 1999; President of the
Company's United Pipeline Systems division during 1998; Director -- East
Group of North American Pipe Rehabilitation of the Company from 1997 to
1998; Operations Manager -- Southeast Region of the Company from 1995 to
1996; General Manager -- Puerto Rico subsidiary of IMA from prior to 1995
until 1995; Director of the Company since 1998.
SHELDON WEINIG, age 72; Adjunct Professor at Columbia University since
prior to 1995 and at State University of New York, Stony Brook since prior
to 1995; Consultant, Sony Engineering and Manufacturing of America from
prior to 1995 to 1996; Director: Intermagnetics General Corporation;
Director of the Company since 1992.
RUSSELL B. WIGHT, JR., age 61; General Partner, Interstate Properties
(real estate development and construction) since prior to 1995; Director:
Vornado Realty Trust, Vornado Operating Company, Alexander's, Inc.;
Director of the Company since 1992.
ALFRED L. WOODS, age 56; President, Woods Group (management
consultant) since 1995; President and Chief Operating Officer, WSR
Corporation (holding company for specialty retail properties) from prior to
1995 until 1995; Director of the Company since 1997.
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, 1999, the Board of Directors of the
Company held six meetings, and took action by unanimous written consent on five
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 or she served.
The members of the Audit Committee of the Board of Directors are Paul A.
Biddelman, Thomas N. Kalishman and Sheldon Weinig. 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
2
<PAGE> 5
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 and reviewing the independence of the independent
auditors. During the year ended December 31, 1999, the Audit Committee held four
meetings.
The members of the Compensation Committee of the Board of Directors are
Robert W. Affholder, Stephen P. Cortinovis and Alfred L. Woods. 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. During
the year ended December 31, 1999, the Compensation Committee held two meetings.
The members of the Nominating Committee of the Board of Directors are
Anthony W. Hooper, Russell B. Wight, Jr. and Robert W. Affholder. The functions
of the Nominating Committee include establishing criteria for the selection of
nominees for election as directors, reviewing the qualifications of and
maintaining information concerning potential nominees, making appropriate
recommendations to the Board of Directors with respect to nominees and reviewing
on a long-term basis the size and composition of the Board of Directors. The
Nominating Committee will consider nominees for election as director recommended
by stockholders and others. Recommendations may be addressed to the Secretary of
the Company at its principal executive offices. During the year ended December
31, 1999, the Nominating Committee did not hold any meetings.
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 $16,000 per annum and
$1,500 per meeting of the Board of Directors, or committee of the Board,
attended by such director ($750 in the case of telephonic meetings and committee
meetings held in conjunction with Board meetings), plus reimbursement of his
expenses.
In February 2000, the Company granted options under its 1992 Director Stock
Option Plan (the "Director Plan") covering 7,500 shares of Common Stock to each
of Robert W. Affholder, Paul A. Biddelman, Stephen P. Cortinovis, Anthony W.
Hooper, Thomas N. Kalishman, Silas Spengler, Sheldon Weinig, Russell B. Wight,
Jr. and Alfred B. Woods, constituting the incumbent members of the Board of
Directors. All such options are currently exercisable at a price per share equal
to $28.94, the closing price per share of the Common Stock on The Nasdaq
National Market on the date of grant, and expire ten years from the date of
grant.
In connection with the appointment to the Board of Directors of Juanita H.
Hinshaw in February 2000, the Company granted an option to her under the
Director Plan covering 7,500 shares of Common Stock. Such option is currently
exercisable at a price per share equal to $27.41, the closing price per share of
the Common Stock on The Nasdaq National Market on the date of grant, and expires
ten years from the date of grant.
Messrs. Affholder, Biddelman, Cortinovis, Hooper, Kalishman, Spengler,
Weinig, Wight and Woods each hold options granted under the Director Plan in
December 1998 covering 15,000 shares of Common Stock, all of which are
exercisable currently at a price per share equal to $13.81, the closing price
per share of the Common Stock on The Nasdaq National Market on the date of
grant, and expire ten years from the date of grant. Messrs. Cortinovis and Woods
also hold options granted under the Director Plan in November 1997 covering
14,000 shares of Common Stock, and Messrs. Affholder, Biddelman, Weinig and
Wight hold options granted under the Director Plan at the same time covering
9,000 shares, all of which are exercisable at a price per share equal to $8.75,
the closing price per share of the Common Stock on The Nasdaq National Market on
the date of grant, and expire ten years from the date of grant. During the year
ended December 31, 1999, Mr. Spengler exercised options covering, respectively,
9,000 shares of Common Stock and 15,000 shares of Common Stock granted to him in
November 1997 and December 1998, respectively, on the same terms as the grant of
options covering the same number of shares then made to the other directors.
3
<PAGE> 6
Anthony W. Hooper also holds options granted to him under the Director Plan
in connection with service as President and Chief Executive Officer of the
Company. See "Executive Compensation" below. Thomas N. Kalishman holds options
granted to him under the Company's 1992 Employee Stock Option Plan (the
"Employee Plan") prior to his appointment as a director. Except for the
foregoing, no current director of the Company holds any options granted by the
Company.
Silas Spengler, following his retirement from the Board of Directors during
the current year, remains party to a two-year consulting agreement with the
Company under which, at the request of the Company, he renders consulting
services in exchange for remuneration at an hourly rate and reimbursement of
expenses.
In connection with his resignation as President of the Company's United
Pipeline Systems division and appointment as a director of the Company in
December 1998, the Company and Thomas N. Kalishman entered into arrangements
pursuant to which Mr. Kalishman continued to receive salary payments, at his
prior rate of $140,000 per annum, and medical, dental, life and disability
insurance coverage, through June 1999. During the year ended December 31, 1999,
Mr. Kalishman was paid his 1998 bonus, in the amount of $92,815, in addition to
$40,000 for transitional expenses under such arrangements.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth certain
information with respect to compensation for each of the Company's last three
completed fiscal years of (i) the Company's chief executive officer, (ii) each
of the other executive officers whose salary and bonus exceeded $100,000 during
the most recent fiscal year, and (iii) one additional individual who would have
been among the four such other most highly-compensated executive officers during
the most recent fiscal year, but was not an executive officer at the end of such
year:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION ------------
------------------------------------------ SECURITIES
OTHER UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) BONUS COMPENSATION(2) OPTIONS(#) COMPENSATION
- --------------------------- ---- --------- -------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Anthony W. Hooper......... 1999 $420,833 $425,000 -- 35,000 $ 16,199(3)
President and Chief 1998 392,917 274,400 -- 140,000 18,460
Executive Officer 1997 344,000 160,875 $ 82,366(4) 49,000 18,269
Robert W. Affholder....... 1999 $125,000 -- -- -- $ 10,341(5)
Senior Executive 1998 250,000 -- -- 15,000 20,748
Vice President 1997 250,000 -- -- 9,000 20,718
Robert L. Kelley.......... 1999 $195,883 $107,144 -- 10,000 $ 14,084(6)
Vice President -- 1998 190,300 104,741 -- -- 16,337
General Counsel 1997 181,714 65,120 $ 39,181(7) 15,000 16,349
Carroll W. Slusher........ 1999 $185,833 $101,010 -- 15,000 $ 13,990(9)
Vice President -- 1998 -- -- -- -- --
North America(8) 1997 -- -- -- -- --
William A. Martin (ret.)... 1999 $161,833 -- -- -- $814,099(11)
Senior Vice President -- 1998 207,683 -- -- -- 17,697
Chief Financial
Officer(10) 1997 196,297 $ 48,840 $ 35,437(12) 15,000 17,655
Antoine Menard............ 1999 $122,526 $ 75,165 -- 10,000 --
Vice President -- 1998 -- -- -- -- --
Europe(13) 1997 -- -- -- -- --
Joseph A. White........... 1999 $ 73,320 $ 41,098 $144,417(15) 15,000 $ 15,310(16)
Vice President -- Chief 1998 -- -- -- -- --
Financial Officer(14) 1997 -- -- -- -- --
</TABLE>
- ---------------
(1) Includes amounts earned but deferred at the election of the executive under
the Company's non-qualified deferred compensation plan.
4
<PAGE> 7
(2) 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.
(3) Represents $6,400 in 401(k) contributions under the Company's 401(k)
Profit-Sharing Plan (the "Restated Plan"), $8,000 in profit-sharing
contributions under the Restated Plan and $1,799 in term life insurance
premiums.
(4) Represents $74,582 pursuant to the Company's relocation plan (the
"Relocation Plan") and $8,784 in reimbursement for taxes. See also "Certain
Agreements with Directors and Executive Officers" below.
(5) Represents $2,708 in 401(k) contributions under the Restated Plan, $6,250
in profit sharing contributions under the Restated Plan and $1,383 in term
life insurance premiums.
(6) Represents $5,174 in 401(k) contributions under the Restated Plan, $8,000
in profit-sharing contributions under the Restated Plan and $910 in term
life insurance premiums.
(7) Represents $34,961 pursuant to the Relocation Plan and $4,220 in
reimbursement for taxes.
(8) Mr. Slusher became an executive officer in February 1999, having served in
other positions since prior to the commencement of such year.
(9) Represents $5,299 in 401(k) contributions under the Restated Plan, $8,000
in profit-sharing contributions under the Restated Plan and $691 in term
life insurance premiums.
(10) Mr. Martin resigned as an executive officer of the Company during the third
quarter of 1999.
(11) Represents $2,777 in 401(k) contributions under the Restated Plan, $1,202
in term life insurance premiums, and $812,120 in severance payments under
Mr. Martin's agreement with the Company. See "Certain Agreements with
Directors and Executive Officers" below.
(12) Represents $30,885 pursuant to the Relocation Plan and $4,552 in
reimbursement for taxes.
(13) Mr. Menard became an executive officer in February 1999, having served in
other positions since prior to the commencement of such year.
(14) Mr. White became an executive officer in August 1999.
(15) Represents $85,345 pursuant to the Relocation Plan and $59,072 in
reimbursement of taxes.
(16) Represents $2,150 in 401(k) contributions under the Restated Plan and $228
in term life insurance premiums.
Option Grant Table. The following table sets forth certain information
regarding options granted by the Company during the year ended December 31, 1999
to the individuals named in the above compensation table:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE FOR OPTION TERM(2)
OPTIONS TO EMPLOYEES PRICE EXPIRATION ---------------------
NAME GRANTED(#) IN FISCAL YEAR(1) ($/SH) DATE 5% 10%
- ---- ---------- ----------------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Anthony W. Hooper........ 35,000(3) 7.1% $18.63 04/27/04 $180,101 $397,976
Robert W. Affholder...... -- -- -- -- -- --
Robert L. Kelley......... 10,000(4) 2.0 14.44 02/25/04 31,886 78,052
Carroll W. Slusher....... 15,000(4) 3.0 14.44 02/25/04 47,830 117,078
</TABLE>
5
<PAGE> 8
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------ VALUE AT ASSUMED
NUMBER OF ANNUAL RATES OF STOCK
SECURITIES % OF TOTAL PRICE APPRECIATION
UNDERLYING OPTIONS GRANTED EXERCISE FOR OPTION TERM(2)
OPTIONS TO EMPLOYEES PRICE EXPIRATION ---------------------
NAME GRANTED(#) IN FISCAL YEAR(1) ($/SH) DATE 5% 10%
- ---- ---------- ----------------- -------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
William A. Martin........ -- -- -- -- -- --
Antoine Menard........... 10,000(4) 2.0 14.44 02/25/04 34,957 187,732
Joseph A. White.......... 15,000(4) 3.0 20.50 08/30/04 84,957 187,732
</TABLE>
- ---------------
(1) Includes options granted to the chief executive officer under the Director
Plan.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on arbitrarily assumed rates of stock price appreciation of 5% and
10% compounded annually from the date the respective options are granted to
their expiration date.
(3) Such option was granted under the Director Plan (see "Director Compensation"
above), with one-quarter of such options exercisable upon grant and the
remainder becoming exercisable in three equal annual installments
thereafter.
(4) Such options were granted under the Employee Plan, with one-quarter of such
options exercisable upon grant and the remainder becoming exercisable in
three equal annual installments thereafter.
Aggregate Option Exercises and Year-End Option Table. The following table
sets forth certain information regarding exercises of stock options, and stock
options held as of December 31, 1999, 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 VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FISCAL YEAR-END(#) AT YEAR-END($)(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Anthony W. Hooper....... 12,000 179,280 204,000 195,000 $3,585,819 $2,941,619
Robert W. Affholder..... -- -- 24,000 -- 392,063 --
Robert L. Kelley........ -- -- 36,500 13,500 591,275 220,575
Carroll W. Slusher...... -- -- 12,750 17,250 227,288 272,363
William A. Martin....... 18,000 282,020 -- -- -- --
Antoine Menard.......... -- -- 25,600 12,900 432,575 208,875
Joseph A. White......... -- -- 3,750 11,250 29,063 87,188
</TABLE>
- ---------------
(1) Calculated on the basis of the fair market value of the underlying
securities at year-end, minus the exercise price.
STOCK PLANS
In June 1992, the stockholders of the Company approved the Employee Plan
and the Director Plan, as previously adopted by the Board of Directors. For a
description of the Employee Plan see "III. Amendment to 1992 Employee Stock
Option Plan" below. For a description of the Director Plan, see "IV. Amendment
to 1992 Director Stock Option Plan" below.
In October 1995, in connection with the consummation of the Company's
acquisition of IMA, 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
6
<PAGE> 9
number of shares of IMA Class A Common Stock subject to such option immediately
prior to the IMA Merger would have been convertible in such transaction if such
shares had been outstanding, and (ii) the option price per share of the
Company's Common Stock was adjusted to an amount obtained by dividing (x) the
exercise price per share in effect on such date times the number of shares of
IMA Class A Common Stock previously covered by such IMA Option, by (y) the
number of shares of the Company's Common Stock covered by such option as so
assumed. As a result of such arrangements, the Company assumed options covering
an aggregate of 449,236 shares of Common Stock, 86,455 shares of which were
covered by options outstanding at March 31, 2000.
CERTAIN AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS
In July 1998, the Company entered into arrangements with Anthony W. Hooper,
the Company's Chairman of the Board, President and Chief Executive Officer,
which replaced prior arrangements with Mr. Hooper, including the severance
benefits surrendered by Mr. Hooper under his 1997 agreement extended by the
Company and more fully described below. The current arrangements provide for a
base salary subject to annual review, in addition to bonus payments in an amount
calculated as a percentage of base salary with a center point objective of 50
percent (intended to provide an opportunity of up to twice the center point),
and that option grants (see "Executive Compensation" above) become immediately
exercisable in the event of specified changes in control of the Company.
Under such arrangements, the Company also provides Mr. Hooper with a car
allowance, reimbursement for one country club membership and medical and life
insurance benefits. Such arrangements also provide that, in the event Mr.
Hooper's employment is terminated without "cause" or he resigns with "good
reason" (as defined therein), he will be entitled to base salary and bonus over
a period of 18 months (or 30 months, if following specified changes in control
of the Company), subject to payment, at his election, in a lump sum at a
discounted rate, and in all cases together with excise taxes due, if any, and
coverage during the foregoing period under the Company's welfare plans (or
equivalent coverage).
In connection with Mr. Hooper's relocation to the Company's new
headquarters facilities in Chesterfield, Missouri, and in addition to the
amounts extended to Mr. Hooper under the Company's Relocation Plan, in September
1997 the Company extended a loan to Mr. Hooper in the amount of $200,000, due on
the fifth anniversary thereof, or earlier in the event of cessation of
employment. Such loan accrues interest after default at the rate of 1% per
month, and does not accrue interest prior to default except as specified
therein.
Effective December 1999, the Company further extended by an additional
year, through December 2000, its employment agreement with Robert W. Affholder,
entered into in October 1995 in connection with the Company's acquisition of
IMA. Under such arrangements, Mr. Affholder serves as Senior Executive Vice
President of the Company, receives an annual salary of $125,000, and devotes
one-half of his business time to the Company's affairs. In the event of Mr.
Affholder's death, such arrangements terminate automatically, and are terminable
by the Company upon the failure of Mr. Affholder to perform his duties
thereunder owing to illness or other incapacity, if such illness continues for a
period of six months, or for other cause (as defined in such agreement). Mr.
Affholder's arrangements with the Company entitle him to participate in medical
and other employee benefit plans and to the use of an automobile. Mr. Affholder
has also entered into a non-competition agreement with the Company extending
from the completion of the Company's acquisition of IMA until the later of five
years thereafter or two years after all service to the Company has ended.
In June 1997, the Company entered into severance agreements (the "1997
Agreements") with Mr. Hooper and with Robert L. Kelley, the Company's Vice
President-General Counsel, and William A. Martin, the Company's former Senior
Vice President-Chief Financial Officer, which provided that, subsequent to the
occurrence of specified events during a period of three years after the date of
such agreement, if the employment of such officer was terminated without "cause"
or such officer resigned with "good reason" (as those terms were defined under
such agreements), or such officer resigned for any reason during a 30-day period
(the "Election Period") following the anniversary of the specified events, such
officer was entitled to the benefits set forth in the agreement. The election of
two members of the Board of Directors in October 1997 outside of the procedures
provided for under the Company's acquisition agreement with IMA
7
<PAGE> 10
was one of the specified events. The benefits to which each officer was entitled
upon severance from the Company as aforesaid included an amount, payable within
30 days after severance, equal to three times compensation (including base
salary and bonus, as defined, and accrued supplemental retirement benefits) plus
amounts to cover any excise taxes due, if any, and coverage for a period of
three years under the Company's welfare plans (or equivalent coverage).
The Company subsequently entered into additional arrangements with Mr.
Martin, which provided that his employment would continue until 30 days after
prior written notice delivered at any time by either the Company or Mr. Martin.
Such additional arrangements provided that, upon termination of employment, Mr.
Martin would be entitled to the severance benefits under the 1997 Agreement
applicable to resignation for any reason during the Election Period, fixed at an
amount calculated as if termination had occurred during the Election Period,
with three-year coverage under the Company's welfare plans to commence on the
actual date of Mr. Martin's termination. During the year ended December 31,
1999, Mr. Martin resigned from the Company and was paid amounts under such
arrangements aggregating $812,120.
The Company has also entered into additional arrangements with Mr. Kelley
providing that he will be entitled to the benefits under the 1997 Agreement
applicable to resignation for any reason during the Election Period, fixed at an
amount calculated as if termination had occurred during the Election Period
payable on December 31, 2002 or, if later, upon six months' prior written notice
of voluntary termination by him, or earlier as follows: (i) within 30 days after
termination by the Company of his employment for any reason, or in the event of
death or disability; (ii) within six months after termination by him of
employment for "good reason" (as defined under the agreement); or (iii) within
30 days after termination by him of employment during the 30-day period
following the first anniversary of specified changes in control of the Company.
Such arrangements also cover excise taxes due, if any, and coverage for a period
of three years under the Company's welfare plans (or equivalent coverage).
During the year ended December 31, 1999, the Company remained party to
arrangements previously entered into with Carroll Slusher, currently Vice
President-North America of the Company, under which for a period of 24 months
after Mr. Slusher's joining the Company in 1997 he was entitled to severance
equal to twelve months' base salary in the event of termination without cause.
Antoine Menard, currently Vice President-Europe of the Company, is
entitled, under arrangements entered into upon joining the Company in 1995, to
severance upon termination, other than for specified causes, calculated as the
greater of twelve months base salary or any amount prescribed by law.
In August 1999, the Company entered in employment arrangements with Joseph
A. White, in connection with his appointment as Vice President-Chief Financial
Officer of the Company, which provide for an initial annual base salary at the
rate of $215,000, subject to annual review, in addition to bonus payments in an
amount calculated as a target rate of 50% of his annual base salary, and an
initial grant of options under the Employee Plan covering 15,000 shares of
Common Stock. Mr. White also became entitled to reimbursements under the
Company's Relocation Plan, under which he was paid $85,345 during the year ended
December 31, 1999. Mr. White's arrangements further provide that, in the event
employment is terminated without cause within the first 24 months, he will be
entitled to severance in an amount equal to two years' base salary, payable in a
lump sum, net of aggregate base salary paid since the commencement of
employment.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the year ended December 31, 1999, the Company's Compensation
Committee consisted of Stephen P. Cortinovis, Robert W. Affholder and Alfred L.
Woods. In addition, the Company's Employee Plan (under which executive officers
who are not directors are granted stock options) and its Director Plan (under
which executive officers who are directors are granted stock options) were,
during the year ended December 31, 1999, administered by the entire Board of
Directors which, in addition to the foregoing directors, included Paul A.
Biddelman, Anthony W. Hooper, Silas Spengler, Sheldon Weinig, Russell B. Wight,
Jr. and Thomas N. Kalishman.
8
<PAGE> 11
Until the 1999 annual meeting of stockholders (the "1999 Meeting"), the
Company was party to an agreement dated July 25, 1997, as amended (the
"Settlement Agreement"), entered into with Jerome Kalishman and Mr. Affholder,
both then directors of the Company, and certain other principal stockholders of
the Company (see "Information Concerning Certain Stockholders" below) consisting
of Nancy F. Kalishman, The Jerome and Nancy Kalishman Family Fund and Xanadu
Investments L.P. (collectively, the "Kalishman/Affholder Group") and Messrs.
Biddelman, Cortinovis, Hooper, Spengler, Weinig, Wight and Woods. Under the
Settlement Agreement, the Kalishman/Affholder Group agreed to end the pending
proxy contest with respect to the election of directors at the Company's 1997
annual meeting of stockholders and not to engage, prior to the 1999 Meeting, in
certain activities in opposition to the Company's management. Among other
matters, the Settlement Agreement provided that the Company would nominate and
recommend for re-election to the Board of Directors at the 1999 Meeting its then
incumbent members, including those selected to fill vacancies on the Board of
Directors as required by the Settlement Agreement.
Pursuant to the Settlement Agreement, during the period ended immediately
prior to the 1999 Meeting, each party (other than the Company) was obligated to
cause all shares of capital stock of the Company beneficially owned by him to be
present, in person or by proxy, at all meetings of stockholders so as to be
counted for the purpose of determining a quorum, and to be voted in favor of the
persons nominated and recommended by the Company in the election of directors.
In addition, during such period, each such party committed to certain standstill
provisions, among which, the commitments, in each case subject to specified
exceptions: (a) not directly or indirectly (except through the Company) to
solicit any proxies or consents, or become a participant in any election contest
with respect to the Company; (b) not to form, join or otherwise participate in
any "group" (within the meaning of Section 13(d)(3) of the Securities Exchange
Act of 1934) with respect to any voting stock of the Company or otherwise act in
concert with any other person for the purpose of holding voting stock; (c) not
to subject any voting stock of the Company to any arrangement or agreement with
respect to the voting of such stock or other agreement having similar effect;
(d) not to make any proposal or bring any business before any meeting of
stockholders; and (e) not to call, request the call, or seek to call, any
special meeting of stockholders.
A subsidiary of the Company is party to a tunnelling equipment lease
agreement with A-Y-K-E Partnership, whose partners during the year ended
December 31, 1999 consisted of Mr. Affholder and Mrs. Kalishman. 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, 1999, such partnership was paid $288,000 under such
arrangements.
REPORT OF BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors of the Company
currently consists of three directors, a majority of whom are not executive
officers of the Company. The Compensation Committee makes recommendations to the
Board of Directors of the Company regarding the compensation arrangements for
executive officers of the Company, including the Company's Chief Executive
Officer. Administration of the Employee Plan, under which stock options may be
awarded to executive officers who are not directors, and of the Director Plan,
under which options may be awarded to executive officers who serve on the Board,
is vested in the entire Board of Directors.
The objectives of the Compensation Committee in recommending executive
compensation to the Board of Directors 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 year ended December 31, 1999, the achievement of the foregoing
objectives was directed to the support of the Company's principal business
strategies, including a continuation of the Company's improved profitability in
its core business while cutting costs and reducing overhead, and expanding its
revenue
9
<PAGE> 12
base. In its last fiscal year, these strategies resulted in significant
improvement to the Company's operations, which demonstrated an increase in
consolidated net income of approximately 45% compared to the prior year while
the market price of the Company's Common Stock (as more fully described below
under "Performance Graph") increased approximately 95%.
As a result of the foregoing objectives, the compensation program for the
Company's executives, including its Chief Executive Officer, has been formulated
to consist principally of: (x) base salary; (y) bonuses; and (z) stock options,
as follows:
(i) Base Salary. The Compensation Committee evaluates 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 the recommendations of the Chief Executive Officers 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, 1999, remuneration as President and
Chief Executive Officer to Mr. Hooper was initially at the rate of $400,000 per
annum, which was established in connection with the renegotiation of his
employment and severance agreements in the prior year. In March 1999, Mr.
Hooper's base salary was increased to $425,000 per annum in connection with the
annual review of his performance, at the recommendation of the Compensation
Committee and upon authorization of the full Board of Directors. The Company
also remains party to certain loan arrangements extended to Mr. Hooper in
connection with his relocation to Chesterfield in July 1997, as described under
"Certain Agreements with Directors and Executive Officers" above.
(ii) Cash Bonuses. Under historical guidelines designed to motivate and
reward key management personnel through the award of cash bonuses, the Chief
Executive Officer and executive officers who report to the Chief Executive
Officer, are eligible for bonuses calculated as a percentage of base salary,
which in the case of executives who report to the Chief Executive Officer are up
to approximately 50% of base salary. Such guidelines have typically provided 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,
individual objectives established for executive management by the Compensation
Committee in discussions with the Chief Executive Officer, and an evaluation of
executive management by the Compensation Committee.
For the year ended December 31, 1999, bonus amounts earned by the Chief
Executive Officer were in the amount of $425,000, based on the Compensation
Committee's evaluation of such specific factors as the Company's continued
substantial progress in improving profitability and earnings per share, and the
enhanced stockholder value represented by the increased market value of the
Company's securities. As part of his employment arrangements entered into in
July 1998, Mr. Hooper is entitled to bonus payments in an amount calculated as a
percentage of base salary with a center point objective of 50 percent, intended
to provide an opportunity of up to twice the center point.
(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's Common Stock. In connection with attracting new
executive management, the Compensation Committee has typically authorized the
grant of options effective upon commencement of employment.
10
<PAGE> 13
The Company's current executive officers, collectively, hold options under
the Employee Plan and, in the case of Messrs. Hooper and Affholder, under the
Director Plan. During the year ended December 31, 1999, the Company authorized
an option grant under the Director Plan to the Chief Executive Officer in
connection with his annual review for the prior year covering 35,000 shares; in
February 2000, as a result of the annual review of performance for 1999, the
Company authorized an option grant under the Director Plan to the Chief
Executive Officer covering 42,500 shares. In addition, both Mr. Hooper and Mr.
Affholder were granted options under the Director Plan commensurate with the
grants to all directors in February 2000 (in each case covering 7,500 shares of
Common Stock). In defining the limits of option grants for executive officers
and in selecting individual officers for options and determining the terms
thereof, the Company will continue to take into consideration any factors it
deems relevant, including present and potential contributions to the success of
the Company.
Pursuant to the recommendation of the Compensation Committee, the Board of
Directors has also adopted, effective February 1, 1999, a non-qualified,
deferred compensation plan for key employees, under which highly-compensated
employees, including executive management, will be able to defer, at their
election, up to specified maximum amounts of compensation by contribution of
such amounts to the plan. The plan allows for base pay deferral, when aggregated
with 401(k) base pay contributions under the Restated Plan, of up to 15% of base
salary, and bonus deferral, in addition to 401(k) bonus contributions under the
Restated Plan, of up to 25% of bonus amounts. Under the plan, the Company will
match the first 3% of contributions at a 100% rate, and the next 2% of
contributions at a 50% rate (limited to compensation up to $160,000 per annum).
Contributions under the plan increase by an amount to match the performance of
participant-selected indices. The Company has the option to actually invest
participant contributions in whatever manner it chooses. Subject to claims of
creditors, the Company will pay account balances to participants after
termination of employment based on their deferrals into the accounts and the
investment performance from their selected indices.
------------------------
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. 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.
The foregoing report on executive compensation is provided by the following
directors, constituting the entire Board of Directors:
<TABLE>
<S> <C>
Robert W. Affholder Thomas N. Kalishman
Paul A. Biddelman Sheldon Weinig
Stephen P. Cortinovis Russell B. Wight, Jr.
Juanita Hinshaw Alfred L. Woods
Anthony W. Hooper
</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 report and the performance graph that follows shall not be deemed
incorporated by reference into any such filings.
PERFORMANCE GRAPH
The following performance graph compares the total stockholder return on
the Company's Common Stock to the S&P 500 Index and a Composite Peer Group Index
for the past five years. The Composite Peer
11
<PAGE> 14
Group Index is comprised of Insituform East Incorporated, Utilx Corporation,
Michael Baker Corporation, BFC Construction Corporation (formerly Banister
Foundation, Inc.), Granite Construction, Inc., MYR Group, Inc. (formerly The LE
Meyers Co. Group) and J. Ray McDermott, S.A. (weighted by market
capitalization). The graph assumes that $100 was invested in the Company's
Common Stock and each Index on December 31, 1994 and that all dividends were
reinvested.
COMPARISON OF FIVE-YEAR CUMULATIVE RETURN
[COMPARISON GRAPH]
<TABLE>
<CAPTION>
INSITUFORM TECHNOLOGIES, COMPOSITE PEER GROUP
INC. S&P 500 INDEX INDEX
------------------------ ------------- --------------------
<S> <C> <C> <C>
1994 100.00 100.00 100.00
1995 100.00 137.58 129.32
1996 63.44 169.17 138.26
1997 66.67 225.60 169.76
1998 124.73 290.08 281.20
1999 243.01 351.12 205.96
</TABLE>
INFORMATION CONCERNING CERTAIN STOCKHOLDERS
The following table sets forth certain information as of March 31, 2000
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," and (iv) all
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>
Nancy F. Kalishman
17988 Edison Avenue
Chesterfield, Missouri 63005.............................. 3,055,448(2) 12.4%
T. Rowe Price Associates, Inc.
100 East Pratt Street
Baltimore, Maryland 21202................................. 2,539,600(3) 10.3
Interstate Properties
Park 80 West-Plaza Two
Saddle Brook, New Jersey 07663(4)......................... 1,660,072(5) 6.7
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
BENEFICIAL OWNER BENEFICIALLY OWNED(1) OF CLASS
- ---------------- --------------------- --------
<S> <C> <C>
David Mandelbaum
80 Main Street
West Orange, New Jersey 07052..................... 1,660,072(5) 6.7
Steven Roth
Park 80 West-Plaza Two
Saddle Brook, New Jersey 07663.................... 1,670,072(5) 6.8
Russell B. Wight, Jr.
Park 80 West-Plaza Two
Saddle Brook, New Jersey 07663.................... 1,699,235(5)(6)(7) 6.9
Kalmar Investments Inc.
3701 Kennett Pike
Greenville, Delaware 19807................................ 1,624,873(8) 6.6
Robert W. and Pamela Long Affholder
5318 West Camino Del Desierto
Tuscon, Arizona 85745..................................... 1,279,571(9) 5.2
Paul A. Biddelman........................................... 31,500(6) (10)
Stephen P. Cortinovis....................................... 36,500(11) (10)
Juanita H. Hinshaw.......................................... 7,500(12) (10)
Anthony W. Hooper........................................... 259,425(13) 1.0
Thomas N. Kalishman......................................... 448,963(14) 1.8
Sheldon Weinig.............................................. 42,600(6) (10)
Alfred L. Woods............................................. 37,000(11) (10)
Robert L. Kelley............................................ 42,981(15) (10)
Carroll W. Slusher.......................................... 22,350(16) (10)
William A. Martin........................................... 29,000 (10)
Antoine Menard.............................................. 29,725(17) (10)
Joseph A. White............................................. 10,100(18) (10)
Directors and Executive Officers as a group (13 persons).... 3,948,205(19) 15.6
</TABLE>
- ---------------
(1) Except as otherwise indicated, as of March 31, 2000 all of such shares are
owned with sole voting and investment power.
(2) Represents: (i) 137,259 shares beneficially owned by Nancy F. Kalishman,
individually, (ii) 2,869,274 shares beneficially owned by Xanadu
Investments, L.P. (the general partners of which are The Jerome Kalishman
Revocable Trust and The Nancy F. Kalishman Revocable Trust, as to each of
which Nancy F. Kalishman acts as trustee), and (iii) 48,915 shares (the
"Fund Shares") beneficially owned by Nancy F. Kalishman, as trustee of The
Jerome and Nancy Kalishman Family Fund. Excludes: (i) 317,388 shares
beneficially owned with sole voting and investment power by John Kalishman
(including 14,925 shares issuable upon exercise of stock options granted by
the Company and exercisable at March 31, 2000), (ii) 302,463 shares
beneficially owned with sole voting and investment power by James
Kalishman, (iii) 271,797 shares beneficially owned with sole voting and
investment power by Susan Kalishman, (iv) 333,963 shares beneficially owned
with sole voting and investment power by Thomas N. Kalishman (including
31,500 shares issuable upon exercise of stock options granted by the
Company and exercisable at March 31, 2000), and (v) 115,000 shares held by
The Jerome and Nancy F. Kalishman Irrevocable Grandchildren's Trust, as to
which John, James, Susan and Thomas N. Kalishman (all of whom are children
of Nancy F. Kalishman) act as co-trustees and have shared voting and
investment power; Nancy F. Kalishman disclaims beneficial ownership of such
shares.
(3) Represents securities as to which T. Rowe Price Associates, Inc.
("Associates") serves as investment advisor beneficially owned by various
individual and institutional investors, including 1,550,000 shares
beneficially owned by T. Rowe Price Small-Cap Value Fund, Inc. (the
"Fund"), a registered
13
<PAGE> 16
investment company. In a Statement on Schedule 13G, as amended, filed with
the Securities and Exchange Commission, Associates and the Fund have
reported that Associates has sole investment power over all such shares,
and that Associates and the Fund have sole voting power over, respectively,
234,800 shares and 1,550,000 shares. Associates disclaims beneficial
ownership of all such securities.
(4) In a Statement on Schedule 13D filed with the Securities and Exchange
Commission by Interstate Properties and its partners, such parties have
reported that Interstate Properties is a general partnership consisting of
David Mandelbaum, Steven Roth and Russell B. Wight, Jr.
(5) Includes 1,660,072 shares beneficially owned by Interstate Properties.
(6) Includes 31,500 shares issuable upon exercise of stock options granted by
the Company and exercisable at March 31, 2000.
(7) Includes: (i) 2,991 shares held by a foundation as to which Mr. Wight has
sole voting and investment power; and (ii) 4,672 shares held by an
investment partnership as to which Mr. Wight has sole voting and investment
power.
(8) In a Statement on Schedule 13G filed with the Securities and Exchange
Commission, Kalmar Investments Inc., a registered investment advisor, has
reported sole investment power with respect to such shares.
(9) Represents: (i) 520,906 shares held individually by Robert W. Affholder;
(ii) 74,165 shares held jointly by Robert W. Affholder and Pamela Long
Affholder; (iii) 650,000 shares held by The Affholder Family Partnership
L.P., the sole general partners of which are The Robert W. Affholder
Revocable Trust and The Pamela Long Affholder Revocable Trust (as to each
of which Robert W. Affholder and Pamela Long Affholder are co-trustees);
(iv) 3,000 shares held by The Robert W. and Pamela Long Affholder
Irrevocable Grandchildren's Trust (as to which Robert W. Affholder is
co-trustee); and (v) 31,500 shares issuable to Robert W. Affholder upon
exercise of stock options granted by the Company and exercisable at March
31, 2000.
(10) Less than one percent.
(11) Includes 36,500 shares issuable upon exercise of stock options granted by
the Company and exercisable at March 31, 2000.
(12) Represents 7,500 shares issuable upon exercise of stock options granted by
the Company and exercisable at March 31, 2000.
(13) Includes 222,125 shares issuable upon exercise of stock options granted by
the Company and exercisable at March 31, 2000.
(14) Excludes shares beneficially owned by Nancy F. Kalishman, as to which Mr.
Kalishman disclaims beneficial ownership. Includes (i) 115,000 shares held
by The Jerome and Nancy F. Kalishman Irrevocable Grandchildren's Trust, as
to which Mr. Kalishman acts as co-trustee with shared voting and investment
power; and (ii) 31,500 shares issuable upon exercise of stock options
granted by the Company and exercisable at March 31, 2000.
(15) Includes 41,250 shares issuable upon exercise of stock options granted by
the Company and exercisable at March 31, 2000 and 500 shares held by Mr.
Kelley's spouse.
(16) Includes 1,500 shares held jointly by Mr. Slusher with his spouse and
20,850 shares issuable upon exercise of stock options granted by the
Company and exercisable at March 31, 2000.
(17) Includes 29,725 shares issuable upon exercise of stock options granted by
the Company and exercisable at March 31, 2000.
(18) Includes 8,100 shares issuable upon exercise of stock options granted by
the Company and exercisable at March 31, 2000.
(19) Includes 556,300 shares issuable upon exercise of stock options granted by
the Company and exercisable at March 31, 2000.
14
<PAGE> 17
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of copies of reports received by it pursuant to
Section 16(a) of the Securities Exchange Act of 1934, and the written
representations of its incumbent directors and officers, and holders of more
than ten percent of any registered class of the Company's equity securities, the
Company believes that during 1999 all filing requirements applicable to its
directors, officers and ten percent holders under said section were satisfied.
II. AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors of the Company, in March 2000, adopted resolutions
setting forth the proposed amendment to the first paragraph of Article FOURTH of
the Restated Certificate of Incorporation of the Company, declaring the
advisability of the amendment and calling for submission of the amendment for
approval at the Meeting.
The following is the text of the first paragraph of Article FOURTH of the
Restated Certificate of Incorporation of the Company, as proposed to be amended:
FOURTH: The corporation shall be authorized to issue sixty-two
million (62,000,000) shares consisting of sixty million (60,000,000) Class
A common shares, par value one cent ($0.01) per share; and two million
(2,000,000) Preferred shares, par value ten cents ($0.10) per share
("Preferred Stock").
The Company is presently authorized to issue 42,000,000 shares of capital
stock, of which 40,000,000 shares are Common Stock, $.01 par value, and
2,000,000 shares are Preferred Stock, $.10 par value ("Preferred Stock"). At the
close of business on March 31, 2000, there were outstanding 24,717,598 shares of
Common Stock. No shares of Preferred Stock were outstanding at such date. At
such date, an additional 2,459,777 shares of Common Stock were reserved for
possible future issuance upon exercise of outstanding stock options and options
that may be granted under the Company's existing stock option plans, and a
further 1,500,000 are proposed to be reserved under the terms of the amendments
to, respectively, the Employee Plan, as described below under "III. Amendment to
1992 Employee Stock Option Plan," and the amendment to the Director Plan,
described below under "IV. Amendment to the 1992 Director Stock Option Plan."
Accordingly, at March 31, 2000, the Company had 12,822,625 shares of Common
Stock available for other purposes (including, in such number, 3,128,266 shares
of treasury stock held by the Company). Holders of capital stock of the Company
do not have any preemptive rights to subscribe for or purchase any shares of
capital stock of the Company.
The proposed amendment to the first paragraph of Article FOURTH of the
Restated Certificate of Incorporation will increase the number of authorized
shares of capital stock to 62,000,000 shares, of which 60,000,000 shares will be
Common Stock, $.01 par value, and 2,000,000 shares will be Preferred Stock, $.10
par value. Thus, the proposed amendment will increase the authorized number of
shares of Common Stock from 40,000,000 to 60,000,000 shares and the number of
authorized shares of Preferred Stock will remain unchanged. The proposed
amendment to the first paragraph of Article FOURTH will not change any other
aspect of Article FOURTH. Approval of the amendment to the first paragraph of
Article FOURTH of the Restated Certificate of Incorporation of the Company will
not of itself cause any change in the capital stock account or surplus account
of the Company.
The overall effect of an issuance of additional shares of Common Stock may
be to render more difficult the accomplishment of any attempted takeover or
other change in control affecting the Company and/or the removal of the
Company's incumbent Board of Directors and management. Information with respect
to the ownership of shares of the Company's Common Stock by directors and
officers is discussed under "I. Election of Directors" above. The proposal to
amend the Restated Certificate of Incorporation of the Company to increase the
number of authorized shares of Common Stock is not being made as an
anti-takeover measure, nor is the proposal being made in response to any
specific efforts known to management to obtain control or accumulate the
securities of the Company. The Company's management has no knowledge of any such
specific efforts.
15
<PAGE> 18
Although no commitments have been made, and no particular transactions are
pending or intended, with respect to the issuance of any of the additional
shares which will be authorized by the amendment to the first paragraph of
Article FOURTH, the Board of Directors may determine subsequently that it would
be in the interests of the Company's stockholders to effect a split of the
issued and outstanding shares of Common Stock, which may take the form of a
stock dividend upon each share of existing Common Stock, and believes that the
proposed amendment to the Restated Certificate of Incorporation would provide
additional flexibility in considering any such action and the ratio of shares
that would be distributed. Any such action would depend upon such factors as the
future marketability and liquidity of the Common Stock, prevailing market
conditions, the likely effect on the market price of the Common Stock and other
relevant criteria. The Company also from time to time evaluates, explores and
has discussions with respect to future potential acquisitions which may involve
the issuance of additional shares, and the Board of Directors of the Company
believes it is prudent to have additional shares of Common Stock available for
such purpose.
The additional shares may be also be used for any issuance in connection
with future financings, and in connection with employee benefit plans or other
corporate purposes. If the proposed amendment is approved, any or all of the
shares of Common Stock that are authorized but not issued and outstanding may
thereafter be made available for such purposes and on such conditions as the
Board of Directors of the Company may determine, without further approval by the
stockholders of the Company, unless in connection with a transaction for which
stockholder approval is otherwise required under applicable law or the rules of
The Nasdaq Stock Market.
The affirmative vote of the holders of a majority of the issued and
outstanding shares of the Company's Common Stock is necessary for the approval
and adoption of the proposed amendment. In the opinion of the Board of
Directors, the increase in the authorized number of shares of Common Stock will
give the Company desired flexibility to meet possible future developments in the
Company's business. Accordingly, the Board urges stockholders to vote FOR
approval and adoption of the amendment to the Restated Certificate of
Incorporation of the Company.
III. AMENDMENT TO 1992 EMPLOYEE STOCK OPTION PLAN
At the Meeting, the Company will propose an amendment of the Employee Plan
in order to increase the number of shares of Common Stock issuable pursuant to
the exercise of options granted under such plan from 1,850,000 to 2,850,000.
In June 1992, the stockholders of the Company approved 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 were not
directors (including executive officers), as previously adopted by the Board of
Directors. In June 1994, the stockholders of the Company approved an increase in
the number of authorized shares of Common Stock available for issuance under the
Employee Plan to 1,000,000 shares. In June 1998, 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 1,850,000 shares. In February
2000, the Board of Directors of the Company approved, subject to approval and
adoption by the stockholders of the Company, an increase in the number of
authorized shares of Common Stock available for issuance under the Employee Plan
to 2,850,000 shares.
SUMMARY OF EMPLOYEE PLAN
Under the Employee Plan, options to purchase shares of Common Stock may be
granted to key employees, including executive officers, of the Company or any
subsidiary thereof, and to consultants and other individuals providing services
to the Company, through March 31, 2002. Options may not be granted under the
Employee Plan to any member of the Board of Directors of the Company (whether or
not a key employee or consultant of the Company or any subsidiary).
The Employee Plan is administered by the Board of Directors of the Company.
The Board of Directors determines the persons who are to receive options under
the Employee Plan, the number of shares subject to
16
<PAGE> 19
each option and whether such options will be incentive stock options or
non-qualified stock options. In selecting individuals for options and
determining the terms thereof, the Board of Directors of the Company may take
into consideration any factors it deems relevant, including present and
potential contributions to the success of the Company. Options granted under the
Employee Plan must be exercised within a period fixed by the Board of Directors
of the Company, which may not exceed ten years from the date of the grant of the
option or, in the case of incentive stock options granted to any holder on the
date of grant of more than ten percent of the total combined voting power of all
classes of stock of the Company, five years from the date of grant of the
option. Options may be made exercisable in whole or in installments, as
determined by the Board of Directors of the Company. Pursuant to amendments to
the Employee Plan adopted in April 1994, the Board of Directors may authorize a
committee of the Board constituted for such purpose to allocate options approved
in the aggregate by the Board of Directors among employees who are not officers.
Options under the Employee Plan may not be transferred other than by will
or by the laws of descent and distribution. However, in the discretion of the
Board of Directors, the terms of an option may permit the optionee to designate
a beneficiary or beneficiaries, in the event of the optionee's death, to
exercise the rights of the optionee and receive the stock issued pursuant to the
option. During the lifetime of an optionee, options under the Employee Plan may
be exercised only by the optionee. The exercise price of an option under the
Employee Plan may not be less than the par value per share of the Common Stock,
provided that no incentive stock options 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 the case of incentive stock options granted to any holder on the date
of grant of more than ten per cent of the total combined voting power of all
classes of stock of the Company, the exercise price may not be less than 110% of
the fair market value of the Common Stock on the date of grant. Unless
designated as "incentive stock options" intended to qualify under Section 422 of
the Code, options which are granted under the Employee Plan are intended to be
"non-qualified stock options". The exercise price may be paid in cash, shares of
Common Stock owned by the optionee, or a combination of both.
The Employee Plan provides that, in the event of changes in the corporate
structure of the Company or certain events affecting the Common Stock, the Board
of Directors of the Company may, in its discretion, make adjustments with
respect to the number and kind of shares which may be issued under the Employee
Plan or which are covered by outstanding options, in the exercise price per
share, or both. In addition, the Board of Directors may terminate the Employee
Plan at any time. No termination or amendment of the Employee Plan may, without
the consent of the optionee, adversely affect the rights of such optionee under
any option held by such optionee.
TAX STATUS OF EMPLOYEE STOCK OPTIONS
For federal income tax purposes, an optionee under the Employee Plan will
not recognize any income upon the grant of a non-qualified or incentive stock
option. Upon the exercise of a non-qualified stock option granted under the
Employee Plan, the optionee will recognize ordinary income in an amount equal to
the excess, if any, of the fair market value of the option stock at the time of
exercise over the exercise price of the option. In certain circumstances, where
the shares are subject to a substantial risk of forfeiture when acquired or
where the optionee is an officer or 10% stockholder of the Company, the date of
taxation may be deferred unless the optionee files an election under Section
83(b) of the Code. Subject to the limitations of Section 162(m) of the Code, the
Company will be entitled to a tax deduction in the same amount and at the same
time as the optionee realizes such income. Upon the sale of shares purchased
upon such exercise, the optionee will realize capital gain or loss measured by
the difference between the amount realized on the sale and the fair market value
of the option stock at the time of exercise of the option. Such capital gain or
loss may be short-term or long-term, depending upon the length of time such
shares were held by the optionee.
In contrast, an optionee will not be taxed upon exercise of an incentive
stock option granted under the Employee Plan, and the Company will not be
entitled to a deduction from income in respect thereof. If the optionee retains
the shares transferred to him upon exercise of an incentive stock option granted
under the Employee Plan for more than one year after the date of issuance of the
stock and two years after the date of grant of the option, any gain or loss
realized on a subsequent sale of the shares by the optionee will be treated as
long-term capital gain or loss. If, on the other hand, the optionee sells the
shares within one year after the
17
<PAGE> 20
date of transfer or two years after the date of grant of the option, the
optionee will realize ordinary income, and the Company will be entitled to a
deduction from income, to the extent of the excess of the value of the shares on
the date of exercise or the amount realized on the sale (whichever is less) over
the exercise price. Any excess of the sale price over the value of the shares on
the date of exercise will be treated as capital gain. The spread between the
fair market value of the shares on the date of exercise and the exercise price
constitutes a tax preference item for purposes of the alternative minimum tax
which, under certain circumstances, could cause tax liability as a result of the
exercise.
The foregoing statements are based upon current federal income tax laws and
regulations and are subject to change if the tax laws and regulations, or
interpretations thereof, change.
NEW PLAN BENEFITS
The grant of options pursuant to the additional authorization proposed
under the Employee Plan to eligible employees and consultants, including the
individuals in the Summary Compensation Table under "I. Election of
Directors -- Executive Compensation", is currently subject to the discretion of
the Board of Directors. As of the date of this Proxy Statement, there has been
no action taken by the Board of Directors with respect to awards under the
additional authorization proposed under the Employee Plan.
During the year ended December 31, 1999, options to purchase an aggregate
of 50,000 shares of Common Stock were granted under the Employee Plan to all
executive officers as a group, of which options with respect to 35,000 shares
were granted at an exercise price of $14.44 per share and options with respect
to 15,000 shares were granted at an exercise price of $20.50 per share, in each
case equal to the closing price of the Common Stock on The Nasdaq National
Market on the date of grant. During such year, options to purchase an aggregate
of 408,000 shares of Common Stock were granted under the Employee Plan to all
other employees of the Company as a group (including officers who are not
executive officers), of which options with respect to 391,500 shares were
granted at an exercise price of $14.44 per share and options with respect to
16,500 shares were granted at an exercise price of $21.50 per share, in each
case equal to the closing price of the Common Stock on The Nasdaq National
Market on the date of grant. Options granted under the Employee Plan during 1999
to the individuals named in the Summary Compensation Table are set forth under
"I. Election of Directors -- Executive Compensation -- Option Grant Table." No
options were granted under the Employee Plan during 1999 to directors or
nominees (including executive officers who are directors or nominees). At March
30, 2000, the closing price per share of the Common Stock on The Nasdaq National
Market was $29.63.
AMENDMENT OF THE EMPLOYEE PLAN
As of March 31, 2000, an aggregate of 1,289,233 shares of Common Stock
remained subject to options granted and outstanding under the Employee Plan. As
of such date, 320,368 shares of Common Stock had been issued under the Employee
Plan from its inception. On March 31, 2000, the Company had approximately 1,600
full-time employees.
There will be presented to the stockholders at the Meeting, a proposal to
amend the Employee Plan to increase from 1,850,000 to 2,850,000 the number of
shares of Common Stock available for options under the Employee Plan as set
forth below.
Section 3 of the Employee Plan would be amended so that the first sentence
thereof would provide as follows:
There shall be available for options under the Plan a total of 2,850,000
shares of Common Stock, subject to any adjustments which may be made
pursuant to Section 5(f) hereof.
The amendment to the Employee Plan will not be made effective unless it is
approved and adopted by the holders of a majority of the shares of the Company's
Common Stock present in person or represented by proxy and entitled to vote at
the Meeting. The Board of Directors regards the number of shares remaining
available under the Employee Plan for new options as insufficient for the future
requirements of the Company. The Board of Directors believes that the benefits
of stockholder approval and adoption of the amendment to the
18
<PAGE> 21
Employee Plan are desirable for the Company and will assist in effectuating the
objectives of the Employee Plan. Accordingly, the Board urges stockholders to
vote FOR approval and adoption of the amendment to the Employee Plan.
IV. AMENDMENT TO 1992 DIRECTOR STOCK OPTION PLAN
At the Meeting, the Company will propose an amendment of the Director Plan
in order to increase the number of shares of Common Stock issuable pursuant to
the exercise of options granted under such plan from 1,000,000 to 1,500,000.
In June 1992, the stockholders of the Company approved the Director Plan,
under which options to purchase an aggregate of 500,000 shares of Common Stock
(as subsequently increased) were subject to grants to directors (including
executive officers), as previously adopted by the Board of Directors. In June
1998, the stockholders of the Company approved an increase in the number of
authorized shares of Common Stock available for issuance under the Director Plan
to 1,000,000 shares. In February 2000, the Board of Directors of the Company
approved, subject to approval and adoption by the stockholders of the Company,
an increase in the number of authorized shares of Common Stock available for
issuance under the Director Plan to 1,500,000 shares.
SUMMARY OF DIRECTOR PLAN
Under the Director Plan, options to purchase shares of Common Stock may be
granted to directors of the Company, including officers, key employees and
consultants providing services to the Company, through March 31, 2002.
The Director Plan is administered by the Board of Directors of the Company.
The Board of Directors of the Company determines the persons who are to receive
options under the Director Plan, the number of shares to be subject to each
option and whether such options will be incentive stock options or non-qualified
stock options. In selecting individuals for options and determining the terms
thereof, the Board of Directors of the Company may take into consideration any
factors it deems relevant, including present and potential contributions to the
success of the Company. Options granted under the Director Plan must be
exercised within a period fixed by the Board of Directors of the Company, which
may not exceed ten years from the date of the grant of the option or, in the
case of incentive stock options granted to any holder on the date of grant of
more than ten percent of the total combined voting power of all classes of stock
of the Company, five years from the date of grant of the option. Options may be
made exercisable in whole or in installments, as determined by the Board of
Directors of the Company.
Options under the Director Plan may not be transferred other than by will
or by the laws of descent and distribution. However, in the discretion of the
Board of Directors, the terms of an option may permit the optionee to designate
a beneficiary or beneficiaries, in the event of the optionee's death, to
exercise the rights of the optionee and receive the stock issued pursuant to the
option. During the life of an optionee, options under the Director Plan may be
exercised only by the optionee. The exercise price of an option under the
Director Plan may not be less than par value per share of the Common Stock
provided that no incentive stock options 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 the case of incentive stock options granted to any holder on the date
of grant of more than ten percent of the total combined voting power of all
classes of stock of the Company, the exercise price may not be less than 110% of
the fair market value of the Common Stock on the date of grant. Unless
designated as "incentive stock options" intended to qualify under Section 422 of
the Code, options which are granted under the Director Plan are intended to be
"non-qualified stock options". The exercise price may be paid in cash, shares of
Common Stock owned by the optionee, or a combination of both.
The Director Plan provides that, in the event of changes in the corporate
structure of the Company or certain events affecting the Common Stock, the Board
of Directors of the Company may, in its discretion make adjustments with respect
to the number and kind of shares which may be issued under the Director Plan or
which are covered by outstanding options, in the exercise price per share, or
both. The Board of Directors
19
<PAGE> 22
may terminate the Director Plan at any time. No termination or amendment of the
Director Plan may, without the consent of the optionee, adversely affect the
events of such optionee under any option held by such optionee.
TAX STATUS OF DIRECTOR STOCK OPTIONS
For federal income tax purposes, an optionee under the Director Plan will
not recognize any income upon the grant of a non-qualified or incentive stock
option. Upon the exercise of a non-qualified stock option granted under the
Director Plan, the optionee will recognize ordinary income in an amount equal to
the excess, if any, of the fair market value of the option stock at the time of
exercise over the exercise price of the option. In certain circumstances, where
the shares are subject to a substantial risk of forfeiture when acquired or
where the optionee is an officer, director or 10% stockholder of the Company,
the date of taxation may be deferred unless the optionee files an election under
Section 83(b) of the Code. Subject to the limitations of Section 162(m) of the
Code, the Company will be entitled to a tax deduction in the same amount and at
the same time as the optionee realizes such income. Upon the sale of shares
purchased upon such exercise, the optionee will realize capital gain or loss
measured by the difference between the amount realized on the sale and the fair
market value of the option stock at the time of exercise of the option. Such
capital gain or loss may be short-term or long-term, depending upon the length
of time such shares were held by the optionee.
In contrast, an optionee will not be taxed upon exercise of an incentive
stock option granted under the Director Plan, and the Company will not be
entitled to a deduction from income in respect thereof. If the optionee retains
the shares transferred to him upon exercise of an incentive stock option granted
under the Director Plan for more than one year after the date of issuance of the
stock and two years after the date of grant of the option, any gain or loss
realized on a subsequent sale of the shares by the optionee will be treated as
long-term capital gain or loss. If, on the other hand, the optionee sells the
shares within one year after the date of transfer or two years after the date of
grant of the option, the optionee will realize ordinary income, and the Company
will be entitled to a deduction from income, to the extent of the excess of the
value of the shares on the date of exercise or the amount realized on the sale
(whichever is less) over the exercise price. Any excess of the sale price over
the value of the shares on the date of exercise will be treated as capital gain.
The spread between the fair market value of the shares on the date of exercise
and the exercise price constitutes a tax preference item for purposes of the
alternative minimum tax which, under certain circumstances, could cause tax
liability as a result of the exercise.
The foregoing statements are based upon current federal income tax laws and
regulations and are subject to change if the tax laws and regulations, or
interpretations thereof, change.
NEW PLAN BENEFITS
The grant of options pursuant to the additional authorization proposed
under the Director Plan to directors (including employees who are directors) is
currently subject to the discretion of the Board of Directors. As of the date of
this Proxy Statement, there has been no action taken by the Board of Directors
with respect to awards under the additional authorization proposed under the
Director Plan.
During the year ended December 31, 1999, options to purchase an aggregate
of 35,000 shares of Common Stock were granted under the Director Plan to Anthony
W. Hooper, a director of the Company who is a nominee for election at the
Meeting and who is also named in the Summary Compensation Table (as set forth
under "I. Election of Directors -- Executive Compensation -- Option Grant
Table"). Accordingly, of such grants, options to purchase an aggregate of 35,000
shares of Common Stock were granted to all executive officers as a group, and no
such options were granted to directors who were not executive officers or to
other employees of the Company. All such options were granted at an exercise
price of $18.63 per share, equal to the closing price of the Common Stock on The
Nasdaq National Market on the date of grant. At March 30, 2000, the closing
price per share of the Common Stock on The Nasdaq National Market was $29.63.
20
<PAGE> 23
AMENDMENT OF THE DIRECTOR PLAN
As of March 31, 2000, an aggregate of 660,500 shares of Common Stock were
subject to options granted and outstanding under the Director Plan. As of March
31, 2000, 156,310 shares had been issued under the Director Plan from its
inception. On such date, the Company had nine directors.
There will be presented to the stockholders at the Meeting, a proposal to
amend the Director Plan to increase from 1,000,000 to 1,500,000 the number of
shares of Common Stock available for options under the Director Plan as set
forth below.
Section 3 of the Director Plan would be amended so that the first sentence
thereof would provide as follows:
There shall be available for options under the Plan a total of 1,500,000
shares of Common Stock, subject to any adjustments which may be made
pursuant to Section 5(f) hereof.
The amendment to the Director Plan will not be made effective unless it is
approved and adopted by the holders of a majority of the shares of the Company's
Common Stock present in person or represented by proxy and entitled to vote at
the Meeting. The Board of Directors regards the number of shares remaining
available under the Director Plan for new options as insufficient for the future
requirements of the Company. The Board of Directors believes that the benefits
of stockholder approval and adoption of the amendment to the Director Plan are
desirable for the Company and will assist in effectuating the objectives of the
Director Plan. Accordingly, the Board urges stockholders to vote FOR approval
and adoption of the amendment to the Director Plan.
V. RELATIONSHIP WITH INDEPENDENT AUDITORS
The Board of Directors has selected Arthur Andersen LLP, independent
certified public accountants, as the auditors of the Company for the fiscal year
ending December 31, 2000. Such firm has audited the consolidated financial
statements of the Company for the fiscal year ended December 31, 1999. The Board
of Directors considers Arthur Andersen LLP to be eminently qualified.
One or more representatives of Arthur Andersen LLP will attend the Meeting,
will have an opportunity to make a statement and will respond to appropriate
questions from stockholders.
VI. 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.
VII. 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 approval and adoption of the
amendment to the Company's Restated Certificate of Incorporation to increase the
number of authorized shares of Common Stock, FOR approval and adoption of the
amendment to the Employee Plan, FOR approval and adoption of the amendment to
the Director Plan and, in the election of directors, in favor of the nine
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.
21
<PAGE> 24
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. The Company has engaged Morrow
& Co., 444 Park Avenue, New York, New York 10022, to aid in the solicitation of
proxies with respect to the Meeting for a fee estimated at $7,500 plus
reimbursement for reasonable and customary out-of-pocket expenses.
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
The Company's By-laws provide that, in order for a stockholder to nominate
a candidate for director at a meeting of stockholders, the stockholder must have
given timely notice thereof in writing to the Secretary of the Company. In the
case of an annual meeting of stockholders, to be timely a stockholder's notice
must ordinarily be delivered to or mailed and received at the principal
executive offices of the Company not less than 90 days (which for the 2001
annual meeting of stockholders would be February 24, 2001) nor more than 120
days (which for the 2001 annual meeting of stockholders would be January 25,
2001) prior to the anniversary date of the preceding year's annual meeting of
stockholders.
However, in the event that the date of the annual meeting is advanced or
delayed by more than 30 days compared to the date of the preceding year's annual
meeting, notice by the stockholder to be timely made must be received not later
than the close of business on the later of (i) the ninetieth day prior to the
meeting, or (ii) the tenth day following the date on which the date set for the
meeting is first announced publicly. Any stockholder filing a notice of
nomination must include the information required by the Company's By-laws,
including information about the nominee, as well as the name and address of the
stockholder and the number of shares of Common Stock held by the stockholder.
In order for a stockholder to bring other business before an annual meeting
of stockholders subsequent to the Meeting, the stockholder must have given
timely notice thereof in writing to the Secretary of the Company within the time
limits described above. Such notice must include the information required by the
Company's By-laws, including a description of the proposed business, the reasons
therefor, and any interest the stockholder has in such business.
In the event that a stockholder fails to notify the Company within the time
limits described above of an intent to be present at the Company's 2001 annual
meeting of stockholders in order to present a proposal for a vote, the Company
will have the right to exercise its discretionary authority to vote against the
proposal, if presented, without including any information about the proposal in
its proxy materials. The foregoing requirements are separate from and in
addition to the requirements of the Securities and Exchange Commission that a
stockholder must meet to have a proposal included in the Company's Proxy
Statement. Stockholder proposals intended to be presented at the 2001 annual
meeting must be received by the Company by December 18, 2000 in order to be
considered for inclusion in the Company's Proxy Statement relating to such
meeting.
HOWARD KAILES,
Secretary
Chesterfield, Missouri
April 17, 2000
22
<PAGE> 25
Appendix 1
INSITUFORM TECHNOLOGIES, INC.
1992 EMPLOYEE STOCK OPTION PLAN
1. Purposes of Plan. The purposes of this Plan, which shall be
known as the Insituform Technologies, Inc. 1992 Employee Stock Option Plan, and
is hereinafter referred to as the "Plan", are (i) to provide incentives for key
employees of Insituform Technologies, Inc. (the "Company") and any parent and
subsidiary corporations (within the respective meanings of Sections 424(e) and
424(f) of the Internal Revenue Code of 1986, as amended (the "Code"), and
referred to herein as "Parent" and "Subsidiary," respectively), and to
consultants and other individuals providing services to such companies, by
encouraging their ownership of the class A common stock, $.01 par value (the
"Common Stock"), of the Company, and (ii) to aid the Company in retaining such
key employees and other persons, upon whose efforts the Company's success and
future growth depends, and attracting other such employees and other persons.
2. Administration. The Plan shall be administered by the Board
of Directors of the Company or, as determined by the Board of Directors in its
sole discretion, by a committee from time to time appointed by the Board of
Directors and consisting of not less than two of its members (the Board of
Directors, or such committee, for purposes of this Plan hereinafter referred to
as the "Committee"), as hereinafter provided. Subject to the terms of the Plan,
the Committee shall have plenary authority to determine the key employees,
consultants and other individuals to whom options are to be granted under the
Plan, the number of shares to be subject to each such option, the terms and
conditions upon which the options are granted and are exercisable and whether
such options will be incentive stock options or non-qualified stock options. For
purposes of administration, the Committee, subject to the terms of the Plan,
shall have plenary authority to establish such rules and regulations, make such
determinations and interpretations and take such other administrative actions as
it deems necessary or advisable. All determinations and interpretations made by
the Committee shall be final, conclusive and binding on all persons, including
Optionees (as hereinafter defined) and their legal representatives and
beneficiaries.
The Board of Directors shall designate one of the members of
the Committee as its Chairman. The Committee shall hold its meetings at such
times and at such places as it may determine. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by all members shall be as effective as if it had been made by a majority
vote at a meeting duly called and held. The Committee may appoint a secretary
(who need not be a member of the Committee). No member of the Committee shall be
liable for any act
<PAGE> 26
or omission with respect to his service on the Committee if he acts in good
faith and in a manner he reasonably believes to be in or not opposed to the best
interests of the Company. Service on the Committee shall constitute service as a
director of the Company for all purposes.
The Committee may, in its sole discretion, authorize the
Non-Insider Stock Option Committee (the "Non-Insider Committee") of the Board of
Directors to determine the key employees, consultants and other individuals to
whom options otherwise authorized by the Committee are to be granted, in each
case subject to the terms of the Plan and such authorization by the Committee
and insofar as such optionees do not constitute "officers", for purposes of
Section 16 of the Securities and Exchange Act of 1934; and, in the event the
Non-Insider Committee does not determine such individuals, shares of Common
Stock otherwise covered by options authorized by the Committee and submitted to
the Non-Insider Stock Option Committee shall be available for further options
hereunder.
The Non-Insider Committee shall be appointed from time to time
by the Board of Directors and shall consist of one or more of its members, who
need not be members of the Committee. The Non-Insider Committee shall hold its
meetings at such times and at such places as it may determine. A majority of its
members shall constitute a quorum. All determinations made by the Non-Insider
Committee shall be made by a majority of its members. Any decision or
determination reduced to writing and signed by all members shall be effective as
if it had been made by a majority vote at a meeting duly called and held. The
Non-Insider Committee may appoint a Secretary (who need not be a member of the
Committee). No member of the Non-Insider Committee shall be liable for any act
or omission with respect to his service on the Committee if he acts in good
faith and in a manner he reasonably believes to be in or not opposed to the best
interests of the Company. Service on the Non-Insider Committee shall constitute
service as a director of the Company for all purposes.
3. Stock Available for Options. There shall be available for
options under the Plan a total of 2,850,000 shares of Common Stock, subject to
any adjustments which may be made pursuant to Section 5(f) hereof. Shares of
Common Stock used for purposes of the Plan may be either authorized and unissued
shares, or previously issued shares held in the treasury of the Company, or
both. Shares of Common Stock covered by options which have terminated or expired
prior to exercise shall be available for further options hereunder.
4. Eligibility. Options under the Plan may be granted to key
employees of the Company or any Parent or Subsidiary thereof, including officers
of the Company or any Parent or Subsidiary thereof, and to consultants and other
individuals providing services to the Company or any Parent or Subsidiary.
Options may not be granted under the Plan to any member of the Board of
Directors of the Company (whether or not a key employee
2
<PAGE> 27
of, or a consultant or other individual providing services to, the Company or
any Parent or Subsidiary). Options may be granted to eligible individuals
whether or not they hold or have held options previously granted under the Plan
or otherwise granted or assumed by the Company. In selecting individuals for
options, the Committee (with reference to any action of the Non-Insider
Committee, if and to the extent authorized pursuant to Section 2) may take into
consideration any factors it may deem relevant, including its estimate of the
individual's present and potential contributions to the success of the Company
and/or any Parent or Subsidiary thereof. Service as a consultant of or to the
Company or any Parent or Subsidiary shall be considered employment for purposes
of the Plan (and the period of such service shall be considered the period of
employment for purposes of Section 5(d) of the Plan); provided, however, that
incentive stock options may be granted under the Plan only to an individual who
is an "employee" (as such term is used in Section 422 of the Code) of the
Company or any Subsidiary or Parent.
5. Terms and Conditions of Options. The Committee (with
reference to any action of the Non-Insider Committee, if and to the extent
authorized pursuant to Section 2) shall, in its discretion, prescribe the terms
and conditions of the options to be granted hereunder which terms and conditions
need not be the same in each case, subject to the following:
(a) Option Price. The price at which each share of
Common Stock covered by an option granted under the Plan may be purchased shall
be determined by the Committee (with reference to any action of the Non-Insider
Committee, if and to the extent authorized pursuant to Section 2) and shall not
be less than the lesser of (i) the tangible book value per share of Common
Stock, determined in accordance with generally accepted accounting principles,
as of the end of the fiscal quarter of the Company immediately preceding the
fiscal quarter in which the option is granted, or (ii) the market value per
share of Common Stock on the date of grant of an option as determined pursuant
to Section 5(c). The date of the grant of an option shall be the date specified
by the Committee (with reference to any action of the Non-Insider Committee, if
and to the extent authorized pursuant to Section 2) in its grant of the option.
(b) Option Period. The period for exercise of an
option shall in no event be more than ten years from the date of grant. Options
may, in the discretion of the Committee, be made exercisable in installments
during the option period. Any shares not purchased on any applicable installment
date may be purchased thereafter at any time before the expiration of the option
period.
(c) Exercise of Options. In order to exercise an
option, the holder thereof (the "Optionee") shall deliver to the Company written
notice specifying the number of shares of Common Stock to be purchased, together
with cash or a certified or bank cashier's check payable to the order of the
Company in the full
3
<PAGE> 28
amount of the purchase price therefor; provided that, for the purpose of
assisting an Optionee to exercise an option, the Company may make loans to the
Optionee or guarantee loans made by third parties to the Optionee, on such terms
and conditions as the Board of Directors may authorize and approve; and provided
further that such purchase price may be paid in shares of Common Stock owned by
the Optionee having a market value on the date of exercise equal to the
aggregate purchase price, or in a combination of cash and Common Stock. For
purposes of the Plan, the market value per share of Common Stock shall be the
last sale price regular way on the date of reference, or, in case no sale takes
place on such day, the average of the closing bid and asked prices regular way,
in either case on the principal national securities exchange on which the Common
Stock is listed or admitted to trading, or if the Common Stock is not listed or
admitted to trading on any national securities exchange, the last sale price of
the Common Stock as reported on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") National Market System on such date, or if the
Common Stock is not so reported, the average of the closing high bid and low
asked prices of the Common Stock in the over-the-counter market on such date, as
reported on the NASDAQ system, or if there are no such prices reported on the
NASDAQ system on such date, as furnished to the Committee by a New York Stock
Exchange member selected from time to time by the Committee for such purpose. If
there is no bid or asked price reported on any such date, the market value shall
be determined by the Committee in accordance with the regulations promulgated
under Section 2031 of the Code, or by any other appropriate method selected by
the Committee. An Optionee shall have none of the rights of a stockholder until
the shares of Common Stock are issued to him. An option may not be exercised for
less than ten shares of Common Stock, or the number of shares of Common Stock
remaining subject to such option, whichever is smaller.
(d) Effect of Termination of Employment. An option
may not be exercised after the Optionee has ceased to be in the employ of the
Company or any Parent or Subsidiary, except in the following circumstances:
(i) if the Optionee's employment is terminated at or
after age 60 (unless the employer shall have grounds to
terminate the Optionee's employment for "cause" [as
hereinafter defined]) or by action of the Optionee's employer
for reasons other than cause, the option may be exercised by
the Optionee within 30 days after such termination, but only
as to any shares exercisable on the date the Optionee's
employment so terminates;
(ii) if the Optionee's employment is terminated by
reason of the Optionee's total and permanent disability
(pursuant to the
4
<PAGE> 29
terms of any employee disability benefit plan maintained by
the Company or any Parent or Subsidiary thereof) while
employed by the Company or any Parent or Subsidiary thereof
(unless the employer shall have grounds to terminate the
Optionee's employment for cause), the option shall thereupon
become exercisable in full by the Optionee within 30 days
after such termination;
(iii) in the event of the death of the Optionee
during the 30-day period after termination of employment
covered by (i) above, the Optionee's beneficiary or the person
or persons to whom his rights are transferred by will or the
laws of descent and distribution shall have a period of one
year from the date of his death to exercise any options which
were exercisable by the Optionee at the time of his death;
(iv) in the event of the death of the Optionee while
employed, the option shall thereupon become exercisable in
full, and the person or persons to whom the Optionee's rights
are transferred by will or the laws of descent and
distribution shall have a period of one year from the date of
the Optionee's death to exercise such option.
The provisions of the foregoing clauses (ii) and (iii) shall apply to any
outstanding options which are incentive stock options to the extent permitted by
Section 422(d) of the Code and such outstanding options in excess thereof shall,
immediately upon the occurrence of the event described in the foregoing clauses
(ii) and (iii), be treated for all purposes of the Plan as nonstatutory stock
options and shall be immediately exercisable as such as provided in the
foregoing clauses (ii) and (iii).
For purposes of this Plan, the term "cause" shall be defined to mean
the Optionee's: (i) breach of any undertaking by the Optionee not to compete
with the Company or any Parent or Subsidiary thereof; (ii) breach of any
undertaking by the Optionee to keep and maintain confidential information of the
Company or any Parent or Subsidiary thereof in strictest confidence, or (iii)
causing or inducing, or attempting to cause or induce, either directly or
indirectly, any employees, sales representatives, consultants or other personnel
of the Company or any Parent or Subsidiary thereof to terminate their
relationships or employment or breach their agreements with the Company or any
Parent or Subsidiary thereof, or requesting or advising any of the customers,
suppliers, or other business contacts of the Company or any Parent or Subsidiary
thereof to withdraw, curtail or cancel their business with the Company or any
Parent or Subsidiary thereof.
5
<PAGE> 30
In no event shall any option be exercisable more than ten
years from the date of grant thereof. Nothing in the Plan or in any option
granted pursuant to the Plan (in the absence of an express provision to the
contrary) shall confer on any individual any right to continue in the employ of
the Company or any Parent or Subsidiary thereof or interfere in any way with the
right of the Company to terminate his employment at any time.
(e) Nontransferability of Options. During the
lifetime of an Optionee, options held by such Optionee shall be exercisable only
by him. No option shall be transferable other than by will or by the laws of
descent and distribution; provided, however, that Options may, in the discretion
of the Committee, permit the Optionee to designate a beneficiary or
beneficiaries, in the event of the Optionee's death, to exercise the rights of
the Optionee and receive the Stock issued pursuant to the Option. Such
beneficiary designation shall be in such form as shall be prescribed by the
Committee, shall be effective upon delivery to the Company, and when effective
shall revoke all prior designations. If an Optionee dies with no such
beneficiary designation in effect, the Option shall be transferred by will or
pursuant to the laws of descent and distribution.
(f) Adjustments for Change in Stock Subject to Plan
and Other Events. In the event of a reorganization, recapitalization, stock
split, stock dividend, combination of shares, merger, consolidation, rights
offering, or any other change in the corporate structure or shares of the
Company, the Committee shall make such adjustments, if any, as it deems
appropriate in the number and kind of shares subject to the Plan, in the number
and kind of shares covered by outstanding options, or in the option price per
share.
(g) Registration, Listing and Qualification of Shares
of Stock. Each option shall be subject to the requirement that if at any time
the Board of Directors shall determine that the registration, listing or
qualification of the shares of Common Stock covered thereby upon any securities
exchange or under any federal or state law, or the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of, or in
connection with, the granting of such option or the purchase of shares of Common
Stock thereunder, no such option may be exercised unless and until such
registration, listing, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Board of
Directors. The Company may require that any person exercising an option shall
make such representations and agreements and furnish such information as it
deems appropriate to assure compliance with the foregoing or any other
applicable legal requirement.
(h) Other Terms and Conditions. The Committee may
impose such other terms and conditions, not inconsistent with the terms hereof,
on the grant or exercise of options, as it deems advisable.
6
<PAGE> 31
6. Provisions Applicable to Incentive Stock Options. The
Committee (with reference to any action of the Non-Insider Committee, if and to
the extent authorized pursuant to Section 2) may, in its discretion, grant
"incentive stock options" (within the meaning of Section 422 of the Code) under
the Plan to eligible employees, provided, however, that: (a) no such incentive
stock option shall be granted at an option price which is less than the market
value per share of Common Stock on the date of the grant; (b) no such incentive
stock option shall be issued to any one Optionee if the aggregate fair market
value, determined at the time of the grant of such incentive stock options, of
the shares with respect to which such incentive stock options are exercisable
for the first time by such Optionee during any calendar year, together with all
options under any other incentive stock option plan of the Company exercisable
during such year, exceeds $100,000; (c) no such incentive stock option shall be
granted to any Optionee who at the time such option is granted owns more than 10
percent of the total combined voting stock of the Company unless (i) the option
price is not less than 110 percent of the fair market value per share of stock
on the date of the grant, and (ii) the option is not exercisable after five
years from the date such option is granted; and (d) Section 5(d)(iii) hereof
shall not apply to any incentive stock option.
7. Withholding Tax. Upon the disposition by any person of
shares of Common Stock acquired pursuant to the exercise of an option granted
pursuant to the Plan, the Company shall have the right to require such person to
pay the Company the amount of any taxes which the Company may be required to
withhold with respect to such shares.
8. Amendment and Termination. Unless the Plan shall
theretofore have been terminated as hereinafter provided, the Plan shall
terminate on, and no option shall be granted thereunder after March 31, 2002;
provided, however, that the Board of Directors may at any time prior to that
date terminate the Plan. The Board of Directors may at any time amend the Plan;
provided, however, that, except as contemplated in Section 5(f) hereof, the
Board of Directors shall not, without approval by a majority of the votes cast
by the stockholders of the Company at a meeting of stockholders at which a
proposal to amend the Plan is voted upon: (i) increase the maximum number of
shares of Common Stock for which options may be granted under the Plan, (ii)
change the formula as to minimum option prices, (iii) extend the period during
which options may be granted or exercised, or (iv) amend the requirements as to
the class of persons eligible to receive options. No termination or amendment of
the Plan may, without the consent of an Optionee, adversely affect the rights of
such Optionee under any option held by such Optionee.
9. Effectiveness of Plan. The Plan will not be made effective
unless approved by a majority of the votes cast by the stockholders of the
Company at a meeting of stockholders within twelve (12) months from the date the
Plan is adopted by the Board
7
<PAGE> 32
of Directors, duly called and held for such purpose, and no option granted
hereunder shall be exercisable prior to such approval.
10. Other Actions. Nothing contained in the Plan shall be
construed to limit the authority of the Company to exercise its corporate rights
and powers, including but not by way of limitation, the right of the Company to
grant or assume options for proper corporate purposes other than under the Plan
with respect to any employee or other person, firm, corporation or association.
8
<PAGE> 33
Appendix 2
INSITUFORM TECHNOLOGIES, INC.
1992 DIRECTOR STOCK OPTION PLAN
1. Purposes of Plan. The purposes of this Plan, which shall be known
as the Insituform Technologies, Inc. 1992 Director Stock Option Plan, and is
hereinafter referred to as the "Plan", are (i) to provide incentives for members
of the Board of Directors of Insituform Technologies, Inc. (the "Company") by
encouraging their ownership of the class A common stock, $.01 par value (the
"Common Stock"), of the Company, and (ii) to aid the Company in retaining such
directors, upon whose efforts the Company's success and future growth depends,
and attracting other such directors.
2. Administration. The Plan shall be administered by the Board of
Directors of the Company or, as determined by the Board of Directors in its sole
discretion, by a committee from time to time appointed by the Board of Directors
and consisting of not less than two of its members (the Board of Directors, or
such committee, for purposes of this Plan hereinafter referred to as the
"Committee"), as hereinafter provided. Subject to the terms of the Plan, the
Committee shall have plenary authority to determine the directors to whom
options are to be granted, the number of shares to be subject to each such
option, the terms and conditions upon which the options are granted and are
exercisable, and whether such options will be incentive stock options or
non-qualified stock options. For purposes of administration, the Committee,
subject to the terms of the Plan, shall have plenary authority to establish such
rules and regulations, make such determinations and interpretations, and take
such other administrative actions as it deems necessary or advisable. All
determinations and interpretations made by the Committee shall be final,
conclusive and binding on all persons, including Optionees (as hereinafter
defined) and their legal representatives and beneficiaries.
The Board of Directors shall designate one of the members of the
Committee as its Chairman. The Committee shall hold its meetings at such times
and at such places as it may determine. A majority of its members shall
constitute a quorum. All determinations of the Committee shall be made by a
majority of its members. Any decision or determination reduced to writing and
signed by all members shall be as effective as if it had been made by a majority
vote at a meeting duly called and held. The Committee may appoint a secretary
(who need not be a member of the Committee). No member of the Committee shall be
liable for any act or omission with respect to his service on the Committee if
he acts in good faith and in a manner he reasonably believes to be in or not
opposed to the best interests of the Company. Service on the Committee shall
constitute service as a director of the Company for all purposes.
<PAGE> 34
3. Stock Available for Options. There shall be available for options
under the Plan a total of 1,500,000 shares of Common Stock, subject to any
adjustments which may be made pursuant to Section 5(f) hereof. Shares of Common
Stock used for purposes of the Plan may be either authorized and unissued
shares, or previously issued shares held in the treasury of the Company, or
both. Shares of Common Stock covered by options which have terminated or expired
prior to exercise shall be available for further options hereunder.
4. Eligibility. Options under the Plan may be granted to directors
of the Company (including officers, key employees and consultants of the
Company). Options may be granted to such directors whether or not they hold or
have held options previously granted under the Plan or otherwise granted or
assumed by the Company. In selecting directors for options, the Committee may
take into consideration any factors it may deem relevant, including its estimate
of the director's present and potential contributions to the success of the
Company.
5. Terms and Conditions of Options. The Committee shall, in its
discretion, prescribe the terms and conditions of the options to be granted
hereunder which terms and conditions need not be the same in each case, subject
to the following:
(a) Option Price. The price at which each share of Common
Stock covered by an option granted under the Plan may be purchased shall be
determined by the Committee and shall not be less than the lesser of (i) the
tangible book value per share of Common Stock, determined in accordance with
generally accepted accounting principles, as of the end of the fiscal quarter of
the Company immediately preceding the fiscal quarter in which the option is
granted, or (ii) the market value per share of Common Stock on the date of grant
of an option as determined pursuant to Section 5(c). The date of the grant of an
option shall be the date specified by the Committee in its grant of the option.
(b) Option Period. The period for exercise of an option shall
in no event be more than ten years from the date of grant. Options may, in the
discretion of the Committee, be made exercisable in installments during the
option period. Any shares not purchased on any applicable installment date may
be purchased thereafter at any time before the expiration of the option period.
(c) Exercise of Options. In order to exercise an option, the
holder thereof (the "Optionee") shall deliver to the Company written notice
specifying the number of shares of Common Stock to be purchased, together with
cash or a certified or bank cashier's check payable to the order of the Company
in the full amount of the purchase price therefor; provided that, for the
purpose of assisting an Optionee to exercise an option, the Company may make
loans to the Optionee or guarantee loans made by third parties to the Optionee,
on such terms and conditions as the Board of Directors may authorize; and
provided further that such purchase
2
<PAGE> 35
price may be paid in shares of Common Stock owned by the Optionee having a
market value on the date of exercise equal to the aggregate purchase price, or
in a combination of cash and Common Stock. For purposes of the Plan, the market
value per share of Common Stock shall be the last sale price regular way on the
date of reference, or, in case no sale takes place on such day, the average of
the closing bid and asked prices regular way, in either case on the principal
national securities exchange on which the Common Stock is listed or admitted to
trading, or if the Common Stock is not listed or admitted to trading on any
national securities exchange, the last sale price of the Common Stock as
reported on the National Association of Securities Dealers Automated Quotation
("NASDAQ") National Market System on such date, or if the Common Stock is not so
reported, the average of the closing high bid and low asked prices of the Common
Stock in the over-the-counter market on such date, as reported on the NASDAQ
system, or if there are no such prices reported on the NASDAQ system on such
date, as furnished to the Committee by a New York Stock Exchange member selected
from time to time by the Committee for such purpose. If there is no bid or asked
price reported on any such date, the market value shall be determined by the
Committee in accordance with the regulations promulgated under Section 2031 of
the Code, or by any other appropriate method selected by the Committee. An
Optionee shall have none of the rights of a stockholder until the shares of
Common Stock are issued to him. An option may not be exercised for less than
1,000 shares of Common Stock, or the number of shares of Common Stock remaining
subject to such option, whichever is smaller.
(d) Effect of Termination of Service. An option may not be
exercised after the Optionee has ceased to be in the service of the Company or
any parent or subsidiary corporations (within the respective meanings of
Sections 424(e) and 424(f) of the Internal Revenue Code of 1986, as amended [the
"Code"], and referred to herein as "Parent" or "Subsidiary", respectively),
whether as a director of the Company or an employee or consultant of the Company
or any Parent or Subsidiary thereof, except in the following circumstances:
(i) if (x) the Optionee's service as a director is terminated
for any reason, and (y) the Optionee is not an employee or
consultant of the Company or any Parent or Subsidiary thereof, or
his employ is terminated at or after age 60 or by action of the
Company, the option may be exercised by the Optionee within 30 days
after the last such termination, but only as to any shares
exercisable on the date the Optionee's service and/or employment so
terminates;
(ii) if the Optionee's service and/or employment is terminated
by reason of the Optionee's total and permanent disability
3
<PAGE> 36
(pursuant to the terms of any employee disability benefit plan
maintained by the Company or any Parent or Subsidiary thereof) while
employed by the Company or any Parent or Subsidiary thereof, the
option shall thereupon become exercisable in full by the Optionee
within 30 days after such termination;
(iii) in the event of the death of the Optionee during the
30-day period after termination of service and/or employment covered
by (i) above, the Optionee's beneficiary or the person or persons to
whom his rights are transferred by will or the laws of descent and
distribution shall have a period of one year from the date of his
death to exercise any options which were exercisable by the Optionee
at the time of his death;
(iv) in the event of the death of the Optionee while serving
as a director or employed, the option shall thereupon become
exercisable in full, and the person or persons to whom the
Optionee's rights are transferred by will or the laws of descent and
distribution shall have a period of one year from the date of the
Optionee's death to exercise such option.
The provisions of the foregoing clauses (ii) and (iii) shall apply to any
outstanding options which are incentive stock options to the extent permitted by
Section 422(d) of the Code and such outstanding options in excess thereof shall,
immediately upon the occurrence of the event described in the foregoing clauses
(ii) and (iii), be treated for all purposes of the Plan as nonstatutory stock
options and shall be immediately exercisable as such as provided in the
foregoing clauses (ii) and (iii).
For purposes of this Section 5(d), service as a consultant of or to
the Company or any Parent or Subsidiary shall be considered employment, and the
period of such service shall be considered the period of employment; provided,
however, that incentive stock options may be granted under the Plan only to a
director who is an "employee" (as such term is used in Section 422 of the Code)
of the Company or any Subsidiary or Parent.
In no event shall any option be exercisable more than ten years from
the date of grant thereof. Nothing in the Plan or in any option granted pursuant
to the Plan (in the absence of an express provision to the contrary) shall
confer on any individual any right to continue in the service of the Company or
any Parent or Subsidiary thereof or interfere in any way with the right of the
Company to terminate his service.
4
<PAGE> 37
(e) Nontransferability of Options. During the lifetime of an
Optionee, options held by such Optionee shall be exercisable only by him. No
option shall be transferable other than by will or by the laws of descent and
distribution; provided, however, that Options may, in the discretion of the
Committee, permit the Optionee to designate a beneficiary or beneficiaries, in
the event of the Optionee's death, to exercise the rights of the Optionee and
receive the Stock issued pursuant to the Option. Such beneficiary designation
shall be in such form as shall be prescribed by the Committee, shall be
effective upon delivery to the Company, and when effective shall revoke all
prior designations. If an Optionee dies with no such beneficiary designation in
effect, the Option shall be transferred by will or pursuant to the laws of
descent and distribution.
(f) Adjustments for Change in Stock Subject to Plan and Other
Events. In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering, or any
other change in the corporate structure or shares of the Company, the Committee
shall make such adjustments, if any, as it deems appropriate in the number and
kind of shares subject to the Plan, in the number and kind of shares covered by
outstanding options, or in the option price per share.
(g) Registration, Listing and Qualification Shares of Stock.
Each option shall be subject to the requirement that if at any time the Board of
Directors shall determine that the registration, listing or qualification of the
shares of Common Stock covered thereby upon any securities exchange or under any
federal or state law, or the consent or approval of any governmental regulatory
body is necessary or desirable as a condition of, or in connection with, the
granting of such option or the purchase of shares of Common Stock thereunder, no
such option may be exercised unless and until such registration, listing,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Board of Directors. The Company may require
that any person exercising an option shall make such representations and
agreements and furnish such information as it deems appropriate to assure
compliance with the foregoing or any other applicable legal requirement.
(h) Other Terms and Conditions. The Committee may impose such
other terms and conditions, not inconsistent with the terms hereof, on the grant
or exercise of options, as it deems advisable.
6. Provisions Applicable to Incentive Stock Options. The Committee
may, in its discretion, grant "incentive stock options" (within the meaning of
Section 422 of the Code), under the Plan to directors provided, however, that:
(a) no such incentive stock option shall be issued to a director of the Company
who is not also an employee or officer of the Company; (b) no such incentive
stock option shall be granted at an option price which is
5
<PAGE> 38
less than the market value per share of Common Stock on the date of the grant;
(c) no such incentive stock option shall be issued to any one Optionee if the
aggregate fair market value, determined at the time of the grant of such
incentive stock options, of the shares with respect to which such incentive
stock options are exercisable for the first time by such Optionee during any
calendar year, together with all options under any other incentive stock option
plan of the Company exercisable during such year, exceeds $100,000; (d) no such
incentive stock option shall be granted to any Optionee who at the time such
option is granted owns more than 10 percent of the total combined voting stock
of the Company unless (i) the option price is not less than 110 percent of the
fair market value per share of stock on the date of the grant, and (ii) the
option is not exercisable after five years from the date such option is granted;
and (e) Section 5(d)(ii) hereof shall not apply to any incentive stock option.
7. Withholding Tax. Upon the disposition by any person of shares of
Common Stock acquired pursuant to the exercise of an option granted pursuant to
the Plan, the Company shall have the right to require such person to pay the
Company the amount of any taxes which the Company may be required to withhold
with respect to such shares.
8. Amendment and Termination. Unless the Plan shall theretofore have
been terminated as hereinafter provided, the Plan shall terminate on, and no
option shall be granted thereunder after March 31, 2002; provided, however, that
the Board of Directors may at any time prior to that date terminate the Plan.
The Board of Directors may at any time amend the Plan; provided, however, that,
except as contemplated in Section 5(f) hereof, the Board of Directors shall not,
without approval by a majority of the votes cast by the stockholders of the
Company at a meeting of stockholders at which a proposal to amend the Plan is
voted upon: (i) increase the maximum number of shares of Stock for which options
may be granted under the Plan, (ii) change the formula as to minimum option
prices, (iii) extend the period during which options may be granted or
exercised, or (iv) amend the requirements as to the class of persons eligible to
receive options. No termination or amendment of the Plan may, without the
consent of an Optionee, adversely affect the rights of such Optionee under any
option held by such Optionee.
9. Effectiveness of Plan. The Plan will not be made effective unless
approved by a majority of the votes cast by the stockholders of the Company at a
meeting of stockholders within twelve (12) months from the date the Plan is
adopted by the Board of Directors, duly called and held for such purpose, and no
option granted hereunder shall be exercisable prior to such approval.
10. Other Actions. Nothing contained in the Plan shall be construed
to limit the authority of the Company to exercise its corporate rights and
powers, including but not by way of limitation, the right of the Company to
grant or assume options for
6
<PAGE> 39
proper corporate purposes other than under the Plan with respect to any employee
or other person, firm, corporation or association.
7
<PAGE> 40
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 Annual
Meeting of Stockholders of Insituform Technologies, Inc. (the "Company") to be
held at the Doubletree Hotel, 16625 Swingley Ridge Road, Chesterfield, Missouri
on Thursday, May 25, 2000 at 10:00 A.M., local time, and the Proxy Statement in
connection therewith and (2) appoints Anthony W. Hooper, Robert L. Kelley and
Joseph A. White and each of them his proxies with full power of substitution,
for and in the name, 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 (the "Common Stock") standing 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 specified on the reverse side.
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.
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
-----------
SEE REVERSE
SIDE
-----------
<PAGE> 41
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
FOR WITHHOLD AUTHORITY
all nominees listed at right (except to vote for all nominees
as marked to the contrary below) listed at right
(a) Election of / / / /
Directors
NOMINEES: Robert W. Affholder
Paul A. Biddelman
Stephen P. Cortinovis
Juanita H. Hinshaw
Anthony W. Hooper
Thomas N. Kalishman
Sheldon Weinig
Russell B. Wight, Jr.
Alfred L. Woods
(Instructions: To withhold authority to vote for any individual
nominee as a director, write that nominee's
name in the space provided below)
_______________________________________________________________
FOR AGAINST ABSTAIN
(b) Proposal to approve and adopt an amendment to / / / / / /
the Company's Restated Certificate of Incorporation
to increase the number of authorized shares of
Common Stock from 40,000,000 to 60,000,000.
(c) Proposal to approve and adopt an amendment to the / / / / / /
Company's 1992 Employee Stock Option Plan
to increase the number of shares of Common Stock
issuable pursuant to the exercise of options from
1,850,000 to 2,850,000.
(d) Proposal to approve and adopt an amendment to / / / / / /
the Company's 1992 Director Stock Option Plan to
increase the number of shares of Common Stock
issuable pursuant to the exercise of options from
1,000,000 to 1,500,000.
(e) 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. IF NO SPECIFICATION IS MADE, THIS
PROXY WILL BE VOTED FOR THE MATTERS SPECIFICALLY REFERRED TO HEREON
PLEASE DATE, SIGN AND MAIL THIS PROXY CARD IN THE ENCLOSED ENVELOPE. NO
POSTAGE IS REQUIRED
SIGNATURE:_____________________________________________ DATED:_________________
(and TITLE, if applicable)
SIGNATURE:_____________________________________________ DATED:_________________
(if held jointly)(and TITLE, if applicable)
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.
