Document:

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.agreement.htm

    Exhibit
10.1

    
 

    February
20, 2008

    

    

    

    

    Mr.
Robert Gudbranson

    [omitted]

     

    

    Dear
Rob:

    

    We are
pleased to confirm our offer of the position of Chief Financial Officer
reporting directly to A. Malachi Mixon, III, Chairman and CEO.

    

    The
following represents the terms and conditions of your employment:

    

    
      	
              1.  

            	
              Salary

            

    

    

    Your
starting base salary for this position will be $27,083.33 per month, which is
$325,000 when calculated on an annual basis.

    

    
      	
              2.  

            	
              Bonus

            

    

    

    Beginning
in January, 2008, as a member of Invacare’s senior management group, your target
bonus eligibility will be at the seventy-fifth (75th)
percent bonus level.  This bonus will be based on corporate
performance.   For Plan Year 2008, we will guarantee full payout
of your bonus, payable in early 2009.

    

    
      	
              3.  

            	
              Stock Option
      Program

            

    

     

    
      Upon
acceptance of our offer, you will be eligible to receive non-qualified options
to purchase 27,500 shares, without par value, of Invacare stock pursuant to the
Company’s Executive Stock Option Plan.  Stock options vest at a rate
of 25% per year with an exercise period of ten (10) years.

    

     

    
      	
              4.  

            	
              Restricted
      Stock

            

    

     

    
      Upon
acceptance of our offer, you will be eligible to receive a restricted stock
grant in the amount of 2,500 shares.  Restrictions lapse at 25% per
year.  Subject to review and approval by the
Compensation Committee of the Board of Directors of Invacare Corporation, you
will be eligible to receive restricted stock grants on an annual
basis.

       

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    
      	
              5.  

            	
              Automobile Leasing
      & Insurance Program

            

    

    

    
      	
               
      

            	
              You
      will be eligible to participate in Invacare’s car allowance in the amount
      of $1600 per month, which is reflected as part of your
      salary.  This allowance is intended to cover monthly car
      payment, gasoline, maintenance and
insurance.

            

    

    

    
      	
              6.  

            	
              Benefits

            

    

    

    
      	
               
      

            	
              Medical -
      You will be eligible to participate Invacare’s flexible benefits
      program, which includes medical, dental and vision coverage, as well as
      increased term life insurance for eligible dependents.  This
      program will be available to you on the first day of the month following
      employment.  In addition, you will be eligible for the Company’s
      Life Insurance, Short and Long Term Disability, Retirement Plan and
      Educational Assistance programs.  The average benefit package
      adds approximately 28% to your base
salary.

            

    

    

    
      	
               
      

            	
              Retirement
      Plan – Invacare
      offers a qualified plan, The Invacare Retirement Savings Plan, and a
      non-qualified plan, The dcPlus Plan (“Plus Plan”).  The Invacare
      Retirement Savings Plan includes a 401(k) program, Employer Match and
      Invacare Quarterly Contribution (IQC).  The Plus Plan is offered
      to those individuals whose annual income exceeds $100,000 and includes an
      enhanced employee contribution plan along with the Employer Match and
      Invacare Quarterly Contribution.  The Plus Plan allows you to
      contribute up to 50% of your compensation.  Invacare will make
      matching contributions equal to 100% of the first 1% of your salary
      deferrals, plus 50% of the next 2% of your salary deferrals after you have
      completed six months of service.  The Quarterly Contribution is
      equal to 4% of your eligible earnings and will be made at the conclusion
      of each calendar quarter after you have completed six months of
      service.  You do not have to contribute to either Plan to
      receive the Quarterly Contribution.

            

    

    

    Vacation –
You are eligible for three weeks vacation
beginning in January 2008.

    

    
      	
              7.  

            	
              Executive Benefits
      (Additional details of each of these plans are
      enclosed)

            

    

    

    Supplemental
Executive Retirement Plan (SERP) - You will be eligible to participate in
the Invacare SERP.  The SERP is a non-qualified plan that provides
retirement income to supplement income available from Invacare’s qualified plans
and to supplement the dcPlus Plan.  The Target Retirement Ratio is 50%
of final compensation.  You will receive a service credit of five (5)
years to count toward the fifteen (15) year service requirement.

    

    Life Insurance
Plan - You will
be eligible to participate in the Executive Life Insurance plan.  This
plan provides a level of death benefit equal to three (3) times compensation at
pre-retirement and one (1) times final compensation at
post-retirement.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    Disability Income
Plan - You will
be eligible to participate in the Executive Disability Income
Plan.  This disability plan, combined with the Invacare Group Long
Term Disability Income plan, can provide disability income of up to 70% of your
compensation.

    

    Health Management
Program - You
will be eligible to participate in the Executive Health Management
Program.  Through this program, you will be entitled to one physical
exam every two years performed at the Cleveland Clinic Department of
Preventative Medicine.

    

    
      	
               
      

            	
              Personal
      Liability -
      Invacare will also provide 5 million dollars of personal umbrella
      coverage over certain underlying retention amounts.  This
      coverage provides you with liability coverage anywhere in the world
      subject to the terms and conditions of the
  policy.

            

    

    

    
      	
              8.  

            	
              Severance

            

    

    

    
      	
               
      

            	
              If
      you are terminated for any reason other than cause during your employment,
      you will be provided one year of salary continuation as severance
      pay.  You will also receive a prorata portion of your target
      bonus based on the date of termination.  In addition, Invacare
      will continue to provide health insurance during your severance period, or
      until you obtain employment that provides you with such coverage,
      whichever comes first.

            

    

    

    
      	
               
      

            	
              Termination
      for cause is defined as fraud, misrepresentation, theft or embezzlement of
      company assets, intentional violations of law or company policies or a
      substantial failure to perform assigned
duties.

            

    

    

    
      	
              9.  

            	
              Change of
      Control

            

    

    

    
      	
               
      

            	
              The
      Change in Control agreement would include provisions for a lump sum cash
      amount equal to three (3) times annual base salary plus target bonus and
      continued participation in the Company’s employee benefit plans, as
      described in more detail in our Annual Proxy
  Statement.

            

    

    

    This
offer is contingent upon verification of employment under the provisions of the
Immigration Reform and Control Act of 1986.  Upon reporting to work,
you will be required to present your Social Security card or birth certificate
and state-issued photo identification.

    

    You will
be required to review and sign a non-compete agreement and a conflict of
interest document as a condition of your employment.

    

    This
offer is also contingent upon you successfully completing a pre-employment drug
screen, post-offer physical examination and reference-checking
process.  Please contact Ann Wilgor at 440/329-6906 to arrange for
your drug screen and post-offer physical examination.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      	
              Rob,
      we are excited at the prospect of you re-joining the Invacare
      team.  Upon signing this offer, a mutually agreed upon start
      date will be determined.  In the interim, if there are any
      questions regarding this offer, please contact me at
      440/329-6427.

            

    

    

     

    

    
      
        	 	
                Sincerely,

              	 
	 	 	 	 
	
                 

              	
                 

              	/s/ Joseph
      Usaj	 
	 	 	Name: 
      Joseph Usaj	 
	 	 	Title: 
      Senior Vice President - Human Resources	 
	 cc:    Mal
      Mixon	 	 	 

      

    

    
 

    I
acknowledge acceptance of this offer and its conditions for the position of
Chief Financial Officer, and have signed two copies of this letter and am
returning one to your attention.

    

    

    
      

      
        
          	 	
                   

                	 
	 	 	 	 
	
                  /s/ Robert
      K. Gudbranson

                	
                   

                	2/20/08	 
	 	 	Date

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