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Exhibit 10.1
 
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2006 Employee Equity Incentive Plan

1. Purpose and Nature of Plan. The purpose of this 2006 Employee Equity
Incentive Plan (the “Plan”) of Insituform Technologies, Inc. (the “Company”) is
to encourage key employees of the Company and such subsidiaries of the Company
as the Administrator may designate, to acquire shares of Class A $0.01 par value
common stock of the Company (“Common Stock”) or to receive monetary payments
based on the value of such stock or based upon achieving certain goals on a
basis mutually advantageous to such employees and the Company and thus provide
an incentive for employees to contribute to the success of the Company and align
the interests of key employees with the interests of the shareholders of the
Company.

2. Administration. The Plan shall be administered by the Board of Directors of
the Company or the Compensation Committee of the Board of Directors (the
“Administrator”).

The authority to select persons eligible to participate in the Plan, to grant
benefits in accordance with the Plan, and to establish the timing, pricing,
amount and other terms and conditions of such grants (which need not be uniform
with respect to the various participants or with respect to different grants to
the same participant), may be exercised by the Administrator in its sole
discretion.

Subject to the provisions of the Plan, the Administrator shall have exclusive
authority to interpret and administer the Plan, to establish appropriate rules
relating to the Plan, to delegate some or all of its authority under the Plan
and to take all such steps and make all such determinations in connection with
the Plan and the benefits granted pursuant to the Plan as it may deem necessary
or advisable. The validity, construction, and effect of the Plan shall be
determined in accordance with the laws of the State of Missouri.

The Board of Directors in its discretion may delegate and assign specified
duties and authority of the Administrator to any other committee and retain the
other duties and authority of the Administrator to itself. Also, the Board of
Directors in its discretion may appoint a separate committee of outside
directors to make awards that satisfy the requirements of Section 162(m) of the
Internal Revenue Code.

3. Shares Reserved Under the Plan. Subject to the provisions of Section 12
(relating to adjustment for changes in capital stock) an aggregate of two
million (2,000,000) shares of Common Stock of the Company shall be available for
issuance under the Plan. The shares of Common Stock issued under the Plan may be
made available from authorized but unissued shares or shares re-acquired by the
Company, including shares purchased in the open market or in private
transactions.

As used in this Section, the term “Plan Maximum” shall refer to the number of
shares of Common Stock of the Company that are available for grant of awards
pursuant to the Plan. Stock underlying outstanding options, stock appreciation
rights, stock units or performance awards will reduce the Plan Maximum while
such options, stock appreciation rights, stock units or performance awards are
outstanding. Shares underlying expired, canceled or forfeited options, stock
appreciation rights, stock units or performance awards shall be added back to
the Plan Maximum. When the exercise price of stock options is paid by delivery
of shares of Common Stock of the Company, or if the Administrator approves
 

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the withholding of shares from a distribution in payment of the exercise price,
the Plan Maximum shall be reduced by the net (rather than the gross) number of
shares issued pursuant to such exercise, regardless of the number of shares
surrendered or withheld in payment. If the Administrator approves the payment of
cash to an optionee equal to the difference between the fair market value and
the exercise price of stock subject to an option, or if a stock appreciation
right is exercised for cash or a performance award is paid in cash, the Plan
Maximum shall be increased by the number of shares with respect to which such
payment is applicable. Restricted stock issued pursuant to the Plan will reduce
the Plan Maximum while outstanding even while subject to restrictions. Shares of
restricted stock shall be added back to the Plan Maximum if such restricted
stock is forfeited or is returned to the Company as part of a restructuring of
benefits granted pursuant to this Plan.

Notwithstanding the above, the maximum number of shares subject to stock options
that may be awarded in any calendar year to any individual shall not exceed
200,000 shares (as adjusted in accordance with Section 12).

4. Participants. Participants will consist of such officers and key employees of
the Company or any designated subsidiary as the Administrator in its sole
discretion shall determine. Designation of a participant in any year shall not
require the Administrator to designate such person to receive a benefit in any
other year or to receive the same type or amount of benefit as granted to the
participant in any other year or as granted to any other participant in any
year. The Administrator shall consider such factors as it deems pertinent in
selecting participants and in determining the type and amount of their
respective benefits.

5. Types of Benefits. The following benefits may be granted under the Plan: (a)
stock appreciation rights (“SARs”); (b) restricted stock (“Restricted Stock”);
(c) performance awards (“Performance Awards”); (d) incentive stock options
(“ISOs”); (e) nonqualified stock options (“NQSOs”); and (f) Stock Units, all as
described below.

6. Stock Appreciation Rights. A SAR is the right to receive all or a portion of
the difference between the fair market value of a share of Common Stock at the
time of exercise of the SAR and the exercise price of the SAR established by the
Administrator, subject to such terms and conditions set forth in a SAR agreement
as may be established by the Administrator in its sole discretion. At the
discretion of the Administrator, SARs may be exercised (a) in lieu of exercise
of an option, (b) in conjunction with the exercise of an option, (c) upon lapse
of an option, (d) independent of an option or (e) each of the above in
connection with a previously awarded option under the Plan. If the option
referred to in (a), (b) or (c) above qualified as an ISO pursuant to Section 422
of the Internal Revenue Code of 1986 (“Code”), the related SAR shall comply with
the applicable provisions of the Code and the regulations issued thereunder. At
the time of grant, the Administrator may establish, in its sole discretion, a
maximum amount per share which will be payable upon exercise of a SAR, and may
impose conditions on exercise of a SAR. At the discretion of the Administrator,
payment for SARs may be made in cash or shares of Common Stock of the Company,
or in a combination thereof. SARs will be exercisable not later than ten years
after the date they are granted and will expire in accordance with the terms
established by the Administrator.
 
7. Restricted Stock. Restricted Stock is Common Stock of the Company issued or
transferred under the Plan (other than upon exercise of stock options or as
Performance Awards) at any purchase price less than the fair market value
thereof on the date of issuance or transfer, or as a bonus, subject to such
terms and conditions set forth in a Restricted Stock agreement as may be
established by the Administrator in its sole discretion. In the case of any
Restricted Stock:

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(a) The purchase price, if any, will be determined by the Administrator.

(b) The period of restriction shall be established by the Administrator for any
grants of Restricted Stock;

(c) Restricted Stock may be subject to (i) restrictions on the sale or other
disposition thereof; (ii) rights of the Company to reacquire such Restricted
Stock at the purchase price, if any, originally paid therefor upon termination
of the employee’s employment within specified periods; (iii) representation by
the employee that he or she intends to acquire Restricted Stock for investment
and not for resale; and (iv) such other restrictions, conditions and terms as
the Administrator deems appropriate.

(d) The participant shall be entitled to all dividends paid with respect to
Restricted Stock during the period of restriction and shall not be required to
return any such dividends to the Company in the event of the forfeiture of the
Restricted Stock.

(e) The participant shall be entitled to vote the Restricted Stock during the
period of restriction.

(f) The Administrator shall determine whether Restricted Stock is to be
delivered to the participant with an appropriate legend imprinted on the
certificate or if the shares are to be issued in the name of a nominee or
deposited in escrow pending removal of the restrictions.

Notwithstanding the above, the maximum number of shares of Restricted Stock that
may be awarded in any calendar year to any individual shall not exceed 50,000
shares (as adjusted in accordance with Section 12).

8. Performance Awards. Performance Awards are Common Stock of the Company,
monetary units or some combination thereof, to be issued without any payment
therefor, in the event that certain performance goals established by the
Administrator are achieved over a period of time designated by the
Administrator, but not in any event more than five years. The goals established
by the Administrator may include return on average total capital employed,
earnings per share, increases in share price or such other goals as may be
established by the Administrator. In the event the minimum corporate goal is not
achieved at the conclusion of the period, no payment shall be made to the
participant. Actual payment of the award earned shall be in cash or in Common
Stock of the Company or in a combination of both, as the Administrator in its
sole discretion determines. If Common Stock of the Company is used, the
participant shall not have the right to vote and receive dividends until the
goals are achieved and the actual shares are issued.

9. Incentive Stock Options. ISOs are stock options to purchase shares of Common
Stock at not less than 100% of the fair market value of the shares on the date
the option is granted, subject to such terms and conditions set forth in an
option agreement as may be established by the Administrator in its sole
discretion that conform to the requirements of Section 422 of the Code. Such
purchase price may be paid (a) by check or (b), in the discretion of the
Administrator, by the delivery of shares of Common Stock owned by the
participant for at least six months, or (c), in the discretion of the
Administrator, by a combination of any of the foregoing, in the manner provided
in the option agreement. The aggregate fair market value (determined as of the
time an option is granted) of the stock with respect to which ISOs are
 
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exercisable for the first time by an optionee during any calendar year (under
all option plans of the Company and its subsidiaries) shall not exceed $100,000.

10. Nonqualified Stock Options. NQSOs are nonqualified stock options to purchase
shares of Common Stock at purchase prices established by the Administrator on
the date the options are granted, subject to such terms and conditions set forth
in an option agreement as may be established by the Administrator in its sole
discretion; provided, however, in no event shall the purchase price per share be
less than 100% of the fair market value of the shares on the date the option is
granted. The purchase price may be paid (a) by check or (b), in the discretion
of the Administrator, by the delivery of shares of Common Stock owned by the
participant for at least six months, or (c), in the discretion of the
Administrator, by a combination of any of the foregoing, in the manner provided
in the option agreement.

11. Stock Units. A Stock Unit represents the right to receive a share of Common
Stock from the Company at a designated time in the future, subject to such terms
and conditions set forth in a Stock Unit agreement as may be established by the
Administrator in its sole discretion. The participant generally does not have
the rights of a shareholder until receipt of the Common Stock. The Administrator
may in its discretion provide for payments in cash, or adjustment in the number
of Stock Units, equivalent to the dividends the participant would have received
if the participant had been the owner of shares of Common Stock instead of the
Stock Units.

12. Adjustment Provisions.

(a) If the Company shall at any time change the number of issued shares of
Common Stock without new consideration to the Company (such as by stock
dividends or stock splits), the total number of shares reserved for issuance
under this Plan and the number of shares covered by each outstanding benefit
shall be adjusted so that the aggregate consideration payable to the Company, if
any, and the value of each such benefit shall not be changed. Benefits may also
contain provisions for their continuation or for other equitable adjustments
after changes in the Common Stock resulting from reorganization, sale, merger,
consolidation, issuance of stock rights or warrants, or similar occurrence.

(b) Notwithstanding any other provision of this Plan, and without affecting the
number of shares reserved or available hereunder, the Board of Directors may
authorize the issuance or assumption of benefits in connection with any merger,
consolidation, acquisition of property or stock, or reorganization upon such
terms and conditions as it may deem appropriate.

13. Nontransferability. Each benefit granted under the Plan to an employee shall
not be transferable otherwise than by will or the laws of descent and
distribution; provided, however, NQSOs granted under the Plan may be
transferred, without consideration, to a Permitted Transferee (as defined
below). Benefits granted under the Plan shall be exercisable, during the
participant’s lifetime, only by the participant or a Permitted Transferee. In
the event of the death of a participant, exercise or payment shall be made only:

(a) By or to the Permitted Transferee, executor or administrator of the estate
of the deceased participant or the person or persons to whom the deceased
participant’s rights under the benefit shall pass by will or the laws of descent
and distribution; and

(b) To the extent that the deceased participant or the Permitted Transferee, as
the case may be, was entitled thereto at the date of his death.

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For purposes of this Section, “Permitted Transferee” shall include (i) one or
more members of the participant’s family, (ii) one or more trusts for the
benefit of the participant and/or one or more members of the participant’s
family, or (iii) one or more partnerships (general or limited), corporations,
limited liability companies or other entities in which the aggregate interests
of the participant and members of the participant’s family exceed 80% of all
interests. For this purpose, the participant’s family shall include only the
participant’s spouse, children and grandchildren.

14. Taxes. The Company shall be entitled to withhold the amount of any tax
attributable to any amounts payable or shares deliverable under the Plan after
giving the person entitled to receive such payment or delivery notice as far in
advance as practicable, and the Company may defer making payment or delivery as
to any benefit if any such tax is payable until indemnified to its satisfaction.
The person entitled to any such delivery may, by notice to the Company at the
time the requirement for such delivery is first established, elect to have such
withholding satisfied by a reduction of the number of shares otherwise so
deliverable, such reduction to be calculated based on a closing market price on
the date of such notice.

15. Tenure. A participant’s right, if any, to continue to serve the Company and
its subsidiaries as an officer, employee, or otherwise, shall not be enlarged or
otherwise affected by his or her designation as a participant under the Plan.

16. Duration, Interpretation, Amendment and Termination. No benefit shall be
granted more than ten years after the date of adoption of this Plan; provided,
however, that the terms and conditions applicable to any benefit granted within
such period may thereafter be amended or modified by mutual agreement between
the Company and the participant or such other person as may then have an
interest therein. Without the prior approval of the Company’s stockholders, the
Company will not effect a “repricing” (as defined below) of any stock options or
other benefits granted under the terms of this Plan. For purposes of the
immediately preceding sentence, a “repricing” shall be deemed to mean any of the
following actions or any other action having the same effect: (a) the lowering
of the purchase price of an option or other benefit after it is granted; (b) the
canceling of an option or other benefit in exchange for another option or
benefit at a time when the purchase price of the cancelled option or benefit
exceeds the fair market value of the underlying stock (unless the cancellation
and exchange occurs in connection with a merger, acquisition, spin-off or other
similar corporate transaction); (c) the purchase of an option or other benefit
for cash or other consideration at a time when the purchase price of the
purchased option or benefit exceeds the fair market value of the underlying
stock (unless the purchase occurs in connection with a merger, acquisition,
spin-off or other similar corporate transaction) or (d) an action that is
treated as a repricing under generally accepted accounting principles. To the
extent that any stock options or other benefits which may be granted within the
terms of the Plan would qualify under present or future laws for tax treatment
that is beneficial to a recipient, then any such beneficial treatment shall be
considered within the intent, purpose and operational purview of the Plan and
the discretion of the Administrator, and to the extent that any such stock
options or other benefits would so qualify within the terms of the Plan, the
Administrator shall have full and complete authority to grant stock options or
other benefits that so qualify (including the authority to grant, simultaneously
or otherwise, stock options or other benefits which do not so qualify) and to
prescribe the terms and conditions (which need not be identical as among
recipients) in respect to the grant or exercise of any such stock option or
other benefits under the Plan.

The Board of Directors may amend the Plan from time to time or terminate the
Plan at any time. However, no action authorized by this paragraph shall reduce
the amount of any existing benefit or change the terms and conditions thereof
without the participant’s consent. No amendment of the Plan shall, without
approval of the stockholders of the Company, (a) increase the total number of
shares which
 
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may be issued under the Plan or increase the amount or type of benefits that may
be granted under the Plan; or (b) modify the requirements as to eligibility for
benefits under the Plan.

17. Effective Date. The Plan will be effective immediately following approval by
the stockholders of the Company at the 2006 Annual Meeting of Stockholders.

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