exhibit1016.htm


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    Exhibit
10.16

    


    


    


    


    INSITUFORM
TECHNOLOGIES, INC.

    MANAGEMENT
ANNUAL INCENTIVE PLAN

    


    This Management Annual Incentive Plan
(the “Plan”) of Insituform Technologies, Inc. (the “Company”) is effective as of
the 1st day of
January, 2008.

    


    A.           Plan
Purpose

    


    The
purpose of this Plan is to enhance business performance by motivating and
rewarding executive and management employees for the achievement of incentive
goals structured to achieve desired corporate results.

    


    B.           Eligible
Employees

    


    A
committee comprised of the Company’s Chief Executive Officer, Chief Operating
Officer, General Counsel and Chief Administrative Officer, Chief Financial
Officer and Vice President – Human Resources, or such other person as may be
charged with performing the duties incident to the office of Vice President –
Human resources (together, the “Plan Committee”), shall designate the employees
of the Company and its subsidiaries who are to be participants (the
“Participants”) in the Plan for the applicable fiscal year (the “Plan
Year”).  Except where prohibited by law, as a condition to
participation in the Plan and the receipt of any payment hereunder, Participants
shall be required to sign any confidentiality, non-solicitation and/or
non-competition agreement and/or acknowledgement of the Company’s right to
recoup  any incentive compensation required by the
Company.

    


    C.           Participant Incentive Award
Goals

    


    The Plan
Committee shall establish an incentive award goal (a “Goal”) for each
participant that shall be expressed as a percentage of such participant’s annual
base salary.  Participant Goals shall be reviewed and approved by the
Plan Committee on an annual basis.  The Compensation Committee shall
approve Goals of all executive officers of the Company.

    


    D.           Funding and Award
Summary

    


    The Plan
shall be funded as to 50% based on total Company performance for the Plan year
and as to the remaining 50% based on the performance of each business unit for
the Plan year.  Each participant Goal shall be divided equally between
these two funding criteria.  Total Company performance shall be
measured based on the actual consolidated Company Net Income achieved as
compared against the targeted consolidated Company Net Income for the Plan Year,
as approved by the Board of Directors of the Company.  Business unit
performance shall be measured based on the actual Operating Income achieved by a
business unit of the Company as compared against the targeted Operating Income
for such business unit for the Plan Year, as approved by the Company’s Chief
Executive Officer.  Goal awards from the business unit funded portion
of the Plan pool shall be earned based on an individual participant’s
performance during the Plan Year, as determined by the individual participant’s
achievement of certain measurable business objectives (“MBOs”) assigned to such
participant.

    


    E.           Net
Income

    


    For
purposes of this Plan, “Net Income” shall be defined as “net income before
extraordinary items” of the Company for the Plan Year, which shall mean the
consolidated net income of the Company during the fiscal year, as determined by
the Plan Committee in conformity with accounting principles generally accepted
in the United States of America and contained in financial statements that are
subject to an audit report of the Company's independent public accounting firm,
but excluding:

     

    
      	
              (i)  

            	
              losses
      associated with the write-down of assets of a subsidiary, business unit or
      division that has been designated by the Board of Directors as a
      discontinued business operation or to be
  liquidated;

            


    

     

    
      	
              (ii)  

            	
              gains
      or losses on the sale of any subsidiary, business unit or division, or the
      assets or business thereof;

            


    

     

    
      	
              (iii)  

            	
              gains
      or losses from the disposition of material capital assets (other than in a
      transaction described in subsection (ii)) or the refinancing of
      indebtedness, including, among other things, any make-whole payments and
      prepayment fees;

            


    

     

    
      	
              (iv)  

            	
              losses
      associated with the write-down of goodwill or other intangible assets of
      the Company due to the determination under applicable accounting standards
      that the assets have been impaired;

            


    

     

    
      	
              (v)  

            	
              gains
      or losses from material property casualty occurrences or condemnation
      awards taking into account the proceeds paid by insurance companies and
      other third parties in connection with the casualty or
      condemnation;

            


    

     

    
      	
              (vi)  

            	
              any
      other material income or loss item the realization of which is not
      directly attributable to the actions of current senior management of the
      Company;

            


    

     

    
      	
              (vii)  

            	
              any
      income statement effect resulting from a change in generally accepted
      accounting principles, except to the extent the effect of such a change is
      already reflected in the target Net Income amount;
  and

            


    

     

    
      	
              (viii)  

            	
              the
      income taxes (benefits) of any of the above-designated gains or
      losses.

            


    

    


    The
Compensation Committee shall have final authority with respect to any
determination by the Plan Committee regarding the definition of “Net Income”
and, in exercising such authority, may consult with the Company’s independent
auditor and/or Audit Committee as it deems necessary and advisable.

    


    F.           Operating
Income

    


    For the
purposes of this Plan, “Operating Income” shall be defined as revenues minus
operating expenses before taxes, as determined by the Plan Committee in
conformity with accounting principles generally accepted in the United States of
America.

    


    G.           Consolidated Company
Financial Performance Pool Funding

    


    The
portion of the Plan funded based on the financial performance of the Company as
a whole shall be referred to as the “Consolidated Company Financial Performance
Pool.”  At the outset of each Plan Year, the Compensation Committee
shall determine the consolidated Company Net Income target (the “Net Income
Target”) for the Plan Year and the threshold funding amount (the “Company
Threshold”) for the Consolidated Company Financial Performance
Pool.  The actual amount funded to the Consolidated Company Financial
Performance Pool shall be determined upon calculation of actual consolidated
Company Net Income (the “Actual Net Income”) after the end of the Plan Year,
subject to any deletions or additions required pursuant to Section E hereof, and
shall be adjusted from the Company Threshold as follows:

    


    
      	
              §  

            	
              If
      Actual Net Income equals the Net Income Target, the Consolidated Company
      Financial Performance Pool shall be equal to the Company
      Threshold.

            


    

     

    
      	
              §  

            	
              If
      Actual Net Income exceeds the Net Income Target, the Consolidated Company
      Financial Performance Pool shall be equal to the Company Threshold plus one-third
      of the amount that exceeds the Net Income
  Target.

            


    

     

    
      	
              §  

            	
              If
      Actual Net Income is less than the Net Income Target, but equals or
      exceeds 90% of the Net Income Target, the Consolidated Company Financial
      Performance Pool shall be equal to the Company Threshold minus
      thirty-three and 1/3 cents (33 1/3 cents) for each dollar by which Actual
      Net Income is less than the Net Income
Target.

            


    

     

    
      	
              §  

            	
              If
      Actual Net Income is less than 90% of the Net Income Target, but equals or
      exceeds 75% of the Net Income Target, the Consolidated Company Financial
      Performance Pool shall be equal to the Company Threshold minus 3.33% of
      the Net Income Target minus the
      amount by which the Actual Net Income is less than 90% of the Net Income
      Target.

            


    

     

    
      	
              §  

            	
              If
      Actual Net Income is less than 75% of the Net Income Target, the minimum
      amount funded to the Consolidated Company Financial Performance Pool shall
      be equal to $700,000; provided,
      however, that such minimum amount shall only be awarded to
      individual Participants for extraordinary performance, as determined by
      the Company’s Chief Executive Officer in his sole
    discretion.

            


    

    


    There
shall be no set maximum funding amount for the Consolidated Company Financial
Performance Pool.  In all events, the Compensation Committee, subject
to any required approval of the Board of Directors, shall have the ability and
authority to increase or decrease the amount of the Consolidated Company
Financial Performance Pool calculated in accordance with the provisions of this
Plan to reflect any extraordinary or unforeseen events or occurrences during the
Plan Year.

    


    H.           Consolidated Company
Financial Performance Bonus Pool Awards

    


    The
Consolidated Company Financial Performance Pool shall be awarded to Participants
based on 50% of their Goals and subject to available pool
funding.   There is no individual performance factor required to
receive an award from the Consolidated Company Financial Performance Pool, but a
participant must be an employee in good standing at the time the award is paid
(that is, the participant must be an active employee not on a performance
improvement plan in order to be eligible for an award from this
pool).

    


    I.           Business Unit/Individual
Performance Pool Funding

    


    The portion of the Plan funded based on
the performance of the Company’s individual business units shall be referred to
as the “Business Unit/Individual Performance Pool” for each business unit;
provided, however, that for corporate staff, the funding of this portion of the
Plan shall be based on Actual Net Income achievement.

    


    Funding
for Individual Business Units

    


    At the
outset of each Plan Year, the Plan Committee shall determine the targeted
Operating Income (the “Operating Income Target”) for the Plan Year and the
threshold funding amount (the “BU Threshold”) for the Business Unit/Individual
Performance Pool.  The actual amount funded to the Business
Unit/Individual Performance Pool for the applicable business unit shall be
determined upon calculation of actual Operating Income (the “Actual Operating
Income”) for such business unit after the end of the Plan Year and shall be
adjusted from the applicable BU Threshold as follows:

    


    
      	
              §  

            	
              If
      Actual Operating Income equals the Operating Income Target, the Business
      Unit/Individual Performance Pool shall be equal to the Operating Income
      Target.

            


    

     

    
      	
              §  

            	
              If
      Actual Operating Income exceeds the Operating Income Target, the Business
      Unit/Individual Performance Pool shall be equal to the BU Threshold plus one-third
      of the amount that exceeds the Operating Income Target; provided, however,
      that Actual Net Income equals or exceeds 75% of the Net Income
      Target.

            


    

     

    
      	
              §  

            	
              If
      Actual Operating Income is less than the Operating Income Target, but
      equals or exceeds 90% of the Operating Income Target, the Business
      Unit/Individual Performance Pool shall be equal to the BU Threshold minus
      thirty-three and 1/3 cents (33 1/3 cents) for each dollar by which Actual
      Operating Income is less than the Operating Income
  Target.

            


    

     

    
      	
              §  

            	
              If
      Actual Operating Income is less than 90% of the Operating Income Target,
      the Business Unit/Individual Performance Pool for such business unit shall
      not be funded.

            


    

     

    
      	
              §  

            	
              If
      the Consolidated Company Financial Performance Pool is not funded, other
      than certain minimum funding for discretionary awards as detailed above,
      then the maximum funding for the Business Unit/Individual Performance Pool
      for a business unit shall be the BU
Threshold.

            


    

     

    Funding
for Corporate Staff

    


    The
amount funded to the Business Unit/Individual Performance Pool for corporate
staff shall be determined in accordance with the Consolidated Company Financial
Performance Pool funding mechanism as set forth above.  Provided, however,
that if Actual Net Income is less than 75% of the Target Net Income, the
Business Unit/Individual Performance Pool for corporate staff shall only be
funded in an amount equal to 50% of the BU Threshold.

    


    J.           Business Unit/Individual
Performance Pool Awards

    


    The
portion of a participant’s Goal relating to the Business Unit/Individual
Performance Pool shall be awarded based on such participant’s individual
performance during the Plan Year.  Individual performance shall be
measured by such participant’s achievement of designated MBOs for the Plan
Year.  The level of achievement of a participant’s individual MBOs
shall be determined by such participant’s direct supervisor, approved by the
participant’s Business Unit leader and confirmed by the next level Corporate
Officer above such Business Unit leader.  All awards from the Business
Unit/Individual Performance Pool are subject to pool funding as set forth
above.

    


    K.           Timing of
Awards

    


    Awards
for a Plan Year are annual and shall be awarded in March of the succeeding
year.  Participants who are not employed on the payment date shall not
be eligible to receive any payment.  Participants must be employed as
of October 1 in a Plan Year to be eligible to participate in the Plan for that
Plan Year.  A participant who is employed after January 1 but prior to
October 1 of a Plan Year shall only be eligible to receive an award prorated for
the amount of time the participant was employed during the Plan
Year.

    


    L.           Nature of
Plan

    


    This Plan
is a statement of intent and is not a contract.  It is not a guarantee
of employment, and each participant’s employment with the company remains “at
will”.  This Plan may be modified, suspended or terminated at any
time, and all awards are at the discretion of the Company’s Board of Directors
or the Compensation Committee.  This Plan may be changed during a Plan
Year without any obligation of the Company to pay for the elapsed part of the
Plan Year in the manner described in the Plan.   The decisions of
Company management, the Plan Committee, the Board of Directors and/or the
Compensation Committee in administering and interpreting the Plan are final and
binding on all persons.