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
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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
