Exhibit 10.7
                       Insituform(R) Tube Supply Agreement



         Agreement  made  this  1st  day of  January  1998,  between  Insituform
Technologies, Inc., ("Seller") and Insituform East, Inc. ("Buyer").

         1. Sale of Goods.  The Seller  shall sell to Buyer and the Buyer  shall
purchase from the Seller the items  specified in paragraph 2 of this  Agreement,
in the quantity stated in paragraph 3 of this Agreement, at the prices stated in
paragraph 4 of this  Agreement,  which the Buyer shall  require  during the term
stated  in  paragraph  5  of  this  Agreement,  for  actual  use  by  Buyer  for
installations performed by Buyer using the Insituform(R) Process.

         2. Items Included. This Agreement shall apply only to Buyer's purchases
of  Insitutubes(R)("Insitutubes"  means  any and all  lining  materials  used to
reconstruct  sewers,  tunnels,  pipelines,  and other  passageways) but excludes
pallets, packaging materials, shipping charges and taxes.

         3.  Quantity.  The Buyer shall  purchase from the Seller and the Seller
shall supply such  quantities  of  Insitutubes  as shall satisfy at least ninety
percent (90%) of the Buyer's requirements during the term of this Agreement, for
use by the Buyer for installations using the Insituform Process

         4.       Prices.

         Exhibit 1 hereto sets out the prices in effect  during the term of this
Agreement. Seller shall be entitled to increase the price in effect hereunder if
Seller  can   establish   that  its  cost  of  raw   materials,   energy  and/or
transportation (but not labor) costs have increased.  Seller shall provide Buyer
at least sixty (60) days' prior written  notice of any price increase along with
Seller's  justification of such increase.  If Buyer declines to accept the price
increase,  either Party may terminate  this Agreement upon written notice to the
other.

         In addition, Seller shall also be entitled to pass through to Buyer any
extraordinary costs which may arise and which otherwise affect Seller's costs of
production.  By way of  example  only such  costs  might  included,  but are not
limited to, extraordinary  assessments,  levies, taxes or charges imposed by any
governmental or other taxing authority,  environmental or other special purposes
levies,

         5.       Term of This Agreement.

         (a) The effective date of  commencement of this Agreement is January 1,
1998,  and this  Agreement  shall  continue for a period of five (5) years until
December 31, 2002. The Agreement  shall  terminate on December 31, 2002, only if
one of the parties hereto has provided  notice of termination to the other party
six months prior to December 31, 2002. Otherwise on January 1, 2003, and on each
anniversary  date  thereafter,  this Agreement shall be  automatically  extended
subject to all terms and  conditions  herein for  successive one (1) year annual
periods,  unless  notice of  termination  is provided by either party six months
prior to the expiration of any such annual period.

         6. Annual  Period.  The term "Annual  Period" as used in this Agreement
means (a) the period  between the effective  date of this Agreement and the next
anniversary  of this  Agreement  or (b) the period  between any two  anniversary
dates of this Agreement.

         7.  General  Terms  and  Conditions.  All  of  the  General  Terms  and
Conditions  appearing on the reverse side of the Price List Schedules  apply and
are  incorporated  herein  by  reference  with the  exception  of  Paragraph  IV
(Prices).  The General Terms and Conditions are set out in full text immediately
following page 5 hereof.

         8.  Failure to  Purchase  Minimum  Volume.  In the event the  aggregate
volume of Buyer's  orders of the items  described in  paragraph 2 herein  placed
during the term of this  Agreement  does not reach the Minimum Volume during any
Annual  Period,  each order  placed by Buyer  during the next  following  Annual
Period  shall be  governed  by the  prices,  terms and  conditions  of  Seller's
Standard Price List prevailing at the time each such order was placed. If during
any Annual Period when the Seller's  Standard Price List is in effect hereunder,
Buyer's  purchases  hereunder  attain at least the Base Year  Volume,  then each
purchase  hereunder  during the next  following  Annual  Period shall be for the
Prices listed in Exhibit A hereto.  The Standard  Price List currently in effect
is attached hereto as Exhibit 2.

         The "Minimum  Volume" shall mean for any Annual Period a quantity which
is the greater of (i) percent (90%) of the volume  purchased by Buyer during the
immediately preceding Annual Period or (ii) the Base Year Volume. The "Base Year
Volume" is ninety  percent of the volume of items  purchased by Buyer during the
period January 1, 1997 through and including December 31, 1997.

         9. Restrictions on Resale.  Buyer acknowledges that the items purchased
hereunder are  manufactured  pursuant to one or more patents,  bear the Seller's
trademark and are designed for installation by licensed installation contractors
which employ in their exclusive territories  additional  proprietary  technology
and  patents  belonging  to  Seller  and  constituting  the  Insituform  Process
("Process Licensees").  Accordingly, Buyer agrees that items purchased hereunder
shall not be resold to any party  other  than a Process  Licensee.  In the event
that any items  purchased  hereunder  are sold to a party which is not a Process
Licensee,  Buyer agrees to pay Seller as liquidated damages for loss of goodwill
and damage to Seller's  goodwill  and  reputation  as well as damage to Seller's
Process  Licensees a sum equal to an  additional  one hundred  percentage of the
original  purchase  price.  This  liquidated  damage sum is in  addition  to the
original purchase price of the items in question.


         10.      Force Majeure.

         (a)  Definition.  As used in the  Agreement,  the term "Force  Majeure"
refers to federal,  state or municipal  action or regulations;  strikes or other
labor trouble or stoppage;  fire,  damage to, or destruction in whole or part of
merchandise  or  manufacturing  plant;  lack of, or  inability  to  obtain,  raw
materials, labor, fuel, or supplies; war, riot, insurrection or revolution; Acts
of God; perils of the sea or of land or air; shortage of cars or transportation;
or  other  unavoidable  cause  other  than the  negligence  of the  party  whose
performance is excused;  provided,  however, that, no party shall be required to
settle any labor dispute on any terms in order to perform under this Agreement.

         (b) Excuse of Seller's Performance. Seller shall not be responsible for
delay,  non- delivery,  or default in shipment in whole or in part if occasioned
directly or indirectly by an event of Force Majeure, any of which shall, without
liability,  excuse Seller, at its option, from the performance of this Agreement
during the continuation of such event of Force Majeure.

         (c) Excuse of Buyer's  Performance When Seller's  Performance  Excused.
If,  during  any  period  Seller's  performance  is excused by an event of Force
Majeure,  Buyer's  Minimum  Volume  for the  Annual  period in which  such Force
Majeure  event occurs shall be reduced pro rata based on the  percentage of days
during  which  Seller's  performance  is excused.  If an event of Force  Majeure
prevents Seller from filling Buyer's orders under this Agreement for a period in
excess of 30 consecutive  days,  Buyer shall, at its option  exercised by giving
written notice to Seller, be excused from further performance of its obligations
to purchase Insitutubes from Seller under this Agreement.

         (d)  Excuse  of  Buyer's  Performance.  If an event  of  Force  Majeure
prevents the Buyer from performing  installations of the Insituform Process, the
Buyer's Minimum Volume for the Annual Period in which such event occurs shall be
reduced  pro rata  based on the  percentage  of days  during  which  such  event
prevents the Buyer from  performing  installations  of the  Insituform  Process;
provided  however,  the Buyer's  inability  to obtain  contracts  for use of the
Insituform  Process,  or other  cancellation  or delay of the performance of any
such  contracts,  shall not be  considered  an event of Force Majeure under this
Agreement.

         11. Entire  Agreement.  This Agreement,  along with the Exhibits hereto
contains  the entire  understanding  of the  parties  and is intended as a final
expression of their Agreement and a complete statement of the terms thereof, and
supersedes all prior oral and written  understandings or agreements  between the
parties  hereto  concerning  the  purchase  and sale of the items  described  in
paragraph 2 of this  Agreement.  The provisions of this  Agreement  shall not be
modified or varied except in writing signed by the parties hereto.  No waiver by
either party of any default shall be deemed a waiver or any subsequent default.


         12.  Execution.  This Agreement  shall be binding upon the parties only
upon the formal execution of this Agreement by both parties.

         13.  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  facsimile,  or to such other  address as it
shall designate by written notice to the other party, as follows:

         In case of notice to Seller:

                  Insituform Technologies, Inc.
                  702 Spirit 40 Park Drive
                  Chesterfield, MO 63005

                  Attention: Chief Executive Officer

                  Facsimile: 314/530-8701

         In case of notice to Buyer:

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

                  Attention: Chief Executive Officer Committee

                  Facsimile: 301/386-2444

         14. Paragraph  headings.  The paragraph  headings of this Agreement are
for convenience only and have no other significance.

         15. 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.

         16.  Successors and Assigns.  This Agreement shall be binding and inure
to the benefit of the parties and their  respective  successors and assigns with
the specific  understanding that the terms and conditions of this Agreement have
been agreed upon to meet the estimated needs of Buyer and so Buyer is prohibited
from assigning or otherwise  transferring its interest in this Agreement without
Seller's written consent.

         17.  Applicable  Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Tennessee.

         18. Payments. All payments shall be made in St. Louis, Missouri to such
bank, address or account as may be designated by the Seller from time to time.

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

Insituform Technologies, Inc.                Insituform East, Inc.



By: /s/ William A. Martin Sr. VP             By: /s/ Robert W. Erikson
------------------------------------         -----------------------------------
Name and Title:   William A. Martin          Name and Title: Robert W. Erikson
                  Sr. V.P. CFO                               President
Date:             12/17/97                   Date:           12-29-97



<PAGE>

                          GENERAL TERMS AND CONDITIONS

I. Payment Terms:  After invoice date, 2% - 10 days; net 30 days.  Late payments
are subject to a service  charge of 1.5% per month to compensate  for additional
expenses incurred in handling past due accounts.

II.  Shipment:  F.O.B.  Seller's  Factory.  In the absence of  specific  written
instructions  or Buyer's  pickup,  Seller  will route  "best way" and at Buyer's
risk.

III.  Taxes:  Taxes  applicable to the goods sold shall be added to the Purchase
Price  and shall be paid by  Buyer,  unless  Buyer  provides  Seller  with a tax
exemption certification acceptable to the appropriate taxing authorities.

IV. Prices: Prices are subject to change with 30 days' notice and orders calling
for subsequent  delivery will be billed according to the prices in effect at the
time of shipment.

V. Warranties:  Seller warrants only that (i) the goods when delivered to Buyer,
conform  to  the   product   specifications,   (ii)  are  free  from  liens  and
encumbrances,  and (iii) are not subject to rightful patent  infringement claims
by any third party as to the goods themselves.

NO OTHER WARRANTY, WHETHER EXPRESS, IMPLIED OR STATUTORY OR ARISING BY OPERATION
OF LAW, OR FROM ANY COURSE OF DEALING OR CUSTOM OR TRADE  USAGE,  OR  OTHERWISE,
INCLUDING THE WARRANTIES OF  MERCHANTABILITY,  FITNESS FOR A PARTICULAR PURPOSE,
AND CORRESPONDENCE  WITH THE DESCRIPTION (OTHER THAN PRODUCT  SPECIFICATIONS AND
SAMPLES) WILL EXIST IN CONNECTION WITH THE SALE OF THE GOODS BY SELLER OR USE BY
BUYER OF THE GOODS.

SELLER  EXPRESSLY  LIMITS  ITS  WARRANTY  OF ANY GOODS  MANUFACTURED  BY ANOTHER
MANUFACTURER  AND  OBTAINED  SOLELY FOR RESALE BY SELLER TO SUCH  MANUFACTURER'S
WARRANTIES, AND NOT FURTHER OR OTHERWISE.

THIS  WARRANTY IS VALID ONLY IF THE  INSITUTUBE  IS USED AND INSTALLED IN STRICT
ACCORDANCE WITH THE DIRECTIONS FOR USAGE AND INSTALLATION OF SAID INSITUTUBES IN
THE INSITUFORM PROCESS AS SET FORTH BY SELLER.

THIS WARRANTY IS INVALID IF BUYER RESELLS THE  INSITUTUBE TO A THIRD PARTY WHICH
THEN  INSTALLS THE  INSITUTUBE,  WHETHER OR NOT SUCH THIRD PARTY  ADHERES TO THE
DIRECTIONS  FOR USAGE AND  INSTALLATION  OF SAID  INSITUTUBFS  IN THE INSITUFORM
PROCESS AS SET FORTH BY SELLER.

VI. Exclusive Remedy; Limitation of Liability: Buyer's sole and exclusive remedy
for goods proven to be other than as warranted  herein shall be the  replacement
of the affected goods,  without charge.  Seller's liability for any and all loss
or  damage to Buyer  resulting  from any cause  whatsoever,  including  Seller's
negligence,  or damaged or defective goods, irrespective of whether such defects
are  discoverable or latent,  shall in no event exceed the purchase price of the
particular  goods with  respect to which  losses or damages  are  claimed;  with
respect to buyer's costs labor and other incidental costs incurred by Buyer (and
evidence by receipts,  vouchers or other written  evidence)  with respect to any
defective goods hereunder,  Seller's  liability shall be limited to $2,000;  and
further provided that Buyer to perfect its warranty claim hereunder must provide
physical proof as to any defective  goods,  have notified Seller within 12 hours
of discovery of such defective  goods and have allowed Seller the opportunity to
inspect such defective goods.

THE FOREGOING IS THE ENTIRE OBLIGATION OF SELLER. IN NO EVENT, INCLUDING A CLAIM
OF NEGLIGENCE,  OR SHOULD SEUER'S WARRANTY FAIL OF ITS ESSENTIAL PURPOSE,  SHALL
SELLER  BE  LIABLE TO BUYER FOR LOST  PROFITS,  INCIDENTAL,  INDIRECT,  SPECIAL,
CONSEQUENTIAL, OR PUNITIVE DAMAGES, HOWSOEVER ARISING.

No  statement  or  recommendation  made or  assistance  given by Seller,  or its
representatives,   either  oral  or  in  its   literature,   to  Buyer,  or  its
representatives, in connection with the use by Buyer of any goods sold hereunder
shall constitute a waiver by Insituform  Technologies of any provision hereof or
affect Seller's liability as herein defined.

VII.  Attorneys' Fees: If this account is placed in the hands of an attorney for
collection  or  otherwise  with respect to  enforcement  of any of the terms and
conditions  hereof or on account of breach of any provision  hereof,  whether or
not  suit is  filed,  Buyer  agrees  to  reimburse  Seller  for  its  reasonable
attorneys' fees as well as all other costs of collection or enforcement.


<PAGE>


                                   Exhibit 1 -

               Price List for Insituform East under the Agreement



<PAGE>


                                   Exhibit 2 -

                         Price List for Insituform East

                       If Minimum Volumes are not attained



<PAGE>


                               SUPPLEMENT NO. 1 TO
                       INSITUFORM(R) TUBE SUPPLY AGREEMENT

SUPPLEMENT NO. I TO INSITUFORM(R) TUBE SUPPLY AGREEMENT made and entered into as
of the 2nd day of February 1998, by and between  INSITUFORM  TECHNOLOGIES,  INC.
("Seller") and INSITUFORM EAST, INCORPORATED ("Buyer').

                               W I T N E S S E T H

         WHEREAS,  the parties have entered  into an  Insituform(R)  Tube Supply
Agreement effective I January 1998; and

         WHEREAS, the parties desire to supplement such Agreement as hereinafter
set

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

                           Paragraph 2. Items Included

         "Insitutubes" as used herein shall additionally  exclude special lining
materials not priced or offered under Exhibits I or 2

                              Paragraph 3. Quantity

         The phrase  "ninety  percent (90%) of the Buyer's  requirements"  shall
mean requirements as measured in dollars.

                 Paragraph 8. Failure to Purchase Minimum Volume

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

INSITUFORM TECHNOLOGIES, INC.          INSITUFORM EAST, INCORPORATED


By /s/ Robert L. Kelley                By /s/ Robert W. Erikson
-------------------------------        -----------------------------------------
Name and Title:  VP & Gen Couns        Name and Title:   Robert W. Erikson
                                                         President
Date:            2/17/98               Date:             2/2/98