FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended: March 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File No. 0-19009
AMETECH, Inc.
_____________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Oklahoma 73-0766924
_______________________ __________________________________
(State of Incorporation) (I.R.S. Employer Identification No.)
1813 Southeast 25th
Oklahoma City, Oklahoma 73129
________________________ ________
(Address of Principal (Zip Code)
Executive Offices)
Registrant's Telephone Number, Including Area Code:
(405) 677-8781
______________
Indicate by check mark whether the Registrant (1) has filed
all reports required by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for the
shorter period of that the Registrant has had to file the reports),
and (2) has been subject to the filing requirements for the past 90
days. YES X NO
____ _____
As of May 14, 1996, the Registrant had 13,754,935 shares of
common stock issued and outstanding (excluding 115,000 shares of
common stock held as treasury stock).
<PAGE>
FORM 10-Q OF AMETECH, INC.
TABLE OF CONTENTS
PART I
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Page
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Item 1. Financial Statements.................... 1
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations......................... 8
PART II
Item 6. Exhibits and Reports on Form 8-K........ 12
SIGNATURES ........................................ 18
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<PAGE>
PART I
FINANCIAL INFORMATION
The accompanying Consolidated Balance Sheet as of March 31, 1996
and the related Statements of Operations and Retained Earnings and
Statements of Cash Flows for the three month periods ended
March 31, 1996 and 1995 are unaudited. In the opinion of
management, all adjustments have been included. Such adjustments
consisted of normal, recurring items. Interim results are not
necessarily indicative of results for a full year. The Financial
statements and notes are presented as permitted by Form 10-Q and do
not contain certain information included in the Company's annual
financial statements and notes; therefore, these financial
statements should be read in conjunction with the notes to the
financial statements contained in the Company's Annual Report on
Form 10-K for the year ended December 31, 1995 which are
incorporated herein by reference.
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AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
1996 1995
____________ ___________
(unaudited)
ASSETS
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CURRENT ASSETS:
Cash and cash equivalents $ 115,000 $ 74,000
Accounts receivable 3,808,000 3,538,000
Prepaid expenses 1,315,000 429,000
Other 640,000 646,000
___________ ___________
Total Current Assets 5,878,000 4,687,000
___________ ___________
PROPERTY AND EQUIPMENT, at cost,
net of accumulated depreciation
of $9,116,000 and $9,742,000 at
March 31, 1996, and December 31,
1995, respectively:
Transportation equipment 9,216,000 9,479,000
Buildings and other 2,029,000 2,061,000
___________ ___________
11,245,000 11,540,000
___________ ___________
OTHER ASSETS, net of accumulated
amortization of $335,000 and
$325,000 at March 31, 1996,
and December 31, 1995,
respectively 469,000 499,000
___________ ___________
$17,592,000 $16,726,000
=========== ===========
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The accompanying notes are an integral part
of these financial statements.
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AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(CONTINUED)
March 31, December 31,
1996 1995
____________ ___________
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 2,389,000 $ 2,053,000
Current maturities of long-term obligations 2,640,000 2,126,000
___________ ___________
Total Current Liabilities 5,029,000 4,179,000
___________ ___________
DEFERRED INCOME TAXES 1,331,000 1,365,000
___________ ___________
LONG-TERM OBLIGATIONS, net of current
maturities 6,563,000 6,242,000
___________ ___________
STOCKHOLDERS' EQUITY:
Common stock of $.01 par value;
25,000,000 shares authorized at
March 31, 1996, and December 31,
1995;
13,900,032 and 13,874,206 shares
issued at March 31, 1996, and
December 31, 1995, respectively 139,000 139,000
Additional paid-in capital 2,990,000 2,985,000
Retained earnings 1,649,000 1,925,000
___________ ___________
4,778,000 5,049,000
Less - Treasury Stock (115,000 shares at
March 31, 1996, and December 31,
1995), at cost 109,000 109,000
___________ ___________
Total Stockholders' Equity 4,669,000 4,940,000
___________ ___________
$17,592,000 $16,231,000
=========== ===========
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The accompanying notes are an integral part
of these financial statements.
<PAGE>
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AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
(UNAUDITED)
Three Months Ended
March 31,
___________________________
1996 1995
___________ ___________
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REVENUES $ 4,310,000 $ 3,796,000
___________ ____________
COSTS AND EXPENSES:
Operating costs 3,538,000 2,714,000
General and administrative expense 609,000 539,000
Depreciation and amortization 495,000 432,000
Interest expense 213,000 134,000
Other expense (income), net (102,000) (29,000)
___________ ___________
4,753,000 3,790,000
___________ ___________
EARNINGS (LOSS) BEFORE INCOME TAXES (443,000) 6,000
___________ ___________
INCOME TAX EXPENSE (BENEFIT):
Current (201,000) (39,000)
Deferred 34,000 41,000
___________ ___________
167,000 2,000
___________ ___________
NET EARNINGS (LOSS) (276,000) 4,000
RETAINED EARNINGS AT BEGINNING
OF PERIOD 2,287,000 2,287,000
___________ ___________
RETAINED EARNINGS AT END OF PERIOD $ 2,011,000 $ 2,291,000
=========== ===========
EARNINGS (LOSS) PER COMMON SHARE:
Earnings (Loss) per common share $ (0.02) $ 0.00
=========== ===========
Weighted average shares outstanding 13,776,600 13,708,208
=========== ===========
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The accompanying notes are an integral part
of these financial statements.
<PAGE>
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AMETECH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
___________________________
1996 1995
___________ ___________
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Cash Flows From Operating Activities:
Cash collected from customers $ 4,043,000 $ 4,147,000
Interest paid (213,000) (140,000)
Interest received 11,000 17,000
Cash paid to employees and other
suppliers of goods and services (4,614,000) (2,973,000)
Income taxes refunded (paid) 50,000 (74,000)
___________ ___________
Net Cash Provided by Operating
Activities (723,000) 977,000
___________ ___________
Cash Flows From Investing Activities:
Additions to property and equipment (256,000) (1,176,000)
Proceeds from disposal of equipment 153,000 78,000
Proceeds from sale of subsidiary 0 18,000
Payments received on notes receivable 27,000 60,000
___________ ___________
Net Cash Used in Investing Activities (76,000) (1,020,000)
___________ ___________
Cash Flows From Financing Activities:
Proceeds of long-term debt 1,138,000 1,042,000
Payments on long-term debt (303,000) (1,050,000)
Sale of unissued stock 5,000 6,000
___________ ___________
Net Cash Used in Financing Activities: 840,000 (2,000)
___________ ___________
Net Increase (Decrease) in Cash and
Cash Equivalents 41,000 (45,000)
___________ ___________
Cash and Cash Equivalents at Beginning
of Period 74,000 45,000
___________ ___________
Cash and Cash Equivalents at End
of Period $ 115,000 $ 0
=========== ===========
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The accompanying notes are an integral part
of these financial statements.
<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
1. The financial statements include the accounts of the Company and
its subsidiaries, all of which are wholly-owned. All significant
intercompany transactions are eliminated.
2. EARNINGS PER SHARE
Earnings per common share are based upon the weighted average
number of common shares outstanding during the respective three
month periods. All outstanding stock options are considered
anti-dilutive and are not included in the calculation for
earnings per share.
3. RECONCILIATION OF NET INCOME (LOSS) TO NET CASH PROVIDED BY
OPERATING ACTIVITIES
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The reconciliation of net earnings (loss) to net cash provided
by operating activities for the three-month periods ended
March 31, 1996 and 1995 is as follows:
Three Months Ended March 31,
__________________________
1996 1995
__________ __________
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Net Earnings (Loss) $ (276,000) $ 4,000
Adjustments to reconcile net income
(loss) to net cash provided by
operating activities:
Depreciation and amortization 495,000 432,000
Gain on sale of subsidiary (9,000) (26,000)
(Gain)loss on sale of property (88,000) 16,000
Change in assets and liabilities:
(Increase) Decrease in accounts
receivable (267,000) 351,000
Increase in prepaid expenses (886,000) (402,000)
(Increase) Decrease in other assets 6,000 (56,000)
Increase in accounts payable
and accrued liabilities 336,000 613,000
Deferred income taxes (34,000) 41,000
Other 0 4,000
__________ _________
$ (723,000) $ 977,000
========== =========
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<PAGE>
AMETECH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
4. CHANGE IN ACCOUNTING ESTIMATE (continued)
Effective January 1, 1995, the Company elected to change the
estimated useful life for tractors from seven to ten years to
more closely approximate the useful life of such assets. The
effect of this change was to increase net income for the three
months ended March 31, 1995 by $78,000 ($.01 per share),
summarized as follows:
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Effect of life of tractors $117,000
Less: Tax effect of change 39,000
________
Increase in net income $ 78,000
========
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5. COMMITMENTS AND CONTINGENCIES
On January 3, 1992, seven individual plaintiffs filed a Petition
against the Company s transportation subsidiary, Environmental
Transportation Services, Inc. ( ETS ), and Dyna-Turn of Oklahoma
Incorporated ( Dyna-Turn ), in the District Court of Oklahoma
County. The seven plaintiffs, who were employees at a waste
incineration facility in Miami, Oklahoma, claim that Dyna-Turn
generated solid waste which was contaminated with toxic and
hazardous chemicals, and that this solid waste was transported
by ETS to the incineration facility for disposal. The
plaintiffs claim that Dyna-Turn and ETS were engaged in ultra-
hazardous activities during the generation and transportation of
the waste, and failed to warn the plaintiffs of the hazardous
nature of the waste or of its harmful side effects.
The plaintiffs claim they sustained personal injuries and lost
earnings and are seeking unspecified actual damages in excess of
$10,000 and punitive damages.
In March 1993, the Company learned that its insurance carrier
had denied coverage for the plaintiffs claims. The Company has
instructed its attorneys to vigorously defend the litigation.
The plaintiffs have not initiated further action, and as a
result, there are still facts unknown to the Company. The
Company believes that ETS has valid defenses to the plaintiffs
claims, but at this stage of litigation, the Company is unable
to determine the amount of its potential exposure to loss, if
any.
<PAGE>
Item 2. Management s Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Quarter Ended March 31, 1996 Compared to Quarter Ended March 31, 1995
The net loss for the quarter ended March 31, 1996 was $276,000 as
compared to net income of $4,000 for the quarter ended March 31,
1995. This decrease in net earnings of $280,000 was primarily
attributable to an decrease in the gross margin (revenues less
operating costs) of $310,000 coupled with higher interest costs of
$79,000.
Total revenues were $4,310,000 and $3,796,000 for the quarters ended
March 31, 1996 and 1995, respectively. This increase of $514,000 was
largely attributable to an increase in transportation and related
revenues of $700,000 due, in part, to revenues generated by Dwight
Trucking, Inc. ( Dwight ), the Company s subsidiary acquired
effective July 1, 1995, and by certain transportation assets acquired
from Smith Systems Transportation, Inc. ( SST ) in July 1995.
Additionally, the Company s transportation subsidiary, Environmental
Transportation Services, Inc. ( ETS ), generated increased miles
during the first quarter of 1996 due to operating additional
transportation equipment. The increase in volume resulting from the
additional tractors was partially offset by a decrease in the running
mile rate of $.04 per mile, which is due to continuing competitive
pressures. Other transportation related revenues decreased $79,000
from the quarter ended March 31, 1995 to the same quarter in 1996 due
to lower accessorial revenues and roll off box rentals.
Non-transportation related revenues decreased $186,000 from the first
quarter of 1995 to the first quarter of 1996 due to decreased
revenues generated by BMH Materials, Inc. ( BMH ), the Company s non-
hazardous waste processing facility located in Green Cove Springs,
Florida, and to a decrease in revenues recorded by the Company s
remediation subsidiary which started a remediation project in March
1995. This subsidiary is currently inactive.
Operating costs were $3,538,000 and $2,714,000 for the first quarters
of 1996 and 1995, respectively. This represents an increase of 10.6
percentage points when expressed as a percentage of total revenues.
Operating costs related to transportation services were $3,510,000
and $2,549,000 for the quarters ended March 31, 1996 and 1995,
respectively. These amounts represent 82.5% and 71.7% of
transportation and related revenues for the respective quarters of
1996 and 1995. This increase in the percentage of operating costs to
revenues from 1995 to 1996 is due largely to the lower running mile
rate as discussed earlier and to increased variable transportation
costs.
<PAGE>
Operating costs associated with BMH decreased $59,000 from 1995 to
1996 due to the reduced activity. Operating costs associated with
the Company s remediation subsidiary decreased $75,000 for the
quarter March 31, 1996 due to the remediation project mention
earlier.
General and administrative expenses increased $70,000 from 1995 to
1996 but remained constant as a percentage of revenues. This
increase was mainly attributable to general and administrative costs
associated with Dwight.
Interest expense increased $79,000 due to increased debt.
Liquidity and Capital Resources
Working capital increased from $508,000 at December 31, 1995 to
$849,000 at March 31, 1996. This increase has resulted from the use
of long-term debt to fund operations.
In February 1996, the Company entered into a new revolving working
capital line of credit agreement (the Agreement ) with a new lender
which provides for a $3,000,000 line of credit for working capital
purposes. This line of credit 1) is collateralized by accounts
receivable, deposit accounts and certain intangible assets, 2) bears
interest at the prime rate published by The Chase Manhattan Bank,
N.A. plus 1.875%, and 3) provides for advances at 80% of eligible
receivables. The note is due February 6, 1998 and there are no
financial covenants associated with the Agreement. The interest on
the note is payable monthly and principal payments are made as
accounts receivable are collected. At March 31, 1996 the Company had
borrowed $2,257,000 under the new credit Agreement, and at
December 31, 1995, the Company had borrowed $1,549,000 under the
former credit agreement. At May 16, 1996, the Company has borrowed
the maximum amount available under the new line of credit.
In the first quarter of 1996, the Company paid only the interest
portion of the February and March loan payments to its principal
equipment lender due to a temporary cash flow shortage. The lender
has orally agreed that the Company may pay the February and March
principal payments in September and October 1996. The Company paid
its April payment to this lender in full and expects to be able to
make the May payment, also. Additionally, this lender increased the
interest rate by one percentage point for the remaining term of such
loans by the lender. As of March 30, 1996, the principal amount
owing to this equipment lender was approximately $4.1 million.
In February 1996, Carl Anderson, Jr., CEO and acting President,
loaned the Company $195,000 bearing interest at 10% per annum. The
loan is payable upon demand and the interest is payable monthly. The
loan was for working capital purposes and is unsecured. The
outstanding balance on this loan at March 31, 1996, was $191,000.
<PAGE>
The Company s subsidiary, ETS, has entered into two lease agreements
with Sullivan s Trucking Company, Inc. ( Sullivan ), effective
March 1, 1996, whereby ETS is leasing a certain number of hazardous
waste tractors, trailers and roll-off boxes. ETS has used this
equipment to transport waste for Sullivan s and ETS customers. In
connection with such leases, ETS is to pay Sullivan $8,684 per month
for twenty four months on one lease and $28,803 per month for forty
eight months on the other lease. ETS began making payments on both
these leases March 1, 1996. The lease providing for monthly rental
payments of $28,803 also allows the Company the option to purchase
the equipment covered by such lease. Under the terms of such lease,
the Company may acquire the equipment covered by such lease at any
time during its term at the then fair market value of such equipment
at the time of such exercise. The other lease with Sullivan does not
provide the Company with an option to purchase the equipment covered
by such lease.
The Company has also reached an agreement in principle to acquire
from Sullivan certain customer lists, goodwill, inventory, and other
business aspects of Sullivan s hazardous waste transportation
business. Upon closing of this transaction, the Company will pay
Sullivan 1,309,221 shares of the Company s common stock and will
lease from Sullivan its transportation terminal in Ponca City,
Oklahoma for a term of four years at a rental of $3,800 per month.
This transaction is subject to the parties finalizing and executing
definitive agreements.
In order to generate additional liquidity, the Company is attempting
to sell certain assets. With its present working capital line of
credit and the anticipated proceeds resulting from the sale of
certain assets, together with the collection of its receivable and
expected income tax refund, the Company believes that it will be able
to meet is presently foreseeable working capital requirements. This
is a forward-looking statement and involves a number of uncertainties
that could cause actual results regarding the Company s ability to
meet is presently foreseeable working capital requirements to differ
materially from that projected in the statement, including but not
limited to, the inability of the Company to sell such assets, the
Company not being able to return to profitability in 1996 or its
revenues materially decreasing from that anticipated in 1996, the
Company s inability to generate sufficient eligible receivables in
order to fully utilize its present working capital line of credit, a
material amount of receivables are not collected when anticipated,
and/or the Company does not receive the tax refund as expected.
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Equipment Lease Agreement between Environmental
Transportation Services, Inc. and Sullivan's
Trucking Co., Inc., dated March 1, 1996
10.2 Equipment Lease Agreement between Environmental
Transportation Services, Inc. and Sullivan's
Trucking Co., Inc., dated March 1, 1996.
27 Financial Data Schedule
(b) Reports on Form 8-K - None.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, as amended, the Company has caused
the undersigned, duly-authorized, to sign this report on its behalf
on the 17th day of May, 1996.
AMETECH, Inc.
By /s/ Carl B. Anderson, Jr.
______________________________
Carl B. Anderson, Jr.
Chief Executive Officer
By /s/ Kerry Willingham
______________________________
Kerry Willingham
Controller
(Principal Financial Officer)
MBEN:\A-C\AMETECH\10Q\10Q.396
EQUIPMENT LEASE AGREEMENT
________________________________________________________________
Lessor: Sullivan's Trucking Co., Inc.
P. O. Box 2165
Ponca City, Oklahoma 74602
Lease Dated: 3/1/96
Lessee Name: Environmental Transportation Services, Inc.
Mailing Address: P. O. Box 36118
Oklahoma City, OK 73136
________________________________________________________________
TERMS AND CONDITIONS
1. LEASE: The above-named Lessor hereby leases to the above named
Lessee (including each and every Lessee jointly and severally if
there is more than one Lessee) and Lessee hereby leases from
Lessor, subject to the terms and conditions hereof and the terms
and conditions of any Schedules executed by Lessee and Lessor which
reference this Equipment Lease Agreement ("Agreement"), the
personal property described in each such Schedule, together with
all present and future attachments, accessories, replacement parts,
additions (including bodies) and all proceeds thereof, collectively
referred to as the "Equipment."
2. EFFECTIVE DATE: The terms and conditions hereof and the
obligations and liabilities of Lessor and Lessee hereunder shall
become effective on the date of Lessor's acceptance of this
Agreement("Effective Date"), even if on Equipment is specified in
a Schedule at that time, or if Equipment is so specified but has
yet been delivered to and accepted by Lessee.
3. SCHEDULES AND ACCEPTANCE CERTIFICATES: Each item of Equipment
subject to this Agreement shall be described in a Schedule, in the
form attached hereto. More than one item may be set forth on a
Schedule, and more than one Schedule may be included under this
Agreement. When Equipment is set forth on a Schedule signed by
both Lessor and Lessee, such Schedule is an integral part of this
Agreement and the rights and duties of Lessor and Lessee with
regard to that Equipment are governed by this Agreement and such
Schedule, the terms of such Schedule shall control as to the
Equipment listed on such Schedule. When Equipment is delivered to
Lessee by Lessor, Lessee shall immediately inspect the Equipment
for compliance with the requirements of this Agreement and the
relevant Schedule. If the Equipment is acceptable to Lessee,
Lessee shall sign and deliver to Lessor an Acceptance Certificate
in the form attached hereto. However, if Lessee retains
possession of this Agreement as fully as if Lessee signed the
Acceptance Certificate, even if a signed certificate is not
delivered to Lessor.
<PAGE>
4. LESSOR'S TITLE: The Equipment is and shall at all times remain
personal property. No right, title or interest in or to the
Equipment shall pass to Lessee, except for Lessee's rights to
possession, quiet enjoyment and use of the Equipment subject to the
terms and conditions of this Agreement and for so long as Lessee is
not in default of this Agreement. Title to the Equipment will at
all times remain in Lessor's name and Lessee will at all times, at
its own cost and expense, protect and defend the title of Lessor
from and against all claims, liens, encumbrances and legal
processes of creditors of Lessee or of others claiming by or
through Lessee, and keep the Equipment free and clear from all such
claims, liens, encumbrances and processes. Lessee acknowledges and
agrees that Lessor is the owner of the Equipment for Federal income
tax purposes.
5. REGISTRATION AND OTHER FILINGS: Each item of Equipment shall
be registered and the certificate of ownership and/or the
certificate of registration shall be issued with such person or
persons as Lessor may designate shown as the legal owner,
registered owner , first lien holder and/or the user or operator.
Lessee acknowledges that the certificates of ownership and\or
registration will be completed as required by applicable law and as
required to protect Lessor's interests in the Equipment, , and
Lessee agrees that nothing contained on any such certificate shall
expand or otherwise affect the rights of Lessee in the Equipment
set forth herein. Lessee shall be solely responsible for the costs
and expenses associated with applying for and obtaining all such
certificates. Lessee shall also be solely responsible for the
costs and expenses of, and shall take whatever actions are
necessary , to renew and maintain such certificates. In the event
that a new certificate of ownership and registration and to avoid
suspension or revocation of such certificates. In the event that
a new certificate of ownership or registration is required, such
certificates shall be obtained in the same manner and subject to
the same requirements as set forth above. In the event that the
Lessor deems it advisable at any time to prepare or file additional
notices, filings, or other documents (for example: CU-1's or
another form of financing statement) in order to protect its
interests in and to the Equipment, Lessee shall cooperate fully
with Lessor and shall sign each such document and hereby
irrevocably consents to and authorizes Lessor to act as Lessee's
attorney-in-fact to sign each and every such document in Lessee's
name, place and stead, with as much force and effect as if Lessee
had itself manually signed such document.
6. IDENTIFICATION OF EQUIPMENT AND RIGHT OF INSPECTION: Upon
Lessor's request, Lessee shall at Lessee's own expense, permanently
affix to the Equipment in a conspicuous place such labels, signs or
other devices as Lessor may require to identify Lessor as the owner
and Lessor of the Equipment. Lessor shall have the right to
inspect the Equipment at all reasonable times and from time to
time.
<PAGE>
7. DISCLAIMER OF WARRANTY AND LIMITATION OF LIABILITY: Lessee
acknowledges and agrees that each item of Equipment listed on any
Schedule has been selected by Lessee for inclusion in this
Agreement based solely upon Lessee's own judgment and without
reliance upon any representations or warranties by Lessor. Lessor
is not the designer, manufacturer, distributor, or seller of the
Equipment leased hereunder, and LESSOR MAKES NO REPRESENTATIONS AND
SPECIFICALLY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO THE EQUIPMENT LEASED HEREUNDER, INCLUDING, WITHOUT
LIMITATION, THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE OR INTENDED USE. LESSOR SHALL HAVE NO LIABILITY
TO LESSEE FOR ANY CLAIM, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE
CAUSED DIRECTLY, INDIRECTLY, INCIDENTALLY OR CONSEQUENTLY BY THE
EQUIPMENT, BY AN INADEQUACY THEREOF OR DEFECT OR DEFICIENCY
THEREIN, OR BY ANY INCIDENT WHATSOEVER THEREWITH, WHETHER ARISING
IN TORT STRICT LIABILITY, NEGLIGENCE, CONTRACT OR OTHERWISE , OR IN
ANY WAY RELATED TO OR ARISING FROM THIS AGREEMENT. During the term
of the lease of each item of Equipment, Lessor hereby assigns to
Lessee all of the rights and benefits of any warranties made by the
manufacturer or seller of such Equipment, and Lessor further agrees
to exercise for the benefit of Lessee any such rights and benefits
which cannot be assigned.
8. TERMS AND RENTALS: The lease term ("Term") for each item of
Equipment shall be as specified in the applicable Schedule. Lessee
agrees to pay Lessor rental payments for each item of Equipment,
including any advance rental payments ("Rental Payments"), in
accordance with the payment schedule specified in such Schedule.
9. PLACE OF PAYMENT AND OBLIGATION TO PAY: All Rental Payments
are payable without notice or demand at the address below:
10. DELINQUENCY CHARGES: For each Rental Payment or other sum due
hereunder which is not paid within ten (10) days after it s due,
Lessee agrees to pay Lessor a delinquency charge calculated thereon
at the greater of (a)the rate of one and on half percent(1 1\2%)per
month for the period of delinquency or (b)5% of such Rental Payment
or other sum due hereunder, provided that such delinquency charge
shall not be in excess of the maximum amount permitted by law
without creation of a defense or imposition of a penalty.
11. MODIFICATION OF EQUIPMENT AND ASSIGNMENT: Lessee shall not
modify, assign, transfer or sublet the Equipment, this Agreement or
Lessee's interests hereunder without Lessor's prior written consent
(which may be withheld in Lessor's sole discretion), nor shall
Lessee's interests hereunder inure to the benefit of any trustee,
receive, creditor or successor of Lessee or of its property,
whether or not in bankruptcy, by operation of law, or otherwise.
This Agreement and all amounts due hereunder may be signed at any
time by Lessor without Lessee's consent. Upon notice of any
assignment from Lessor or its assignee, Lessee shall make all
payments coming due thereafter to the assignee without offset
counterclaim or defense of any kind. LESSEE FURTHER AGREES THAT
LESSOR MAY WITHOUT NOTICE TO OR CONSENT OF LESSEE, SELL OR GRANT A
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SECURITY INTEREST IN THE EQUIPMENT AND, IN SUCH EVENT, LESSEE'S
RIGHTS IN AND TO THE EQUIPMENT SHALL BE SUBJECT AND SUBORDINATE TO
THE INTEREST AND RIGHTS, INCLUDING THE RIGHT OF POSSESSION, OF ANY
SUCH PURCHASER OR HOLDER OF A SECURITY INTEREST IN THE EQUIPMENT.
12. LESSEE'S GENERAL DUTIES: Lessee agrees, at its own cost and
expense:(a)to use the Equipment in careful and prudent manner in
the regular course of Lessee's business and to permit only
qualified personnel to use the Equipment, notifying each such
person that he or she is not an employee of Lessor nor under
Lessor's direction or control;(b)to comply with all applicable
laws, rules and regulations relating to the possession, use or
maintenance of the Equipment;(c)to comply with any published
instruction, procedures or specification of the manufacturer of the
Equipment and of the party selling the Equipment to Lessor;(d)to
comply with all of the terms and conditions of each and every
insurance policy covering the Equipment;(e)to obtain any and all
certificates , permits or licenses required or permitted by law
with respect to the Equipment, subject to Lessor's instruction; and
(f)to furnish Lessor promptly with any financial statements or
other information which Lessor may reasonably request from time to
time.
13. MAINTENANCE AND REPAIR: Lessee shall, at its own cost and
expense keep the Equipment in good condition, repair and appearance
and to comply with all of the manufacturer's recommended procedures
in this regard. In addition, Lessee shall maintain the Equipment
in compliance with all applicable federal, state and local safety,
environmental and other rules and regulations. Lessee shall
furnish, at its own expense , all necessary for maintenance and
lawful operation of the Equipment. Lessee shall not alter or
modify the Equipment in any manner that adversely affects its
value. All parts installed and any modifications and alterations
made in the course of the ordinary maintenance and repair of the
Equipment shall become the property of Lessor and shall remain the
property of Lessor upon termination of this Agreement unless
otherwise provided herein.
14. INSURANCE: Lessee shall also obtain from an insurance company
approved by Lessor liability insurance with combined single limits
of at least $1,000,000 per occurrence. If Lessee is using the
Equipment to transport hazardous material, the insurance must
include Environmental Restoration coverage in an amount not less
than $5,000,000 per occurrence. Each insurance policy must
provide, in a form acceptable to Lessor, that Lessor is an
additional insured and the loss payee under the policy. If the
Equipment is lost or damaged, any and all insurance proceeds shall
be paid to the Lessor, and the Lessor may apply them as it chooses
either (i) to satisfy any obligation arising under this Agreement
(whether or not due or otherwise matured), or (ii)to repair the
Equipment. Each policy must provide that Lessor's interest therein
shall not be invalidated by any acts, omissions or neglect of
anyone other than Lessor, and that the policy can be canceled only
after written notice of intention to cancel has been delivered to
<PAGE>
Lessor at least thirty (30) days before the cancellation date.
Lessee shall deliver to Lessor proof of insurance coverage
acceptable to Lessor. Lessee shall be solely liable for any losses
which occur because no insurance has been obtained or the coverage
of the insurance which has been obtained is incomplete, even if
Lessor has reviewed the insurance coverage.
15. TAXES: On and after the Effective Date, Lessee agrees to pay
promptly to the appropriate governmental agency or, upon request,
to Lessor, all taxes, assessments, levies, duties, and other
governmental charges (including any penalties and interest and any
fees for titling or registration) levied or assessed against
Lessee, Lessor or the Equipment, upon or with respect to this
Agreement or the purchase, use, operation, leasing, ownership,
value, return or other disposition of the Equipment, or the rent,
earnings or receipts arising therefrom, exclusive, however, of any
taxes based on Lessor's net income and exclusive of any sales taxes
paid by Lessor with respect to its initial purchase of the
Equipment which have already been included in the cost of the
Equipment under the applicable Schedule. If requested by Lessor,
Lessee agrees to prepare on behalf of Lessor and in a form
satisfactory to Lessor all requested tax returns and reports
concerning the Equipment, to file such returns and reports with all
appropriate governmental charges. The obligations arising under
this Section shall survive payment of all other obligations under
this Agreement and the termination of this Agreement.
16. LOSS OR DESTRUCTION OF EQUIPMENT: On and after delivery of
any item of Equipment to Lessee, Lessee shall bear all of the risk
of loss, damage, or destruction of such Equipment. If any of the
Equipment is lost, stolen, destroyed or damaged and beyond repair,
for any reason, Lessee shall (a)immediately and fully inform Lessor
with regard thereto: and (b)promptly pay to Lessor the casualty
value as shown in the Casualty and Termination Value Schedule
attached hereto ("Casualty Value"), as of the date of payment
thereof, plus all accrued and unpaid Rental Payments and other
amounts then due and remaining unpaid. Except as expressly
provided herein, the total or partial destruction of the Equipment,
or the total or partial loss of use or possession thereof by
Lessee, shall not relieve or release Lessee from its obligations
and liabilities under this Agreement.
17. RETURN TO LESSOR: Upon the expiration of the Term for any
Equipment, Lessee shall return, at Lessee's sole expense, such
Equipment to Lessor at such place as is designated by Lessor at
that time and in the same condition as when received by Lessee,
except only reasonable wear and tear resulting from the normal and
customary use thereof. However, if any Schedule to this Agreement
contains specific requirements for the condition of the Equipment
upon its return to Lessor, the Equipment must satisfy such
requirements. Lessee shall pay to Lessor on demand, as additional
rental hereunder, the cost of any repairs necessary to place the
Equipment in the condition required by this Agreement at that time.
If the equipment ceases to operate for any reason other than
<PAGE>
Lessee's negligence or fault and it is determined by mutual
agreement of Lessee and Lessor that it is not economically feasible
for such equipment to be repaired, then Lessee may return such
equipment to Lessor after which all future rental payments for such
equipment shall be terminated.
18. TERMINAL RENTAL ADJUSTMENT CLAUSE: If Lessee so elects by
executing the Terminal Rental Adjustment Clause ("TRAC")
Supplement in the form attached hereto with regard to one or more
item of Equipment, then there shall be a terminal rental adjustment
for such Equipment as further specified in such Supplement. If
this Agreement is terminated with respect to any item of Equipment
covered by a TRAC Supplement for any reason other than expiration
of the Term, then this Section shall not apply and Lessee's rights
and obligations shall be governed by the other Sections hereof.
19. PERFORMANCE OF OBLIGATIONS OF LESSEE BY LESSOR: If Lessee
fails to perform duly and promptly any of its obligations under
this Agreement, Lessor may perform the same , but shall not be
obligated to do so, to protect the interests of Lessor, Lessee or
both, and any cost, liability or expense (including reasonable
attorney's fees) incurred by Lessor in such performance shall be
paid to Lessor by Lessee upon demand as additional rent for the
Equipment.
20. GENERAL INDEMNITY: Lessee assumes liability of and agrees to
indemnify, defend and hold Lessor, its agents, employees,
successors and assigns harmless from any and all actions, suits,
liabilities, obligations and claims of every nature (including,
without limitation, those arising from contract, strict or absolute
liability in tort, product liability, negligence, or any other
cause) and from any and all damages, awards, penalties, fines,
forfeitures, settlements, interest and attorney's fees awarded to
any person whomsoever and regardless of the reason, which directly
or indirectly results from or relates to the manufacture, delivery,
purchase, sale, ownership leasing, use, possession, operation,
condition (including Federal income tax), which Lessor is required
to pay in respect of the amounts received under this Section,
including any interest, penalties and additions to tax. For the
purposes of this Section, the term Lessor shall include the
affiliated taxpayer group, within the meaning of Section 1504 of
the Internal Revenue Code as amended ("Code") of which Lessor is a
member. Lessee's indemnities and liabilities under this Section
shall continue in full force and effect, notwithstanding the
expiration or termination of this Agreement for any reason.
Upon request of Lessor, Lessee shall assume the defense of any and
all demands, claims, actions, suits and all other proceedings
against Lessor for which indemnity is provided herein and, Lessee
shall allow Lessor to participate in the defense thereof. At
Lessor's option, Lessor may assume the defense of the matter, but
shall no relieve or reduce Lessee's obligations to indemnify Lessor
as set forth herein.
<PAGE>
21. TAX INDEMNITY: Lessee acknowledges that the Lessor is the
owner of the Equipment for Federal income tax purposes and that
Lessor intends to take the accelerated cost recovery deductions
("ACRS Deductions") as provided by Section 168 of the Code.
Accordingly, Lessee agrees that at all times during the term of
this Agreement, Lessee shall not take any action, fail to take any
action, assert any claim or make any representation which results,
or may result, in the loss to Lessor of ACRS Deductions. In the
event that the ACRS Deductions are lost, reduced or delayed due to
any act or omission by Lessee, Lessee agrees to promptly pay to
Lessor, as additional rent, an amount such that the portion
remaining after deduction of all taxes required to be paid by
Lessor in respect to the receipt of such amount (including Federal
income tax) shall fully compensate Lessor for the loss, reduction
or delay of the ACRS Deductions, including any interest, penalties
and additions to tax. Lessor shall have no obligation to contest,
beyond the level of an Internal Revenue Service auditing agent, any
recapture, disallowance, elimination, reduction or disqualification
caused by any act or omission of the Lessee. Lessee also
acknowledges that there is a possibility that, after the
commencement of this Agreement, the Code, or any regulations
promulgated thereunder, might be amended or changed so as to
deprive Lessor of the right to claim all or part of the ACRS
Deductions, or to lengthen the time period over which the Equipment
must be depreciated, or in some other manner impair Lessor's after-
tax margin with respect to this Agreement ("Tax Benefits"). In the
event that the Lessor' Tax Benefits are impaired due to an
amendment or change to the Code, or any regulation promulgated
thereunder, the Lessee agrees to pay the Lessor an adjusted rent
over the remaining term of the lease such that Lessor's after-tax
margins (after consideration of all taxes, including Federal income
tax, and increased costs) with respect to this Agreement is
maintained . Lessor shall have no obligation to contest any
impairment of Tax Benefits due to an amendment or change to the
Code or any regulations promulgated thereunder. For the purposes
of this Section, the term Lessor shall include affiliated taxpayer
group, within the meaning of Section 1504 of the Code, of which
Lessor is a member. Lessee's indemnities and liabilities under
this Section shall continue in full force and effect
notwithstanding the expiration or termination of this Agreement for
any reason.
Lessee acknowledges that the percentage set forth in the Casualty
and Termination Schedules attached hereto have been computed on the
assumption that Lessor shall be entitled to the Tax Benefits as
allowed under the present Code. Accordingly, in the event Lessee
becomes obligated to pay additional sums to Lessor, the percentages
set forth in the schedules shall be revised as may be necessary in
the reasonable opinion of Lessor so that the amount payable by
Lessee in the event of a casualty loss or termination shall be
sufficient to maintain Lessor's net after-tax margin at the same
level that would have been available to the Lessor upon payment of
the Casualty Value or Termination Value paid after the liability
of Lessee hereunder shall become fixed regardless of the date of
<PAGE>
such casualty or other occurrence. Further, with respect to any
previous payment of Casualty Value or Termination Value under the
lease by the Lessee, the Lessee would have been the additional
amount, in excess of the amount actually paid, that the Lessee
would have been required to pay had the liability of Lessee become
fixed prior to the date of the original payment.
22. DEFAULT: Time is of the essence on this Agreement and the
occurrence of any of the following events shall constitute a
default hereof: (a) Lessee's failure to pay when due the full
amount of any payments required hereunder, including, without
limitation, rents or additional rents, delinquency and late
charges, interest, taxes, insurance, the costs of maintenance or
repairs, amounts due for indemnification, the Casualty or
Termination Values (if applicable) or any other amounts;
(b)Lessee's failure to perform any action or other obligation
required by the terms hereof to be performed by Lessee; (c) any
attempt by Lessee to remove, sell, transfer, sublease, encumber, or
otherwise transfer, dispose or part with possession of the
Equipment without Lessor's prior written consent; (d) the making of
any false or misleading statements by Lessee prior to or in
connection with this Agreement; (e) Lessee's death, dissolution, or
other termination of existence; (f) Lessee's becoming insolvent or
becoming the subject of a petition in bankruptcy, either
voluntarily or involuntary, Lessee' making an assignment for the
benefit of creditors, or being named or subjected to a suit for the
appointment of a receiver; (g) seizure of or levy upon any
Equipment leased hereunder reason of any legal or governmental
process directed against Lessee; or (h) any bankruptcy, insolvency,
death, dissolution, termination of existence or other default of
any guarantor of Lessee.
23. TERMINATION VALUE: Lessor and Lessee hereby agree that the
amount set forth under the appropriate entry of the termination
value section of the Casualty and Termination Value Schedule
attached hereto ("Termination Value") represents the amount
necessary to compensate Lessor for any breach by Lessee of its
obligation to make future Rental Payments under this Agreement with
regard to the items of Equipment shown on such Schedule. In the
event of Lessee's breach of its Rental Payment obligation, Lessee
agrees to pay Lessor the Termination Value (determined by reference
to the most recent Rental Payment date shown thereon) as liquidated
damages and not as a penalty. The Termination Value does not
include, and Lessee shall remain liable for and shall immediately
pay to Lessor, all other amounts due under this Agreement (except
for the future Rental Payments), including but not limited to past
due Rental Payments, delinquency and late charges, taxes,
insurance, costs of maintenance and repair, and any amounts due
under the indemnification provisions hereof.
24. REMEDIES: In the event of any default by Lessee under this
Agreement, Lessor shall have all of the rights and remedies
permitted at law and in equity. The rights and remedies available
to Lessor may vary with the law of the applicable jurisdiction, and
<PAGE>
Lessee acknowledges and agrees that Lessor shall be entitled to
exercise any and all available rights and remedies in any
combination or sequence not expressly prohibited by law. Lessee
hereby agrees and consents to any rights or remedies which are
available to Lessor if Lessee has so agreed or consented. Unless
prohibited by law, Lessor's available rights and remedies in the
event of a default by Lessee include, without limitation: (a)
without terminating this Agreement, request Lessee to assemble any
or all of the Equipment, to make the same available to Lessor at a
reasonable place designated by Lessor, and to put Lessor in
possession thereof; (b) without terminating this Agreement,
immediately and without legal proceedings or notice to Lessee
enter Lessee's premises, take possession of, remove and retain any
or all of the Equipment or render the same unusable; (c) without
terminating this Agreement, declare the Termination Value and all
other sums payable hereunder immediately due and payable; (d)
without notice to Lessee, terminate the Agreement as to any or all
of the Equipment leased hereunder, but such termination shall not
release Lessee from the liabilities and obligation arising from
such breach; and (e) sell or otherwise dispose of any or all of the
Equipment private or public sale, or re-lease any or all of the
same on such terms and conditions as Lessor deems appropriate. In
the event that Lessor repossesses, re-leases, sells or otherwise
disposes of the Equipment, any net proceeds of such action which
are attributable to Lessee's interest in the Equipment under this
Agreement shall be applied against Lessee's obligations hereunder.
Unless otherwise mandatory required by applicable law, any
remaining net proceeds shall belong solely to Lessor. Lessee shall
be liable for any amounts due to Lessor hereunder after application
of the net proceeds as set forth above. The net proceeds shall be
determined by deducting from the gross sales proceeds, or from the
<PAGE>
net present value of the proceeds of a re-lease, any applicable
sales, use and excise taxes, and sales or other fees or commissions
actually paid to any party (including the party who sold the
Equipment to Lessor) who helps Lessor sell or otherwise dispose of
the Equipment, and Lessor's expenses of locating, repossessing,
repairing, preparing and disposing of the Equipment, including
attorney's fees.
Lessee hereby expressly waives any rights it may have to possession
of the Equipment after default and all claims it may have for
damages or injuries suffered through or loss caused by any
repossession, sale or other disposition of the Equipment hereunder.
Lessee agrees that any property other than Equipment which is in or
upon the Equipment at the time of repossession may be taken and
held without liability until its return is requested by Lessee.
Lessee hereby acknowledges and agrees that any applicable standard
of commercial reasonableness will be satisfied if the Lessor sell
or otherwise disposes of the Equipment by any method which is
customarily used for similar Equipment, or which Lessor has used or
would use for similar Equipment owned solely by Lessor, even if
Lessee believes or proves that a different method of disposition
would have been more beneficial for Lessee. Unless otherwise
required by law, any requirement of reasonable notice regarding the
re-lease, sale or other disposition of the Equipment which Lessor
may be obligated to give will be met if such notice is mailed to
Lessee at tits address shown herein at least ten (10) days before
the time of such re-lease, sale or other disposition. Nothing
herein contained shall require Lessor to re-lease, sell or
otherwise dispose of the Equipment.
25. NOTICES: All notices relating hereto shall be either
delivered in person to an officer of Lessor or Lessee, or be sent
by certified mail, return receipt requested, to Lessor or Lessee at
its address as shown on the face hereof or to the last known
address of the recipient.
26. LIMITATIONS ON USE: The Equipment shall not be used in the
transportation of radioactive materials, hazardous wastes,
explosives, hazardous materials, gasses or liquids, unless Lessor
has expressly approved the transportation of such material in
writing.
27. MISCELLANEOUS: This Agreement constitutes the entire
understanding of the parties and supersedes any and all prior
understandings or agreements, oral or written, between and among
the parties respecting the within subject matter. This Agreement
shall be binding upon the successors, assigns and legal
representatives of the parties hereto. This Agreement may not be
modified unless in a writing signed both parties. No provision of
this Agreement may be waived unless in a writing deemed to be a
waiver of any other or subsequent default. The provisions of this
Agreement are severable, and if a court of competent jurisdiction
determines that any of them are unenforceable in accordance with
their terms, the court may modify, sever or divide such provisions
as necessary to enforce those provisions to the extent they may be
executed in any number of counterparts, each of which shall be
deemed to be an original, and such counterparts shall together
constitute but one agreement. In the event of litigation
concerning this Agreement, the prevailing party shall be entitled
to recover its costs and expenses, including reasonable attorney's
fees.
LESSEE ACKNOWLEDGES THAT HE HAS RECEIVED A TRUE COPY OF THIS
AGREEMENT, HE HAS READ IT AND IT WAS COMPLETELY FILLED IN BEFORE HE
SIGNED IT.
_________________________________________________________________
ALL TERMS AND CONDITIONS ON THE PREVIOUS PAGES OF THIS AGREEMENT
ARE A PART HEREOF AND ARE BINDING UPON THE PARTIES HERETO.
<PAGE>
LESSEE ACKNOWLEDGES THAT HE HAS RECEIVED A TRUE COPY OF THIS
AGREEMENT, HE HAS READ IT AND IT WAS COMPLETELY FILLED IN BEFORE HE
SIGNED IT.
LESSEE: Environmental
Transportation
Services, Inc.
ACCEPTED BY: SS#/Tax ID #__________________
Sullivan's Trucking co., Inc.
By: /s/ Roy Sullivan By: /s/ Carl Anderson, Jr.
___________________________ ___________________________
Title: President Title: President
_______________________ ________________________
Address: 1705 NE Woodland Address: 1813 SE 25th St.
Ponca City, OK OKC, OK 73129
______________________ ______________________
Date: 5/1/96 Date: 5/1/96
________________________ _________________________
<PAGE>
EQUIPMENT LEASE AGREEMENT
SCHEDULE A: RENTAL PAYMENTS
___________________________
Schedule A is made a part of the Equipment Lease Agreement dated
March 1, 1996 between Sullivan's Trucking Co., Inc. (Lessor) and
Environmental Transportation Services, Inc. (Lessee)
______________________________________________________________
COMMENCEMENT DATE TERM OF LEASE LOCATION OF EQUIPMENT
March 1, 1996 24 MONTHS 1813 S.E. 25th STREET
OKLAHOMA CITY, OK
_______________________________________________________________
STATE OF JURISDICTION STATE EQUIPMENT WILL BE TITLED IN
OKLAHOMA OKLAHOMA
_______________________________________________________________
BASEPLATE REGISTRATION (STATE, COUNTY, CITY)
OKLAHOMA, OKLAHOMA, OKLAHOMA CITY
_______________________________________________________________
DESCRIPTION OF EQUIPMENT
SCHEDULE A MONTHLY
YEAR MAKE MODEL VEHICLE ID NUMBER VALUE RENTAL PAYMENT
_________________________________________________________________
SEE ATTACHED SCHEDULE
_________________________________________________________________
MONTHLY RENTAL PAYMENTS
1. Schedule A Value (Total Equipment Cost) $192,000.00
===========
2. Total Monthly Payments $ 8,683.64
===========
Monthly rental payments are due on the same day each month
beginning March 1, 1996.
LESSOR: Sullivan's Trucking LESSEE: Environmental
Transportation
Co., Inc. Services, Inc.
By: /s/ Roy Sullivan By: /s/ Carl B. Anderson, Jr.
________________________ ______________________________
Title: President Title: President
______________________ __________________________
Date: 5/1/96 Date: 5/1/96
______________________ __________________________
<PAGE>
<TABLE>
<CAPTION>
VEHICLE MONTHLY
IDENTIFICATION SCHEDULE A RENTAL
YEAR MAKE NUMBER VALUE PAYMENT
________________________________________________________________
TRACTORS
<S> <C> <C> <C> <C>
1988 FREIGHTLINER 1FUY2WYB5JP326609 $10,000.00 $452.27
1984 FREIGHTLINER 1FUCYUYB5EP231342 6,000.00 271.36
1985 FREIGHTLINER 1FV8YOY95EP259926 6,000.00 271.36
1988 FREIGHTLINER 1FV9YOY91JP321819 10,000.00 452.27
1988 FREIGHTLINER 1FV9YOY95JP329258 10,000.00 452.27
1988 FREIGHTLINER 1FV9YOY97JP329259 10,000.00 452.27
1988 FREIGHTLINER 1FV82OY93JP329241 10,000.00 452.27
1988 FREIGHTLINER 1FUY2SYB6JP335716 10,000.00 452.27
1988 FREIGHTLINER 1FUY2SYB8JP335717 10,000.00 452.27
1988 FREIGHTLINER 1FUY2SYB1JP335719 10,000.00 452.27
1988 FREIGHTLINER 1FUY2SYB2JP336281 10,000.00 452.27
1988 FREIGHTLINER 1FUY2SYB4JP336282 10,000.00 452.27
1989 FREIGHTLINER 1FUYDSYB4KP351344 10,000.00 452.27
1986 FREIGHTLINER 1FUYYRYB5GP278361 10,000.00 452.27
1986 FREIGHTLINER 1FUYYRYB1GP278356 10,000.00 452.27
1988 FREIGHTLINER 1FUYYRYB4JP328335 10,000.00 452.27
1988 FREIGHTLINER 1FUYYRYB6JP328336 10,000.00 452.27
1988 FREIGHTLINER 1FUYYRYB7JP328331 10,000.00 452.27
1988 FREIGHTLINER 1FUYYRYBxJP328338 10,000.00 452.27
1988 FREIGHTLINER 1FUYYRYB1JP328339 10,000.00 452.27
______________________
20 $192,000.00 $8,683.64
======================
</TABLE>
<PAGE>
CASUALTY AND TERMINATION SCHEDULE
_________________________________
This Casualty and Termination Schedule is made a part of the
Equipment Lease Agreement dated April 17, 1996. Termination values
assume that all rental payments, fees, and other payments due under
the agreement are paid. The table below reflects the percentage of
original cost for casualty or termination at each rental month.
<TABLE>
<S> <S> <S>
PAYMENT PAYMENT
DATE NO. PERCENTAGE
_________________________________________________________________
<C> <C> <C>
03/01/96 1 96.14394%
04/01/96 2 92.26217%
05/01/96 3 88.35452%
06/01/96 4 84.42082%
07/01/96 5 80.46090%
08/01/96 6 76.47457%
09/01/96 7 72.46168%
10/01/96 8 68.42202%
11/01/96 9 64.35544%
12/01/96 10 60.26175%
01/01/97 11 56.14076%
02/01/97 12 51.99231%
03/01/97 13 47.81619%
04/01/97 14 43.61224%
05/01/97 15 39.38026%
06/01/97 16 35.12006%
07/01/97 17 30.83147%
08/01/97 18 26.51428%
09/01/97 19 22.16832%
10/01/97 20 17.79338%
11/01/97 21 13.38927%
12/01/97 22 8.95580%
01/01/98 23 4.49278%
02/01/98 24 -0.00000%
</TABLE>
LESSOR: Sullivan's Trucking LESSEE: Environmental
Transportation
Co., Inc. Services, Inc.
By: /s/ Roy Sullivan By: /s/ Carl B. Anderson, Jr.
________________________ ______________________________
Title: President Title: President
______________________ __________________________
Date: 5/1/96 Date: 5/1/96
______________________ __________________________
EQUIPMENT LEASE AGREEMENT
________________________________________________________________
Lessor: Sullivan's Trucking Co., Inc.
P. O. Box 2165
Ponca City, Oklahoma 74602
Lease Dated: 3/1/96
Lessee Name: Environmental Transportation Services, Inc.
Mailing Address: P. O. Box 36118
Oklahoma City, OK 73136
________________________________________________________________
TERMS AND CONDITIONS
1. LEASE: The above-named Lessor hereby leases to the above named
Lessee (including each and every Lessee jointly and severally if
there is more than one Lessee) and Lessee hereby leases from
Lessor, subject to the terms and conditions hereof and the terms
and conditions of any Schedules executed by Lessee and Lessor which
reference this Equipment Lease Agreement ("Agreement"), the
personal property described in each such Schedule, together with
all present and future attachments, accessories, replacement parts,
additions (including bodies) and all proceeds thereof, collectively
referred to as the "Equipment."
2. EFFECTIVE DATE: The terms and conditions hereof and the
obligations and liabilities of Lessor and Lessee hereunder shall
become effective on the date of Lessor's acceptance of this
Agreement("Effective Date"), even if on Equipment is specified in
a Schedule at that time, or if Equipment is so specified but has
yet been delivered to and accepted by Lessee.
3. SCHEDULES AND ACCEPTANCE CERTIFICATES: Each item of Equipment
subject to this Agreement shall be described in a Schedule, in the
form attached hereto. More than one item may be set forth on a
Schedule, and more than one Schedule may be included under this
Agreement. When Equipment is set forth on a Schedule signed by
both Lessor and Lessee, such Schedule is an integral part of this
Agreement and the rights and duties of Lessor and Lessee with
regard to that Equipment are governed by this Agreement and such
Schedule, the terms of such Schedule shall control as to the
Equipment listed on such Schedule. When Equipment is delivered to
Lessee by Lessor, Lessee shall immediately inspect the Equipment
for compliance with the requirements of this Agreement and the
relevant Schedule. If the Equipment is acceptable to Lessee,
Lessee shall sign and deliver to Lessor an Acceptance Certificate
in the form attached hereto. However, if Lessee retains possession
of this Agreement as fully as if Lessee signed the Acceptance
Certificate, even if a signed certificate is not delivered to
Lessor.
4. LESSOR'S TITLE: The Equipment is and shall at all times remain
personal property. No right, title or interest in or to the
<PAGE>
Equipment shall pass to Lessee, except for Lessee's rights to
possession, quiet enjoyment and use of the Equipment subject to the
terms and conditions of this Agreement and for so long as Lessee is
not in default of this Agreement. Title to the Equipment will at
all times remain in Lessor's name and Lessee will at all times, at
its own cost and expense, protect and defend the title of Lessor
from and against all claims, liens, encumbrances and legal
processes of creditors of Lessee or of others claiming by or
through Lessee, and keep the Equipment free and clear from all such
claims, liens, encumbrances and processes. Lessee acknowledges and
agrees that Lessor is the owner of the Equipment for Federal income
tax purposes.
5. REGISTRATION AND OTHER FILINGS: Each item of Equipment shall
be registered and the certificate of ownership and/or the
certificate of registration shall be issued with such person or
persons as Lessor may designate shown as the legal owner,
registered owner , first lien holder and/or the user or operator.
Lessee acknowledges that the certificates of ownership and\or
registration will be completed as required by applicable law and as
required to protect Lessor's interests in the Equipment, , and
Lessee agrees that nothing contained on any such certificate shall
expand or otherwise affect the rights of Lessee in the Equipment
set forth herein. Lessee shall be solely responsible for the costs
and expenses associated with applying for and obtaining all such
certificates. Lessee shall also be solely responsible for the
costs and expenses of, and shall take whatever actions are
necessary , to renew and maintain such certificates. In the event
that a new certificate of ownership and registration and to avoid
suspension or revocation of such certificates. In the event that
a new certificate of ownership or registration is required, such
certificates shall be obtained in the same manner and subject to
the same requirements as set forth above. In the event that the
Lessor deems it advisable at any time to prepare or file additional
notices, filings, or other documents (for example: CU-1's or
another form of financing statement) in order to protect its
interests in and to the Equipment, Lessee shall cooperate fully
with Lessor and shall sign each such document and hereby
irrevocably consents to and authorizes Lessor to act as Lessee's
attorney-in-fact to sign each and every such document in Lessee's
name, place and stead, with as much force and effect as if Lessee
had itself manually signed such document.
6. IDENTIFICATION OF EQUIPMENT AND RIGHT OF INSPECTION: Upon
Lessor's request, Lessee shall at Lessee's own expense, permanently
affix to the Equipment in a conspicuous place such labels, signs or
other devices as Lessor may require to identify Lessor as the owner
and Lessor of the Equipment. Lessor shall have the right to
inspect the Equipment at all reasonable times and from time to
time.
7. DISCLAIMER OF WARRANTY AND LIMITATION OF LIABILITY: Lessee
acknowledges and agrees that each item of Equipment listed on any
Schedule has been selected by Lessee for inclusion in this
<PAGE>
Agreement based solely upon Lessee's own judgment and without
reliance upon any representations or warranties by Lessor. Lessor
is not the designer, manufacturer, distributor, or seller of the
Equipment leased hereunder, and LESSOR MAKES NO REPRESENTATIONS AND
SPECIFICALLY DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, WITH
RESPECT TO THE EQUIPMENT LEASED HEREUNDER, INCLUDING, WITHOUT
LIMITATION, THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE OR INTENDED USE. LESSOR SHALL HAVE NO LIABILITY
TO LESSEE FOR ANY CLAIM, LOSS OR DAMAGE CAUSED OR ALLEGED TO BE
CAUSED DIRECTLY, INDIRECTLY, INCIDENTALLY OR CONSEQUENTLY BY THE
EQUIPMENT, BY AN INADEQUACY THEREOF OR DEFECT OR DEFICIENCY
THEREIN, OR BY ANY INCIDENT WHATSOEVER THEREWITH, WHETHER ARISING
IN TORT STRICT LIABILITY, NEGLIGENCE, CONTRACT OR OTHERWISE , OR IN
ANY WAY RELATED TO OR ARISING FROM THIS AGREEMENT. During the term
of the lease of each item of Equipment, Lessor hereby assigns to
Lessee all of the rights and benefits of any warranties made by the
manufacturer or seller of such Equipment, and Lessor further agrees
to exercise for the benefit of Lessee any such rights and benefits
which cannot be assigned.
8. TERMS AND RENTALS: The lease term ("Term") for each item of
Equipment shall be as specified in the applicable Schedule. Lessee
agrees to pay Lessor rental payments for each item of Equipment,
including any advance rental payments ("Rental Payments"), in
accordance with the payment schedule specified in such Schedule.
9. PLACE OF PAYMENT AND OBLIGATION TO PAY: All Rental Payments
are payable without notice or demand at the address below:
10. DELINQUENCY CHARGES: For each Rental Payment or other sum due
hereunder which is not paid within ten (10) days after it s due,
Lessee agrees to pay Lessor a delinquency charge calculated thereon
at the greater of (a)the rate of one and on half percent(1 1\2%)per
month for the period of delinquency or (b)5% of such Rental Payment
or other sum due hereunder, provided that such delinquency charge
shall not be in excess of the maximum amount permitted by law
without creation of a defense or imposition of a penalty.
11. MODIFICATION OF EQUIPMENT AND ASSIGNMENT: Lessee shall not
modify, assign, transfer or sublet the Equipment, this Agreement or
Lessee's interests hereunder without Lessor's prior written consent
(which may be withheld in Lessor's sole discretion), nor shall
Lessee's interests hereunder inure to the benefit of any trustee,
receive, creditor or successor of Lessee or of its property,
whether or not in bankruptcy, by operation of law, or otherwise.
This Agreement and all amounts due hereunder may be signed at any
time by Lessor without Lessee's consent. Upon notice of any
assignment from Lessor or its assignee, Lessee shall make all
payments coming due thereafter to the assignee without offset
counterclaim or defense of any kind. LESSEE FURTHER AGREES THAT
LESSOR MAY WITHOUT NOTICE TO OR CONSENT OF LESSEE, SELL OR GRANT A
SECURITY INTEREST IN THE EQUIPMENT AND, IN SUCH EVENT, LESSEE'S
RIGHTS IN AND TO THE EQUIPMENT SHALL BE SUBJECT AND SUBORDINATE TO
<PAGE>
THE INTEREST AND RIGHTS, INCLUDING THE RIGHT OF POSSESSION, OF ANY
SUCH PURCHASER OR HOLDER OF A SECURITY INTEREST IN THE EQUIPMENT.
12. LESSEE'S GENERAL DUTIES: Lessee agrees, at its own cost and
expense:(a)to use the Equipment in careful and prudent manner in
the regular course of Lessee's business and to permit only
qualified personnel to use the Equipment, notifying each such
person that he or she is not an employee of Lessor nor under
Lessor's direction or control;(b)to comply with all applicable
laws, rules and regulations relating to the possession, use or
maintenance of the Equipment;(c)to comply with any published
instruction, procedures or specification of the manufacturer of the
Equipment and of the party selling the Equipment to Lessor;(d)to
comply with all of the terms and conditions of each and every
insurance policy covering the Equipment;(e)to obtain any and all
certificates , permits or licenses required or permitted by law
with respect to the Equipment, subject to Lessor's instruction; and
(f)to furnish Lessor promptly with any financial statements or
other information which Lessor may reasonably request from time to
time.
13. MAINTENANCE AND REPAIR: Lessee shall, at its own cost and
expense keep the Equipment in good condition, repair and appearance
and to comply with all of the manufacturer's recommended procedures
in this regard. In addition, Lessee shall maintain the Equipment
in compliance with all applicable federal, state and local safety,
environmental and other rules and regulations. Lessee shall
furnish, at its own expense , all necessary for maintenance and
lawful operation of the Equipment. Lessee shall not alter or
modify the Equipment in any manner that adversely affects its
value. All parts installed and any modifications and alterations
made in the course of the ordinary maintenance and repair of the
Equipment shall become the property of Lessor and shall remain the
property of Lessor upon termination of this Agreement unless
otherwise provided herein.
14. INSURANCE: Lessee shall also obtain from an insurance company
approved by Lessor liability insurance with combined single limits
of at least $1,000,000 per occurrence. If Lessee is using the
Equipment to transport hazardous material, the insurance must
include Environmental Restoration coverage in an amount not less
than $5,000,000 per occurrence. Each insurance policy must
provide, in a form acceptable to Lessor, that Lessor is an
additional insured and the loss payee under the policy. If the
Equipment is lost or damaged, any and all insurance proceeds shall
be paid to the Lessor, and the Lessor may apply them as it chooses
either (i) to satisfy any obligation arising under this Agreement
(whether or not due or otherwise matured), or (ii)to repair the
Equipment. Each policy must provide that Lessor's interest therein
shall not be invalidated by any acts, omissions or neglect of
anyone other than Lessor, and that the policy can be canceled only
after written notice of intention to cancel has been delivered to
Lessor at least thirty (30) days before the cancellation date.
Lessee shall deliver to Lessor proof of insurance coverage
<PAGE>
acceptable to Lessor. Lessee shall be solely liable for any losses
which occur because no insurance has been obtained or the coverage
of the insurance which has been obtained is incomplete, even if
Lessor has reviewed the insurance coverage.
15. TAXES: On and after the Effective Date, Lessee agrees to pay
promptly to the appropriate governmental agency or, upon request,
to Lessor, all taxes, assessments, levies, duties, and other
governmental charges (including any penalties and interest and any
fees for titling or registration) levied or assessed against
Lessee, Lessor or the Equipment, upon or with respect to this
Agreement or the purchase, use, operation, leasing, ownership,
value, return or other disposition of the Equipment, or the rent,
earnings or receipts arising therefrom, exclusive, however, of any
taxes based on Lessor's net income and exclusive of any sales taxes
paid by Lessor with respect to its initial purchase of the
Equipment which have already been included in the cost of the
Equipment under the applicable Schedule. If requested by Lessor,
Lessee agrees to prepare on behalf of Lessor and in a form
satisfactory to Lessor all requested tax returns and reports
concerning the Equipment, to file such returns and reports with all
appropriate governmental charges. The obligations arising under
this Section shall survive payment of all other obligations under
this Agreement and the termination of this Agreement.
16. LOSS OR DESTRUCTION OF EQUIPMENT: On and after delivery of
any item of Equipment to Lessee, Lessee shall bear all of the risk
of loss, damage, or destruction of such Equipment. If any of the
Equipment is lost, stolen, destroyed or damaged and beyond repair,
for any reason, Lessee shall (a)immediately and fully inform Lessor
with regard thereto: and (b) promptly pay to Lessor the casualty
value as shown in the Casualty and Termination Value Schedule
attached hereto ("Casualty Value"), as of the date of payment
thereof, plus all accrued and unpaid Rental Payments and other
amounts then due and remaining unpaid. Except as expressly
provided herein, the total or partial destruction of the Equipment,
or the total or partial loss of use or possession thereof by
Lessee, shall not relieve or release Lessee from its obligations
and liabilities under this Agreement.
17. RETURN TO LESSOR: Upon the expiration of the Term for any
Equipment, Lessee shall return, at Lessee's sole expense, such
Equipment to Lessor at such place as is designated by Lessor at
that time and in the same condition as when received by Lessee,
except only reasonable wear and tear resulting from the normal and
customary use thereof. However, if any Schedule to this Agreement
contains specific requirements for the condition of the Equipment
upon its return to Lessor, the Equipment must satisfy such
requirements. Lessee shall pay to Lessor on demand, as additional
rental hereunder, the cost of any repairs necessary to place the
Equipment in the condition required by this Agreement at that time.
18. PURCHASE OPTION: Provided Lessee shall have fully complied
with all of the terms and conditions of this Agreement, the Lessee
<PAGE>
shall have the option to purchase Equipment on an AS IS WHERE IS
basis without any warranty by Lessor at the Fair Market Value (FMV)
of such Equipment. The FMV shall be determined by negotiations
between Lessor and Lessee. If Lessor and Lessee are unable to
agree on a value, then the Equipment shall be appraised by a party
mutually agreeable to Lessor and Lessee, the cost of which shall be
born equally by Lessor and Lessee. Lessor and Lessee agree to
abide by the values placed on Equipment by the above mentioned
party. This option must be exercised by written notice to the
Lessor; with such notice being dated at least 90 days prior to
Lessee s intent to purchase Equipment. If the purchase option set
forth herein is exercised, the purchase price shall be paid in full
to Lessor at the end of the month following the last payment date.
19. TERMINAL RENTAL ADJUSTMENT CLAUSE: If Lessee so elects by
executing the Terminal Rental Adjustment Clause ("TRAC")
Supplement in the form attached hereto with regard to one or more
item of Equipment, then there shall be a terminal rental adjustment
for such Equipment as further specified in such Supplement. If
this Agreement is terminated with respect to any item of Equipment
covered by a TRAC Supplement for any reason other than expiration
of the Term, then this Section shall not apply and Lessee's rights
and obligations shall be governed by the other Sections hereof.
20. PERFORMANCE OF OBLIGATIONS OF LESSEE BY LESSOR: If Lessee
fails to perform duly and promptly any of its obligations under
this Agreement, Lessor may perform the same , but shall not be
obligated to do so, to protect the interests of Lessor, Lessee or
both, and any cost, liability or expense (including reasonable
attorney's fees) incurred by Lessor in such performance shall be
paid to Lessor by Lessee upon demand as additional rent for the
Equipment.
21. GENERAL INDEMNITY: Lessee assumes liability of and agrees to
indemnify, defend and hold Lessor, its agents, employees,
successors and assigns harmless from any and all actions, suits,
liabilities, obligations and claims of every nature (including,
without limitation, those arising from contract, strict or absolute
liability in tort, product liability, negligence, or any other
cause) and from any and all damages, awards, penalties, fines,
forfeitures, settlements, interest and attorney's fees awarded to
any person whomsoever and regardless of the reason, which directly
or indirectly results from or relates to the manufacture, delivery,
purchase, sale, ownership leasing, use, possession, operation,
condition (including Federal income tax), which Lessor is required
to pay in respect of the amounts received under this Section,
including any interest, penalties and additionsto tax. For the
purposes of this Section, the term Lessor shall include the
affiliated taxpayer group, within the meaning of Section 1504 of
the Internal Revenue Code as amended ("Code") of which Lessor is a
member. Lessee's indemnities and liabilities under this Section
shall continue in full force and effect, notwithstanding the
expiration or termination of this Agreement for any reason.
Upon request of Lessor, Lessee shall assume the defense of any and
<PAGE>
all demands, claims, actions, suits and all other proceedings
against Lessor for which indemnity is provided herein and, Lessee
shall allow Lessor to participate in the defense thereof. At
Lessor's option, Lessor may assume the defense of the matter, but
shall no relieve or reduce Lessee's obligations to indemnify Lessor
as set forth herein.
22. TAX INDEMNITY: Lessee acknowledges that the Lessor is the
owner of the Equipment for Federal income tax purposes and that
Lessor intends to take the accelerated cost recovery deductions
("ACRS Deductions") as provided by Section 168 of the Code.
Accordingly, Lessee agrees that at all times during the term of
this Agreement, Lessee shall not take any action, fail to take any
action, assert any claim or make any representation which results,
or may result, in the loss to Lessor of ACRS Deductions. In the
event that the ACRS Deductions are lost, reduced or delayed due to
any act or omission by Lessee, Lessee agrees to promptly pay to
Lessor, as additional rent, an amount such that the portion
remaining after deduction of all taxes required to be paid by
Lessor in respect to the receipt of such amount (including Federal
income tax) shall fully compensate Lessor for the loss, reduction
or delay of the ACRS Deductions, including any interest, penalties
and additions to tax. Lessor shall have no obligation to contest,
beyond the level of an Internal Revenue Service auditing agent, any
recapture, disallowance, elimination, reduction or disqualification
caused by any act or omission of the Lessee. Lessee also
acknowledges that there is a possibility that, after the
commencement of this Agreement, the Code, or any regulations
promulgated thereunder, might be amended or changed so as to
deprive Lessor of the right to claim all or part of the ACRS
Deductions, or to lengthen the time period over which the Equipment
must be depreciated, or in some other manner impair Lessor's after-
tax margin with respect to this Agreement ("Tax Benefits"). In the
event that the Lessor' Tax Benefits are impaired due to an
amendment or change to the Code, or any regulation promulgated
thereunder, the Lessee agrees to pay the Lessor an adjusted rent
over the remaining term of the lease such that Lessor's after-tax
margins (after consideration of all taxes, including Federal income
tax, and increased costs) with respect to this Agreement is
maintained . Lessor shall have no obligation to contest any
impairment of Tax Benefits due to an amendment or change to the
Code or any regulations promulgated thereunder. For the purposes
of this Section, the term Lessor shall include affiliated taxpayer
group, within the meaning of Section 1504 of the Code, of which
Lessor is a member. Lessee's indemnities and liabilities under
this Section shall continue in full force and effect
notwithstanding the expiration or termination of this Agreement for
any reason.
Lessee acknowledges that the percentage set forth in the Casualty
and Termination Schedules attached hereto have been computed on the
assumption that Lessor shall be entitled to the Tax Benefits as
allowed under the present Code. Accordingly, in the event Lessee
becomes obligated to pay additional sums to Lessor, the percentages
<PAGE>
set forth in the schedules shall be revised as may be necessary in
the reasonable opinion of Lessor so that the amount payable by
Lessee in the event of a casualty loss or termination shall be
sufficient to maintain Lessor's net after-tax margin at the same
level that would have been available to the Lessor upon payment of
the Casualty Value or Termination Value paid after the liability
of Lessee hereunder shall become fixed regardless of the date of
such casualty or other occurrence. Further, with respect to any
previous payment of Casualty Value or Termination Value under the
lease by the Lessee, the Lessee would have been the additional
amount, in excess of the amount actually paid, that the Lessee
would have been required to pay had the liability of Lessee become
fixed prior to the date of the original payment.
23. DEFAULT: Time is of the essence on this Agreement and the
occurrence of any of the following events shall constitute a
default hereof: (a) Lessee's failure to pay when due the full
amount of any payments required hereunder, including, without
limitation, rents or additional rents, delinquency and late
charges, interest, taxes, insurance, the costs of maintenance or
repairs, amounts due for indemnification, the Casualty or
Termination Values (if applicable) or any other amounts;
(b) Lessee's failure to perform any action or other obligation
required by the terms hereof to be performed by Lessee; (c) any
attempt by Lessee to remove, sell, transfer, sublease, encumber, or
otherwise transfer, dispose or part with possession of the
Equipment without Lessor's prior written consent; (d) the making of
any false or misleading statements by Lessee prior to or in
connection with this Agreement; (e) Lessee's death, dissolution, or
other termination of existence; (f) Lessee's becoming insolvent or
becoming the subject of a petition in bankruptcy, either
voluntarily or involuntary, Lessee' making an assignment for the
benefit of creditors, or being named or subjected to a suit for the
appointment of a receiver; (g) seizure of or levy upon any
Equipment leased hereunder reason of any legal or governmental
process directed against Lessee; or (h) any bankruptcy, insolvency,
death, dissolution, termination of existence or other default of
any guarantor of Lessee.
24. TERMINATION VALUE: Lessor and Lessee hereby agree that the
amount set forth under the appropriate entry of the termination
value section of the Casualty and Termination Value Schedule
attached hereto ("Termination Value") represents the amount
necessary to compensate Lessor for any breach by Lessee of its
obligation to make future Rental Payments under this Agreement with
regard to the items of Equipment shown on such Schedule. In the
event of Lessee's breach of its Rental Payment obligation, Lessee
agrees to pay Lessor the Termination Value (determined by reference
to the most recent Rental Payment date shown thereon) as liquidated
damages and not as a penalty. The Termination Value does not
include, and Lessee shall remain liable for and shall immediately
pay to Lessor, all other amounts due under this Agreement (except
for the future Rental Payments), including but not limited to past
due Rental Payments, delinquency and late charges, taxes,
<PAGE>
insurance, costs of maintenance and repair, and any amounts due
under the indemnification provisions hereof.
25. REMEDIES: In the event of any default by Lessee under this
Agreement, Lessor shall have all of the rights and remedies
permitted at law and in equity. The rights and remedies available
to Lessor may vary with the law of the applicable jurisdiction, and
Lessee acknowledges and agrees that Lessor shall be entitled to
exercise any and all available rights and remedies in any
combination or sequence not expressly prohibited by law. Lessee
hereby agrees and consents to any rights or remedies which are
available to Lessor if Lessee has so agreed or consented. Unless
prohibited by law, Lessor's available rights and remedies in the
event of a default by Lessee include, without limitation: (a)
without terminating this Agreement, request Lessee to assemble any
or all of the Equipment, to make the same available to Lessor at a
reasonable place designated by Lessor, and to put Lessor in
possession thereof; (b) without terminating this Agreement,
immediately and without legal proceedings or notice to Lessee enter
Lessee's premises, take possession of, remove and retain any or all
of the Equipment or render the same unusable; (c) without
terminating this Agreement, declare the Termination Value and all
other sums payable hereunder immediately due and payable; (d)
without notice to Lessee, terminate the Agreement as to any or all
of the Equipment leased hereunder, but such termination shall not
release Lessee from the liabilities and obligation arising from
such breach; and (e) sell or otherwise dispose of any or all of the
Equipment private or public sale, or re-lease any or all of the
same on such terms and conditions as Lessor deems appropriate. In
the event that Lessor repossesses, re-leases, sells or otherwise
disposes of the Equipment, any net proceeds of such action which
are attributable to Lessee's interest in the Equipment under this
Agreement shall be applied against Lessee's obligations hereunder.
Unless otherwise mandatory required by applicable law, any
remaining net proceeds shall belong solely to Lessor. Lessee shall
be liable for any amounts due to Lessor hereunder after application
of the net proceeds as set forth above. The net proceeds shall be
determined by deducting from the gross sales proceeds, or from the
net present value of the proceeds of a re-lease, any applicable
sales, use and excise taxes, and sales or other fees or commissions
actually paid to any party (including the party who sold the
Equipment to Lessor) who helps Lessor sell or otherwise dispose of
the Equipment, and Lessor's expenses of locating, repossessing,
repairing, preparing and disposing of the Equipment, including
attorney's fees.
Lessee hereby expressly waives any rights it may have to possession
of the Equipment after default and all claims it may have for
damages or injuries suffered through or loss caused by any
repossession, sale or other disposition of the Equipment hereunder.
Lessee agrees that any property other than Equipment which is in or
upon the Equipment at the time of repossession may be taken and
held without liability until its return is requested by Lessee.
Lessee hereby acknowledges and agrees that any applicable standard
<PAGE>
of commercial reasonableness will be satisfied if the Lessor sell
or otherwise disposes of the Equipment by any method which is
customarily used for similar Equipment, or which Lessor has used or
would use for similar Equipment owned solely by Lessor, even if
Lessee believes or proves that a different method of disposition
would have been more beneficial for Lessee. Unless otherwise
required by law, any requirement of reasonable notice regarding the
re-lease, sale or other disposition of the Equipment which Lessor
may be obligated to give will be met if such notice is mailed to
Lessee at tits address shown herein at least ten (10) days before
the time of such re-lease, sale or other disposition. Nothing
herein contained shall require Lessor to re-lease, sell or
otherwise dispose of the Equipment.
26. NOTICES: All notices relating hereto shall be either
delivered in person to an officer of Lessor or Lessee, or be sent
by certified mail, return receipt requested, to Lessor or Lessee at
its address as shown on the face hereof or to the last known
address of the recipient.
27. LIMITATIONS ON USE: The Equipment shall not be used in the
transportation of radioactive materials, hazardous wastes,
explosives, hazardous materials, gasses or liquids, unless Lessor
has expressly approved the transportation of such material in
writing.
28. MISCELLANEOUS: This Agreement constitutes the entire
understanding of the parties and supersedes any and all prior
understandings or agreements, oral or written, between and among
the parties repecting the within subject matter. This Agreement
shall be binding upon the successors, assigns and legal
representatives of the parties hereto. This Agreement may not be
modified unless in a writing signed both parties. No provision of
this Agreement may be waived unless in a writing deemed to be a
waiver of any other or subsequent default. The provisions of this
Agreement are severable, and if a court of competent jurisdiction
determines that any of them are unenforceable in accordance with
their terms, the court may modify, sever or divide such provisions
as necessary to enforce those provisions to the extent they may be
executed in any number of counterparts, each of which shall be
deemed to be an original, and such counterparts shall together
constitute but one agreement. In the event of litigation
concerning this Agreement, the prevailing party shall be entitled
to recover its costs and expenses, including reasonable attorney's
fees.
LESSEE ACKNOWLEDGES THAT HE HAS RECEIVED A TRUE COPY OF THIS
AGREEMENT, HE HAS READ IT AND IT WAS COMPLETELY FILLED IN BEFORE HE
SIGNED IT.
_________________________________________________________________
ALL TERMS AND CONDITIONS ON THE PREVIOUS PAGES OF THIS AGREEMENT
ARE A PART HEREOF AND ARE BINDING UPON THE PARTIES HERETO.
<PAGE>
LESSEE ACKNOWLEDGES THAT HE HAS RECEIVED A TRUE COPY OF THIS
AGREEMENT, HE HAS READ IT AND IT WAS COMPLETELY FILLED IN BEFORE HE
SIGNED IT.
LESSEE: Environmental
Transportation
Services, Inc.
ACCEPTED BY: SS#/Tax ID #__________________
Sullivan's Trucking co., Inc.
By: /s/ Roy Sullivan By: /s/ Carl Anderson, Jr.
___________________________ ___________________________
Title: President Title: President
_______________________ ________________________
Address: 1705 NE Woodland Address: 1813 SE 25th St.
Ponca City, OK OKC, OK 73129
______________________ ______________________
Date: 5/1/96 Date: 5/1/96
________________________ _________________________
<PAGE>
EQUIPMENT LEASE AGREEMENT
SCHEDULE A: RENTAL PAYMENTS
___________________________
Schedule A is made a part of the Equipment Lease Agreement dated
March 1, 1996 between Sullivan's Trucking Co., Inc. (Lessor) and
Environmental Transportation Services, Inc. (Lessee)
______________________________________________________________
COMMENCEMENT DATE TERM OF LEASE LOCATION OF EQUIPMENT
March 1, 1996 48 MONTHS 1813 S.E. 25th STREET
OKLAHOMA CITY, OK
_______________________________________________________________
STATE OF JURISDICTION STATE EQUIPMENT WILL BE TITLED IN
OKLAHOMA OKLAHOMA
_______________________________________________________________
BASEPLATE REGISTRATION (STATE, COUNTY, CITY)
OKLAHOMA, OKLAHOMA, OKLAHOMA CITY
_______________________________________________________________
DESCRIPTION OF EQUIPMENT
SCHEDULE A MONTHLY
YEAR MAKE MODEL VEHICLE ID NUMBER VALUE RENTAL PAYMENT
_________________________________________________________________
SEE ATTACHED SCHEDULE
_________________________________________________________________
MONTHLY RENTAL PAYMENTS
1. Schedule A Value (Total Equipment Cost) $1,573,100.00
============
2. Total Monthly Payments $ 8,683.64
============
Monthly rental payments are due on the same day each month
beginning March 1, 1996.
LESSOR: Sullivan's Trucking LESSEE: Environmental
Transportation
Co., Inc. Services, Inc.
By: /s/ Roy Sullivan By: /s/ Carl B. Anderson, Jr.
________________________ ______________________________
Title: President Title: President
______________________ __________________________
Date: 5/1/96 Date: 5/1/96
______________________ __________________________
<PAGE>
<TABLE>
<CAPTION>
VEHICLE MONTHLY
IDENTIFICATION SCHEDULE A RENTAL
YEAR MAKE NUMBER VALUE PAYMENT
________________________________________________________________
<S> <C> <C> <C> <C>
1987 MATE 1M9A36538HH036661 $15,000.00 $274.65
1987 MATE 1M9A36533HH036681 15,000.00 274.65
1987 MATE 1M9A36535HH036682 15,000.00 274.65
1987 MATE 1M9A3653XHH036721 15,000.00 274.65
1987 MATE 1M9A36532HH036722 15,000.00 274.65
1988 MATE 1M9A36535JH036803 16,000.00 292.96
1988 MATE 1M9A36537JH036804 16,000.00 292.96
1988 MATE 1M9A36539JH036805 16,000.00 292.96
1988 MATE 1M9A3653XJH036806 16,000.00 292.96
1988 MATE 1M9A36532JH036807 16,000.00 292.96
1988 MATE 1M9A36534JH036808 16,000.00 292.96
1988 MATE 1M9A36536JH036809 16,000.00 292.96
1988 MATE 1M9A36532JH036810 16,000.00 292.96
1988 MATE 1M9A36534JH036811 16,000.00 292.96
1988 MATE 1M9A36536JH036812 16,000.00 292.96
1988 MATE 1M9a36538JH036813 16,000.00 292.96
1988 MATE 1M9A3653XJH036814 16,000.00 292.96
1988 MATE 1M9A36513JH036815 16,000.00 292.96
1988 MATE 1M9A36533JH036816 16,000.00 292.96
1988 MATE 1M9A36536JH036817 16,000.00 292.96
1988 MATE 1M9A36537JH036818 16,000.00 292.96
1989 MATE 1M9A36534JH036882 17,000.00 311.26
1989 MATE 1M9A3753XKH036982 17,000.00 311.26
1989 MATE 1M9A37531KH036983 17,000.00 311.26
1989 MATE 1M9A37536KH036008 17,000.00 311.26
1989 MATE 1M9A37538KH036009 17,000.00 311.26
1989 MATE 1M9A37534KH036010 17,000.00 311.26
1989 MATE 1M9A37536KH036016 17,000.00 311.26
1989 MATE 1M9A37538KH036017 17,000.00 311.26
1989 MATE 1M9A3753XKH036018 17,000.00 311.26
1989 MATE 1M9A37532KH036023 17,000.00 311.26
1989 MATE 1M9A37534KH036024 17,000.00 311.26
1989 MATE 1M9A37539KH036049 17,000.00 311.26
1989 MATE 1M9A37535KH036050 17,000.00 311.26
1989 MATE 1M9A37538KH036057 17,000.00 311.26
1990 MATE 1M9A37535KH036082 18,000.00 329.57
1987 HOBBS 1H5D03724GM043201 15,000.00 274.65
1987 HOBBS 1H5D03726GM043202 15,000.00 274.65
1987 HOBBS 1H5D03726GM044706 15,000.00 274.65
1987 HOBBS 1H5D03728GM044707 15,000.00 274.65
1987 HOBBS 1H5D03720GM047102 15,000.00 274.65
1990 MATE 1M9A37537LH036083 18,000.00 329.57
1990 MATE 1M9A3752XLH036157 18,000.00 329.57
1990 MATE 1M9A37522LH036158 18,000.00 329.57
1990 MATE 1M9A3752XLH036160 18,000.00 329.57
1990 MATE 1M9A37522LH036161 18,000.00 329.57
1983 FRUEHAUF 1H4D03522DF035704 10,000.00 183.10
1983 FRUEHAUF 1H4D03523DF040605 10,000.00 183.10
1990 MATE 1M9A3952XLH036073 18,000.00 329.57
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VEHICLE MONTHLY
IDENTIFICATION SCHEDULE A RENTAL
YEAR MAKE NUMBER VALUE PAYMENT
________________________________________________________________
<S> <C> <C> <C> <C>
1990 MATE 1M9A39522LH036074 18,000.00 329.57
1984 FRUEHAUF 1H4D03528EF028905 11,000.00 201.41
1988 MATE 1M9A39523JH036802 16,000.00 292.96
1985 CMC 1A9A1AN26E11A9736 13,000.00 238.03
1984 MATE 1M9A338428EH036191 11,000.00 201.41
1990 MATE 1M9A39524LH036097 18,000.00 329.57
55
VANS
1984 GREAT DANE 1GRHA9629EB003221 6,000.00 109.86
1984 GREAT DANE 1GRHA9621EB046130 6,000.00 109.86
1984 GREAT DANE 1GRHA962XEB003227 6,000.00 109.86
3
50' DROP DECK
1990 FRUEHAUF 1H5P05026LM009001 12,000.00 219.72
48 x 102 DROP DECKS
1991 TRANSCRAFT ITT-E4820-X-M1036224 12,000.00 219.72
1991 TRANSCRAFT ITT-E4820-1-M1036225 12,000.00 219.72
1991 TRANSCRAFT ITT-E4820-6-M1036222 12,000.00 219.72
1991 TRANSCRAFT ITT-E4820-6-M1026219 12,000.00 219.72
1991 TRANSCRAFT ITT-E4820-2-M1036220 12,000.00 219.72
5
ROLL OFF TRAILERS
1995 BENLEE 1B9B14522SA181050 35,000.00 640.84
1995 BENLEE 1B9B14524SA181051 35,000.00 640.84
1991 BENLEE 1B9B14524MA180730 25,000.00 457.74
1991 BENLEE 1B9B14526MA180731 25,000.00 457.74
1991 BENLEE 1B9B14528MA180732 25,000.00 457.74
1991 BENLEE 1B9B14523MA180738 25,000.00 457.74
1991 BENLEE 1B9B14525MA180739 25,000.00 457.74
1991 BENLEE 1B9B14522MA180760 25,000.00 457.74
8
50 YARD ROLL OFF BOXES
1992 5-STAR 627796156 2,700.00 49.44
1992 5-STAR 691892172 2,700.00 49.44
1992 5-STAR 691892173 2,700.00 49.44
1992 5-STAR 691892174 2,700.00 49.44
1992 5-STAR 691892175 2,700.00 49.44
1992 5-STAR 691892176 2,700.00 49.44
1992 5-STAR 691892177 2,700.00 49.44
1993 5-STAR 691892178 2,700.00 49.44
1992 5-STAR 691892179 2,700.00 49.44
1992 5-STAR 691892180 2,700.00 49.44
1992 5-STAR 691892181 2,700.00 49.44
1992 5-STAR 691892182 2,700.00 49.44
1992 5-STAR 691892183 2,700.00 49.44
1992 5-STAR 691892184 2,700.00 49.44
1992 5-STAR 691892185 2,700.00 49.44
1992 5-STAR 691892186 2,700.00 49.44
1992 5-STAR 164293237 2,700.00 49.44
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VEHICLE MONTHLY
IDENTIFICATION SCHEDULE A RENTAL
YEAR MAKE NUMBER VALUE PAYMENT
________________________________________________________________
<S> <C> <C> <C> <C>
1992 5-STAR 164293233 2,700.00 49.44
1992 5-STAR 164293234 2,700.00 49.44
1992 5-STAR 164293228 2,700.00 49.44
1992 5-STAR 164293229 2,700.00 49.44
1992 5-STAR 164293230 2,700.00 49.44
1992 5-STAR 164293231 2,700.00 49.44
1992 5-STAR 164293232 2,700.00 49.44
1992 5-STAR 164293235 2,700.00 49.44
1992 5-STAR 164293236 2,700.00 49.44
1995 MODERN 4215 2,700.00 49.44
1995 MODERN 4216 2,700.00 49.44
1995 MODERN 4217 2,700.00 49.44
1995 MODERN 4218 2,700.00 49.44
1995 MODERN 4219 2,700.00 49.44
1995 MODERN 4220 2,700.00 49.44
25 YARD ROLL OFF BOXES
1992 5-STAR 273392165 2,700.00 49.44
1992 5-STAR 273392158 2,700.00 49.44
1992 5-STAR 273392164 2,700.00 49.44
1992 5-STAR 273392163 2,700.00 49.44
1992 5-STAR 690892171 2,700.00 49.44
1992 5-STAR 273392161 2,700.00 49.44
1992 5-STAR 273392160 2,700.00 49.44
1992 5-STAR 273392159 2,700.00 49.44
1992 5-STAR 273392162 2,700.00 49.44
1992 5-STAR 275392157 2,700.00 49.44
1992 5-STAR 690892166 2,700.00 49.44
1992 5-STAR 690892167 2,700.00 49.44
1992 5-STAR 690892168 2,700.00 49.44
1992 5-STAR 690892169 2,700.00 49.44
1992 5-STAR 690832170 2,700.00 49.44
1992 5-STAR 109193227 2,700.00 49.44
1992 5-STAR 109193223 2,700.00 49.44
1992 5-STAR 109193222 2,700.00 49.44
1992 5-STAR 109193220 2,700.00 49.44
1992 5-STAR 109193219 2,700.00 49.44
1992 5-STAR 109193221 2,700.00 49.44
1992 5-STAR 109193225 2,700.00 49.44
1992 5-STAR 109193226 2,700.00 49.44
1992 5-STAR 109193218 2,700.00 49.44
1992 5-STAR 109193224 2,700.00 49.44
910528672 2,700.00 49.44
910528676 2,700.00 49.44
910528677 2,700.00 49.44
910528674 2,700.00 49.44
910528675 2,700.00 49.44
910528673 2,700.00 49.44
910778275 2,700.00 49.44
910778726 2,700.00 49.44
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VEHICLE MONTHLY
IDENTIFICATION SCHEDULE A RENTAL
YEAR MAKE NUMBER VALUE PAYMENT
________________________________________________________________
<S> <C> <C> <C> <C>
4542 2,700.00 49.44
4543 2,700.00 49.44
4544 2,700.00 49.44
4545 2,700.00 49.44
4546 2,700.00 49.44
4547 2,700.00 49.44
4548 2,700.00 49.44
4549 2,700.00 49.44
4550 2,700.00 49.44
4551 2,700.00 49.44
910888764 2,700.00 49.44
910888765 2,700.00 49.44
910888766 2,700.00 49.44
910888773 2,700.00 49.44
910888775 2,700.00 49.44
910888768 2,700.00 49.44
910888770 2,700.00 49.44
910888776 2,700.00 49.44
910888777 2,700.00 49.44
910888778 2,700.00 49.44
910888779 2,700.00 49.44
910888780 2,700.00 49.44
910888781 2,700.00 49.44
910888782 2,700.00 49.44
910888783 2,700.00 49.44
4706 2,700.00 49.44
4708 2,700.00 49.44
4709 2,700.00 49.44
4710 2,700.00 49.44
4711 2,700.00 49.44
4731 2,700.00 49.44
4732 2,700.00 49.44
4735 2,700.00 49.44
4736 2,700.00 49.44
4737 2,700.00 49.44
4738 2,700.00 49.44
910888772 2,700.00 49.44
910888774 2,700.00 49.44
910888767 2,700.00 49.44
910888769 2,700.00 49.44
810888771 2,700.00 49.44
1994 MODERN 2587 2,700.00 49.44
1994 MODERN 2589 2,700.00 49.44
1994 MODERN 2675 2,700.00 49.44
1994 MODERN 2721 2,700.00 49.44
1994 MODERN 2742 2,700.00 49.44
1994 MODERN 2743 2,700.00 49.44
1994 MODERN 2744 2,700.00 49.44
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
VEHICLE MONTHLY
IDENTIFICATION SCHEDULE A RENTAL
YEAR MAKE NUMBER VALUE PAYMENT
________________________________________________________________
<S> <C> <C> <C> <C>
1994 MODERN 2745 2,700.00 49.44
1994 MODERN 2746 2,700.00 49.44
1994 MODERN 2750 2,700.00 49.44
1994 MODERN 2751 2,700.00 49.44
1994 MODERN 2752 2,700.00 49.44
1994 MODERN 2753 2,700.00 49.44
1994 MODERN 2754 2,700.00 49.44
1994 MODERN 2755 2,700.00 49.44
1994 MODERN 2756 2,700.00 49.44
1994 MODERN 2757 2,700.00 49.44
1994 MODERN 2758 2,700.00 49.44
1994 MODERN 2759 2,700.00 49.44
1994 MODERN 2876 2,700.00 49.44
1994 MODERN 2877 2,700.00 49.44
1994 MODERN 2878 2,700.00 49.44
1994 MODERN 2879 2,700.00 49.44
1994 MODERN 2880 2,700.00 49.44
1994 MODERN 2881 2,700.00 49.44
1994 MODERN 2882 2,700.00 49.44
1994 MODERN 2883 2,700.00 49.44
1994 MODERN 2884 2,700.00 49.44
1994 MODERN 2885 2,700.00 49.44
55
20 YARD ROLL OFF BOXES
1995 3506 2,700.00 49.44
1995 3510 2,700.00 49.44
1995 3507 2,700.00 49.44
1995 3410 2,700.00 49.44
1995 3511 2,700.00 49.44
1995 3645 2,700.00 49.44
_________________________
6 $1,573,100.00 $28,802.98
=========================
</TABLE>
<PAGE>
CASUALTY AND TERMINATION SCHEDULE
_________________________________
This Casualty and Termination Schedule is made a part of the
Equipment Lease Agreement dated April 17, 1996. Termination values
assume that all rental payments, fees, and other payments due under
the agreement are paid. The table below reflects the percentage of
original cost for casualty or termination at each rental month.
<TABLE>
<S> <S> <S> <S> <S> <S>
PAYMENT PAYMENT PAYMENT PAYMENT
DATE NO. PERCENTAGE DATE NO. PERCENTAGE
_________________________________________________________________
<C> <C> <C> <C> <C> <C>
03/01/96 1 98.66903% 03/01/98 25 63.92265%
04/01/96 2 97.32919% 04/01/98 26 62.35116%
05/01/96 3 95.98041% 05/01/98 27 60.76920%
06/01/96 4 94.62265% 06/01/98 28 59.17669%
07/01/96 5 93.25583% 07/01/98 29 57.57357%
08/01/96 6 91.87990% 08/01/98 30 55.95976%
09/01/96 7 90.49480% 09/01/98 31 54.33518%
10/01/96 8 89.10046% 10/01/98 32 52.69978%
11/01/96 9 87.69683% 11/01/98 33 51.05348%
12/01/96 10 86.28384% 12/01/98 34 49.39620%
01/01/97 11 84.86143% 01/01/99 35 47.72787%
02/01/97 12 83.42953% 02/01/99 36 46.04842%
03/01/97 13 81.98809% 03/01/99 37 44.35778%
04/01/97 14 80.53704% 04/01/99 38 42.65586%
05/01/97 15 79.07632% 05/01/99 39 40.94259%
06/01/97 16 77.60586% 06/01/99 40 39.21791%
07/01/97 17 76.12560% 07/01/99 41 37.48173%
08/01/97 18 74.63547% 08/01/99 42 35.73397%
09/01/97 19 73.13540% 09/01/99 43 33.97456%
10/01/97 20 71.62533% 10/01/99 44 32.20342%
11/01/97 21 70.10520% 11/01/99 45 30.42047%
12/01/97 22 68.57493% 12/01/99 46 28.62564%
01/01/98 23 67.03446% 01/01/2000 47 26.81884%
02/01/98 24 65.48372% 02/01/2000 48 25.00000%
</TABLE>
LESSOR: Sullivan's Trucking LESSEE: Environmental
Co., Inc. Transportation
Services, Inc.
By: /s/ Roy Sullivan By: /s/ Carl B. Anderson, Jr.
________________________ ______________________________
Title: President Title: President
______________________ __________________________
Date: 5/1/96 Date: 5/1/96
______________________ __________________________
<TABLE> <S> <C>
<ARTICLE> 5
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> $ 115,000
<SECURITIES> 0
<RECEIVABLES> 3,808,000
<ALLOWANCES> 0
<INVENTORY> 204,000
<CURRENT-ASSETS> 5,878,000
<PP&E> 20,361,000
<DEPRECIATION> 9,116,000
<TOTAL-ASSETS> 17,592,000
<CURRENT-LIABILITIES> 5,029,000
<BONDS> 6,563,000
0
0
<COMMON> 139,000
<OTHER-SE> 4,530,000
<TOTAL-LIABILITY-AND-EQUITY> 17,592,000
<SALES> 0
<TOTAL-REVENUES> 4,310,000
<CGS> 0
<TOTAL-COSTS> 3,538,000
<OTHER-EXPENSES> 1,002,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 213,000
<INCOME-PRETAX> (443,000)
<INCOME-TAX> (167,000)
<INCOME-CONTINUING> (276,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (276,000)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
