Edgar Filing: INSITUFORM TECHNOLOGIES INC

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)

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INSITUFORM TECHNOLOGIES, INC.
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(Name of Registrant as Specified in its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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INSITUFORM TECHNOLOGIES, INC.

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON APRIL 27, 2005

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TO THE OWNERS OF COMMON STOCK
OF INSITUFORM TECHNOLOGIES, INC.:

You are invited to attend Insituform Technologies, Inc.'s 2005 annual
meeting of stockholders. The meeting will be held on Wednesday, April 27, 2005,
at 9:00 a.m. (local time) at the Hilton St. Louis Frontenac, 1335 South
Lindbergh Boulevard, St. Louis, Missouri.

The purposes of this year's meeting are:

(1) to elect eight directors;

(2) to approve an amendment to our restated certificate of
incorporation to provide permissive indemnification for our
employees and agents against liabilities, claims and expenses
they incur while serving as our employees or agents;

(3) to ratify the appointment of PricewaterhouseCoopers LLP as our
independent auditors for the year ending December 31, 2005;
and

(4) to transact any other business that may properly come before
the meeting or any adjournment(s) of the meeting.

The board of directors set March 1, 2005 as the record date for the
meeting. This means that if you are an owner of our common stock at the close of
business on that date, you are entitled to receive this notice of the meeting,
and to vote at the meeting and any adjournment(s) of the meeting.

If you do not expect to attend the meeting, please mark, sign, date and
return the enclosed proxy card in the postage-paid envelope, so that your vote
can be recorded.

By Order of the Board of Directors,

DAVID F. MORRIS
Secretary

Chesterfield, Missouri
March ___, 2005

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PROXY STATEMENT

Insituform Technologies, Inc.'s board of directors is mailing this proxy
statement and the proxy card to you to solicit proxies on its behalf to be voted
at our 2005 annual meeting of stockholders, and at any adjournment(s) of the
meeting. This proxy statement and the proxy card were first mailed on March ___,
2005. The meeting will be held on Wednesday, April 27, 2005 at 9:00 a.m. (local
time) at the Hilton St. Louis Frontenac, 1335 South Lindbergh Boulevard, St.
Louis, Missouri, for the purposes listed in the accompanying notice.

We will bear all costs relating to the solicitation of proxies. Proxies
may be solicited by our officers, directors and regular employees personally, by
mail or by telephone. We may pay brokers and other persons holding shares of
stock in their names, or the names of their nominees, for the reasonable
expenses in sending soliciting material to their principals.

Our executive office is located at 702 Spirit 40 Park Drive, Chesterfield,
Missouri 63005.

TABLE OF CONTENTS

QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING................ 2
PROPOSAL 1: ELECTION OF DIRECTORS................................ 5
Certain Information Concerning Nominees And Directors.......... 5
Independent Directors.......................................... 7
Non-Executive Chairman of the Board............................ 7
Board Meetings and Committees.................................. 8
Corporate Governance - Corporate Governance Principles,
Board Committee Charters, Code of Ethics and Business Code
of Conduct..................................................... 9
DIRECTOR COMPENSATION............................................. 10
EXECUTIVE COMPENSATION............................................ 11
Summary Compensation Table..................................... 11
Option/SAR Grants Table........................................ 13
Aggregate Option/SAR Exercises and Year-End Option/SAR
Table.......................................................... 13
Long-Term Incentive Plan Awards Table.......................... 14
CERTAIN AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS.......... 15
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION........... 18
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.................... 23
REPORT OF THE AUDIT COMMITTEE..................................... 23
PERFORMANCE GRAPH................................................. 25
INFORMATION CONCERNING CERTAIN STOCKHOLDERS....................... 26
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE........... 28
EQUITY COMPENSATION PLAN INFORMATION.............................. 28
PROPOSAL 2: AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION... 28
Purpose of the Amendment....................................... 29
Effect of Amendment............................................ 29
Text of Proposed Amendment..................................... 29
Effectiveness of Amendment..................................... 29
Approval of Proposal 2......................................... 29
PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS.. 29
Independent Auditors' Fees..................................... 30
Approval of Proposal 3......................................... 31
OTHER MATTERS..................................................... 31
STOCKHOLDER PROPOSALS............................................. 31
STOCKHOLDER COMMUNICATIONS WITH DIRECTORS......................... 32
APPENDIX A - AMENDMENT TO CERTIFICATE OF INCORPORATION............ A-1

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QUESTIONS AND ANSWERS ABOUT THE MEETING AND VOTING

WHO MAY VOTE?

You may vote if you owned shares at the close of business on March 1,
2005, the record date for our 2005 annual meeting of stockholders. You are
entitled to one vote for each share you owned on that date for each
director to be elected and on each other matter presented at the meeting.
As of March 1, 2005, we had [___________] shares of Class A common stock,
$.01 par value, outstanding. We have no class or series of voting stock
outstanding other than the common stock.

WHAT AM I VOTING ON?

- First, you are voting to elect eight directors. Each director,
if elected, will serve a term of one year or until his or her
successor has been elected and qualified.

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR.

- Second, you are voting to approve an amendment to our restated
certificate of incorporation. The amendment, if approved, will
provide permissive indemnification for our employees and
agents against liabilities, claims and expenses they incur
while serving as our employees or agents.

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
AMENDMENT TO OUR RESTATED CERTIFICATE OF INCORPORATION.

- Third, you are voting to ratify the appointment of
PricewaterhouseCoopers LLP as our independent auditors for the
year ending December 31, 2005.

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT AUDITORS
FOR THE YEAR ENDING DECEMBER 31, 2005.

- In addition, you may vote on other business, if it properly
comes before the meeting, or any adjournment(s) of the
meeting.

HOW DO I VOTE?

- BY WRITTEN PROXY: You can vote by written proxy. If you sign
and return the enclosed proxy card, the shares represented by
the proxy will be voted in accordance with the terms of the
proxy, unless you subsequently revoke your proxy. You can
return your proxy card in the enclosed envelope, which
requires no postage if mailed in the U.S.

- IN PERSON: If you are a record stockholder, you can vote in
person at the meeting.

WHAT IS THE DIFFERENCE BETWEEN A RECORD STOCKHOLDER AND A STOCKHOLDER WHO HOLDS
SHARES IN STREET NAME?

- If your shares are registered in your name, you are a record
stockholder.

- If your shares are in the name of your broker or bank, your
shares are held in street name.

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WHAT VOTE IS REQUIRED TO ELECT DIRECTORS?

Directors are elected by a plurality vote. That means that the eight
nominees who receive the most votes are elected. A majority vote is not
required.

CAN I REVOKE MY PROXY?

Yes. You can revoke your proxy by:

- giving written notice to our corporate Secretary prior to the
actual vote at the meeting,

- delivering a later-dated proxy card prior to or at the
meeting, or

- voting in person at the meeting.

WHAT IS THE RECORD DATE AND WHAT DOES IT MEAN?

The record date for the 2005 annual meeting of stockholders is March 1,
2005. The record date is set by our board of directors, as required by
Delaware law. Record stockholders at the close of business on the record
date are entitled to:

- receive notice of the meeting, and

- vote at the meeting, and at any adjournment(s) of the meeting.

WHAT IF I DO NOT SPECIFY MY VOTE WHEN I RETURN MY PROXY?

You should specify your choice for each matter on the enclosed proxy card.
If no specific instructions are given, proxies that are signed and
returned will be voted "FOR" the election of all director nominees, "FOR"
the amendment to our restated certificate of incorporation and "FOR" the
ratification of the appointment of PricewaterhouseCoopers LLP as our
independent auditors for the year ending December 31, 2005.

HOW ARE DESIGNATIONS TO "WITHHOLD AUTHORITY" AND BROKER NON-VOTES COUNTED?

If you designate on the proxy that you are "withholding authority" to vote
for a director nominee or nominees, your shares will be counted as present
for the purpose of determining the presence of a quorum for transacting
business at the meeting.

Broker "non-votes" will not be counted as present for the purpose of
determining the presence of a quorum unless these shares are voted on
another matter presented at the meeting. A broker "non-vote" occurs when a
broker or nominee holding shares for a beneficial owner does not vote on a
particular proposal because the broker or nominee:

- has not received voting instructions on a particular matter
from the beneficial owner or persons entitled to vote, and

- does not have the discretionary voting power on the matter.

As discussed above, a plurality of the votes cast is required for the
election of directors, which means that the nominees with the eight
highest vote totals will be elected as directors. As a result, a
designation on the proxy that you are "withholding authority" for a
director nominee or nominees

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will only have the effect of lowering the vote totals of the individual
directors for whom authority is withheld.

WHAT IS A QUORUM?

A majority of the outstanding shares of our common stock must be
represented, in person or by proxy, at the meeting to constitute a quorum
for purposes of conducting business at the meeting.

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PROPOSAL 1: ELECTION OF DIRECTORS

Our board of directors currently consists of ten directors. Based on the
recommendation of the Corporate Governance & Nominating Committee, our board has
approved a reduction in the number of directors on the board from ten to eight,
effective upon the election of directors at the meeting, and has named eight
director nominees in accordance with such approval. Stockholders will elect
eight directors at the meeting, each to serve a term of one year or until a
successor is elected and qualified. Each of the persons named on the
accompanying proxy card intends to vote the shares represented thereby in favor
of the eight nominees listed under "Certain Information Concerning Nominees and
Directors" below, unless otherwise instructed in the proxy and, in any event,
may not vote the shares for a greater number of persons than the eight nominees
named.

Each director nominee is presently serving as a director of Insituform. We
have no reason to believe that any of the director nominees will be unable or
will decline to serve. If, however, any nominee should become unable or
unwilling to serve, the persons named on the accompanying proxy card will vote
the shares represented by the proxy for another person duly nominated by our
board, based on the recommendation of its Corporate Governance & Nominating
Committee, to act in the nominee's place, or, if no other person is so
nominated, to vote the shares only for the remaining nominees. OUR BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE NOMINEES FOR DIRECTOR.

CERTAIN INFORMATION CONCERNING NOMINEES AND DIRECTORS

Certain information concerning the nominees for election as directors is
set forth below. This information was furnished to us by the nominees. No family
relationship exists between any of our directors or executive officers. Only the
companies noted as such, or sharing the "Insituform" name, are our affiliates.

PAUL A. BIDDELMAN Director since 1988
Age 59

President of Hanseatic Corporation (a private investment company);
Director: Celadon Group, Inc. (truckload carrier), Six Flags, Inc.
(a regional theme park company), Star Gas LLC (general partner of
Star Gas Partners, L.P., a diversified energy distributor and
services provider) and SystemOne Technologies Inc. (designer,
manufacturer and seller of self-contained, recycling industrial
parts washers).

Chair of our Audit Committee and member of our Corporate Governance
& Nominating Committee.

STEPHEN P. CORTINOVIS Director since 1997
Age 55

Partner of Bridley Capital Partners (a private equity firm); Senior
Advisor to The Cypress Group (a private equity firm); Vice President
International and President - Europe, Emerson Electric Co.
(designer, manufacturer and seller of electrical, electromechanical
and electronic products, systems and services) from before 1998
until 2001; Director: Plexus Corp.

Member of our Compensation Committee and Corporate Governance &
Nominating Committee.

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JOHN P. DUBINSKY Director since 2002
Age 61

President and Chief Executive Officer of Westmoreland Associates,
LLC (a financial consulting company) since 1999; President and Chief
Executive Officer of CORTEX (a public purpose non-profit established
to buy property for development of a biotechnology corridor in the
St. Louis, Missouri area) since 2003; President Emeritus of Firstar
Bank from 1999 until 2001; Chairman, President and Chief Executive
Officer of Mercantile Bank from before 1998 until its merger with
U.S. Bank National Association (formerly, Firstar Bank, N.A.) in
1999; previously, President and CEO of Mark Twain Bancshares, Inc.;
Vice Chairman: BJC HealthCare; Director: Stifel Financial Corp.;
Trustee: Barnes-Jewish Hospital and Washington University.

Chair of our Strategic Planning Committee and member of our
Compensation Committee.

JUANITA H. HINSHAW Director since 2000
Age 60

Senior Vice President and Chief Financial Officer of Graybar
Electric Company, Inc. (electrical and communications distributor)
since 2000; Chief Financial Officer (non-paying position) of
Highlights of Ophthalmology International, Inc. (a publishing
company) from 1999 until 2000; Vice President and Treasurer of
Monsanto Company (manufacturer and marketer of agricultural and
biotechnology products, prescription pharmaceuticals, food
ingredients and performance chemicals used in consumer products)
from before 1998 to 1999; Director: Graybar Electric Company, Inc.,
IPSCO, Inc. (North American steel producer) and The Williams
Company, Inc.

Chair of our Compensation Committee and member of our Audit
Committee.

ALFRED T. MCNEILL Director since 2004
Age 68

Consultant to the construction industry, serving clients such as
Skanska, Cashman, Kraerner, Haskell and Global Construction
Solutions; Chief Executive Officer of New Jersey Schools
Construction Corporation from 2002 until 2003; Interim Chairman and
Chief Executive Officer of J.A. Jones Construction Group from 2000
until 2001; Chairman of American International Contractors, Inc.
from 1998 until 2000.

Member of our Strategic Planning Committee.

THOMAS S. ROONEY, JR. Director since 2003
Age 45

Insituform's President and Chief Executive Officer since July 2003;
Insituform's President and Chief Operating Officer from April 2003
until July 2003; Senior Vice President and Regional Manager, from
2000 until April 2003, and Vice President and Regional Manager of
Business Development, from before 1998 until 2000, of Gilbane
Building Company.

Member of our Strategic Planning Committee.

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SHELDON WEINIG Director since 1992
Age 77

Adjunct Professor at Columbia University and at State University of
New York, Stony Brook; Director: Intermagnetics General Corporation.

Chair of our Corporate Governance & Nominating Committee and member
of our Audit Committee.

ALFRED L. WOODS Chairman of the Board since 2003
Director since 1997
Age 61

President of Woods Group (a management consulting company); Chairman
and Chief Executive Officer of R&S/Strauss, Inc. (a specialty retail
chain) from 1998 until 2001; Director: Clutchmobile, Inc.
(distributor of automotive parts, specializing in drive train
components).

INDEPENDENT DIRECTORS

Based on the findings of our board's Corporate Governance & Nominating
Committee, our board has determined that the following directors are
"independent directors" as defined by the rules applicable to companies listed
on The Nasdaq Stock Market:

Paul A. Biddelman Alfred T. McNeill
Stephen P. Cortinovis Sheldon Weinig
John P. Dubinsky Alfred L. Woods
Juanita H. Hinshaw

NON-EXECUTIVE CHAIRMAN OF THE BOARD

Effective as of July 2003, the Chairman of the Board position is a
non-executive position. Prior to that time, the Chairman of the Board was an
officer of our company. Alfred L. Woods has served as our non-executive Chairman
since July 2003. From April 2003 to July 2003, Mr. Woods served as our board's
presiding director, and prior to that time, Mr. Woods was Chair of our Corporate
Governance & Nominating Committee, a member of our Compensation Committee and a
member of our board.

Our non-executive Chairman is responsible for the smooth functioning of
our board, enhancing its effectiveness. The non-executive Chairman guides the
processes of our board, setting the agenda for, and presiding at, board
meetings. Our non-executive Chairman also presides at stockholder meetings, and
ensures that directors receive appropriate information from our company to
fulfill their responsibilities.

Our non-executive Chairman is an ex officio member of each standing board
committee, providing guidance and, like all directors, taking an active role in
evaluating our Chief Executive Officer.

Our non-executive Chairman acts as a regular liaison between our board and
our Chief Executive Officer, consulting regularly with our Chief Executive
Officer over business matters and providing our Chief Executive Officer with
more immediate consultation and advice on material business decisions which
require prompt reflection or policy interpretation.

The non-executive Chairman has no operating or independent oversight
authority or responsibility. All oversight authority and responsibility remains
with our full board or its designated committees, and all executive authority
and responsibility remains with our Chief Executive Officer.

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BOARD MEETINGS AND COMMITTEES

BOARD OF DIRECTORS. During 2004, our board of directors held eight
meetings and acted three times by unanimous written consent. No director
attended fewer than 75% of the aggregate number of board meetings and board
committee meetings on which the director served during 2004. Our board has an
Audit Committee, a Compensation Committee, a Corporate Governance & Nominating
Committee and a Strategic Planning Committee.

AUDIT COMMITTEE. The members of our board's Audit Committee are Paul A.
Biddelman (Chair), Juanita H. Hinshaw and Sheldon Weinig. Messrs. Biddelman and
Weinig and Ms. Hinshaw are independent directors. The primary functions of the
Audit Committee are to oversee (a) the integrity of our financial statements,
(b) our compliance with legal and regulatory requirements, (c) the independent
auditor's qualifications and independence and (d) the performance of our
internal audit function and independent auditors. The Audit Committee also
prepares the Audit Committee report included in our proxy statement. The Audit
Committee's activities are intended to describe a program of guidance and
oversight and not to diminish the primary responsibility of management for our
financial statements and internal controls. The Audit Committee's
responsibilities include:

- the appointment, compensation, retention and termination of the
independent auditors and of our internal auditors,

- oversight of the work of independent auditors engaged for the
purpose of preparing or issuing an audit report or performing other
audit, review or attest services for us,

- oversight of the internal auditors' work,

- review of the scope and results of our internal controls,

- approval of the professional services provided by the independent
auditors, and

- review of the independence of the independent auditors.

Based on the findings of the Audit Committee, our board has determined
that the Audit Committee has at least one "audit committee financial expert," as
defined in the rules promulgated by the Securities and Exchange Commission, and
as required of Nasdaq-listed companies, and that Juanita H. Hinshaw, one of our
independent directors, qualifies as an audit committee financial expert.

During 2004, the Audit Committee held eleven meetings. Our board has
adopted a written charter for the Audit Committee.

COMPENSATION COMMITTEE. The members of our board's Compensation Committee
are Juanita H. Hinshaw (Chair), Stephen P. Cortinovis and John P. Dubinsky.
Messrs. Cortinovis and Dubinsky and Ms. Hinshaw are independent directors. The
Compensation Committee (a) determines the compensation level of the Chief
Executive Officer and other executive officers, (b) prepares the executive
compensation report included in our proxy statement and (c) administers, and
makes recommendations with respect to, our incentive compensation plans and
stock based plans. During 2004, the Compensation Committee held six formal
meetings, several informal meetings and acted five times by unanimous written
consent. The board has adopted a written charter for the Compensation Committee.

CORPORATE GOVERNANCE & NOMINATING COMMITTEE. The members of our Corporate
Governance & Nominating Committee are Sheldon Weinig (Chair), Paul A. Biddelman
and Stephen P. Cortinovis. Messrs. Weinig, Biddelman and Cortinovis are
independent directors. The Corporate Governance & Nominating Committee advises
the board on corporate governance principles, including developing and
recommending to our board a set of corporate governance principles, and
identifies qualified individuals to recommend as potential board members to our
stockholders.

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Stockholders also may make nominations for directors. Stockholders wishing
to propose nominees for consideration at our 2006 annual meeting of stockholders
must comply with a by-law provision dealing with nominations. For a discussion
of the nominating procedures, see "Stockholder Proposals." All director
candidates, including those recommended by stockholders, are evaluated on the
same basis. In its evaluation of director candidates, the Corporate Governance &
Nominating Committee considers a variety of characteristics, including, but not
limited to, core competencies, experience, independence, level of commitment,
board and company needs and considerations, and personal characteristics. The
Corporate Governance & Nominating Committee may engage a third party to assist
it in identifying potential director nominees.

The Corporate Governance & Nominating Committee held six formal meetings
and several informal meetings and acted once by unanimous written consent in
2004. The board has adopted a written charter for the Corporate Governance &
Nominating Committee.

STRATEGIC PLANNING COMMITTEE. The members of our board's Strategic
Planning Committee are John P. Dubinsky (Chair), Robert W. Affholder, Thomas N.
Kalishman, Alfred T. McNeill and Thomas S. Rooney, Jr. Messrs. Dubinsky and
McNeill are independent directors. The role of this committee is to review and
to make recommendations to the board regarding our strategy and strategic
planning process.

During 2004, the Strategic Planning Committee held two formal meetings and
several informal meetings. The board has adopted a written charter for the
Strategic Planning Committee.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION. The members
and functions of the Compensation Committee are set forth above under
"Compensation Committee." All members of the Compensation Committee are
independent directors and served on the Compensation Committee at all times
during 2004.

CORPORATE GOVERNANCE - CORPORATE GOVERNANCE PRINCIPLES, BOARD COMMITTEE
CHARTERS, CODE OF ETHICS AND BUSINESS CODE OF CONDUCT

CORPORATE GOVERNANCE PRINCIPLES. Based on the recommendation of the
Corporate Governance & Nominating Committee, our board has adopted a set of
corporate governance guidelines, effective April 28, 2004. These corporate
governance guidelines, which are subject to annual review by the Corporate
Governance & Nominating Committee, provide a framework within which our board
and executive officers fulfill their respective responsibilities and reflect our
board's commitment to monitor the effectiveness of decision-making both at the
board and senior executive management level.

BOARD COMMITTEE CHARTERS. As described above, the board has adopted a
charter for each of its Audit, Corporate Governance & Nominating, Compensation
and Strategic Planning Committees.

CODE OF ETHICS FOR OUR CEO, CFO AND SENIOR FINANCIAL EMPLOYEES. Our Audit
Committee has adopted a written code of ethics that applies to our Chief
Executive Officer, our Chief Financial Officer and senior financial employees.
The purposes of the code of ethics, among other things, are to deter wrongdoing,
to promote ethical conduct and to ensure that information that we provide in our
public reports, including those filed with the Securities and Exchange
Commission, is full, fair, accurate, timely and understandable.

BUSINESS CODE OF CONDUCT. In addition, based on the recommendation of the
Corporate Governance & Nominating Committee, our board has adopted a revised
business code of conduct that applies to all of our employees, including our
officers, and our directors.

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AVAILABILITY OF CORPORATE GOVERNANCE DOCUMENTS. Each of our corporate
governance guidelines, board committee charters, code of ethics and business
code of conduct are available, free of charge, on our website,
www.insituform.com. We will also provide these documents, free of charge, to any
stockholder who requests them by writing to the following address:

Investor Relations
c/o Insituform Technologies, Inc.
702 Spirit 40 Park Drive
Chesterfield, MO 63005

If we amend our code of ethics or grant a waiver of our code of ethics to any of
our officers or directors, we will disclose the amendment or waiver on our
website.

DIRECTOR COMPENSATION

Each director, other than Messrs. Woods and Rooney, is compensated at a
rate of $27,000 per year, plus reimbursement of related business travel
expenses. Directors are no longer paid meeting fees. Mr. Rooney, as an executive
officer of Insituform, receives no additional fees for his service as a
director. Mr. Woods, our non-executive Chairman, is compensated at a rate of
$77,000 per year, plus reimbursement of related business travel expenses.

Directors other than Messrs. Woods and Rooney receive additional
compensation for serving on board committees as follows:

CHAIR MEMBER
BOARD COMMITTEE COMPENSATION COMPENSATION
--------------- ------------ ------------

Audit Committee $14,500 $10,000
------- -------
Compensation Committee 11,500 7,000
------- -------
Corporate Governance & Nominating Committee 11,500 7,000
------- -------
Strategic Planning Committee 11,500 7,000
======= =======

Non-employee directors also are eligible to receive grants of stock
options and deferred stock units under the 2001 Non-Employee Director Equity
Incentive Plan from time to time. During 2004, each of Messrs. Affholder,
Biddelman, Cortinovis, Dubinsky, Kalishman, McNeill and Weinig and Ms. Hinshaw
received a grant of 3,200 deferred stock units. Mr. Woods received a grant of
5,700 deferred stock units. Each deferred stock unit represents our obligation
to transfer one share of our common stock to the director in the future, and is
fully vested at grant. Following termination of the director's service on our
board due to death or a change in control, or 6 months after termination of the
director's service for any other reason, shares of our common stock equal to the
number of deferred stock units reflected on the director's account, will be
distributed. A director may, while serving on our board, elect to defer the
distribution date in annual installments over a period of up to 5 years,
beginning in the year following termination of service on our board. Messrs.
Affholder, Biddelman, Cortinovis, Dubinsky, Kalishman, McNeill, Weinig and Woods
and Ms. Hinshaw did not receive any options to purchase shares of our common
stock in 2004.

Mr. Rooney, our President and Chief Executive Officer, received no
additional compensation for his service on our board.

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EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth certain information with respect to
compensation for each of our last three completed fiscal years of our chief
executive officer and certain other individuals who were executive officers
during 2004.

LONG-TERM COMPENSATION
AWARDS
--------------------------------------------
ANNUAL COMPENSATION NUMBER OF
------------------------------------------ SECURITIES
NAME AND PRINCIPAL FISCAL OTHER RESTRICTED STOCK UNDERLYING ALL OTHER
POSITION YEAR SALARY(1) BONUS COMPENSATION(2) AWARDS($)(3) OPTIONS(#) COMPENSATION
---------------------------- ------ ----------- ------------ --------------- ---------------- ----------- -------------

Thomas S. Rooney, Jr. (4) 2004 $590,000(5) $[_____] (6) $ 75,302 (7) $534,560 (8) 154,000 $ 12,578 (9)
President and Chief 2003 329,615 210,000 222,260 201,216 32,200 6,325
Executive Officer 2002 -- -- -- -- -- --

Christian G. Farman (10) 2004 265,000 [_____](11) 114,993(12) 107,520 (13) 16,500 10,478(14)
Senior Vice President and 2003 19,196 -- 1,848 -- 12,500 --
Chief Financial Officer 2002 -- -- -- -- -- --

Thomas W. Vaughn (15) 2004 112,530 [_____](16) 34,926 (17) 107,520 (18) 16,500 5,570(19)
Senior Vice President and 2003 -- -- -- -- -- --
Chief Operating Officer 2002 -- -- -- -- -- --

Thomas A. A. Cook (20) 2004 135,513 -- -- -- -- 138,673(21)
Former Vice President 2003 217,400 70,000 -- 110,040 17,150(22) 9,117
and General Counsel 2002 216,167 44,367 -- -- 15,236(22) 8,216

Robert W. Affholder (23) 2004 125,000 -- -- 51,040 (24) -- 5,138(25)
Former Senior Executive 2003 125,000 -- -- 49,219 -- 4,789
Vice President 2002 125,000 -- -- -- 7,500 3,872

---------------------

(1) Includes amounts earned but deferred at the election of the executive
officer under our nonqualified deferred compensation plan.

(2) Excludes car allowances, cellular phone allowances and certain other
amounts which, when aggregated for each officer, did not exceed the lesser
of $50,000 or 10% of any such officer's salary or bonus.

(3) Represents the value of restricted stock or deferred stock units.
Dividends on restricted stock and deferred stock units are paid at the
same rate as paid to all stockholders.

(4) Mr. Rooney has served as our President and Chief Executive Officer since
July 2003 and previously served as our President and Chief Operating
Officer from April 2003 until July 2003.

(5) Includes $90,000 paid solely in the form of deferred stock units under our
2001 Employee Equity Incentive Plan.

(6) Represents amounts awarded under our Annual Incentive Plan.

(7) Represents amounts paid in reimbursement of country club membership fees.

(8) Represents grant of 26,000 restricted shares of our common stock on
October 27, 2004. The value of these shares was calculated on the basis of
the closing price of our unrestricted stock on The Nasdaq Stock Market on
the date of grant ($20.56 per share). The value of these shares based on
the closing price of our unrestricted stock on The Nasdaq Stock Market as
of December 31, 2004 ($23.28 per share) was $605,280. The restrictions on
these shares lapse on October 27, 2007, provided that certain company
performance goals are met as of September 30, 2005, and that employment
continues through October 27, 2007. We will not be able to calculate
whether the performance goals have been met until after September 30,
2005. The awards amount reported herein does not include the grant of
deferred stock units on October 27, 2004, the number of which shall equal
the product of 104,000 times the positive difference

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between the market value of one share of our common stock on October 27,
2007, over $15.50 (not to exceed $5.06), divided by the market value of
one share of our common stock on such date. We will not be able to
calculate the number of deferred stock units granted until after October
27, 2007.

(9) Represents $3,833 in employer-matching contributions under our 401(k)
Profit-Sharing Plan, $4,367 in employer-matching contributions under the
deferred compensation plan, $1,728 in term life insurance premiums and
$2,650 in long-term disability insurance premiums.

(10) Mr. Farman has served as our Senior Vice President and Chief Financial
Officer since January 2005 and previously served as our Vice President and
Chief Financial Officer from December 2003 until January 2005.

(11) Represents amounts awarded under our Annual Incentive Plan.

(12) Represents amounts paid pursuant to our relocation plan.

(13) Represents grant of 6,000 restricted shares of our common stock on
September 1, 2004. The value of these shares was calculated on the basis
of the closing price of our unrestricted stock on The Nasdaq Stock Market
on the date of grant ($17.92 per share). The restrictions on these shares
lapse on September 1, 2007, provided that certain company performance
goals are met as of June 30, 2005, and that employment continues through
September 1, 2007. We will not be able to calculate whether the
performance goals have been met until after June 30, 2005. The awards
amount reported herein does not include the grant of deferred stock units
on October 27, 2004, the number of which shall equal the product of 16,500
times the positive difference between the market value of one share of our
common stock on October 27, 2007, over $15.50 (not to exceed $2.42),
divided by the market value of one share of our common stock on such date.
We will not be able to calculate the number of deferred stock units
granted until after October 27, 2007.

(14) Represents $3,533 in employer-matching contributions under our 401(k)
Profit-Sharing Plan, $4,667 in employer-matching contributions under the
deferred compensation plan, $878 in term life insurance premiums and
$1,400 in long-term disability insurance premiums.

(15) Mr. Vaughn has served as our Senior Vice President and Chief Operating
Officer since August 2004.

(16) Represents $[___] awarded under our Annual Incentive Plan and $50,000 paid
as a sign-on bonus.

(17) Represents amounts paid pursuant to our relocation plan.

(18) Represents grant of 6,000 restricted shares of our common stock on
September 1, 2004. The value of these shares was calculated on the basis
of the closing price of our unrestricted stock on The Nasdaq Stock Market
on the date of grant ($17.92 per share). The restrictions on these shares
lapse on September 1, 2007, provided that certain company performance
goals are met as of June 30, 2005, and that employment continues through
September 1, 2007. We will not be able to calculate whether the
performance goals have been met until after June 30, 2005.

(19) Represents $4,200 in employer-matching contributions under our 401(k)
Profit-Sharing Plan, $706 in term life insurance premiums and $664 in
long-term disability insurance premiums.

(20) Mr. Cook ceased to be an executive officer on June 18, 2004.

(21) Represents $8,038 in employer-matching contributions under our 401(k)
Profit-Sharing Plan, $66 in term life insurance premiums, $569 in
long-term disability insurance premiums, and $130,000 in severance
payments.

(22) Those options that were unvested and unexercised as of June 18, 2004 were
canceled. Therefore, as of that date, Mr. Cook could no longer exercise
8,574 and 3,809 of the options granted in 2003 and 2002, respectively. The
options that were vested and unexercised (8,576 and 11,427 of the options
granted in 2003 and 2002, respectively) remained exercisable until July
18, 2004.

(23) Mr. Affholder ceased to be an executive officer on December 31, 2004.

(24) Represents grant of 3,200 deferred stock units on July 28, 2004. Each
deferred stock unit represents our obligation to transfer one share of our
common stock to Mr. Affholder in the future. Mr. Affholder's grant was
made under our 2001 Employee Equity Incentive Plan, on the same terms as
those made to our non-employee directors. The value of these shares was
calculated on the basis of the closing price of our common stock on The
Nasdaq Stock Market on the date of grant ($15.95 per share). The value of
these shares based on the closing price of our common stock on The Nasdaq
Stock Market as of December 31, 2004 ($23.28 per share) was $74,496.

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(25) Represents $3,542 in employer-matching contributions under our 401(k)
Profit-Sharing Plan, $933 in term life insurance premiums and $663 in
long-term disability insurance premiums.

OPTION/SAR GRANTS TABLE

The following table sets forth certain information regarding options that
we granted during 2004 to the individuals named in the Summary Compensation
Table. We did not grant any stock appreciation rights during 2004.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

INDIVIDUAL GRANTS
---------------------------------------------------- POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS/SARS ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO EXERCISE PRICE APPRECIATION FOR
OPTIONS/SARS EMPLOYEES IN PRICE EXPIRATION OPTION TERM(1)
Name GRANTED (#) FISCAL YEAR ($/SHARE) DATE 5% 10%
--------------------- ------------ ------------ --------- ---------- -------- -----------

Thomas S. Rooney, Jr. 50,000 (2) 12.0% $15.40 6/1/2011 $313,467 $ 730,512
104,000 (2) 24.9 20.56 10/27/2011 870,478 2,028,585
Christian G. Farman 16,500 (3) 4.0 17.92 9/1/2011 120,371 280,517
Thomas W. Vaughn 16,500 (4) 4.0 17.92 9/1/2011 120,371 280,517
Thomas A. A. Cook -- 0.0 -- -- -- --
Robert W. Affholder -- 0.0 -- -- -- --

---------------

(1) 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. Actual gains, if any, on stock option
exercises will be dependent on, among other things, the future performance
of the common stock and overall market conditions. There can be no
assurance that the amounts reflected above will be achieved.

(2) Represents options to buy, under our 2001 Employee Equity Incentive Plan,
(a) 50,000 shares of our common stock, 25,000 of which became exercisable
on June 1, 2004 (date of grant), and 12,500 of which become exercisable on
June 1, 2005 and 2006, respectively; and (b) 104,000 shares of our common
stock, 26,000 of which became exercisable on October 27, 2004 (date of
grant), and 26,000 of which become exercisable on October 27, 2005, 2006
and 2007, respectively.

(3) Represents options to buy 16,500 shares of our common stock under our 2001
Employee Equity Incentive Plan, 4,125 of which became exercisable on
September 1, 2004 (date of grant), and 4,125 of which become exercisable
on September 1, 2005, 2006 and 2007, respectively.

(4) Represents options to buy 16,500 shares of our common stock under our 2001
Employee Equity Incentive Plan, 4,125 of which became exercisable on
September 1, 2004 (date of grant), and 4,125 of which become exercisable
on September 1, 2005, 2006 and 2007, respectively.

AGGREGATE OPTION/SAR EXERCISES AND YEAR-END OPTION/SAR TABLE

The following table sets forth certain information regarding exercises of
stock options, and stock options held as of December 31, 2004, by the
individuals named in the Summary Compensation Table.

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AGGREGATE OPTION/ SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES

NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
OPTIONS/SARS AT MONEY OPTIONS/SARS AT
SHARES VALUE FISCAL YEAR-END(#) FISCAL YEAR-END ($)(1)
ACQUIRED ON REALIZED -------------------------- ------------------------------
NAME EXERCISE (#) ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------- ------------ -------- ----------- ------------- ----------- -------------

Thomas S. Rooney, Jr -- $ -- 67,100 119,100 $381,349 $491,069
Christian G. Farman -- -- 10,375 18,625 66,594 105,781
Thomas W. Vaughn -- -- 4,125 12,375 19,594 58,781
Thomas A. A. Cook 8,574 24,436 -- -- -- --
Robert W. Affholder -- -- 46,500 -- 258,180 --

------------------

(1) Calculated on the basis of the fair market value of the underlying
securities at December 31, 2004, minus the exercise price.

(2) Calculated on the basis of the fair market value of the underlying
securities at the time of exercise, minus the exercise price.

LONG-TERM INCENTIVE PLAN AWARDS TABLE

Under our Long-Term Incentive Plan, key executives designated by our
Compensation Committee are eligible to earn a deferred cash incentive award
based on our financial performance. Participants in the plan are eligible to
earn an award after the end of each performance period. New performance periods
are expected to begin each year. If our actual performance falls below certain
parameters, no payouts are made.

In 2002, each of Anthony W. Hooper, our former Chairman of the Board,
President and Chief Executive Officer, Joseph A. White, our former Vice
President and Chief Financial Officer, Thomas A. A. Cook, our former Vice
President and General Counsel and Carroll W. Slusher, our former Vice President
- North America, was named as a participant in a performance period beginning in
2002 and ending in 2004. As of December 31, 2004, each of these named
participants had ceased to be an executive officer and, as a result, all awards
granted under the plan for the 2002-2004 performance period had been forfeited.

The following table sets forth certain information regarding awards made
to executive officers pursuant to our Long-Term Incentive Plan during the last
fiscal year.

LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR

ESTIMATED
FUTURE PAYOUTS UNDER
NUMBER OF PERFORMANCE OR OTHER NON-STOCK PRICE-BASED PLAN(1)
SHARES, UNITS OR PERIOD UNTIL ------------------------------
OTHER RIGHTS MATURATION OR PAYOUT THRESHOLD TARGET MAXIMUM
---------------- -------------------- --------- -------- -------

Thomas S. Rooney, Jr 180,000 (2) 2004-2006 $[__] $370,000 $[__]
Christian G. Farman 22,500 (3) 2004-2006 [__] 111,000 [__]
Thomas W. Vaughn 22,500 (4) 2004-2006 [__] 111,000 [__]

-----------------

(1) The target amount is earned if performance targets are achieved. Any
awards earned under the Long-Term Incentive Plan during the 2004-2006
performance period would be paid in 2007.

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(2) Represents grant of (a) 26,000 restricted shares of our common stock on
October 27, 2004; and (b) options to buy, under our 2001 Employee Equity
Incentive Plan, (i) 50,000 shares of our common stock, 25,000 of which
became exercisable on June 1, 2004 (date of grant), and 12,500 of which
become exercisable on June 1, 2005 and 2006, respectively; and (ii)
104,000 shares of our common stock, 26,000 of which became exercisable on
October 27, 2004 (date of grant), and 26,000 of which become exercisable
on October 27, 2005, 2006 and 2007, respectively. Does not include the
grant of deferred stock units on October 27, 2004, the number of which
shall equal the product of 104,000 times the positive difference between
the market value of one share of our common stock on October 27, 2007,
over $15.50 (not to exceed $5.06), divided by the market value of one
share of our common stock on such date. We will not be able to calculate
the number of deferred stock units granted until after October 27, 2007.

(3) Represents grant of (a) 6,000 restricted shares of our common stock on
September 1, 2004; and (b) options to buy 16,500 shares of our common
stock under our 2001 Employee Equity Incentive Plan, 4,125 of which became
exercisable on September 1, 2004 (date of grant), and 4,125 of which
become exercisable on September 1, 2005, 2006 and 2007, respectively. Does
not include the grant of deferred stock units on October 27, 2004, the
number of which shall equal the product of 16,500 times the positive
difference between the market value of one share of our common stock on
October 27, 2007, over $15.50 (not to exceed $2.42), divided by the market
value of one share of our common stock on such date. We will not be able
to calculate the number of deferred stock units granted until after
October 27, 2007.

(4) Represents grant of (a) 6,000 restricted shares of our common stock on
September 1, 2004; and (b) options to buy 16,500 shares of our common
stock under our 2001 Employee Equity Incentive Plan, 4,125 of which became
exercisable on September 1, 2004 (date of grant), and 4,125 of which
become exercisable on September 1, 2005, 2006 and 2007, respectively.

CERTAIN AGREEMENTS WITH DIRECTORS AND EXECUTIVE OFFICERS

THOMAS S. ROONEY, JR. Under the terms of an employment letter, we hired
Thomas S. Rooney, Jr. as our President and Chief Operating Officer effective
April 1, 2003, replacing Anthony W. Hooper as our President. Mr. Hooper
continued as our Chairman of the Board and Chief Executive Officer until July
22, 2003. Upon Mr. Hooper's departure as Chief Executive Officer, Mr. Rooney
assumed the title of Chief Executive Officer and retained the President title.
Pursuant to Mr. Rooney's employment letter, as President and Chief Operating
Officer, we paid Mr. Rooney an annual base salary of $350,000. Also, Mr.
Rooney's annual bonus was calculated as a percentage of his base salary,
determined with reference to (a) a range of percentages identified by our
Compensation Committee based upon a center point objective of 60%, intended to
provide an opportunity of up to twice the center point and (b) annual goals,
each identified by our Compensation Committee. Pursuant to Mr. Rooney's
employment letter, Mr. Rooney was guaranteed a minimum of 60% of his potential
2003 annual incentive bonus (based on the 60% center point objective and
disregarding any proration for partial year service).

Effective from his appointment as Chief Executive Officer on July 22,
2003, Mr. Rooney's base salary was increased to $500,000, and his annual bonus
center point objective was increased to 70% effective during 2004. Effective as
of October 27, 2004, Mr. Rooney's base salary was increased to $590,000. Mr.
Rooney's base salary and annual bonus are both subject to annual reviews by our
Compensation Committee.

Mr. Rooney was granted an option to purchase up to 32,200 shares of our
common stock and 12,800 restricted shares of our common stock under his
employment letter. The restrictions on these restricted shares were to lapse on
May 27, 2006, provided that certain company performance goals were met as of
March 31, 2004, and that employment continues through May 27, 2006. The
performance goals were not met as of March 31, 2004, and the shares were
forfeited by Mr. Rooney as of April 29, 2004. We also provide Mr. Rooney with a
car allowance, reimbursement for one country club membership and medical and
life insurance benefits.

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Mr. Rooney's employment is "at-will" except that, pursuant to his
employment letter as amended during 2004, if his employment is terminated
without "cause," upon his termination, he would be entitled to receive a
severance payment equal to 12 months' base salary, car allowance and medical
benefits.

In connection with Mr. Rooney's relocation to our headquarters facilities
in Chesterfield, Missouri, and in addition to the amounts extended to Mr. Rooney
under our relocation policy, Mr. Rooney received a relocation allowance of
$41,000 upon the purchase of his home in the St. Louis area. Mr. Rooney has also
entered into a non-competition and non-solicitation agreement with us that
expires one year and one month after his service to us has ended.

CHRISTIAN G. FARMAN. Under the terms of an employment letter, we hired
Christian G. Farman as our Vice President and Chief Financial Officer effective
December 4, 2003. Pursuant to Mr. Farman's employment letter, during 2004 we
paid Mr. Farman a base salary of $265,000, and an annual bonus. Mr. Farman's
annual bonus is calculated as a percentage of his base salary, determined with
reference to (a) a range of percentages identified by our Compensation Committee
based upon a center point objective of 50%, intended to provide an opportunity
of up to twice the center point and (b) annual goals, each identified by our
Compensation Committee. Mr. Farman's base salary and annual bonus are both
subject to annual reviews by our Compensation Committee. Mr. Farman was also
granted an option to purchase up to 12,500 shares of our common stock under his
employment letter. We also provide Mr. Farman with a car allowance and medical
and life insurance benefits.

Mr. Farman's employment is "at-will" except that, if his employment is
terminated without "cause" during the first 24 months of employment, upon his
termination, he will be entitled to receive a severance payment equal to 12
months' base salary, car allowance and medical benefits, and reasonable
outplacement assistance.

In connection with Mr. Farman's relocation to our headquarters facilities,
certain amounts were extended to Mr. Farman under our relocation policy. Mr.
Farman has also entered into a non-competition and non-solicitation agreement
with us that expires one year and one month after his service to us has ended.

THOMAS W. VAUGHN. Under the terms of an employment letter, we hired Thomas
W. Vaughn as our Senior Vice President and Chief Operating Officer effective
August 30, 2004. Pursuant to Mr. Vaughn's employment letter, during 2004 we paid
Mr. Vaughn a base salary of $330,000, and an annual bonus. Mr. Vaughn's annual
bonus is calculated as a percentage of his base salary, determined with
reference to (a) a range of percentages identified by our Compensation Committee
based upon a center point objective of 50%, intended to provide an opportunity
of up to twice the center point and (b) annual goals, each identified by our
Compensation Committee. His base salary and his annual bonus are both subject to
annual reviews by our Compensation Committee. We also provide Mr. Vaughn with a
car allowance and medical and life insurance benefits.

Mr. Vaughn's employment is "at-will" except that, if his employment is
terminated without "cause" during the first 24 months of employment, upon his
termination, he will be entitled to receive a severance payment equal to 12
months' base salary, car allowance and medical benefits, and reasonable
outplacement assistance.

In connection with Mr. Vaughn's relocation to our headquarters facilities
in Chesterfield, Missouri, and in addition to the amounts extended to Mr. Vaughn
under our relocation policy, we granted Mr. Vaughn a sign-on bonus in the amount
of $50,000 payable upon his closing on a home in the St. Louis area. Mr. Vaughn
has also entered into a non-competition and non-solicitation agreement with us
that expires one year and one month after his service to us has ended.

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THOMAS A. A. COOK. Thomas A. A. Cook, our former Vice President and
General Counsel, ceased to be an executive officer effective June 18, 2004. In
connection with his departure, we entered into a separation agreement with Mr.
Cook. Pursuant to the agreement, Mr. Cook received a lump sum separation payment
of $130,000. Under the terms of Mr. Cook's agreement, any vested and unexercised
stock options held by Mr. Cook as of June 18, 2004 remained exercisable until
July 18, 2004. All of Mr. Cook's unvested stock options were canceled as of June
18, 2004. Pursuant to the agreement, Mr. Cook is bound by non-solicitation and
non-competition provisions that expire on June 18, 2005.

ROBERT W. AFFHOLDER. In connection with our acquisition of Insituform
Mid-America, Inc. in October 1995, we entered into a three-year employment
agreement with Robert W. Affholder, which was extended annually, by amendment,
through April 28, 2004, the date of our 2004 annual meeting of stockholders.
Under his employment agreement, Mr. Affholder served as our Senior Executive
Vice President, received an annual salary of $125,000 and devoted one-half of
his business time to our affairs.

Notwithstanding the termination of Mr. Affholder's employment agreement on
April 28, 2004, Mr. Affholder's employment was extended through December 31,
2004, and we continued to provide Mr. Affholder an annual salary, medical
benefits and an automobile for his use through December 31, 2004. In addition,
Mr. Affholder agreed under the terms of his employment agreement to continue to
act as a qualifier until December 31, 2004 in any jurisdiction in which he acted
as a qualifier as of March 1, 2004. Mr. Affholder has also entered into a
non-competition agreement with us that expires two years after his service to us
has ended.

* * *

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COMPENSATION COMMITTEE REPORT ON
EXECUTIVE COMPENSATION

The Compensation Committee of our board of directors consists of three
directors: Juanita H. Hinshaw (Chair), Stephen P. Cortinovis and John P.
Dubinsky, each of whom is an independent director.

The Compensation Committee has a formal charter, pursuant to which it is
directed to:

- assist our board in the discharge of our board's
responsibilities relating to the compensation of our directors
and executives,

- issue a report on executive compensation in accordance with
applicable requirements, including the rules and regulations
of the Securities and Exchange Commission, for inclusion in
our annual proxy statement, and

- administer, and make recommendations with respect to, our
incentive compensation plans and equity based plans.

Specifically, the duties and responsibilities of our Compensation
Committee under its charter are to:

- periodically review and approve our corporate goals and
objectives relevant to the compensation of our Chief Executive
Officer and other executive officers,

- evaluate our Chief Executive Officer's and other executive
officers' performance in light of our goals and objectives,

- assess our competitive position for the components of
executive compensation on a national and local level as well
as in our industry and consider different compensation
approaches,

- determine the compensation level of our Chief Executive
Officer and our other executive officers,

- annually evaluate the performance of our Compensation
Committee, and

- recommend to our board specific amounts and forms of director
compensation based on general guidelines established by our
Corporate Governance & Nominating Committee.

Our Compensation Committee charter requires that the compensation of our
Chief Executive Officer be determined by our Compensation Committee meeting in
an executive session without our Chief Executive Officer present. The
compensation of our other executive officers must be determined by our
Compensation Committee meeting in an executive session in which our Chief
Executive Officer may be present, by invitation of the committee, but may not
vote.

In connection with our Compensation Committee's review and approval of our
Chief Executive Officer's long-term compensation, the charter requires the
Compensation Committee to consider the following factors:

- our performance and relative total shareholder return,

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- the value of such awards granted to other chief executive
officers at comparable companies, and

- the awards granted to our Chief Executive Officer in prior
years.

Our Compensation Committee establishes the overall compensation philosophy
for our company, but it may delegate the determination and administration of
non-executive officer compensation as it deems appropriate. It also makes
recommendations to our board regarding the adoption, amendment and rescission of
equity based incentive compensation plans. Our Compensation Committee also
administers the 2001 Employee Equity Incentive Plan and the Long-Term Incentive
Plan, under which incentive compensation may be awarded to executive officers.

Consistent with its charter, during 2004, our Compensation Committee made
all decisions relating to executive officer compensation, including the award of
2003 annual incentive bonuses, payable in 2004, and the determination of bonus
award criteria and levels for the 2004 annual incentive bonus and the long-term
incentive awards.

The objectives of our Compensation Committee in establishing executive
compensation are:

- to offer levels of compensation substantially equivalent to
those offered by other companies in similar businesses which
we consider to be competitors for executive talent,

- to compensate executives based on each executive's level of
responsibility and contribution to our business goals,

- to link compensation with the independent individual goals for
each executive as well as the financial performance of the
entire company and the financial performance of the business
unit for which the executive is responsible, and

- to align the interests of our executives with the interests of
our stockholders.

To achieve these objectives, our executive compensation program, which
includes our Chief Executive Officer, Thomas S. Rooney, Jr., was developed with
the assistance of an independent compensation advisor retained by our
Compensation Committee. Our program consists principally of base salary, annual
incentive cash bonuses, long-term incentive plan awards payable in restricted
stock and deferred stock units and stock options (both incentive stock options
and nonqualified), as described below.

BASE SALARY. Our Compensation Committee evaluates executive base salaries
by level of responsibility, individual performance and our corporate
performance, as well as by reference to competitive factors in the marketplace
for key executives. The committee authorized a salary increase budget, net of
the salary increases for executive officers, of 3.5% to be assigned in the
discretion of the Chief Executive Officer.

For 2004, our Chief Executive Officer recommended to our Compensation
Committee to raise the annual salary of only one of the executive officers, the
former Vice President and General Counsel, Thomas A. A. Cook, from $217,400 to
$260,000. Due to the commencement of his employment in December 2003, no
increase was made to the annual salary of our Senior Vice President and Chief
Financial Officer, Christian G. Farman, for 2004, but Mr. Farman's salary was
increased from $265,000 to $310,000 by the Compensation Committee in December
2004, with the increase to be effective January 1, 2005. Our Senior Vice
President and Chief Operating Officer, Thomas W. Vaughn, joined the

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company on August 30, 2004 at an annual salary of $330,000 and a one-time cash
sign-on bonus of $50,000, which was set in his employment letter with us.

Mr. Rooney's annual salary had been established at a rate of $500,000 per
annum, effective with his election as Chief Executive Officer in July 2003, and
was increased to $590,000 effective as of October 27, 2004, $90,000 of which was
paid in the form of 4,182 deferred stock units on January 4,2005.

ANNUAL INCENTIVE CASH BONUSES. For 2004, executive officers were eligible
to receive annual incentive cash bonuses if our entire company exceeded the
threshold level of its financial plan. Key employees at the individual business
units also had their bonuses based upon the financial performance of the
executive's business unit compared to the threshold level of the particular
unit's plan. In addition, the plan was redesigned to contain a number of
independent individual performance components for each executive and key
employee. These threshold levels and the individual performance goals were set
for each of the participants in the first half of the year.

The mid-point target amount of the bonus was established as a percentage
of the executive's or the key employee's salary, but varied, higher or lower,
from the mid-point target percentage based upon the level of the executive's
achievement of his or her financial and individual goals. For 2004, Mr. Rooney's
mid-point target for Annual Incentive Compensation was set at 70% of his annual
salary and at 50% of the respective annual salaries of Messrs. Farman, Vaughn
and Cook (who is not eligible for a 2004 annual bonus because of his termination
of employment prior to the end of the year), but the maximum annual bonus could
be twice the mid-point target percentages. The employment letters upon hiring of
Messrs. Farman and Vaughn also stated a mid-point target incentive of 50% and
set the maximum annual bonus potential at twice the mid-point target level. Each
of the computed bonuses are subject to reduction in the sole discretion of the
Compensation Committee.

For 2004, Mr. Rooney was awarded a bonus in the amount of $[____] under
our Annual Incentive Plan calculated based upon [_______], Mr. Farman was
awarded a bonus in the amount of $[____] under our Annual Incentive Plan
calculated based upon[_______] and Mr. Vaughn was awarded a bonus in the amount
of $[____] under our Annual Incentive Plan calculated based upon [_______].
These annual cash bonuses are intended to qualify as "qualified
performance-based compensation" within the meaning of Section 162(m) of the
Internal Revenue Code of 1986, as amended, by virtue of the Compensation
Committee providing performance criteria for these annual cash bonuses as awards
under our Long-Term Incentive Plan.

LONG-TERM EXECUTIVE CASH PERFORMANCE PROGRAM. The purpose of the Long-Term
Cash Performance Program is to provide our senior management with long-term
incentive compensation in the form of cash based on the level of achievement of
financial and other pre-established performance criteria over a three-year
performance period. Each year a new three-year performance period commences with
differing performance criteria and/or targets set for each such period. Our
Long-Term Cash Performance Plan focuses the interests of our key executives on
one or more of the key measures of our financial success as determined by our
Compensation Committee over the longer term than the annual cash bonuses. Those
key measures are embodied in the Long-Term Incentive Plan, which our
stockholders have previously approved.

For the three-year performance period starting in 2004 and ending in 2006,
the Compensation Committee established a target payout for our current Chief
Executive Officer of $360,000 and a target payout for our Senior Vice President
and Chief Financial Officer and our Senior Vice President and Chief Operating
Officer of $111,000. The performance criteria are [_________] and the payment of
actual amounts calculated thereunder may be reduced in the sole discretion of
the Compensation Committee. Each of the long-term cash bonuses are intended to
qualify as "qualified performance-based compensation" within the meaning of
Section 162(m) of the Internal Revenue Code

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by virtue of the Compensation Committee providing performance criteria for these
long-term cash awards under our Long-Term Incentive Plan.

EQUITY INCENTIVES. The primary purpose of our equity incentive program is
to align the interests of our key employees, including the executive officers,
more closely with the interests of our stockholders by offering these key
employees an opportunity to benefit from increases in the market price of our
common stock. Our equity incentive program provides long-term incentives that
have enabled us to attract and retain key employees by encouraging their
ownership of our common stock. In connection with attracting new executive
management, we have typically authorized the grant of options effective upon
commencement of employment.

There were a number of grants of stock options, restricted stock and
deferred stock units to our executive officers during 2004. Messrs. Farman and
Vaughn each received seven-year options to purchase 16,500 shares of our common
stock, vesting 25% upon grant and 25% annually thereafter for the next three
years. The exercise price for the options was set at the fair market value of
our stock on the date of grant. Messrs. Farman and Vaughn were also awarded
6,000 shares of restricted stock that will vest fully on the third anniversary
date of the award if the named executive remains in our employ on the third
anniversary date of the award. The restricted stock award is also subject to the
achievement of positive net income by our company during the performance period
beginning on July 1, 2004 and ending on June 30, 2005. Mr. Farman was also
granted a deferred stock unit award pursuant to which he will receive the number
of shares of our common stock determined by multiplying 16,500 by the positive
difference between the fair market value of our common stock on the third
anniversary of the award date and $15.50 (with the difference not to exceed
$2.42) and dividing the result by the fair market value of our common stock on
the third anniversary of the award date. During the deferral period, Mr. Farman
will be entitled to receive an amount in cash equal to the cash dividend that
would have been payable had his deferred stock units been shares of our common
stock on the date of the dividend payment.

In compensation for Mr. Rooney's long-term performance grants being
substantially less than the promised dollar amount of such grants as of the date
of his employment, in June 2004, Mr. Rooney received a special grant of a
seven-year option for 50,000 shares of our common stock, vesting 50% on the date
of grant and 25% annually thereafter for the next two years. As his scheduled
2004 grant, Mr. Rooney also received a seven-year option to purchase 104,000
shares of our common stock, vesting 25% upon grant and 25% annually thereafter
for the next three years. The exercise price for each of the options was set at
the fair market value of our stock on each date of grant. Mr. Rooney was also
awarded 26,000 shares of restricted stock that will fully vest if Mr. Rooney
remains in our employ on the third anniversary date of the award. The restricted
stock award is also subject to the achievement of positive net income by our
company during the performance period beginning on October 1, 2004 and ending on
September 30, 2005.

Mr. Rooney was also granted a deferred stock unit award pursuant to which
he will receive the number of shares of our common stock determined by
multiplying 104,000 by the positive difference between the fair market value of
our common stock on the third anniversary of the award date and $15.50 (with the
difference not to exceed $5.06) and dividing the result by the fair market value
of our common stock on the third anniversary of the award date. The issuance of
the shares due Mr. Rooney under these deferred stock units will be deferred
until the third anniversary of the award date. During the deferral period,
Mr. Rooney will be entitled to receive an amount in cash equal to the
cash dividend that would have been payable had his deferred stock units been
shares of our common stock on the date of the dividend payment.

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Each of the restricted stock awards are intended to qualify as "qualified
performance-based compensation" within the meaning of Section 162(m) of the
Internal Revenue Code by virtue of the Compensation Committee setting
performance criteria for these restricted awards under our Long-Term Incentive
Plan.

OTHER COMPENSATION MATTERS. Executive officers may choose to defer up to
specified maximum amounts of compensation by contributing those amounts to our
nonqualified, deferred compensation plan for key employees. This plan allows for
base salary deferral, when aggregated with 401(k) base salary contributions
under our 401(k) Profit-Sharing Plan, subject to legal limitations, of up to 15%
of base salary, and bonus deferral of up to 50% of bonus amounts. Under the
plan, we 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 $205,000 per
annum for 2004). Contributions in the non-qualified, deferred compensation plan
are adjusted to match the performance of participant-selected indices. Subject
to claims of creditors, we will pay account balances to key employee
participants after termination of employment based on their deferrals into the
accounts and the investment performance of their selected indices. During 2004,
Messrs. Rooney and Farman deferred $167,000 and $26,750, respectively, of their
compensation to their respective accounts under our non-qualified, deferred
compensation plan, which amounts do not include $4,367 and $4,667, respectively,
in company-matching contributions that we contributed to their respective
accounts under the plan during 2004.

Section 162(m) of the Internal Revenue Code of 1986, as amended, generally
limits federal income tax deductions for compensation to $1 million per year for
our Chief Executive Officer and our four other most highly compensated officers,
but it contains an exception for performance-based compensation that satisfies
certain conditions. Our Long-Term Incentive Plan is intended to allow us to pay
performance-based compensation as defined in Section 162(m). Under our Long-Term
Incentive Plan, our Compensation Committee designates participants in various
incentive programs for each fiscal year or other period set by our Compensation
Committee. Each incentive program can have its own specific performance goals or
targets and performance period. Our Compensation Committee establishes objective
performance goals based upon one or more of the following criteria, individually
or in combination, adjusted in the manner our Compensation Committee determines
in its sole discretion:

- stock price - earnings per share

- sales - free cash flow

- return on equity - net income

- book value - individual performance

- expense management - business unit performance

The payment of an incentive program award under our Long-Term Incentive
Plan may be reduced by our Compensation Committee in its sole discretion, and
the granting of awards is subject to the discretion of our Compensation
Committee.

In making compensation decisions, we consider the net cost of
compensation. We also consider whether it is practicable, and consistent with
other compensation objectives, to qualify our incentive compensation under the
applicable exemption of Section 162(m). We anticipate that deductibility of
compensation payments will be one of a number of factors considered in
ascertaining appropriate levels or types of compensation, and that we will make
our compensation decision based upon an overall determination of what we believe
to be in the best interests of our stockholders.

The foregoing report on executive compensation is provided by our
Compensation Committee.

Juanita H. Hinshaw, Chair Stephen P. Cortinovis
John P. Dubinsky

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Notwithstanding anything set forth in any of our previous filings under
the Securities Act of 1933 or the Securities Exchange Act of 1934 which might
incorporate future filings, including this proxy statement, in whole or in part,
the preceding report shall not be deemed incorporated by reference into any such
filings.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Affholder, Inc., our wholly-owned subsidiary that comprises the tunneling
segment, owns, or leases under long term operating leases with third-party
leasing companies, several pieces of tunneling equipment, including cranes and
tunnel boring machines. From time to time for specific projects, Affholder, Inc.
will lease additional equipment from a variety of sources. During 2004,
Affholder, Inc. leased four cranes and two tunnel boring machines from A-Y-K-E
Partnership. A-Y-K-E is a partnership that is controlled by Robert W. Affholder,
our former Senior Executive Vice President and a member of our board of
directors. During 2004, Affholder, Inc. paid A-Y-K-E approximately $475,000
pursuant to equipment leases. This amount represents 6.1% of all lease payments
made by Affholder during 2004 and 2.7% of all lease payments made by us in 2004.
The cranes and tunnel boring machines that are currently under lease are leased
under separate lease agreements on terms that are substantially similar to, or
better than, those otherwise available to Affholder, Inc. in the market. The
leases are terminable upon 30 days' prior notice by either party. During 2004,
A-Y-K-E leased equipment only to Affholder, Inc. Affholder, Inc. may sublease
the equipment to third parties and retain any profit generated from the
sublease.

Brett Affholder, the son of Robert W. Affholder, is employed by Affholder,
Inc. as Position Project Manager. For fiscal year 2004, Brett Affholder received
total salary and incentives of $76,256 from Affholder, Inc.

Hope Affholder, the wife of Brett Affholder and daughter-in-law of Robert
W. Affholder, is employed by Affholder, Inc. as Position Contract Administrator.
For fiscal year 2004, Hope Affholder received total salary and incentives of
$42,960 from Affholder, Inc.

* * *

REPORT OF THE AUDIT COMMITTEE

The board's Audit Committee operates under a written charter, which was
adopted by our board of directors. A copy of this charter is available, free of
charge, on our website, www.insituform.com. The Audit Committee consists of
three independent directors: Paul A. Biddelman (Chair), Juanita H. Hinshaw and
Sheldon Weinig. The Audit Committee reviewed and discussed our audited
consolidated financial statements for 2004 with our management. In addition, the
Audit Committee discussed with our auditors, PricewaterhouseCoopers LLP, the
matters required to be discussed by Statement on Auditing Standards No. 61, as
amended, which include the following:

- PricewaterhouseCoopers' responsibility under generally accepted
auditing standards,

- significant accounting policies,

- management judgments and accounting estimates,

- significant audit adjustments,

- other information in documents containing audited financial
statements,

- disagreements with our management, including accounting principles,
scope of audit and disclosures,

- consultation with other accountants by management,

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- major issues discussed with our management prior to retention of
PricewaterhouseCoopers, and

- difficulties encountered in performing the audit.

The Audit Committee received and discussed with PricewaterhouseCoopers
written disclosures and the letter regarding any significant relationships that
could impair PricewaterhouseCoopers' independence (as required by Independence
Standards Board Standard No. 1), and considered the compatibility of non-audit
services with PricewaterhouseCoopers' independence. Based upon the above reviews
and discussions, the Audit Committee recommended to the board that our audited
consolidated financial statements for 2004 be included in the Annual Report on
Form 10-K for the fiscal year ended December 31, 2004.

The board and the Audit Committee believe that the Audit Committee's
current member composition satisfies the rules that govern audit committee
composition, including the requirement that all audit committee members are
"independent" directors, as that term is defined in the National Association of
Securities Dealers' listing standards.

Paul A. Biddelman, Chair Juanita H. Hinshaw
Sheldon Weinig

* * *

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PERFORMANCE GRAPH

The following performance graph compares the total stockholder return on
our common stock to the S&P 500 Index and a composite peer group index for the
past five years. Our peer group index is comprised of the following six
companies:

- INEI Corporation, f/k/a Insituform East Incorporated

- Michael Baker Corporation

- Granite Construction, Inc.

- Fluor Corporation

- Jacobs Engineering Group, Inc.

- Foster Wheeler Corp.

As of September 5, 2003, we acquired the business of Insituform East
Incorporated, including selected assets.

At the end of 2000, Fluor Corporation, a publicly-traded company,
completed a reverse spin-off of one of its businesses that resulted in two
publicly-traded companies. As a result, Fluor Corporation, the company that now
contains the segment relevant to our peer group index, is only included in the
peer group index for 2001 through 2003, the period following the spin-off.

The graph assumes that $100 was invested in our common stock and each
index on December 31, 1998 and that all dividends were reinvested.

COMPARISON OF FIVE-YEAR CUMULATIVE RETURN

[PERFORMANCE GRAPH]

1999 2000 2001 2002 2003 2004

Insituform Technologies, Inc. $100.00 $141.15 $ 90.55 $ 60.35 $ 58.41 $ 80.25
S&P 500 Index $100.00 $ 90.89 $ 80.09 $ 62.39 $ 80.29 $ 89.02
Composite Peer Group Index $100.00 $129.75 $160.96 $131.42 $184.97 $224.06

Notwithstanding anything set forth in any of our previous filings under
the Securities Act of 1933 or the Securities Exchange Act of 1934 which might
incorporate future filings, including this proxy statement, in whole or in part,
the preceding performance graph shall not be deemed incorporated by reference
into any such filings.

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INFORMATION CONCERNING CERTAIN STOCKHOLDERS

The table below sets forth certain information as of March 1, 2005 with
respect to the number of shares of common stock owned by:

- each of our executive officers or former executive officers named in
the Summary Compensation Table under "Executive Compensation,"

- each of our directors and director nominees,

- each person known by us to own beneficially more than 5% of the
outstanding shares of our common stock, and

- all of our directors and executive officers as a group.

AMOUNT AND NATURE OF PERCENT OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP(1) CLASS
---------------- ----------------------- ----------

T. Rowe Price Associates, Inc. 3,920,500 (2) [___]%
100 East Pratt Street
Baltimore, Maryland 21202
Royce & Associates, LLC 2,959,400 (3) [___]
1414 Avenue of the Americas
New York, New York 10019
Barrow, Hanley, Mewhinney & Strauss, Inc. 1,665,200 (4) [___]
One McKinney Plaza
3232 McKinney Avenue, 15th Floor
Dallas, Texas 75204
Kayne Anderson Rudnick Investment Management, LLC 1,662,072 (5) [___]
1800 Avenue of the Stars, Second Floor
Los Angeles, California 90067
Robert W. Affholder 887,343 (6) [___]
Paul A. Biddelman 46,825 (7) (8)
Thomas A. A. Cook -- (8)
Stephen P. Cortinovis 58,825 (9) (8)
John P. Dubinsky 21,477 (10) (8)
Christian G. Farman 16,375 (11) (8)
Juanita H. Hinshaw 30,825 (12) (8)
Thomas N. Kalishman 46,825 (13) (8)
Alfred T. McNeill 4,200 (14) (8)
Thomas S. Rooney, Jr 93,100 (15) (8)
Thomas W. Vaughn 10,125 (16) (8)
Sheldon Weinig 49,825 (17) (8)
Alfred L. Woods 63,325 (18) (8)
Directors and executive officers as a group (14 persons) 1,329,070 (19) [___]

----------

(1) Except as otherwise indicated, as of March 1, 2005, all shares are owned
with sole voting and investment power. Beneficial ownership is determined
in accordance with the rules of the Securities and Exchange Commission.
For the listed officers and directors, the number of shares beneficially
owned includes shares of common stock that the individual had the right to
acquire on or within 60 days after March 1, 2005, including through the
exercise of stock options and in connection with deferred stock units.
References to stock options in the footnotes to this table include only
those options that are or will become exercisable within 60 days after
March 1, 2005. A director would only receive shares of common stock in
connection with deferred stock units within 60 days after March 1, 2005 if
the director's service on the board terminated during that time period.
Also included are restricted shares of common stock, over which the
individual has voting power, but no investment power.

(2) The information provided herein is based on a Schedule 13G/A filed jointly
by T. Rowe Price Associates, Inc. and T. Rowe Price Small-Cap Value Fund,
Inc. with the Securities and Exchange Commission on February 9, 2004. T.
Rowe Price Associates, Inc. has sole voting power with respect to
1,349,300 shares of our common stock and sole dispositive

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power with respect to 3,920,500 shares of our common stock. These
securities are owned by various individual and institutional investors,
including the fund (which owns 1,560,800 shares, representing [___]% of
the shares outstanding, over which the fund has sole voting power), which
T. Rowe Price Associates, Inc. serves as investment adviser with power to
direct investments and/or sole power to vote the securities. For purposes
of the reporting requirements of the Securities Exchange Act of 1934, T.
Rowe Price Associates, Inc. is deemed to be a beneficial owner of these
securities; however, T. Rowe Price Associates, Inc. expressly disclaims
that it is, in fact, the beneficial owner of these securities.

(3) The information provided herein is based on a Schedule 13G/A filed by
Royce & Associates, LLC with the Securities and Exchange Commission on
January 28, 2005. The information in the Schedule 13G/A indicates that
Royce & Associates, LLC, an investment adviser, has sole voting and
dispositive power with respect to all of these shares.

(4) The information provided herein is based on a Schedule 13G/A filed by
Barrow, Hanley, Mewhinney & Strauss, Inc. with the Securities and Exchange
Commission on February 8, 2005. The information in the Schedule 13G/A
indicates that Barrow, Hanley, Mewhinney & Strauss, Inc., an investment
adviser, has sole voting power with respect to 721,200 of these shares,
shared voting power with respect to 944,000 of these shares and sole
dispositive power with respect to all 1,665,200 of these shares.

(5) The information provided herein is based on a Schedule 13G/A filed by
Kayne Anderson Rudnick Investment Management, LLC with the Securities and
Exchange Commission on February 7, 2005. The information in the Schedule
13G/A indicates that Kayne Anderson Rudnick Investment Management, LLC, an
investment adviser, has sole voting and dispositive power with respect to
all of these shares.

(6) Represents: (a) 348,243 shares held individually by Robert W. Affholder;
(b) 196,958 shares held jointly by Robert W. Affholder and Pamela Long
Affholder; (c) 286,317 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);
(d) 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); (e) 46,500 stock options; and (f) 6,325 deferred stock units.

(7) Represents 40,500 stock options and 6,325 deferred stock units.

(8) Less than one percent.

(9) Represents 1,000 shares of common stock, 51,500 stock options and 6,325
deferred stock units.

(10) Represents 152 shares of common stock, 15,000 stock options and 6,325
deferred stock units.

(11) Represents 10,375 stock options, and 6,000 restricted shares of our common
stock. Does not include the grant of deferred stock units on October 27,
2004, the number of which shall equal the product of 16,500 times the
positive difference between the market value of one share of our common
stock on October 27, 2007, over $15.50 (not to exceed $2.42), divided by
the market value of one share of our common stock on such date. We will
not be able to calculate the number of deferred stock units granted until
after October 27, 2007.

(12) Represents 2,000 shares of common stock, 22,500 stock options and 6,325
deferred stock units.

(13) Represents 3,000 shares of common stock, 37,500 stock options and 6,325
deferred stock units.

(14) Represents 1,000 shares of common stock and 3,200 deferred stock units.

(15) Represents 67,100 stock options and 26,000 restricted shares of our common
stock. Does not include the grant of deferred stock units on October 27,
2004, the number of which shall equal the product of 104,000 times the
positive difference between the market value of one share of our common
stock on October 27, 2007, over $15.50 (not to exceed $5.06), divided by
the market value of one share of our common stock on such date. We will
not be able to calculate the number of deferred stock units granted until
after October 27, 2007.

(16) Represents 4,125 stock options and 6,000 restricted shares of our common
stock.

(17) Represents 6,000 shares of common stock, 37,500 stock options and 6,325
deferred stock units.

(18) Represents 500 shares of common stock, 51,500 stock options and 11,325
deferred stock units.

(19) Includes 384,100 stock options and 58,800 deferred stock units.

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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

To our knowledge, based solely upon a review of copies of reports received
by us pursuant to Section 16(a) of the Securities Exchange Act of 1934 and
written representations that no other reports were required to be filed, we
believe that during 2004 all filing requirements applicable to our directors,
officers and 10% stockholders under Section 16(a) were satisfied, except with
respect to Thomas S. Rooney, Jr. and Thomas A. A. Cook. Each of Messrs. Rooney
and Cook filed one late report in 2004 that contained information relating to
one transaction effected in 2004.

EQUITY COMPENSATION PLAN INFORMATION

The following table provides information as of December 31, 2004 with
respect to the shares of common stock that may be issued under our existing
equity compensation plans:

NUMBER OF
SECURITIES
REMAINING
NUMBER OF AVAILABLE FOR
SECURITIES TO BE WEIGHTED- FUTURE ISSUANCE
ISSUED UPON AVERAGE EXERCISE UNDER EQUITY
EXERCISE OF PRICE OF COMPENSATION
OUTSTANDING OUTSTANDING PLANS (EXCLUDING
OPTIONS, WARRANT OPTIONS, WARRANTS SECURITIES REFLECTED
AND RIGHTS AND RIGHTS IN COLUMN (a))
(a) (b) (c)
---------------- ----------------- --------------------

Equity compensation plans approved by security holders 1,709,358 $ 21.28 1,078,079
Equity compensation plans not approved by security holders -- -- --
---------------- ----------------- --------------------
Total 1,709,358 $ 21.28 1,078,079
================ ================= ====================

We have never repriced options to purchase shares of our common stock and
have no intention of repricing such options in the future.

PROPOSAL 2: AMENDMENT TO RESTATED CERTIFICATE OF INCORPORATION

We are asking stockholders to consider and vote upon a proposal to amend
our restated certificate of incorporation to provide permissive indemnification
for our employees and agents against liabilities, claims and expenses they incur
while serving as our employees or agents.

We currently are obligated by Article Seventh of our restated certificate
of incorporation to indemnify our employees and agents to the full extent
permitted by Delaware General Corporation Law. Section 145 of the Delaware
General Corporation Law allows a corporation to indemnify its employees and
agents against expenses, judgments, fines and settlements paid in connection
with claims made against its employees and agents arising out of their services
to the corporation if they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the corporation's best interests, and with
respect to criminal proceedings, if they had no reasonable cause to believe
their conduct was unlawful. Similarly, a corporation is also allowed under
Section 145 of the Delaware General Corporation Law to indemnify its employees
and agents against expenses they incur in connection with a suit by the
corporation or in the right of the corporation against the employee or agent
arising from their services to the corporation if they acted in good faith and
in a manner they reasonably believed to be in, or not opposed to, the best
interests of the corporation as long as they are not found to be liable to the
corporation, unless a court determines the employee or agent is otherwise
entitled to indemnification.

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PURPOSE OF THE AMENDMENT

The proposed amendment to our restated certificate of incorporation is
principally intended to allow us, but not obligate us, to provide
indemnification to our employees and agents in accordance with Section 145 of
the Delaware General Corporation Law. Our board believes that, although
appropriate steps should be taken to protect our employees and agents against
personal liability for claims brought against them, we should not be obligated
to do so in every circumstance. This amendment would allow us flexibility to
determine, on a case-by-case basis, whether we will provide indemnification to
our employees and agents for liabilities, claims and expenses they incur in
performing services for us.

EFFECT OF AMENDMENT

This amendment would only affect our obligation to provide indemnification
to our employees and agents who are not also officers and directors. We
currently are obligated by Article Seventh of our restated certificate of
incorporation to indemnify our directors and officers to the full extent
permitted by Section 145 of the Delaware General Corporation Law. This
obligation to provide indemnification to our officers and directors would
continue and would not be affected by the proposed amendment.

TEXT OF PROPOSED AMENDMENT

The amendment described in this Proposal 2 would read in its entirety as
set forth in the form attached as Appendix A to this proxy statement.

EFFECTIVENESS OF AMENDMENT

If stockholders approve this Proposal 2, the proposed amendment to our
restated certificate of incorporation will become effective upon the filing of a
certificate of amendment with the Delaware Secretary of State. We will file the
certificate of amendment promptly after the annual meeting if the amendment is
approved by our stockholders.

APPROVAL OF PROPOSAL 2

Approval of this Proposal 2 will require the affirmative vote of a
majority of the shares of our common stock represented in person or by proxy at
the annual meeting.

The Board adopted the amendment on January 26, 2005 and is seeking
approval by the stockholders through this proxy solicitation.

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE AMENDMENT TO OUR
RESTATED CERTIFICATE OF INCORPORATION.

PROPOSAL 3: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

Our board of directors, upon the recommendation of the Audit Committee of
the board, has appointed PricewaterhouseCoopers LLP as our independent auditors
for the year ending December 31, 2005. A resolution will be presented at the
meeting to ratify the appointment of PricewaterhouseCoopers.

PricewaterhouseCoopers LLP served as our independent auditors for the year
ended December 31, 2004. Representatives of PricewaterhouseCoopers LLP are
expected to be present at our annual meeting and to respond to appropriate
questions from our stockholders. Such representatives will have the opportunity
to make statements if they so desire.

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INDEPENDENT AUDITORS' FEES

Consistent with its charter adopted by our board of directors, the Audit
Committee pre-approves all auditing services and all significant non-audit
services (to the extent such non-audit services are permissible) to be provided
by our independent auditors. Proposed auditing and non-audit services are
presented to our Audit Committee periodically for pre-approval, based on a
budget that includes a description of, and a budgeted amount for, particular
categories of audit services, non-audit services, tax services and other
services. The Audit Committee's approval is required to exceed the budgeted
amount. In addition, as permitted by law, the Chair of our Audit Committee may
pre-approve services or changes to estimated, approved fees. If the Audit
Committee Chair pre-approves services on behalf of the Audit Committee, the
services are presented to our Audit Committee for ratification at its next
regularly scheduled meeting.

In our two most recent fiscal years, we paid the following amounts to our
independent auditors:

2004 2003
----------- ----------

Audit Fees $ 852,650 $ 613,975 (1)
Audit-Related Fees 24,350 138,850
Tax Fees 344,000 275,742
All Other Fees -- --
----------- ----------
Total $ 1,221,000 $1,028,567
=========== ==========

------------

(1) Represents an aggregate of $369,000 paid to PricewaterhouseCoopers for the
2004 fiscal year audit, as reported in the proxy statement for our 2004
annual meeting of stockholders, and a supplemental payment of $244,975 in
March 2004, for services performed in connection with the 2003 fiscal year
audit.

AUDIT FEES. We paid an aggregate of $852,650 to PricewaterhouseCoopers for
the 2004 fiscal year audit, for the reviews of the financial statements included
in our 2004 quarterly reports on Form 10-Q, and for statutory and subsidiary
audits. In 2003, we paid an aggregate of $613,975 to PricewaterhouseCoopers for
these services.

AUDIT-RELATED FEES. In 2004, we paid PricewaterhouseCoopers $24,350 for
assurance and related services that were reasonably related to the performance
of PricewaterhouseCoopers' audit and review of our financial statements. These
services included employee benefit plan audits, consultation in connection with
acquisitions and consultation concerning financial accounting and reporting
standards. All of these services were pre-approved by our Audit Committee. In
2003, we paid an aggregate of $138,850 to PricewaterhouseCoopers for these
services.

TAX FEES. In 2004, we paid PricewaterhouseCoopers $344,000 for tax
services, which primarily consisted of services for federal, state and
international tax compliance, tax planning and tax consultation, exclusive of
tax services rendered in connection with the audit. Our Audit Committee
pre-approved all of these services. In 2003, we paid an aggregate of $275,742 to
PricewaterhouseCoopers for these services.

ALL OTHER FEES. In 2004 and 2003, PricewaterhouseCoopers did not perform
any services for us other than those described above.

We intend to use our independent auditors to provide only audit,
audit-related and tax services in the future.

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APPROVAL OF PROPOSAL 3

Approval of this Proposal 3 will require the affirmative vote of a
majority of the shares of our common stock represented in person or by proxy at
the annual meeting.

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS AS OUR INDEPENDENT AUDITORS FOR THE YEAR
ENDING DECEMBER 31, 2005.

OTHER MATTERS

The board does not know of any other matters which may be brought before
the annual meeting. However, if any other matters are properly presented for
action, it is the intention of the persons named on the accompanying proxy card
to vote the shares represented thereby in accordance with their judgment on such
matters.

STOCKHOLDER PROPOSALS

Our by-laws provide that, in order for a stockholder to nominate a
candidate for director or to bring other business before a meeting of
stockholders, the stockholder must have given timely notice thereof in writing
to our Secretary. We must receive stockholder proposals intended to be presented
at the 2006 annual meeting by December [___], 2005 in order to be considered for
inclusion in our proxy statement relating to such meeting. Stockholder proposals
that do not appear in the proxy statement may be considered at a meeting of
stockholders only if written notice of the proposal is delivered to or mailed
and received at our principal executive office not less than 90 days (which for
the 2006 annual meeting of stockholders would be January 27, 2006) nor more than
120 days (which for the 2006 annual meeting of stockholders would be December
28, 2005) prior to the anniversary date of the preceding year's annual meeting
of stockholders.

However, if 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:

- the ninetieth day prior to the meeting, or

- the tenth day following the date on which the date set for the
meeting is first announced publicly.

Notwithstanding the foregoing requirements, a proxy may confer
discretionary authority to vote on any stockholder proposal, provided that such
proposal is received at least 45 days (which for the 2006 annual meeting of
stockholders would be February [___], 2005) prior to the anniversary date on
which we first mailed our proxy materials for the preceding year's annual
meeting of stockholders.

Any written notice of a stockholder proposal must include the information
required by our by-laws and, in the case of a notice of nomination, all
information relating to each person whom the stockholder proposes to nominate
for election or reelection as a director, that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in
each case pursuant to Regulation 14A under the Exchange Act, as amended
(including such person's written consent to being named in the proxy statement
as a nominee and to serving as a director if elected).

If a stockholder fails to notify us within the time limits described above
of an intent to present a nomination or proposal for a stockholder vote at our
2006 annual meeting of stockholders, we will declare the nomination or business
to be not properly brought before the meeting and, therefore, the nomination

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will be disregarded or the business will not be transacted. 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 our proxy statement.

STOCKHOLDER COMMUNICATIONS WITH DIRECTORS

Our board has an informal process in place for our stockholders to
communicate with directors. Any stockholder wishing to contact our board or one
of our directors can write to:

Board of Directors
c/o Insituform Technologies, Inc.
702 Spirit 40 Park Drive
Chesterfield, MO 63005

All correspondence received by us and addressed as indicated above will be
reviewed by appropriate Insituform personnel and promptly forwarded to our
Chairman of the Board or to the appropriate director. Communications that relate
to our accounting, internal accounting controls or auditing matters will also be
referred to the Chair of our board's Audit Committee.

Although our board does not have an express policy regarding director
attendance at the annual meeting of stockholders, we anticipate that all
directors will attend this year's annual meeting. Eight directors attended the
2004 annual meeting of stockholders.

DAVID F. MORRIS
Secretary

Chesterfield, Missouri
March ___, 2005

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APPENDIX A

INSITUFORM TECHNOLOGIES, INC.

AMENDMENT TO CERTIFICATE OF INCORPORATION

The Restated Certificate of Incorporation of the Corporation is hereby
amended by deleting Article SEVENTH in its entirety and substituting therefor a
new Article SEVENTH in the following form:

"SEVENTH: The corporation shall, to the full extent permitted by
Section 145 of the Delaware General Corporation Law, as amended, from time
to time, indemnify the corporation's officers and directors. The
corporation may, to the full extent permitted by Section 145 of the
Delaware General Corporation Law, as amended, from time to time, indemnify
all other persons whom it may indemnify pursuant thereto."

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INSITUFORM TECHNOLOGIES, INC.

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned having received the notice of the annual meeting of stockholders
of Insituform Technologies, Inc. and the proxy statement, appoints Thomas S.
Rooney, Jr. and David F. Morris, and each of them acting individually, the
undersigned's 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 our Class A common shares, $.01 par value, 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 or adjournments 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 or adjournments 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)

ANNUAL MEETING OF STOCKHOLDERS OF

INSITUFORM TECHNOLOGIES, INC.

APRIL 27, 2005

PLEASE DATE, SIGN AND MAIL YOUR PROXY
CARD IN THE ENVELOPE PROVIDED AS SOON AS POSSIBLE.

- Please detach along perforated line and mail in the envelope provided. -

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE FOLLOWING:
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE /X/

1. ELECTION OF DIRECTORS

/ / FOR all nominees NOMINEES:

/ / WITHHOLD AUTHORITY / / PAUL A. BIDDELMAN
for all nominees / / STEPHEN P. CORTINOVIS
/ / JOHN P. DUBINSKY
/ / FOR ALL EXCEPT / / JUANITA H. HINSHAW
(See instructions
below) / / ALFRED T. MCNEILL
/ / THOMAS S. ROONEY, JR.
/ / SHELDON WEINIG
/ / ALFRED L. WOODS

INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(s), MARK
"FOR ALL EXCEPT" AND CHECK THE BOX NEXT TO EACH NOMINEE YOU WISH TO
WITHHOLD, AS SHOWN HERE:
[GRAPHIC]

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2. PROPOSAL TO AMEND THE RESTATED CERTIFICATE OF INCORPORATION

/ / For
/ / Against
/ / Abstain

3. PROPOSAL TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS
INDEPENDENT PUBLIC AUDITORS

/ / For
/ / Against
/ / Abstain

This proxy also may be voted, in the discretion of the proxies, on any matter
that may properly come before the meeting or any adjournment or adjournments
thereof.

This proxy will be voted as specified. IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED "FOR" ALL THE NAMED NOMINEES FOR DIRECTOR, "FOR" PROPOSAL 2 AND
"FOR" PROPOSAL 3.

Please sign exactly as your name appears hereon. If two persons hold the power
to vote the same shares, either one of them may sign this proxy card. If more
than two persons hold the power to vote the same shares, a majority of them must
sign this proxy card. When signing as executor, administrator, attorney, trustee
or guardian, please give full title as such. If the signer is a corporation,
please sign full corporate name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership name by authorized
person.

To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that changes
to the registered name(s) on the account may not be submitted via this
method.//

Signature of Stockholder _______________ Date: ________
Signature of Stockholder _______________ Date: ________

NOTE: Please see instructions above right.

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