S OH
                                                                    Exhibit 10.5

                              SUB-LICENSE AGREEMENT

         AGREEMENT  made and entered into as of the 1st day of August,  1985, by
and between  INSITUFORM  OF NORTH  AMERICA,  INC., a  corporation  organized and
existing  under the laws of the State of  Delaware,  hereinafter  referred to as
"North  America" and Insituform  East,  Inc., a Delaware  corporation,  having a
principal  place of business at 3421 Pennsy  Drive,  Landover,  Maryland  20785,
hereinafter referred to as "Operator";

                                   WITNESSETH

         WHEREAS,  North  America has  valuable  experience  in the  practice of
certain  inventions,  know-how and  techniques  comprising the subject matter of
this Agreement and possesses valuable information with respect thereto;

         WHEREAS,   North  America  is  the  exclusive  licensee  of  INSITUFORM
INTERNATIONAL  N.V., a corporation  organized and existing under the laws of the
Netherland  Antilles  having a  principal  place of  business  at P.O.  Box 840,
Curacao  Netherland,  Antilles,  hereinafter  referred  to  as  "International",
throughout the United States of America, of certain know-how,  patent rights and
inventions  relating to methods,  apparatus and materials  used in the lining of
sewers,  tunnels,  pipelines and other  passageways by impregnating an absorbent
layer  with a  synthetic  resin,  and  retaining  such  layer  in  place in such
passageway while the layer cures or is cured and any improvements thereon, and

         WHEREAS,  Operator is desirous of gaining knowledge of such inventions,
know-how,  techniques, and information and an exclusive right and license within
and  throughout  the  territory  listed  on  Schedule  A herein  to use the same
together with any and all patent rights and  copyrights  relating  thereto under
which North America has or obtains the right to grant licenses therein;

         NOW,   THEREFORE,   in   consideration  of  the  mutual  covenants  and
undertakings set forth herein, the parties hereto agree, as follows:

         I.       DEFINITIONS.  As employed herein.

         A. "Territory"  shall mean that geographical area set forth on Schedule
A within which  Operator may exploit the various  inventions,  know-how,  patent
rights, techniques and information granted herein.

         B. "Subject  Matter" shall mean and include all methods,  apparatus and
materials  used  in  the  lining  of  sewers,  tunnels,   pipelines,  and  other
passageways (excepting those used to carry natural or manufactured fuel gases or
other  hazardous  gases) by  impregnating  an  absorbent  layer with a synthetic
resin,  and  retaining  such layer in place in such  passageway  while the layer
cures or is cured,  and  including  all  matters  relating  to the  preparation,
installation and completion of said lining.

         C.  "Know-how"  shall mean and include all  technological  information,
ideas and techniques  relating to the Subject  Matter now owned or  subsequently
acquired by North America or which North America subsequently acquires the right
to communicate to its licensees within the United States of America,  except any
information,  ideas or techniques  which are common knowledge to the industry or
which are readily available from sources other than North America.

         D.  "Patent  Rights"  shall mean and  include  the  patents  and patent
applications  designated  in  Schedule B attached  hereto and made a part hereof
together with any and all other patents and patent applications  relating to the
Subject  Matter in the  Territory  under which North  America  has, or hereafter
acquires, the right to license others.

         E. "Copyrights" shall mean and include any and all copyrights at common
and/or  statutory  law within the  Territory  which relate to plans,  brochures,
instructions or other means of expression,  including photographs,  diagrams and
other visual  presentations,  having to do with the Subject  Matter or useful in
connection  with the  commercialization  thereof,  which North  America  has, or
hereafter acquires, the right to license others.

         F.  "Materials"  shall  mean  and  include  any and  all  compositions,
products,  components and other materials,  whether patented or unpatented,  for
use in the practice of the Subject  Matter.  Such Materials shall include by way
of  illustration  but  not of  limitation,  the  resin-absorbent  material,  the
impervious  sheet  material,  the  thermosetting  resin  and any  and all  other
materials which go into the lining of passageways or the like in accordance with
the Patent Rights except for such fuels as may be required for energy purposes.

         G. "Apparatus" shall mean and include but not be limited to any and all
tools,  equipment,  instruments,  machines,  and  devices,  whether  patented or
unpatented, for use in the practice of the Subject Matter.

         H. "Royalty"  shall mean an amount payable by Operator to North America
equivalent  to 8% of the  gross  contract  price  of  all  sales  and  contracts
performed by Operator utilizing the Subject Matter as further defined herein.

         Words of the neuter  gender  shall be deemed to be of the  masculine or
feminine gender where the context  requires.  Words of the singular number shall
be deemed to be plural where the context requires and vice versa.

         II.  GRANT.   North  America  hereby  grants   Operator  an  exclusive,
non-transferable right and license within and throughout the Territory:

         A. To utilize the  Know-how,  to practice the  inventions of the Patent
Rights  relating  to the  Subject  Matter,  and to sell the  resultant  product,
however,  the  Subject  Matter may not be used to line  tunnels,  pipelines  and
passageways carrying aromatic hydrocarbons in the gaseous state;

         B. To use any and all  Copyrights,  if there are any,  as an adjunct to
the practice of such methods and the commercialization thereof; and

         C. To use and display  "Insituform"  as a trademark in connection  with
each and every  aspect of the  exploitation  of the  Process  including  but not
limited to all materials,  apparatus and products sold hereunder  purchased from
North  America  or a source  recommended  and  approved  by North  America.  All
equipment,  letterheads,  invoices,  advertising  signs of all types and printed
material shall bear appropriate insignia  acknowledging such products,  material
or equipment as under exclusive license from Insituform of North America, Inc.

         D. The Operator hereby acknowledges that the name,  "INSITUFORM",  is a
valid service and/or trademark solely owned by INSITUFORM INTERNATIONAL N.V. and
exclusively  licensed to North  America,  in the  territory of the United States
excluding the State of California, and that only North America or its designated
licensees  have the right within said  territory to use such  trademark and such
trademarks,  service marks, trade names and copyrights as may presently exist or
be acquired by North  America and licensed  for use by Operator,  along with all
ancillary signs, symbols or other indicia used in connection or conjunction with
said marks.  Operator further acknowledges that valuable goodwill is attached to
such trademarks,  service marks,  trade names, and copyrights,  and that it will
use  same  in the  manner  and to  the  extent  specifically  licensed  by  this
agreement.  Operator  understands  and agrees that license to these  Proprietary
Marks is non-exclusive,  and that North America, in its sole discretion, has the
right itself to operate businesses under said marks, and to grant other licenses
in, to and under  such  Proprietary  Marks on any  terms  and  conditions  North
America deems fit; provided,  however that North America may so operate or grant
other licenses  subject to the limitations of this agreement  within  Operator's
exclusive  territory,  but  solely for use of the  Insituform  Process in lining
tunnels, pipelines, and other passageways used to carry aromatic hydrocarbons in
a gaseous  state.  Operator  expressly  covenants  that  during the term of this
Agreement,  and after the expiration or termination thereof,  Operator shall not
directly or indirectly contest or aid in contesting the validity or ownership of
said Proprietary Marks and copyrights.  Operator agrees promptly to notify North
America of any claim,  demand,  or suit  based upon or arising  from,  or of any
attempt by any other  person,  firm or  corporation,  to use the service  and/or
trademarks licensed  hereunder,  or any trademark,  service mark, symbol,  trade
name,  copyright or colorable  variation  thereof,  in which North America has a
proprietary  interest.  Operator agrees also promptly to notify North America of
any  material  litigation  instituted  by  Operator,  or by  any  person,  firm,
corporation or governmental agency against Operator. In the event North America,
pursuant to the terms of this  agreement,  undertakes the defense or prosecution
of any litigation,  Operator agrees to execute any and all documents and do such
acts and things  which may,  in the  opinion of counsel  for North  America,  be
necessary to carry out such defense or prosecution,  either in the name of North
America  or in the name of  Operator  as North  America  shall  elect.  Operator
expressly  recognizes that any and all goodwill associated with said Proprietary
Marks and  copyrights,  including  any  goodwill  which  might be deemed to have
arisen through  Operator's  activities,  inures  directly and exclusively to the
benefit of North America, except as otherwise provided herein.

         E. The Operator hereby  acknowledges  that the Subject Matter is a new,
specialized  and  highly  technological  process  and the  exploitation  thereof
throughout  the  United  States  will best be  served by the grant of  exclusive
licenses to carefully selected Operators for various defined  Territories in the
United States.

         F. It is  specifically  understood  and  agreed  that the grant of this
exclusive  license for the  Territory  is based upon the size and ability of the
Operator to exploit the demand for the Subject  Matter  within the Territory and
the nature  and scope of the  Territory  has been  determined  accordingly.  The
Operator further  understands and agrees that North America retains the right to
grant exclusive Licenses to other Operators in other defined Territories; and

         G. It is  anticipated  that  Operator  will fully  exploit  the Subject
Matter  primarily in the  Territory  for the mutual  benefit of Operator,  North
America,  and the  customers and  potential  customers of Operator,  in order to
assure maximum market penetration for the Subject Matter, and that Operator will
assure that the  customers  and  potential  customers  of Operator  are provided
adequate information, warranties, and services by Operator. In so exploiting the
Subject  Matter,  it is  anticipated  that  Operator  will be  required  to make
significant financial investments,  necessary for market development, in capital
equipment,  in  marketing  and  promotion,  and  in  providing  information  and
services.

         In order to compensate licensees in other territories for the making of
such  investments  and to induce them to do so, should  Operator seek to exploit
the Subject  Matter  outside of its exclusive  Territory and in an area where an
exclusive  license has already  been  granted,  Operator  shall make a crossover
payment of 12% of the gross  contract price of all  installations  utilizing the
Subject Matter in such areas in addition to the normal royalty  payable to North
America as set forth in Paragraph IX herein.  Such  crossover  payment  shall be
paid by Operator to North America who shall in turn pay such  crossover  payment
to the  licensee in whose  territory  the  installation  was  performed.  Should
Operator  fail to make a  crossover  payment  to North  America  within the time
applicable for payment of the normal  royalty,  such failure shall be a material
breach of the Sub-License  Agreement.  In calculating  minimum  royalties,  such
installation  shall be treated as if the licensee of the  territory in which the
work was  performed  had in fact  performed  the  installation,  and any royalty
payable for such installation shall apply to the minimum royalty requirements of
the licensee of the territory  where the work was performed.  North America may,
from time to time, alter the amount of the crossover payment in order to reflect
more accurately necessary costs of market development.

         Operator acknowledges that North America cannot prevent other licensees
from exploiting the Subject Matter in Operator's exclusive Territory.

         In  addition,  in order to assure top  product  quality and to meet all
products  liability  and  health  and  safety  requirements,  it  shall  be  the
responsibility  of  Operator,  should it  perform  work  outside  its  exclusive
Territory, to assure that satisfactory arrangements are made to provide full and
complete  after-sales  service and  warranty  protection  for the job  involved,
including  specifically,  but not limited  to, the  ability to rapidly  deploy a
repair crew to the site of any such job.

         H. North America is granting exclusive licenses for the exploitation of
the Insituform process in certain defined Territories,  however, it reserves the
right to vary or otherwise  modify the nature and scope of  subsequent  licenses
granted  to  subsequent   licensees  to  accommodate  specific  territories  and
population considerations and other factors.

         I. In connection with his exploitation of the exclusive license granted
herein,  Operator understands the importance of its after sales responsibilities
and agrees to provide  prompt and efficient  service to all those whether within
or outside of his Territory,  for whom it has performed any functions  utilizing
the practice of the Subject Matter.

         III.  ADEQUACY OF  CONSIDERATION.  It is  specifically  understood  and
agreed that the exclusive licenses defined in Paragraph II above relating to the
specific territory set forth on Schedule A, and the Royalty defined in Paragraph
IX shall be deemed adequate consideration for this Agreement.

         IV.  AVAILABILITY.  Since the Insituform  Process and the  installation
thereof is highly  technical,  its  success in large  part,  is  dependent  upon
quality materials made to exacting  specifications  and North America shall make
available  information  enabling  Operator to acquire Apparatus and Materials as
may be required for Operator to properly operate  hereunder.  Such Apparatus and
Materials which are not covered by any of the Patent Rights or Copyrights hereof
may be purchased from any source Operator desires.  However,  all such purchases
by  Operator  may be subject to North  America's  approval  of the  quality  and
specifications thereof, which shall not be unreasonably withheld.  North America
may in its sole discretion improve, vary or otherwise upgrade the specifications
and quality standards to which the Operator must abide.

         V. DISCLOSURE AND TRAINING.  Promptly upon execution of this Agreement,
Operator shall proceed to purchase the Apparatus and Materials required properly
to operate  hereunder,  and North  America  thereupon  shall  fully  disclose to
Operator all Know-how,  Patent Rights and  Copyrights,  if any,  required in the
practice of the methods of the Subject Matter, and shall train at least four (4)
representatives  of the Operator in the practice of the methods described above.
Further,  North America shall provide a continuing  education program to the end
that  all  lining  of  sewers,  tunnels,  pipelines  and  other  passageways  in
accordance  with  the  Subject  Matter  shall  be  effectively  and  efficiently
performed and the  resultant  product of uniformly  high  quality.  The content,
extent,  and  frequency  of the  educational  program  shall  be  solely  at the
discretion  of  North  America.  At the  request  of  Operator  and  subject  to
availability,  North  America  will  provide  a  technician  experienced  in the
operation  of the Subject  Matter to assist the  Operator  and to render  advice
subject to payment by the Operator of all direct  traveling  and hotel  expenses
and a per diem rate which shall be agreed upon between the parties.

         VI.  PRESERVATION OF SECRECY.  As North America  considers its know-how
and  technique  to be a key  element  in  the  successful  exploitation  of  the
Insituform  process,  it insists that the Operator exert every reasonable effort
to keep in strict secrecy the improvements  therein,  and modifications  thereof
disclosed to Operator by or on behalf of North America and all plans,  drawings,
specifications  and other data and documents relating thereto and to the Subject
Matter,  except  as may be  necessary,  and  only to the  extent  necessary,  to
exercise its rights hereunder;  and shall not reveal or communicate,  or permit,
or  cause to be  revealed  or  communicated,  the  same to any  person,  firm or
corporation,  except as above noted,  nor shall Operator  disclose or divulge in
whole or in part any trade secrets or private  processes of North America or its
affiliated  companies;  and  shall  make  diligent  effort  to  ensure  that its
officers, employees, agents, sub-contractors, and all others under its direction
or control to whom the same is communicated properly pursuant to the purposes of
this Agreement fully observe and abide by such obligations of secrecy.  Operator
will execute an Agreement in the form attached hereto as Schedule C dealing with
non-disclosure of such information, among other things, contemporaneous with the
execution of this Sub-license Agreement and will cause its officers,  employees,
agents,  and other  persons  to whom such data or  documents  are  disclosed  to
execute such agreement.

         VII. STANDARDS AND INSPECTION.  Operator shall maintain a high standard
of quality in all products  made with the practice of the methods of the Subject
Matter  and  in  all  other   products  sold   hereunder   under  the  trademark
"Insituform".  To ensure the  maintenance of such  standards,  North America may
periodically  inspect Operator's  practice of the methods of the Subject Matter.
Operator shall cooperate fully with North America in such  inspections and shall
promptly  put in effect  all  suggested  improvements  in its  practices  of the
methods  of the  Patent  Rights  made by North  America  which are  economically
practical and are  reasonably  calculated  to result in an improved  product and
service.  At all times  Operator  shall exert  diligent  effort to practice  the
methods  and  techniques  in  accordance  with  the  best  available   technical
information and advice received from North America.

         VIII.    IMPROVEMENTS AND MODIFICATIONS.

         A. If during the term of this  Agreement,  the Operator,  its officers,
agents or employees  develop any  improvements or  modifications  in the Subject
Matter,  all such information must be disclosed  immediately in writing to North
America and will become the property of North America.  North America is obliged
to  disseminate  all such  information  and material to all of its licensees for
their  mutual  benefit.  Operator  will cause each of its  officers,  agents and
employees  to execute an  Agreement  in the form  attached  hereto as Schedule C
requiring  disclosure to North America and Operator of all such improvements and
modifications among other things.

         B.  Operator  recognizes  and agrees  that from time to time  hereafter
North America may change or modify the system presently  identified by the mark,
"INSITUFORM",  including  the adoption  and use of new or modified  trade names,
trademarks,  service marks or copyrighted materials, new products, new equipment
or new  techniques,  and that  Operator  will  accept,  use and  display for the
purpose of this Agreement any such changes in system,  including new or modified
trade names,  trademarks,  service marks or copyrighted materials, new products,
new equipment or new  techniques,  as if they were part of this Agreement at the
time of execution  hereof.  Operator will make such expenditures as such changes
or  modifications  in the  system  may  reasonably  require,  and do so within a
reasonable time.

         IX.      ROYALTY.

         A. The Operator  will pay quarterly to North America a Royalty equal to
8% of the gross contract price of all contracts,  including sales of the Subject
Matter,  whether or not invoiced or paid,  for the  installation  of the Subject
Matter,  including  preparatory and finishing work therefor,  carried out by the
Operator,  or any  agent,  employee,  subcontractor  or  independent  contractor
retained for such purpose,  in its or any other  Territory,  such gross contract
price  (adjusted  for  all  proper  change  orders  and  contractually  required
adjustments)  being  calculated  after  adding  back trade  discounts  and other
preferences,  provided  however  that  such  price is  calculated  at the  going
commercial rate (i.e. current market price derived from arms length negotiation)
and in the event that the Operator carries out installations in the Territory at
less than the going  commercial  rate,  then for the purposes of  calculation of
Royalty  due in  respect  of such work,  it will be  assumed  that the  Operator
performed such installations at the going commercial rate.

         The gross  contract  price shall  include the cost of all raw materials
necessary to complete the installation of the Subject Matter.  If some or all of
the raw  materials  are acquired  separately  by the ultimate  customer the cost
thereof shall nevertheless be added to the price charged by the Operator for the
purpose of computing  Royalty under this  Agreement.  The gross  contract  price
shall also include the value of any actual,  preparatory  and/or  finishing work
performed by any  subcontractor or independent  contractor,  whether retained or
hired by Operator, its agents or employees,  the ultimate customer, or any other
party,  when such actual,  preparatory  and/or  finishing work is performed as a
part of and/or adjunct to the  installation  and use of the Subject Matter,  and
the value of any such work shall  nevertheless  be added to the price charged by
the Operator for the purpose of computing the Royalty under this Agreement.

         Within  45 days  after  the end of each  calendar  quarter  or  portion
thereof the Operator shall submit to North America a written report in such form
as may be  requested  by  North  America  fully  detailing  all  sales  and work
performed utilizing the Subject Matter during such calendar quarter,  whether or
not invoiced or paid,  the total of amounts  invoiced,  the  contract  price and
terms for the work  performed,  the stage of  completion,  a computation  of the
Royalty due, and such other information as North America may reasonably  request
and shall be  accompanied  by payment in full in favor of North  America for the
Royalties due North America.

         Operator shall keep accurate records of all of its operations involving
the Subject  Matter and of all  contracts  entered  into  involving  the Subject
Matter.  North America or its designated agent shall have a right to inspect and
audit any and all such  records and  contracts  at all  reasonable  times at its
expense,  provided  that  North  America  shall not  disclose  any  confidential
information  so  obtained  to persons  other than  employees  or agents of North
America except pursuant to subpoena of a court of proper jurisdiction.

         B.       Minimum Royalty Obligation

         Until  June 30,  1986,  Operator  undertakes  and  agrees  to pay North
America a total royalty of not less than $58,970.00, (between INAC and INEI from
one  territory  to  another)  only until June 30,  1987 may apply any  excessive
Royalty  over minimum  Royalty  from  previously  licensed  territories  towards
meeting  this  minimum  Royalty  obligation.  Should  Operator  fail to generate
sufficient  Royalties  as per  Paragraph  IX A above  to  achieve  such  minimum
payment,  it shall contribute such additional  amounts so as to meet the minimum
set forth herein.  In meeting the minimum  royalty  obligation  hereunder,  only
Royalties  realized from work performed within the Operator's  Territory will be
included in such calculation. The Operator is further obligated,  beginning July
1, 1986 and continuing for each and every subsequent and successive  twelve-(12)
month period during the term of this agreement, to pay to North America, a total
Royalty of not less than $58,970.00  subject however,  to increases or decreases
of such amount  determined  in  proportion  to  increases  or  decreases  in the
Engineering  News  Record  Construction  Cost Index as  compiled  by McGraw Hill
Publications  for each 12 month period or a  comparable  index should such index
not be available.  Any such  contribution due from the Operator to North America
to meet the minimum set forth  herein shall be made within 45 days after the end
of each relevant 12 month period.  In the event of a termination of this License
Agreement,  Operator  shall  pay a pro  rata  minimum  Royalty  for the  year of
termination  based on the number of months in which the License Agreement was in
effect during such year.

         C. Non-Payment.  Should Operator fail to pay the Royalties set forth in
this Paragraph IX herein,  or fail to pay for other invoiced goods and services,
or any other amounts due North America for any reason,  when due,  North America
shall have the right pursuant to Paragraph XIV hereof, TERMINATION, to terminate
its agreement with the Operator.

         X.  RECORDS.  Operator  shall  keep true and  accurate  records  of all
operations of the Subject Matter. Such records shall be adequate to permit North
America to verify the accuracy of the Royalty Paragraph IX hereof and to perform
inspection  and audit of  information  called for in Paragraphs VII and IX. Such
records  shall be open at reasonable  times during  regular  business  hours for
inspection  and  copying by North  America  and its duly  authorized  agents and
representatives.  North  America  shall  make such  periodic  inspection  of the
records as it may consider necessary,  provided always that  International,  the
owner of the Patent  Rights  sub-licensed  hereunder,  or North America may from
time to time require a specific audit to be carried out on Operator's operations
hereunder and in such event such audit shall be undertaken by North America with
a representative of International in attendance if International so elects. Such
audits shall be at the expense of the party requiring the audit unless the audit
discloses  a  material  violation  of this  Agreement  in which  event the party
requiring the audit shall be  reimbursed  the expenses of the audit by the party
in violation.

         XI.      WARRANTY.

         By North America.  North America represents and warrants that it is the
exclusive  licensee of International  throughout the United States to the Patent
Rights  described on Exhibit A and fully entitled to enter into this  Agreement.
North  America  further  represents  and  warrants  that the Subject  Matter can
successfully line many types of sewers, tunnels, pipelines and other passageways
when said methods are properly  performed and that it will instruct  Operator in
such performance.  Every reasonable precaution will be taken by North America in
producing  all  Materials  and  Apparatus,  compiling  all  data,  and  offering
instructions in the methods of use of the Materials and Apparatus purchased from
North  America  for  operation  hereunder  to assure that they comply with North
America's  exacting  standards and that the ultimate lining for sewers and other
passageways maintains a high standard of quality. To the best of North America's
knowledge, all information given will be correct and the Materials and Apparatus
are believed by North America to be adequately suited to the purposes  intended.
However,  it is impossible to anticipate every possible  variation in the manner
of use or the  conditions  under which the  Operator  will apply the  Materials,
Apparatus, Know-how, data, and methods and North America makes no warranty as to
the results which the Operator will attain,  and shall under no circumstances be
held responsible for any such results that occur as a consequence of a departure
from the instructions  provided or from negligence or malfeasance on the part of
Operator except as may be contained in the specific written warranty provided by
North America with regard to any  materials  furnished by North  America.  North
America  makes no  representation  nor warranty as to the validity of any of the
Patent Rights hereof,  other than that it has no knowledge of any basis on which
any of the issued  patents is  invalid;  no  representation  nor  warranty  that
performance in accordance  with this Agreement will not infringe any existing or
subsequently  issued or pending  patent,  other than that it has no knowledge of
the  existence  of any such patent,  and no  representation  nor  warranty  that
"Insituform" is available for use as a tradename,  trademark, and/or certificate
mark in the  United  States  other than it  believes  it to be.  Further,  North
America  shall  not be held  responsible  for use by the  Operator  of any  such
Materials,  Apparatus,  Know-how, data or method in such a manner as to infringe
any patent, trademark or copyright owned by another. North America agrees not to
sell its  Materials  or  Apparatus  hereof  below its cost in  violation  of any
applicable  provision of any antitrust or unfair trade  practice  statute and to
charge all  Sub-Licensees of the Patent Rights  Royalties  according to the same
scale or formula.

         Notwithstanding  the above  North  America  does hereby  agree,  at its
expense, to use its best efforts to defend the Patent Rights by such means as it
in its sole discretion may determine appropriate,  including but not limited to,
patent infringement suits. North America reserves,  however, the exclusive right
to determine whether a patent infringement has occurred or whether litigation or
other action is appropriate or feasible.

         By  Operator.  Operator  agrees to  indemnify,  defend  and hold  North
America  harmless  from any and all claims for bodily  injury  including  death,
personal injury and damage to property of Operator, North America and/or others,
which arise from the alleged  negligence or  malfeasance of Operator or from the
existence or use of Materials and/or Apparatus  acquired from sources other than
North America or which are produced by Operator.

         The Operator also agrees at its expense to procure a policy or policies
of  insurance  from an  insurance  company or  companies  satisfactory  to North
America,  providing  coverage  for the  operations  of the  Operator,  including
product and completed  operations,  with minimum  limits of Two Million  Dollars
($2,000,000.00)  per occurrence and Two Million Dollars  ($2,000,000.00)  annual
aggregate for injury to persons and Two Million Dollars  ($2,000,000.00)  annual
aggregate for damage to property. The operator also agrees to have North America
named as an  additional  named  insured  under  the  above  described  policy or
policies and to cause North America to be furnished  with a Certificate  of such
insurance  which  shall  contain a  requirement  that North  America be notified
thirty  (30) days prior to any  cancellation  or any  reduction  in  coverage or
limits.  The  insurance  required  above  shall  commence  prior to the time the
Operator  commences  operations  under  this  Sub-License  Agreement  and  shall
continue in force  throughout  the life of the  Sub-License  Agreement  until it
expires or is terminated.

         This  Agreement  does  not  constitute  Operator  as  an  agent,  legal
representative,  joint venturer,  partner, employee, or servant of North America
for any purpose whatsoever; and it is understood between the parties hereto that
Operator is an  independent  contractor  and is in no way authorized to make any
contract,  agreement,  warranty or representation on behalf of North America, or
to create  any  obligation,  express  or  implied,  on behalf of North  America.
Operator shall  prominently  display in its place of business a certificate from
North  America  stating that said business is operated by Operator as a Licensee
of North America,  and not as an agent  thereof.  Under no  circumstances  shall
North America be liable for any act,  omission,  debt or any other obligation of
Operator.  Operator shall indemnify and save North America  harmless against any
such claim and the cost of  defending  against such claims  arising  directly or
indirectly from, or as a result of, or in connection with,  Operator's operation
of the licensed business.

         Operator shall promptly pay when due all taxes and assessments  against
the premises or the equipment used in connection with Operator's  business,  and
all liens or encumbrances  of every kind or character  created or placed upon or
against any of said property,  and all accounts and other  indebtedness of every
kind incurred by Operator in the conduct of said  business.  Operator shall have
the right to contest the  validity  or amount of any  assessment,  tax,  lien or
encumbrance,  provided that Operator  shall (1) give North America notice of its
intention to contest (2) diligently prosecute such contest, and (3) at all times
effectively  stay or prevent any official or judicial  sale of such  property or
any part thereof by reason of the non-payment of any lien, encumbrance,  tax, or
assessment.  Operator shall comply with all federal,  state,  and local laws and
regulations,  and shall  timely  obtain any and all  permits,  certificates,  or
licenses necessary for the full and proper conduct of its business.

         XII. DILIGENCE.  Operator  understands that the Subject Matter has been
designed to meet the growing  needs of its  customers  and  potential  customers
within  his  exclusive  Territory  and that its  license  has been  specifically
granted on the understanding that it will use all reasonable endeavors to create
a demand within the Territory for the Insituform  products,  and shall fill such
demand all as good  businesslike  conduct  requires.  The operator  specifically
agrees to  immediately  establish  a  business  location  within  its  exclusive
territory  including an office for the conduct of its Insituform  business,  and
facilities for the  maintenance  and storage of its equipment and materials.  To
assure Operator's financial ability to meet its obligations hereunder,  Operator
covenants  that at all times it shall  retain a net worth of at least  $500,000,
and shall provide annual  financial  statements to North  America,  each with an
officer's  certificate  stating  that  the  statements  have  been  prepared  in
accordance with generally accepted  accounting  principles applied  consistently
with the prior year,  and present  fairly the financial  position of the company
and the results of  operations  and changes in  financial  position for the year
then  ended.  It is  specifically  understood  and agreed  that  nothing  herein
provided shall be construed as requiring  Operator to operate in accordance with
any  designated  marketing plan or system which,  except for the  maintenance of
high  standards of quality,  the exercise of diligence  and the  performance  in
accordance with the terms and conditions  hereof,  are left to the determination
of Operator.

         XIII. TERM. The Term of this Agreement shall commence on the date first
above  written  and  shall  continue  for the life of the last to  expire of the
patents (see Schedule A) or the Patent  Rights  including  any  improvements  or
modifications  thereto  including  patents  subsequently  granted extending such
life, unless sooner terminated as hereinafter provided.

         XIV.     TERMINATION

         A. By Operator.  The Operator may terminate  this Agreement at any time
by service of written  notice to such effect on North  America two (2)  calendar
quarters in advance of the  effective  date  thereof and by  complying  with the
applicable  terms and conditions of this Paragraph XIV. During such period after
notice  but prior to actual  termination,  Operator  shall not bid or accept any
additional jobs without the written consent of North America.

         B. By North America.  In the event Operator (i) becomes  insolvent or a
petition in bankruptcy is filed by or against Operator and not removed within 90
days thereafter,  or a receiver is appointed for Operator; (ii) fails to pay the
minimum  Royalties in  accordance  with  Paragraph IX hereof or other  Royalties
hereunder,  or fails to provide  computations of Royalties,  within fifteen (15)
days of when due and such  failure  shall  continue for a period of fifteen (15)
days after written notice from North America to the Operator; (iii) fails to pay
when due for other invoiced goods and services,  or any other amounts due INA or
any of its  subsidiaries  for any reason and such failure  shall  continue for a
period of  fifteen  (15) days after  written  notice  from North  America to the
Operator;  (iv) fails to perform any other  material  term or  condition of this
Agreement  and fails to correct the same within  fifteen (15) days after written
notice  from North  America to the  Operator,  or if not  reasonably  capable of
correction  within such period,  fails to commence such  correction  within such
period and thereafter diligently proceeds to make such correction; or (v) in the
event Operator's net worth falls below $500,000;  then in any such event,  North
America may declare this Agreement terminated immediately upon written notice to
the  Operator.  Such  termination  shall not limit or affect any other  right or
remedy of North  America,  including  the right to  damages  resulting  from the
Operator's breach.

         C.  Consequences.  Upon  termination of this Agreement by either of the
parties hereto,  Operator shall immediately pay North America all Royalties then
due from it,  terminate all use by it of the word  "Insituform"  as a tradename,
trademark, certification mark or corporate name, avoid all subsequent use of all
tradenames,  trademarks,  certification  marks or  corporate  names likely to be
confused with "Insituform" as well as all stationery,  invoices,  signs or other
visual devices displaying or otherwise  associated with "Insituform",  terminate
all use of the methods, as well as the manufacture, use and sale of the products
of the Patent Rights, Copyrights, and Know-how; and assign to North America free
of  charge  all  claims  to and any  and  all  rights  arising  from  the use of
"Insituform",  or combination involving "Insituform",  in the specific Territory
and return to North America all  confidential  matter in its possession  such as
instruction manuals and written know-how and any copies which it has made of the
same.  Following  termination Operator shall continue to be obligated to provide
all after sales services for which it has theretofore contracted,  including the
honoring of all warranties.  Should  Operator fail to fulfill such  obligations,
and  should  North  America,  in its sole  discretion,  whether  for  reason  of
preserving product goodwill or otherwise, choose to perform any such obligations
(this  paragraph in no way to be construed as an  assumption by North America of
any obligations  for which it is not  specifically  contractually  responsible),
then Operator shall  promptly  reimburse  North America the  reasonable  cost to
North  America of  performing  such  obligations  of Operator.  If Operator is a
corporation  having  the  word  "Insituform"  as a part of its  corporate  name,
Operator shall,  within sixty (60) days of termination  amend its corporate name
to remove the word "Insituform" therefrom.

         Operator  shall  promptly pay to North  America all damages,  costs and
expenses,  including  reasonable  attorney's fees,  incurred by North America by
reason of default on the part of Operator, whether or not such occurred prior to
or subsequent to the  termination or expiration of the  Agreement,  and said sum
shall  include all costs and expenses,  including  reasonable  attorney's  fees,
incurred by North America in obtaining injunctive or other relief to enforce the
provisions  of this  contract.  No  right or  remedy  herein  conferred  upon or
reserved to North America is exclusive of any other right or remedy herein or by
law or equity provided or permitted; but each shall be cumulative of every right
or remedy  given  hereunder.  In addition to whatever  remedy or remedies  North
America  may have by way of damages  for  violation  of the  provisions  of this
Agreement  and/or  termination  of the same,  North  America shall also have the
right to injunctive relief to enforce the provisions of this Agreement. Operator
herein agrees to abide by all of the terms and conditions of the  Non-Disclosure
Agreement despite the termination of this License Agreement.

         XV.  Notices.  Any notice  required or  permitted to be given or served
upon either party hereto pursuant to this Agreement shall be sufficiently  given
or served if sent to such party by certified mail,  postage prepaid addressed to
such party as set forth below or by telex,  or to such other address as it shall
designate by written notice to the other party, as follows:

In case of notice to North America:

3315 Democrat Road
P.O. Box 181071
Memphis, TN 38118

In case of Notice to Operator:

Insituform East, Inc.
3421 Pennsy Drive
Landover, Maryland 20785

         XVI.  SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their  respective  successors and
assigns  with  the  specific  understanding  that  no  Operator,  without  North
America's prior written consent, shall, by operation of law or otherwise,  sell,
assign,  transfer,  convey,  give  away,  or  encumber  to any  person,  firm or
corporation,  its  interest  in this  Agreement  or its  interest in the license
granted hereby or its interest in any proprietorship  which owns any interest in
the license, nor offer, permit, or suffer the same. Any such assignment shall be
made on the express  condition that the assignor  guarantees the  performance of
its assignees  strictly in accordance with the terms and provisions  hereof.  In
the event that Operator is a corporation,  Operator agrees that this license may
not be transferred by sale, conveyance,  operation of law or otherwise,  without
the express written permission of North America.  Should beneficial ownership of
an amount of the  outstanding  common  stock or other  indicia of  ownership  in
Operator  be  conveyed  so as to effect a change  in the  control  of  Operator,
whether by sale, conveyance, operation of law or otherwise, without having first
obtained the written  consent of North  America to transfer  the license,  North
America shall at its option have the right to immediately terminate this license
agreement.  Any purported  assignment of this agreement not having the aforesaid
consent  shall  be null  and  void  and  shall  constitute  a  material  default
hereunder.

         XVII.  DEATH OF  OPERATOR.  In the event of the death of an  individual
Operator,  or any  partner of an  Operator  which is a  partnership,  the heirs,
beneficiaries,  devisees or legal representatives of said individual or partner,
together with all  surviving  partners,  shall,  within ninety (90) days of such
event:

         A. Apply to North  America for the right to  continue to operate  under
the license (for the duration of the term of this Agreement),  which right shall
be granted if North  America,  in its sole judgment  considers  such  continuing
right to be practicable; or

         B. Sell, assign,  transfer, or convey Operator's interest in compliance
with the provisions of paragraph XVI of this Agreement;  provided,  however,  in
the event a proper and timely  application  for the right to continue to operate
has been made and rejected,  the ninety (90) days to sell, assign,  transfer, or
convey shall be computed from the date of said rejection.

         Except as herein  provided,  if said  representatives  fail to take the
steps  hereinabove  noted,  this  Agreement  and  license  shall   automatically
terminate ninety (90) days after the death of such operator or partner.

         XVIII. EXCLUSIVE LICENSE. North America has herein granted an exclusive
license to the Operator  together with its Know-how,  technical  experience  and
training  program for the  exploitation  of the  Insituform  process  within and
throughout the defined  Territory.  If, despite North  America's best efforts to
maintain the  exclusivity  of its licenses and defend its Patent,  Trademark and
Copyright protections,  such exclusivity and/or protections should be terminated
for any reason whatsoever,  the Operator hereunder is nevertheless  obligated to
comply  in full  with  each and  every  term and  condition  of this  agreement,
including, but not limited to, the payment of Royalties to North America and the
maintenance of high standards of quality and service.

         XIX. EXCLUSIONS. In the event that any one or more of the provisions of
this  Agreement is, or are, held to be invalid it is agreed  between the parties
that if legally practical said provision or provisions shall be considered never
to have been  contained  herein and the Agreement  shall  otherwise  continue in
force and effect.

         XX. ENTIRE AGREEMENT.  This Agreement  constitutes the entire agreement
between  the  parties  hereto  with  respect to the  Subject  Matter  hereof and
supersedes all prior oral and written  understandings and agreements between the
parties hereto  concerning the Subject  Matter.  The paragraph  headings of this
Agreement  are  for  convenience  only  and  have  no  other  significance.  The
provisions of this Agreement shall not be waived, modified or amended, except by
a subsequent writing signed by both parties.

         XXI.  APPLICABLE LAW. This  Sub-License  Agreement shall be governed by
and construed in accordance with the laws of the State of Tennessee.

         The  foregoing  notwithstanding,  to the extent that the  provisions of
this  Agreement  provide  for  periods  of notice  less than those  required  by
applicable law, or provide for termination, cancellation, nonrenewal or the like
other than in accordance  with  applicable  law, such  provisions  shall, to the
extent such are not in  accordance  with  applicable  law, not be effective  and
North America shall comply with  applicable law in connection with each of these
matters.

         XXII. BENEFIT.  This Agreement shall issue only to the benefit of North
America, Insituform International, N.V., Operator, and their approved successors
and assigns.

         XXIII.   PAYMENTS.  All payments shall be made in Memphis, Tennessee.

         IN WITNESS WHEREOF,  the parties hereto have executed this Agreement as
of the day and year first above written.


INSITUFORM OF NORTH AMERICA, INC.     OPERATOR
                                      INSITUFORM EAST, INC.

By /s/ Jack Massar                    By /s/ Arthur G. Lang III
Jack Massar, Vice President           A.G. Lang, III
                                      President



<PAGE>

                                   SCHEDULE A
                                    TERRITORY
                 Ohio:  All those counties not previously included in License
                        Agreement dated January 16, 1984

             Kentucky:  Boone, Campbell and Kenton Counties




<PAGE>


                                   SCHEDULE B
                              UNITED STATES PATENT
                                   #4,064,211
                                   #4,366,012
                                   #4,385,885
                                   #4,390,574
                                   #4,401,696
                                   #4,439,469


<PAGE>


                                   SCHEDULE C

                    NONDISCLOSURE AGREEMENT AND AGREEMENT ON
            IMPROVEMENTS, MODIFICATIONS AND TECHNOLOGICAL DEVELOPMENT

                              Insituform East, Inc.
                              (Name of Sublicensee)

being a party to a certain  Sublicensing  Agreement,  dated August 1st, 1985, by
and  between  itself  and  Insituform  of  North  America,   Inc.   (hereinafter
"Insituform"), pursuant to the terms of the aforesaid Agreement,

                                      -OR-


--------------------------------------------------------------------------------
                   (Name of employee, agent or representative)

as an employee, agent or representative of the above-named sublicensee,  and for
good and  valuable  consideration,  receipt  of which  is  hereby  acknowledged,
sublicensee or its employee, agrees as follows:

         1. Operator or his employee,  agent, or representative shall not during
the term of this  Agreement or after its  termination  communicate or divulge to
any other  person,  persons,  partnership  or  corporation  except for marketing
purposes,  any  information or knowledge  concerning the method of  manufacture,
preparation, promotion, sale or distribution used in the North America business,
nor shall Operator or his agent,  representative or employee disclose or divulge
in whole or in part any trade  secrets or private  processes of North America or
its affiliated companies,  or any Subject Matter defined in the above-referenced
Sublicensing  Agreement to include all methods,  apparatus and materials used in
the  preparation  and  installation  (including  cutting  out of laterals of the
lining of sewers,  tunnels,  pipelines,  and other passageways)  excepting those
used to carry  aromatic  hydrocarbons  in a  gaseous  state by  impregnating  an
absorbent  layer with a synthetic  resin,  and retaining  such layer in place in
such passageway while the layer cures or is cured.

         2. Operator or his agent, representative or employee shall at all times
treat as  confidential,  and shall not at  anytime  disclose,  copy,  duplicate,
record, or otherwise reproduce, in whole or in part, or otherwise make available
to any  unauthorized  person or  source,  the  contents  of any  manual or other
technical information or writing provided by Insituform.

         3. If during the term of this Agreement,  the Operator or his employee,
agent or  representative,  develop  any  improvements  or  modifications  in the
Subject  Matter,   all  such  information  must  be  disclosed   immediately  to
Insituform, and will become the property of Insituform.

         4. Should Operator or his employee,  agent or  representative,  design,
develop, devise or invent any process,  device,  equipment or technology for use
in conjunction  with the Subject  Matter,  or as a  development,  improvement or
modification of Subject Matter, which process,  device,  equipment or technology
is, or may be, patentable or subject to copyright law, then aforesaid  Operator,
or his employee, agent or representative, shall sell to North America all of his
right,  title or interest in said  process,  device,  equipment  or  technology,
including patent rights or copyrights, if any, for the sum of ONE DOLLAR.

         IN WITNESS WHEREOF,  Operator or its employee, agent or representative,
does hereby set his hand.

                             Insituform East, Inc..
                              (Name of Sublicensee)

                           By /s/ Arthur G. Lang, III
                           Pres/CEO
                           (Employee, Agent or Representative of Operator)

WITNESS


-----------------------
Witness
-----------------------



<PAGE>


                                   SCHEDULE D

                            DEDUCTIONS FROM ROYALTY

In relation to Clause IX, headed "Royalty" of the Insituform Sub-License granted
by us to your company,  and dated , we confirm that in computing the gross price
of all contracts involving the installation of the Insituform  Process,  you may
deduct the following:

          (a) Fees billed for preparatory T.V. survey work but not including the
     immediate  T.V.  survey which is  recommended  as part of the  installation
     process.

          (b) Fees billed for  overpumping  provided that these shall not exceed
     $2,000 per line unless agreed to in advance.

          (c) Fees billed for  incidentals,  including  cleaning,  not  directly
     relating  to  the  installation  but  performed  in  conjunction  therewith
     provided these do not exceed 3.5% of the total contract price.