OMEGA ENVIRONMENTAL INC, 10-Q, 1997-02-14

OMEGA ENVIRONMENTAL INC
10-Q, 1997-02-14
CONSTRUCTION - SPECIAL TRADE CONTRACTORS

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<PAGE>

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(b) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
--------- ----------
Commission File Number 0-20267

OMEGA ENVIRONMENTAL, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 91-1499751
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

19805 NORTH CREEK PARKWAY, PO BOX 3005
BOTHELL, WASHINGTON 98041-3005
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

206-486-4800
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

----------------------------------------------
(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL
YEAR, IF CHANGED SINCE LAST REPORT)

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES X NO
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. AS OF JANUARY 31, 1997,
OUTSTANDING COMMON SHARES TOTALED 48,409,824.

<PAGE>

OMEGA ENVIRONMENTAL, INC.
AND SUBSIDIARIES

PART I - FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . 1

Consolidated Balance Sheets as of December 31, 1996 and March
31, 1996. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Consolidated Statements of Operations for the Three Months and
Nine Months Ended December 31, 1996 and December 31, 1995 . . . . . . . . 2

Consolidated Statements of Cash Flows for the Nine Months ended
December 31, 1996 and December 31, 1995 . . . . . . . . . . . . . . . . . 3

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . 4

Review by Independent Public Accountant. . . . . . . . . . . . . . . . . . 9

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . .10

Results of Operations. . . . . . . . . . . . . . . . . . . . . . . . . .10

Liquidity and Capital Resources. . . . . . . . . . . . . . . . . . . . .12

Forward Looking Statements . . . . . . . . . . . . . . . . . . . . . . .14

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . .15

ITEM 2. CHANGE IN SECURITIES . . . . . . . . . . . . . . . . . . . . . . . .16

ITEM 3. DEFAULTS UPON SENIOR SECURITIES. . . . . . . . . . . . . . . . . . .16

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . . . . .16

ITEM 5. OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . .16

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . .17

SIGNATURES

<PAGE>

PART I - FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Omega Environmental, Inc. and Subsidiaries
Consolidated Balance Sheets
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
DECEMBER 31, MARCH 31,
ASSETS 1996 1996
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current assets:
Cash $ 1,954 $ 1,276
Receivables, net of allowance for doubtful accounts of $1,942 at
December 31,1996 and $2,518 at March 31, 1996 36,778 29,758
Receivables from related parties 852 883
Inventories 12,624 10,512
Costs and estimated earnings in excess of billings on uncompleted contracts 13,580 18,757
Prepaid expenses and other current assets 4,414 1,956
---------------------
Total current assets 70,202 63,142

Property and equipment, at cost, net of accumulated depreciation
and amortization 8,748 9,752

Goodwill, net of accumulated amortization 19,442 28,554

Other assets 937 565
- ---------------------------------------------------------------------------------------------------------------
$ 99,329 $ 102,013
- ---------------------------------------------------------------------------------------------------------------

- ---------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
- ---------------------------------------------------------------------------------------------------------------
Current liabilities:
Revolving credit loan $ 18,604 $ 8,895
Current installments of long-term obligations 1,705 2,025
Accounts payable 16,879 17,495
Accrued expenses 9,590 9,441
Billings in excess of costs and estimated earnings on uncompleted contracts 3,332 2,352
---------------------
Total current liabilities 50,110 40,208

Long-term obligations, excluding current installments 83 6,554
Class action lawsuit settlement obligation - 5,225
---------------------
Total liabilities 50,193 51,987
---------------------

Shareholders' equity:
Preferred stock, $.0025 par value. Authorized 5,000,000 shares;
500 shares of Series A Convertible Redeemable Preferred Stock and
500 shares Series B Convertible Redeemable Preferred Stock issued;
no shares of Series A outstanding at December 31, 1996 and 210 shares
of Series A outstanding at March 31, 1996; and 40 shares of Series B
oustanding at December 31, 1996 and no shares of Series B outstanding
at March 31, 1996
Common stock, $.0025 par value. Authorized 100,000,000 shares;
issued and outstanding 48,409,824 shares at December 31, 1996
and 38,662,637 at March 31, 1996 121 97
Additional paid in capital 124,496 111,636
Treasury stock, 100,000 shares at December 31, 1996 and
March 31, 1996, at cost (563) (563)
Foreign currency translation adjustment (1,102) (972)
Accumulated deficit (73,816) (60,172)
---------------------
Total shareholders' equity 49,136 50,026

Commitments and contingencies
- ---------------------------------------------------------------------------------------------------------------
$ 99,329 $ 102,013
- ---------------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

Omega Environmental, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>

- -------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
-------------------------- --------------------------
1996 1995 1996 1995
- ------------------------------------------------------------------------- --------------------------
<S> <C> <C> <C> <C>
Sales $ 41,014 $ 40,058 $ 120,855 $ 118,646
Cost of sales 35,922 32,021 99,668 94,416
-------------------------- --------------------------
Gross profit 5,092 8,037 21,187 24,230
-------------------------- --------------------------

Operating expenses:
Selling, general and administrative 8,700 8,769 24,096 23,877
Goodwill write-down 7,982 - 7,982 -
Amortization of goodwill 410 488 1,240 1,467
-------------------------- --------------------------
Total operating expenses 17,092 9,257 33,318 25,344
-------------------------- --------------------------
Operating loss (12,000) (1,220) (12,131) (1,114)
-------------------------- --------------------------

Other income (expense):
Interest income 46 76 136 353
Interest expense (696) (602) (2,088) (1,513)
Other, net 11 (61) 439 117
-------------------------- --------------------------
Total other income (expense) (639) (587) (1,513) (1,043)
-------------------------- --------------------------
Net loss $ (12,639) $ (1,807) $ (13,644) $ (2,157)
-------------------------- --------------------------

Net loss per common share $ (0.28) $ (0.05) $ (0.32) $ (0.06)
-------------------------- --------------------------

Weighted average number of
common shares outstanding 44,942 35,505 42,576 34,224
- -------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

OMEGA ENVIRONMENTAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>

- --------------------------------------------------------------------------------------------------------------
NINE MONTHS ENDED
DECEMBER 31,
-----------------------
1996 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(13,644) $ (2,157)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 3,240 3,515
Goodwill write-down 7,982 -
Loss on disposition of equipment 96 90
Change in certain assets and liabilities:
Increase in receivables (7,022) (7,038)
Increase in inventories (2,142) (946)
Decrease (increase) in costs and estimated earnings in excess of billings
on uncompleted contracts 5,170 (3,194)
Increase in prepaids and other current assets (2,459) (1,086)
(Decrease) increase in accounts payable and accrued expenses (434) 2,562
Increase in billings in excess of cost and estimated earnings on
uncompleted contracts 984 473
Change in other assets and liabilities, net (481) (812)
-----------------------
Net cash used in operating activities (8,710) (8,593)
-----------------------

Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired - (814)
Collection of loans to related parties 128 2,498
Additions to related party receivables (97) -
Proceeds from the disposition of equipment 245 665
Additions to property and equipment (1,338) (1,762)
-----------------------
Net cash (used in) provided by investing activities (1,062) 587
-----------------------

Cash flows from financing activities:
Proceeds from lines of credit - 29,625
Repayments of lines of credit - (40,702)
Net proceeds from borrowings under revolving credit loan 9,709 11,100
Proceeds from long-term obligations - 11,778
Repayments of long-term obligations (6,791) (9,387)
Proceeds from exercise of stock options, unit purchase options, warrants
and employee stock purchase plan 2,997 229
Proceeds from sale of common and preferred stock 4,700 9,830
Costs associated with sale and registration of common and preferred stock (38) (314)
-----------------------
Net cash provided by financing activities 10,577 12,159
-----------------------

Effect of exchange rate changes on cash (127) 35
-----------------------
Net increase in cash 678 4,188

Cash at beginning of period 1,276 2,156
-----------------------

Cash at end of period $ 1,954 $ 6,344
-----------------------

Supplemental disclosure of cash flow information:
Issuance of common stock in payment of class action lawsuit
settlement obligation $ 5,225 -
- --------------------------------------------------------------------------------------------------------------

</TABLE>

See accompanying notes to consolidated financial statements.

<PAGE>

OMEGA ENVIRONMENTAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(1) CONSOLIDATION

The consolidated financial statements and related notes have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, certain information and footnote disclosures
normally included in consolidated financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations. The accompanying consolidated
financial statements and related notes should be read in conjunction with
the audited consolidated financial statements of Omega Environmental, Inc.
and Subsidiaries ("Omega" or "Company"), and notes thereto, for its fiscal
year ended March 31, 1996.

Intercompany transactions and balances have been eliminated in
consolidation. The information furnished reflects, in the opinion of
management, all adjustments, consisting of normal recurring accruals,
necessary for a fair presentation of the results of the interim periods
presented.

(2) LIQUIDITY

The Company has incurred significant losses since inception and operations
have not generated cash. To meet cash needs the Company has obtained cash
from borrowings and the sale of equity securities.

Borrowing capacity under the BNY Financial Corporation ("BNYFC") Loan
Agreement is limited to a percent of eligible assets (as defined in the
Loan Agreement), primarily receivables, inventories and property and
equipment. At December 31, 1996, the Company had borrowing capacity under
the revolving loan of approximately $18.8 million and borrowings of
$18,604,000.

This financing agreement contains covenants which, among other provisions,
require the Company to maintain a minimum tangible net worth, minimum
working capital, minimum net income, and other financial ratios, and
restrictions on acquisitions, capital expenditures, additional indebtedness
or liens, payment of dividends, and other restrictions. The Company is
currently in default of the minimum net income, interest coverage, and
minimum tangible net worth covenant provisions of the Loan Agreement with
BNYFC. As a result of such defaults, the interest rates increased by 200
basis points during the default period and $659,000 of the term loan has
been reclassified from long-term to current liabilities. BNYFC has
continued to extend credit to the Company during the default period. As of
February 13, 1997, the Company's borrowings under the revolving loan of
$20,513,000 exceeded eligible assets by approximately $1,200,000. BNYFC
has agreed to temporarily extend credit over eligible assets, but could
discontinue the extension at any time. The Loan Agreement also provides
for an additional interest rate increase of 200 basis points during the
month when borrowings exceed eligible assets.

<PAGE>

OMEGA ENVIRONMENTAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

with BNYFC, no assurances can be given that such amendment will occur or
that the Company will not have to pay substantial fees or increased
interest rates to accomplish such an amendment. The Company is currently
dependent on the BNYFC loan to supply necessary working capital for its
operations.

In June and July 1996, certain unit options and underlying warrants were
exercised by the underwriters for net proceeds to the Company of
approximately $2,759,000. In July 1996, the Company sold 500 shares of
Series B Convertible Redeemable Preferred Stock under Regulation S for net
proceeds of $4,700,000. These proceeds were used to reduce long-term
obligations and the revolving credit loan.

As part of its organizational consolidation, management has continued to
take steps to reduce overhead and improve margins. There can be no
assurance that the Company will be able to generate cash from operations,
borrowings or the sale of additional Company equity securities.
Additionally, there can be no assurance that the Company will be able to
amend the loan agreement covenants or that eligible assets will be adequate
to support borrowing under the loan agreement. The accompanying
consolidated financial information has been prepared on the basis that the
Company will be able to meet its cash needs and continue as a going
concern.

(3) CONCENTRATIONS OF CREDIT RISK

The Company's financial instruments that are exposed to concentrations of
credit risk consist primarily of receivables and costs and estimated
earnings in excess of billings on uncompleted contracts resulting from
sales to the commercial and retail petroleum industry. Other than amounts
related to Florida and Texas State reimbursement programs, concentrations
of credit risk are limited due to the Company's large number of customers
and their geographic dispersion. At December 31, 1996, the Company had
receivables and costs and estimated earnings in excess of billings on
uncompleted contracts relating to Florida and Texas State reimbursement
programs of approximately $2,800,000 and $8,200,000, respectively.

(4) GOODWILL

In the Company's 1996 annual report, it disclosed that (i) the Company had
assessed the recoverability of goodwill and its dependence upon certain
entities achieving future profitable operations, (ii) management had taken
and continued to take steps to significantly reduce overhead and is
evaluating further cost reduction and margin improvement programs, (iii)
based upon current information and projections, goodwill will be recovered
over the period of benefit, and (iv) if future profitable operations are
not achieved at these entities, goodwill will be impaired. In the opinion
of management, based on information and projections at that time, the
remaining goodwill balance at March 31, 1996 will be recovered over the
expected period of benefit. However, if future profitable operations are
not achieved at these entities, goodwill will be impaired.

<PAGE>

OMEGA ENVIRONMENTAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

In December 1996, the Company recognized a goodwill write-down of
$7,982,000 related to the acquisitions of the W.B. Goode Company,
Incorporated ("Goode") in September 1993, Silicate Technology Corporation
("STC") in September 1994, Fedco Tank and Equipment, Inc. and Affiliates
("Fedco") in May 1994, and Braswell and Arnold Equipment Companies
("Braswell") in November 1994. These operations have had significant
operating losses since being acquired. During the quarter ended December
31, 1996, management made a strategic decision to realign and downsize
Goode, Fedco and Braswell's operations. Reduced future operating levels,
past losses and debt incurred to finance these losses have impaired these
entities ability to recover goodwill over the expected period of benefit.
Also, management decided to downsize or dispose of STC's operations due to
past performance and none of the associated goodwill is expected to be
recovered.

The methodology that management used to assess the recoverability of
goodwill of entities with continuing operations was to project results of
operations forward through the remaining period of benefit. Projections
were based on past business operations and management's changes to
operations. The forecasts are management's best estimate of future results
and includes a 3% annual increase in sales and slightly increasing margins.
Projected future results were discounted at 13%, the Company's estimated
cost of funds. The evaluation resulted in a full write-down of these
entities' goodwill.

The Company has assessed the recoverability of remaining goodwill, and it
is dependent upon certain entities achieving future profitable operations.
Management is continuing to monitor the operating performance of these
entities in relation to projections. In the opinion of management, based
upon current information and projections, the remaining goodwill balance at
December 31, 1996 will be recovered over the expected period of benefit.

(5) REVOLVING CREDIT LOAN AND LONG-TERM OBLIGATIONS

In September 1995, the Company entered into a $30,000,000 Revolving and
Term Loan Agreement ("Loan Agreement") with BNYFC. The three-year Loan
Agreement provides for a $10,000,000 term loan and $20,000,000 revolving
loan and is secured by the Company's assets. In October 1996, BNYFC agreed
to increase the maximum borrowing capacity under the revolving loan from
$20,000,000 to $25,000,000. Borrowing capacity under the Loan Agreement is
limited to a percent of eligible assets (as defined in the Loan Agreement),
primarily receivables, inventories and property and equipment. At December
31, 1996, the Company had borrowing capacity under the revolving loan of
approximately $18.8 million and borrowings of $18,604,000. Borrowings
under the term loan are $2,327,000 at December 31, 1996.

<PAGE>

OMEGA ENVIRONMENTAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(6) PREFERRED STOCK

In December 1995, the Board of Directors designated 500 shares of the
preferred stock to be Series A Convertible Redeemable Preferred Stock
("Series A Preferred Stock"). On December 28, 1995, the Company sold 500
shares of Series A Preferred Stock for net proceeds of $4,635,000. In the
fiscal year ended March 31, 1996, 290 shares were converted into 1,582,794
shares of Common Stock and during the nine months ended December 31, 1996,
the remaining 210 shares of Series A Preferred Stock were converted into
970,899 shares of Common Stock.

The holders of Series B Preferred Stock have the right to vote, together
with the holders of all the outstanding shares of Common Stock, on all
matters on which holders of Common Stock have the right to vote. The
holders of Series B Preferred Stock have the right to cast one vote for
each share of Common Stock into which each share of Series B Preferred
Stock held by them is convertible. The holders of Series B Preferred Stock
do not have any liquidation preference.

Each share of Series B Preferred Stock is convertible into shares of Common
Stock, through July 30, 1997. The number of shares of Common Stock to be
issued upon conversion is determined by dividing $10,000 by the lower of
(i) $1.83661 or (ii) 85% of the average closing bid price of the Company's
Common Stock over the seven trading-day period immediately preceding each
written notice by a holder of the Series B Preferred Stock of such
conversion. For the nine month period ended December 31, 1996, 460 shares
of Series B Preferred Stock were converted into 5,027,044 shares of Common
Stock.

The Company has the right, subject to BNYFC approval, to redeem all of the
outstanding Series B Preferred Stock for $12,200 per share. Unless
redeemed or converted, the Series B Preferred Stock will automatically
convert to Common Stock on July 30, 1997.

(7) UNIT OPTIONS

In June and July 1996, the underwriters exercised 114,011 IPO and 4.59375
Private Placement unit options, including underlying Class A and B common
stock purchase warrants. The Company issued 1,839,555 shares of Common
Stock for net proceeds to the Company of approximately $2,759,000. At
December 31, 1996, 4.34375 Private Placement unit options are outstanding.

<PAGE>

OMEGA ENVIRONMENTAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

(8) COMMITMENTS AND CONTINGENCIES

In January 1995 the Company entered into an agreement in principle to
settle the May 17, 1994 class action lawsuits. On December 5, 1995, the
United States District Court in Seattle, Washington, approved the class
action settlement agreement. Pursuant to such agreement, the settlement
consisted of (i) $250,000 in cash, (ii) $125,000 in cash or common stock,
and (iii) 550,000 shares of the Company's common stock. However, the
Company guaranteed that the Common Stock to be issued in settlement, as of
February 1, 1996 (the "guarantee date"), would have a minimum value of
$9.50 per share. The stock value based upon the 20 trading-day average of
the closing market prices of the Company's Common Stock (as reported in the
Wall Street Journal the following day) through February 1, 1996 was
$3.00795. Since the average was less than $9.50 per share, the Company was
required to issue 1,187,063 additional shares of Common Stock. In April
1996, the Company issued 1,737,063 shares as final settlement.

As of December 31, 1996, principal amounts owing to Funders from the
Florida State reimbursement program for services performed by the Company
were approximately $22,000,000. The reimbursement received by the Funder
may be less than amounts originally submitted due to deductions for costs
which, in the State's opinion, are not allowable under the regulations.
Upon such notification, the Funder may appeal and/or require the Company to
repurchase the denied amount. In accordance with certain Funder
agreements, the Company has placed approximately $2,951,000 in escrow
(classified in other current assets) to provide security to Funders for any
shortfalls. Management believes the Company has reserved adequate amounts
to cover any anticipated shortfalls.

In 1994 the Company filed a lawsuit against Gilbarco Inc., a unit of
General Electric PLC in the United Kingdom and a major manufacturer of fuel
dispensing equipment, alleging violation of antitrust and other laws. This
action was filed by the Company in response to Gilbarco's canceling its
distributorship arrangement with two of the Company's operations. On
December 4, 1995, in the U.S. Federal Court for the Western District of
Washington, in Seattle, a jury awarded the Company and two of its
operations, $27 million in damages and related interest and attorneys' fees
and costs. The U.S. Federal Court judge has since entered a judgment in
favor of the Company and denied a motion to set aside the previously
announced judgment. Gilbarco has filed an appeal. The Company will not
recognize the award in its consolidated financial statements until it is
received or assured.

The Company from time to time is subject to ordinary routine litigation
relating to its operations, some of which is covered by insurance, some of
which may not be. The Company may have liability under environmental laws
for work performed by it or its acquired entities, including clean-up
liability under the Super Fund laws or similar state and local laws. At
the current time the Company does not believe that any litigation it is
involved in would result in a material adverse effect on the Company's
financial condition or results of operations. However, given the nature of
environmental lawsuits the Company is or could be subject to, no assurance
can be given that any such lawsuits may not result, individually or in the
aggregate, in a material judgment against the Company. As of the December
31, 1996, the Company is not subject to any environmental lawsuit brought
by any governmental agency.

<PAGE>

INDEPENDENT AUDITORS' REVIEW REPORT
- --------------------------------------------------------------------------------

The Board of Directors
Omega Environmental, Inc.

We have reviewed the accompanying consolidated balance sheet of Omega
Environmental, Inc. and subsidiaries as of December 31, 1996 and the related
consolidated statements of operations and cash flows for the three-month and
nine month periods ended December 31, 1996. These consolidated financial
statements are the responsibility of the Company's management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the object of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for it to be
in conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Omega Environmental, Inc. and
subsidiaries as of March 31, 1996, and the related consolidated statements of
operations, shareholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated May 31, 1996, except as to notes 2
and 5(d), which are dated June 26, 1996, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information set
forth in the accompanying consolidated balance sheet as of March 31, 1996, is
fairly stated, in all material respects, in relation to the consolidated balance
sheet from which it has been derived.

Our report dated May 31, 1996, except as to notes 2 and 5 (d), which are as of
June 26, 1996, on the consolidated financial statements of Omega Environmental,
Inc. and subsidiaries as of and for the year ended March 31, 1996, contains an
explanatory paragraph that states that the Company has incurred significant
losses since inception and operations have not generated sufficient cash to
cover current obligations. These matters raise substantial doubt about the
Company's ability to continue as a going concern. The consolidated balance
sheet as of March 31, 1996, does not include any adjustments that might result
from the outcome of that uncertainty.

/s/ KPMG Peat Marwick LLP
Seattle, Washington
February 13, 1997

<PAGE>

OMEGA ENVIRONMENTAL, INC. AND SUBSIDIARIES

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

RESULTS OF OPERATIONS

Management is focused on improving operations and achieving profitability.
Operating results have not met management's expectations and steps are
continuing to be taken to either improve, downsize, or dispose of unprofitable
operations. As a result of these decisions and past operating losses of certain
operations, a goodwill write-down of $7,982,000 was recorded in December 1996.
To improve operations and reduce overhead, the Company is continuing the process
of aligning operations along functional lines on a national basis including (i)
centralizing purchasing and bringing distribution under one national
computerized information system, (ii) consolidating maintenance services in one
nationally coordinated and directed unit, (iii) consolidating construction
management and implementing improved project management systems and controls,
(iv) consolidating marketing and sales activities, and (v) consolidating
locations and closing unprofitable locations. Management expects operating
losses to continue in the short-term until operations are fully aligned along
functional lines and discontinued units are fully disposed of. The cost and
timing of this process can not be estimated at this time.

THREE MONTHS AND NINE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO 1995

The Company's net loss was $12,639,000 and $13,644,000 for the three and nine
months ended December 31, 1996, respectively, as compared to a net loss of
$1,807,000 and $2,157,000 during the same period in 1995. The net loss for the
three months and nine months ended December 31, 1996 excluding the goodwill
write-down and amortization was $4,247,000 and $4,422,000, respectively. Net
losses from discontinued units were $974,000 for the three month period and
$1,569,000 for the nine month period ended December 31, 1996. Additionally, the
Company incurred $631,000 of expense in the three month period ended December
31, 1996 for severance and related costs and additional bank charges.

SALES, COST OF SALES AND GROSS PROFIT

Sales increased $956,000 or 2% and $2,209,000 or 2% for the three months and
nine months ended December 31, 1996, respectively, primarily due to the growth
in construction and maintenance repair services. Growth was net of sales from
non-core operations included in 1995 and discontinued by March 1996.

Cost of sales increased $3,901,000 or 12% and $5,252,000 or 6% for the three and
nine months ended December 31, 1996, respectively, primarily due to
significantly higher than previously estimated costs on certain fixed-price
government construction contracts. Management has decided to exit this business
and has estimated total costs-to-complete on these contracts, but actual final
total costs-to-complete could differ from those estimates.

Gross profit margins as a percent of sales decreased to 12.4% and 17.5% for the
three and nine months ended December 31, 1996, respectively, from 20.1% and
20.4% in the same periods in 1995. This was due to losses and lower margins on
construction contracts, primarily fixed-priced government construction
contracts, as well as lower margins in maintenance services and distribution.

<PAGE>

OMEGA ENVIRONMENTAL, INC. AND SUBSIDIARIES

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses were comparable for the three month
period and increased by $219,000 for the nine months ended December 31, 1996.
The increase included severance and other expenses related to the operational
consolidation of purchasing and distribution, consolidating maintenance service
activities, and increased bank charges. As a percentage of sales, selling,
general and administrative expenses decreased slightly for the three month
period and remained the same at 20% for the nine month period.

GOODWILL WRITE-DOWN AND AMORTIZATION

In December 1996, the Company recognized a goodwill write-down of $7,982,000
related to the acquisitions of the W.B. Goode Company, Incorporated ("Goode") in
September 1993, Silicate Technology Corporation ("STC") in September 1994, Fedco
Tank and Equipment, Inc. and Affiliates ("Fedco") in May 1994, and Braswell and
Arnold Equipment Companies ("Braswell") in November 1994. These operations have
had significant operating losses since being acquired. During the quarter ended
December 31, 1996, management made a strategic decision to realign and downsize
Goode, Fedco and Braswell's operations. Reduced future operating levels, past
losses and debt incurred to finance these losses have impaired these entities
ability to recover goodwill over the expected period of benefit. Also,
management decided to downsize or dispose of STC's operations and none of the
associated goodwill is expected to be recovered.

The methodology that management used to assess the recoverability of goodwill of
entities with continuing operations was to project results of operations forward
through the remaining period of benefit. Projections were based on past
business operations and management's changes to operations. The forecasts are
management's best estimate of future results and includes a 3% annual increase
in sales and slightly increasing margins. Projected future results were
discounted at 13%, the Company's estimated cost of funds. The evaluation
resulted in a full write-down of these entities' goodwill.

The Company has assessed the recoverability of remaining goodwill, and it is
dependent upon certain entities achieving future profitable operations.
Management is continuing to monitor the operating performance of these entities
in relation to projections. In the opinion of management, based upon current
information and projections, the remaining goodwill balance at December 31, 1996
will be recovered over the expected period of benefit.

Amortization of goodwill decreased due to the goodwill write-down recorded in
March 1996. Goodwill will continue to have an adverse effect on future results
of operations.

OTHER INCOME (EXPENSE)

The decrease in interest income and the increase in interest expense for the
three and nine months ended December 31, 1996 related to higher interest rates,
increased borrowings and the continued use of cash in operations.

<PAGE>

OMEGA ENVIRONMENTAL, INC. AND SUBSIDIARIES

LIQUIDITY AND CAPITAL RESOURCES
(IN THOUSANDS)
Nine Months Ended December 31, 1996 1995
-----------------------
Net cash used in operating activities $ (8,710) $ (8,593)
Net cash provided by (used in) investing activities (1,062) 587
Net cash provided by financing activities 10,577 12,159

December 31, March 31,
1996 1996
-----------------------
Working capital $ 20,092 $ 22,934
Long-term obligations, excluding current installments
and class action lawsuit settlement obligation 83 6,554

The Company has incurred significant losses since inception and operations have
not generated cash. Net cash used in operating activities was $8,710,000 due to
net losses and net increases in certain assets over liabilities. Cash provided
by the reduction of costs and estimated earnings in excess of billings on
uncompleted contracts, principally related to the Florida State reimbursement
program, was more than offset by cash used in the increase of receivables,
inventories and prepaids and other assets. The Company's Environmental Services
Division has rapidly expanded its operations in Texas due to favorable changes
in the Texas State reimbursement program and as of December 31, 1996 had
receivables and costs and estimated earnings in excess of billings of
$8,200,000. Changes in the Texas State reimbursement program that extend
payment terms would adversely impact the Company's liquidity.

Net cash used in investing activities was $1,062,000 in the nine months of 1996,
as compared to cash provided by investing activities of $587,000 in the same
period in 1995. This change is primarily due to the collection of loans from
related parties in 1995. Net cash provided by financing activities was
$10,577,000 in the nine months of 1996, as compared to $12,159,000 in 1995.
This decrease is primarily due to an increase in cash at December 31, 1995 from
the proceeds of the sale of preferred stock that was used to pay down the
borrowing under the Loan Agreement in January 1996. Proceeds from the sale of
preferred stock and exercise of unit options of approximately $7,700,000 in 1996
were used to repay borrowings under the revolving credit and term loans.

Working capital decreased $2,842,000, primarily due to net losses and additions
to property and equipment. Long-term obligations, excluding current
installments and class action lawsuit settlement obligation, decreased
$6,471,000 due to repayment of borrowings under the term loan agreement from the
proceeds of the exercise of unit options and sale of preferred stock and
reclassification of the BNYFC term debt of $659,000 from long-term to current
liabilities.

As of December 31, 1996, the Company completed its billings to Funders under the
Florida Reimbursement Program and is responsible for any shortfalls related to
the approximately $22,000,000 of billings to the Florida State reimbursement
program for services performed by the Company and paid to the Company by the
Funders. In accordance with certain Funder agreements, the Company has placed
approximately $2,951,000 in escrow (classified in other current assets) to
provide security to Funders for any shortfalls. Management believes the Company
has reserved adequate amounts to cover any anticipated shortfalls. Management
expects to continue to provide services in Florida under the revised

<PAGE>

OMEGA ENVIRONMENTAL, INC. AND SUBSIDIARIES

government program that provides for an assigned priority ranking system, task
pre-approval, and payment within 90 days of invoicing of completed tasks.

Borrowing capacity under the BNYFC Loan Agreement is limited to a percent of
eligible assets (as defined in the Loan Agreement), primarily receivables,
inventories and property and equipment. At December 31, 1996, the Company had
borrowing capacity under the revolving loan of approximately $18.8 million and
borrowings of $18,604,000.

This financing agreement contains covenants which, among other provisions,
require the Company to maintain a minimum tangible net worth, minimum working
capital, minimum net income, and other financial ratios, and restrictions on
acquisitions, capital expenditures, additional indebtedness or liens, payment of
dividends, and other restrictions. The Company is currently in default of the
minimum net income, interest coverage, and minimum tangible net worth covenant
provisions of the Loan Agreement with BNYFC. As a result of such defaults, the
interest rates increased by 200 basis points during the default period and
$659,000 of the term loan has been reclassified from long-term to current
liabilities. BNYFC has continued to extend credit to the Company during the
default period. As of February 13, 1997, the Company's borrowings under the
revolving loan of $20,513,000 exceeded eligible assets by approximately
$1,200,000. BNYFC has agreed to temporarily extend credit over eligible
assets, but could discontinue the extended credit at any time. The Loan
Agreement also provides for an interest rate increase of an additional 200
basis points during the month when borrowings exceed eligible assets.

The Company is currently negotiating with BNYFC to try to amend the Loan
Agreement to provide for additional collateral eligibility based on a
reappraisal of property and equipment values, extended eligibility periods for
receivables from state reimbursement programs, and modified covenants based on
future operating plans and forecasts. At this time, the Company is preparing
the information needed for the amendment and expects the process to be completed
in the next 30 to 60 days. While the Company expects to successfully amend the
Loan Agreement with BNYFC, no assurances can be given that such amendment will
occur or that the Company will not have to pay substantial fees or increased
interest rates to accomplish such an amendment. The Company is currently
dependent on the BNYFC loan to supply necessary working capital for its
operations.

If amendment of the BNYFC agreement is not successful, the Company will seek to
replace the loans from BNYFC with loans from other lenders. There can be no
assurance that the Company will be able to replace the loans from BNYFC.
Alternatively, the Company may seek to raise additional capital. In order to
induce parties to purchase equity securities in the recent past, the Company
sold convertible preferred stock that was convertible into Common Stock of the
Company at a conversion price that was lower than the price at which the Common
Stock was trading. Only 40 shares of such preferred stock are still
outstanding. In order to raise additional capital, the Company may have to
issue convertible debt or preferred stock that is convertible into Common Stock
at a conversion price that is lower than the current market price of the Common
Stock. Further, the conversion price may adjust based on the then current
market price of the Common Stock. In the event of a significant decline in the
market price of the Common Stock of the Company, such a conversion feature could
result in significant dilution to the Company's existing stockholders. The past
sales were, and any future sales could be, made in offshore transactions
pursuant to Regulation S, promulgated by the Securities and Exchange Commission.
Under Regulation S, purchasers of such securities are free to sell them in the
United States after holding them for 40 days after the last sale of such
securities by the Company to the purchasers. However, no assurances can be
given that the Company can successfully raise additional capital.

<PAGE>

OMEGA ENVIRONMENTAL, INC. AND SUBSIDIARIES

In June and July 1996, certain unit options and underlying warrants were
exercised by the underwriters for net proceeds to the Company of approximately
$2,759,000. In July 1996, the Company sold 500 shares of Series B Convertible
Redeemable Preferred Stock under Regulation S for net proceeds of $4,700,000.
These proceeds were used to reduce long-term obligations and the revolving
credit loan.

As part of its organizational consolidation, management is continuing to take
steps to significantly reduce overhead and is evaluating further cost reduction
and margin improvement programs. There can be no assurance that the Company
will be able to generate cash from operations, borrowings or the sale of
additional Company equity securities. Additionally, there can be no assurance
that the Company will be able to amend the Loan Agreement covenants or that
eligible assets will be adequate to support borrowings under the Loan Agreement.

In addition to normal operating cash commitments, the Company has the following
existing and planned cash requirements:

- - In accordance with the STC acquisition agreement, additional cash of up to
$875,000 will be paid if certain income levels, as defined in the
acquisition agreement, are achieved for each six month period between
September 30, 1994 and September 30, 1997. As of December 31, 1996, these
income levels have not been achieved.

- - Omega Financial facilitates third-party financing primarily for customers
of the Company's operating divisions. In addition to serving as an
intermediary between customers and funding sources, Omega Financial was
authorized by the Company's Board of Directors to provide up to $2 million
to be held in limited recourse assurances and guarantees to participating
financial institutions. At December 31, 1996, the Company has guaranteed
repayment of certain loans of customers totaling $1,394,000.

FORWARD LOOKING STATEMENTS

Matters discussed herein contain forward looking statements that involve risk
and uncertainties. The Company's results may differ significantly from results
indicated by forward looking statements. Factors that might cause some
differences, include but are not limited to:

- - Changes in general economic conditions, include but are not limited to
increases in interest rates and supply and prices of petroleum products,
affecting customers or the Company;

- - Changes in government regulations affecting customers or the Company or
additional changes in governmental reimbursement programs particularly in
Florida and Texas;

- - Risks generally involved in the construction business, including weather,
fixed price contracts and shortages of materials or labor;

- - Competition;

- - Foreign operations in Mexico, which could be subject to high inflation
rates, additional devaluation of the peso and foreign currency and import
restrictions;

<PAGE>

OMEGA ENVIRONMENTAL, INC. AND SUBSIDIARIES

- - The ability to successfully reorganize the Company into functional lines on
a national basis and obtain quantity discounts from vendors and to continue
relationships with vendors;

- - The ability to generate cash from operations, borrowings or the sale of
additional equity securities;

- - The ability to amend the covenants and conditions of the Company's loan
agreement or that eligible assets will be adequate to support borrowing
levels under the loan agreement;

- - Recoverability of goodwill and its dependency on certain entities achieving
future profitable operations.

- - The occurrences of incidents which could subject the Company to liability
or fines under any environmental laws or the adequacy of insurance; and

- - The timing and nature of any future acquisitions.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

In 1994 the Company filed a lawsuit against Gilbarco Inc., a unit of
General Electric PLC in the United Kingdom and a major manufacturer of
fuel dispensing equipment, alleging violation of antitrust and other
laws. This action was filed by the Company in response to Gilbarco's
canceling its distributorship arrangement with two of the Company's
operations. On December 4, 1995, in the U.S. Federal Court for the
Western District of Washington, in Seattle, a jury awarded the Company
and two of its operations, $27 million in damages and related interest
and attorneys' fees and costs. The U.S. Federal Court judge has since
entered a judgment in favor of the Company and denied a motion to set
aside the previously announced judgment. Gilbarco has filed an
appeal. The Company will not recognize the award in its consolidated
financial statements until it is received or assured.

The Company from time to time is subject to ordinary routine
litigation relating to its operations, some of which is covered by
insurance, some of which may not be. The Company may have liability
under environmental laws for work performed by it or its acquired
entities, including clean-up liability under the Super Fund laws or
similar state and local laws. At the current time the Company does
not believe that any litigation it is involved in would result in a
material adverse effect on the Company's financial condition or
results of operations. However, given the nature of environmental
lawsuits the Company is or could be subject to, no assurance can be
given that any such lawsuits may not result, individually or in the
aggregate, in a material judgment against the Company. As of December
31, 1996, the Company is not subject to any environmental lawsuit
brought by any governmental agency.

<PAGE>

OMEGA ENVIRONMENTAL, INC. AND SUBSIDIARIES

ITEM 2. CHANGE IN SECURITIES

Sales of Unregistered Securities

In April 1996, two entities converted 190 shares of Series A
Convertible Redeemable Preferred Stock ("Series A Preferred Stock")
(sold in fiscal year 1996) into 859,421 shares of Common Stock. In
July and August 1996, one entity converted 20 shares of Series A
Preferred Stock into 111,478 shares of Common Stock.

In July 1996, the Board of Directors designated 500 shares of the
preferred stock to be Series B Convertible Redeemable Preferred Stock
("Series B Preferred Stock") and the Company sold these 500 shares to
eight entities under Regulation S for net proceeds of $4,700,000. See
Note 6 Preferred Stock in Notes to Consolidated Financial Statements
for conversion rights. In September 1996, two entities converted 19
shares of Series B Preferred Stock into 134,485 shares of Common
Stock. During the quarter ended December 31, 1996, eight entities
converted 441 shares of Series B Preferred Stock into 4,892,559 shares
of Common Stock.

These conversions are exempt under Section 3(a)9 of the Securities Act
of 1933 as exchanges of securities are with existing security holders
without the payment of any compensation.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

The BNYFC Loan Agreement contains covenants which, among other
provisions, require the Company to maintain a minimum tangible net
worth, minimum working capital, minimum net income, and other
financial ratios, and restrictions on acquisitions, capital
expenditures, additional indebtedness or liens, payment of dividends,
and other restrictions. The Company is currently in default of the
minimum net income, interest coverage, and minimum tangible net worth
covenant provisions of the Loan Agreement with BNYFC. As a result of
such defaults, the interest rates increased by 200 basis points during
the default period and $659,000 of the term loan has been reclassified
from long-term to current liabilities. BNYFC has continued to extend
credit to the Company during the default period. As of December 31,
1996, borrowings under the revolving and term loans were $18,604,000
and $2,327,000, respectively.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

ITEM 5. OTHER INFORMATION

None.

<PAGE>

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

10 (a) Transition Agreement with Louis J. Tedesco
10 (b) Transition Agreement with Jeffery B. Weinress
10 (c) Transition Agreement with Dan E. Steigerwald
10 (d) Settlement Agreement with Edward J. O'Sullivan
10 (e) Non-Qualified Stock Option Agreement with Leo L. Azure,
Jr.
10 (f) Non-Qualified Stock Option Agreement with Peter DeMay
10 (g) Employment Agreement with Jeffery B. Weinress
10 (h) Separation Agreement with Leo L. Azure, Jr.
11 Statement regarding computation of per share loss
15 Letter re unaudited interim financial information
27 Financial Data Schedule

(b) Reports on Form 8-K

None

<PAGE>

SIGNATURES

Pursuant to the registration requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.

OMEGA ENVIRONMENTAL, INC.
(Registrant)

DATE: February 14, 1997 /s/ Louis J. Tedesco
------------------- ----------------------------------------
Louis J. Tedesco
Chairman of the Board of Directors,
Chief Executive Officer and President
(Principal Executive Officer)

DATE: February 14, 1997 /s/ Dan E. Steigerwald
------------------- ----------------------------------------
Dan E. Steigerwald
Chief Financial Officer (Principal
Financial Officer)

DATE: February 14, 1997 /s/ Bradley S. Powell
------------------- ----------------------------------------
Bradley S. Powell
Corporate Controller (Principal
Accounting Officer)

<PAGE>

<PAGE>
EXHIBIT 10(a)

TRANSITION AGREEMENT

This Transition Agreement is entered into this 30th day of January, 1997
and is by and between the executive executing this agreement on the last page
hereof ("Executive") and Omega Environmental, Inc. ("Company").

WHEREAS, the employment arrangements currently in place between Executive
and Company do not address or provide any protection for Executive or Company in
the event of a Change in Control of Company; and

WHEREAS, should Company receive any proposal from a third person concerning
a possible business combination with, or acquisition of equity securities of,
Company, the Board of Directors of Company believes it imperative that Company
be able to rely on Executive's advice as to the best interest of Company and its
shareholders without concern that Executive might be distracted by the personal
uncertainties and risks created by such a proposal.

NOW, THEREFORE, Executive and Company hereby agree as follows:

1. In the event a third person begins a tender or exchange offer,
circulates a proxy to shareholders, or takes another step to effect a Change of
Control (as defined in Section 9 hereof) of Company, Executive agrees that he
will not voluntarily leave the employ of Company, and will render the services
as contemplated in his employment offer, until the third person has abandoned or
terminated his efforts to effect a Change of Control or until a Change of
Control has occurred.

2. In the event Executive's employment with the Company (including its
subsidiaries) is involuntarily terminated (as defined in Section 7 hereof),
other than as a consequence of his death or disability, or of his retirement at
or after his normal retirement date under Company's pension or other retirement
plans, within one and one-half (1 1/2) years after a Change of Control of
Company (a "Covered Termination"), each of the following payments, less required
withholding taxes, shall be made by Company to Executive not later than thirty
(30) days after the date of such Covered Termination:

(a) BASE SALARY. An amount in cash equal to two (2) times the amount
of Executive's base salary (as defined below). Base Salary is the greater of
the Executive's annual base salary (x) immediately prior to the Change in
Control or (y) on the effective date of his Covered Termination. Any payments
made hereunder are in lieu of any lump sum payment of base salary required under
any employment arrangements currently existing between Executive and Company.

(b) BONUS. An amount in cash equal to the amount of Executive's
Target Incentive Level for an Award under the Company's Performance Compensation
System as in effect on his date of Covered Termination, or, if greater, as in
effect immediately prior to the Change in Control.

<PAGE>

(c) 401 (K) PLAN. An amount in cash equal to the amount contributed
by Company under the Company's 401(k) Retirement Plan (the "401(k) Plan") to
Executive's "Company Contribution Account," as such term is defined in the
401(k) Plan, for the year ending immediately prior to the Change in Control.

(d) In the event of Executive's re-employment by the Company or any
new parent company within one year of a Covered Termination, the Executive
agrees to return a prorated portion of the payments in 2(a)-2(c) above remaining
after Executive's taxes on such payments, such proration being determined on a
monthly basis over the first year following a Covered Termination. Executive
also agrees that his Benefits would promptly revert to the level normally
provided other Executives.

3. BENEFITS. Company agrees that for the period beginning on the date of
Executive's Covered Termination and ending on the first to occur of (i) the date
of Executive's re-employment or (ii) the last day of the twelfth (12th) month
following the date of Executive's Covered Termination, Company shall provide
under Executive's COBRA election medical and dental insurance, life insurance,
accidental death and dismemberment insurance and disability protection no less
favorable to (including with respect to any costs borne by Executive) than the
better of (a) the coverage provided by Company immediately prior to the Change
of Control or (b) the coverage provided by Company immediately prior to
Executive's date of Covered Termination.

4. SUPPORT. Without in any way limiting any pre-existing agreements
between Company and Executive, in the event of a Covered Termination, Company
(a) will assist Executive with executive outplacement up to a cost of $50,000,
and (b) will provide secretarial assistance and office space from which
Executive may conduct employment efforts for a period of up to one year at no
cost to Executive.

5. STOCK OPTIONS. Upon a Change in Control, all of Executive's stock
options become fully vested and exercisable immediately for a period of the
lesser of one year or their current remaining term. In the event of a Covered
Termination, Company shall pay to Executive, in respect of each option to
purchase common stock of the Company granted to Executive under Company's 1990
Stock Option Plan, as amended (the "Stock Option Plan") that is then outstanding
(and that has not been exercised) an amount in cash equal to the excess, if any,
of the higher of (a) the Closing Price per share of Company's common stock on
the Executive's termination date or (b) the highest per share price actually
paid in connection with any Change of Control (such higher amount being
hereinafter referred to as "Fair Market Value") over the exercise price,
multiplied by the total number of shares of Company's common stock subject to
such option. Such payment shall be in consideration of a cancellation of any
rights which Executive may have in said stock options.

6. EMPLOYEE'S COMMITMENT. In consideration for the benefits accorded
Executive hereunder, Executive agrees that:

<PAGE>

(a) During the life of this agreement Executive will faithfully
perform his duties to the best of his ability and in accordance with the
directions of the Board, provided that after a Change in Control of the Company
such directions do not constitute good reason for Executive to terminate his
employment; and Executive will devote to the performance of his duties his full
working time, attention and energies;

(b) Executive will not at any time during the life of this Agreement,
or thereafter, communicate or disclose to any unauthorized person, or use for
his own account, without the written consent of the Company, any processes,
equipment or products of the Company or any subsidiary, or other information
concerning their business or affairs, suppliers or customers, it being
understood, however, that the obligations of this paragraph shall not apply to
the extent that the aforesaid matters become generally known to and available
for use by the public otherwise than by Executive's act or omission.

7. INVOLUNTARY TERMINATION. For purpose of this agreement, Executive's
employment with Company (including its subsidiaries) shall be deemed to have
been involuntarily terminated by Company if (a) Executive's employment is
terminated by Company for a reason other than for cause (which for purposes of
this Transition Agreement shall mean Executive's gross negligence, habitual
neglect or willful misconduct in performance of the duties and services required
of him pursuant to his employment offer or Executive's final conviction of a
felony or of a misdemeanor involving moral turpitude) or (b) Executive
terminates his employment with Company within sixty (60) days of the occurrence
of one or more of the following events: (i) a substantial adverse alteration in
the nature or status of Executive's responsibilities from those in effect
immediately prior to the Change in Control (other than any such alteration
primarily attributable to the fact that Company may no longer be a public
company); (ii) the assignment to Executive of any duties inconsistent with his
status as an executive officer of Company; (iii) a reduction by Company in
Executive's annual base salary as in effect on the date hereof or as the same
may be increased from time to time except for across-the-board salary reductions
similarly affecting all executives of Company and all executives of any person
in control of Company; (iv) Company's requiring Executive to be permanently
based anywhere other than the continental United States except for required
travel on Company's business to an extent substantially consistent with
Executive's present business travel obligations; (v) the failure by Company to
continue in effect compensation plans that, in the aggregate, provide Executive
with benefits not materially less favorable than those provided to Executive
immediately prior to the Change in Control under Company's pension, profit
sharing, bonus, incentive, life insurance, health, accident, disability and
other employee benefit plans, programs or arrangements (other than stock-based
compensation plans, programs or arrangements); or (vi) the taking of any action
by Company that would materially adversely affect the physical conditions
existing at the time of the Change in Control in or under which Executive
performs his employment duties; PROVIDED, HOWEVER, that a termination of
employment by Executive pursuant to clause (ii), (iii), (iv), (v) or (vi) of
this Section 7 shall not fail to constitute an involuntary termination within
the meaning of this Section 7 merely because the event set forth in any such
clause is primarily attributable to the fact that Company is no longer a public
company; and PROVIDED, FURTHER, that for purposes of this subsection (b), any
good faith determination of an event described in clauses (i)-(vi) made by the
Executive shall be

<PAGE>

conclusive; or (c) Executive's employment is terminated by the Company for a
reason other than for cause in anticipation of a Change in Control or at the
request of a third party seeking to cause a Change in Control.

8. OTHER AGREEMENTS. Upon a Change in Control, the provisions of
Executive's Confidentiality, Noncompetition And Nonsolicitation Agreement shall
not be construed to prohibit Executive from seeking or continuing employment
with any third person who may acquire 50% or more of the outstanding common
shares of the Company nor shall the provisions of Section 1 (Noncompetition) be
enforced by the Company.

9. DEFINITION OF CHANGE OF CONTROL. A "Change in Control" shall mean
any of the following events:

(a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act") (a "Person") of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that for purposes of this
subsection (1), the following acquisitions shall not constitute a Change of
Control: (i) any acquisition directly from the Company, (ii) any acquisition
by the Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by an corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) below; or

(b) individuals who, as of the date hereof, constitute the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided, however, that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

(c) approval by the shareholders of the Company of a reorganization,
merger or consolidation or sale or other disposition of all or substantially all
of the assets of the Company (a "Business Combination"), in each case, unless
following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners of the outstanding
Company voting securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 50% of, respectively, the
then outstanding shares of common stock and the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of

<PAGE>

the Company's assets either directly or through one or more subsidiaries) in
substantially the same proportions their ownership, immediately prior to such
Business Combination of the outstanding Company voting securities, (ii) no
Person (excluding any employee benefit plan (or related trust) of the Company
or such corporation resulting from such Business Combination) beneficially
owns, directly or indirectly, 50% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding
voting securities of such corporation except to the extent that such
ownership existing prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation
resulting from such Business Combination were members of the Incumbent Board
at the time of the execution of the initial agreement, or of the action of
the Board, providing for such Business Combination.

10. RELATION TO OTHER BENEFIT PLANS. Except for the specific references
above to the existing employment arrangements between Executive and Company,
nothing in this Transition Agreement shall be deemed to alter or be in lieu of
any entitlements due Executive under the benefit plan or policies of Company in
existence on the date hereof. In the event any benefit plan or policy of
Company shall provide for earlier vesting or payment to Executive (e.g., stock
options, stock appreciation rights or stock grants) than set forth herein then
the terms of the plan or policy shall govern.

11. SUCCESSORS. This Transition Agreement shall be binding upon and inure
to the benefit of the Executive and his estate, and the Company and its
successors or assigns, but neither this Transition Agreement nor any rights
arising hereunder may be assigned or pledged by the Executive.

12. REDUCTION IN PAYMENTS

(a) For purposes of this section, (i) "Payment" shall mean any
payment or distribution in the nature of compensation to or for the benefit of
Executive, whether paid or payable pursuant to this Transition Agreement or
otherwise; (ii) "Agreement Payment" shall mean a Payment paid or payable
pursuant to this Transition Agreement (disregarding this Section); (iii) "Net
After Tax Receipt" shall mean the Present Value of a Payment net of all taxes
imposed on Executive with respect thereto under Sections 1 and 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), determined by applying
the highest marginal rate under Section 1 of the Code which applied to the
Executive's taxable income for the immediately preceding taxable year; (iv)
"Present Value" shall mean such value determined in accordance with Section 280G
(d)(4) of the Code; and (v) "Safe Harbor" shall mean the sum of $1.00 less than
three times the Executive's "base amount" within the meaning of that term in
Section 280G of the Code.

(b) Anything in this Transition Agreement to the contrary
notwithstanding, in the event KPMG Peat Marwick LLP (the "Accounting Firm")
shall determine that receipt of all Payments would subject Executive to tax
under Section 4999 of the Code, it shall determine whether the receipt of the
Safe Harbor would result in greater Net After Tax Receipts to the Executive
than receipt of all the Agreement Payments. If said firm determines that the
receipt of

<PAGE>

the Safe Harbor would so result, the aggregate Agreement Payments shall be
reduced to the Safe Harbor.

If the Accounting firm determines that aggregate Agreement Payments
should be reduced to the Safe Harbor, the Company shall promptly give Executive
notice to that effect and a copy of the detailed calculation thereof, and the
Executive may then elect, in his sole discretion, which and how much of the
Agreement Payments shall be eliminated or reduced (as long as after such
election the present value of the aggregate Agreement Payments equals the Safe
Harbor), and shall advise the Company in writing of his election within ten days
of his receipt of notice. If no such election is made by the Executive within
such ten-day period, the Company may elect which of such Agreement Payments
shall be eliminated or reduced (as long as after such election the present value
of the aggregate Agreement Payments equals the Safe Harbor) and shall notify the
Executive promptly of such election. All determinations made by the Accounting
Firm under this Section shall be binding upon Company and Executive and shall be
made within 60 days of a termination of employment of the Executive. As
promptly as practicable following such determination, the Company shall pay to
or distribute for the benefit of Executive such Agreement Payments as are then
due to Executive under this Transition Agreement and shall promptly pay to or
distribute for the benefit of Executive in the future such Agreement Payments as
become due to Executive under this Transition Agreement.

(c) While it is the intention of the Company and the Executive to
reduce the amounts payable or distributable to Executive hereunder only if the
aggregate Net After Tax Receipts to Executive would thereby be increased, as a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that amounts will not have been paid or distributed by the Company to
or for the benefit of Executive pursuant to this Transition Agreement which
should not have been so paid or distributed ("Overpayment") or that additional
amounts which will have not been paid or distributed by the Company to or for
the benefit of Executive pursuant to this Transition Agreement could have been
so paid or distributed ("Underpayment"), in each case, consistent with the
calculation of the Reduced Amount hereunder. In the event that the Accounting
Firm, based either upon the assertion of a deficiency by the Internal Revenue
Service against the Company or Executive which the Accounting Firm believes has
a high probability of success determines that an Overpayment has been made, any
such Overpayment paid or distributed by the Company to or for the benefit of
Executive shall be treated for all purposes as a loan to Executive which
Executive shall repay to the Company together with interest at the applicable
federal rate provided for in Section 7872 (f) (2) of the Code; provided,
however, that no such loan shall be deemed to have been made and no amount shall
be payable by Executive to the Company if and to the extent such deemed loan and
payment would not either reduce the amount on which the Executive is subject to
tax under Section 1 and Section 4999 of the Code or generate a refund of such
taxes. In the event that the Accounting Firm, based upon controlling precedent
or substantial authority, determines than an Underpayment has occurred, any such
Underpayment shall be promptly paid by the Company to or for the benefit of the
Executive together with interest at the applicable federal rate provided for in
Section 7872 of the Code.

<PAGE>

13. REIMBURSEMENT. The Company agrees to pay as incurred, to the full
extent permitted by law, all legal fees and expenses (up to a maximum amount of
$75,000) which the Executive may reasonably incur as a result of any content
(regardless of the outcome thereof) by the Company, the Executive or others of
the validity or enforceability of, or liability under, any provision of this
Transition Agreement or any guarantee of performance thereof (including as a
result of any contest by the Executive about the amount of any payment pursuant
to this Transition Agreement), plus in each case interest on any delayed payment
at the applicable Federal rate provided for in Section 7872 of the Code.

14. MISCELLANEOUS. No provision of this Transition Agreement may be
modified, waived or discharged except in writing specifically referring to such
provision and signed by an officer of the Company specially designated by the
Board of Directors of the Company. No waiver at any time by either party hereto
of the breach of any condition or provision of this Transition Agreement, or of
compliance by the other party with the same, shall be deemed a waiver of any
other condition or provision at the same or at any other time. No agreement or
representation, oral or otherwise, express or implied, with respect to the
subject matter hereof has been made by either party other than those set forth
expressly in this Transition Agreement. The validity, interpretation,
construction and performance of this Transition Agreement shall be governed by
the laws of the State of Washington.

15. ARBITRATION. Any dispute or controversy arising under or in
connection with this Transition Agreement shall be settled exclusively by
arbitration in King County, Washington by one arbitrator in accordance with the
rules of the American Arbitration Association then in effect. Pending the
resolution of such dispute or controversy, the Company will continue to pay
Executive his full base salary in effect when the notice giving rise to the
dispute was given and continue Executive as a participant in all thrift,
incentive, compensation, pension, life insurance, health and accident or
disability plans in which Executive was participating when the notice giving
rise to the dispute was given. Judgment may be entered on the arbitrator's
award in any court having jurisdiction; provided, however, that (a) Executive
shall be entitled to seek specific performance of his right to be paid until the
Date of Termination during the pendency of any dispute or controversy arising
under or in connection with this Transition Agreement and (b) in the event the
Arbitrator confirms Executive's termination as not being a Covered Termination,
the Executive agrees to promptly return the after-tax cash payments received by
Executive pursuant to this section.

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

OMEGA ENVIRONMENTAL, INC. EXECUTIVE

By: /s/ Dan E. Steigerwald /s/ Louis J. Tedesco
----------------------- -------------------------
Its: CFO Louis J. Tedesco

<PAGE>
EXHIBIT 10(b)

TRANSITION AGREEMENT

NOW, THEREFORE, Executive and Company hereby agree as follows:

<PAGE>

6. EMPLOYEE'S COMMITMENT. In consideration for the benefits accorded
Executive hereunder, Executive agrees that:

2
<PAGE>

3
<PAGE>

9. DEFINITION OF CHANGE OF CONTROL. A "Change in Control" shall mean
any of the following events:

4
<PAGE>

12. REDUCTION IN PAYMENTS

(b) Anything in this Transition Agreement to the contrary
notwithstanding, in the event KPMG Peat Marwick LLP (the "Accounting Firm")
shall determine that receipt of all Payments would subject Executive to tax
under Section 4999 of the Code, it shall determine whether the receipt of the
Safe Harbor would result in greater Net After Tax Receipts to the Executive than
receipt of all the Agreement Payments. If said firm determines that the receipt
of

5
<PAGE>

the Safe Harbor would so result, the aggregate Agreement Payments shall be
reduced to the Safe Harbor.

6
<PAGE>

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

OMEGA ENVIRONMENTAL, INC. EXECUTIVE

By: /s/ Louis J. Tedesco /s/ Jeffery B. Weinress
----------------------- --------------------------------
Its: Chairman Jeffery B. Weinress
-----------------------

<PAGE>
EXHIBIT 10(c)

TRANSITION AGREEMENT

NOW, THEREFORE, Executive and Company hereby agree as follows:

<PAGE>

(c) 401 (k) PLAN. An amount in cash equal to the amount contributed
by Company under the Company's 401(k) Retirement Plan (the "401(k) Plan") to
Executive's "Company Contribution Account," as such term is defined in the
401(k) Plan, for the year ending immediately prior to the Change in Control.

6. EMPLOYEE'S COMMITMENT. In consideration for the benefits accorded
Executive hereunder, Executive agrees that:

<PAGE>

9. DEFINITION OF CHANGE OF CONTROL. A "Change in Control" shall mean
any of the following events:

<PAGE>

12. REDUCTION IN PAYMENTS

(b) Anything in this Transition Agreement to the contrary
notwithstanding, in the event KPMG Peat Marwick LLP (the "Accounting Firm")
shall determine that receipt of all Payments would subject Executive to tax
under Section 4999 of the Code, it shall determine whether the receipt of the
Safe Harbor would result in greater Net After Tax Receipts to the Executive than
receipt of all the Agreement Payments. If said firm determines that the receipt
of

<PAGE>

the Safe Harbor would so result, the aggregate Agreement Payments shall be
reduced to the Safe Harbor.

<PAGE>

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

OMEGA ENVIRONMENTAL, INC. EXECUTIVE

By: /s/ Louis J. Tedesco /s/ Dan E. Steigerwald
--------------------------- --------------------------
Its: Chairman Dan E. Steigerwald
---------------------------

<PAGE>

EXHBIT 10(d)

SETTLEMENT AGREEMENT AND MUTUAL RELEASE

This Settlement Agreement and Mutual Release (the "Agreement") is entered
into as of this 21st day of November, 1996, between Omega Environmental, Inc.
("Omega"), Shamrock Services, Inc. ("Shamrock"), and Edward J. O'Sullivan
("O'Sullivan").

WHEREAS, Omega, Shamrock, and O'Sullivan desire to settle on the terms and
conditions set forth in this Agreement, all claims, controversies, disputes and
demands that any of them may have against each other arising out of any acts or
omissions by themselves, any of their officers, directors, employees and others
and the terms and conditions of the Agreement and Plan of Reorganization dated
May 16th, 1991, Amendments thereto and ancillary Agreements ("Acquisition
Agreements") up to and including the date of this Agreement, whether known or
unknown, matured or not, fixed or contingent.

NOW, THEREFORE, in consideration of the mutual promises and for other good
and valuable consideration, it is agreed between the parties as follows:

1. Upon execution of this Agreement by all parties, O'Sullivan agrees
to: (i) to serve as an Independent Consultant to Omega for a period of one
year commencing on the date hereof; and (ii) to hold himself available at all
reasonable times during said period for consultation in connection with any
and all matters concerning Omega's business affairs as Omega may, in its
discretion, request; and (iii) to hold in strictest confidence and not to
reveal to any third party, any information and data (including documents)
concerning Omega, its officers, directors and its business affairs which have
come or come into O'Sullivan's knowledge or possession up to the date of this
Agreement and during the currency of any term hereof, except (1) as to
information which is or becomes publicly known through no fault of
O'Sullivan; or (2) is required to be disclosed by process of law or in order
to satisfy Omega's SEC filing and public disclosure obligations under federal
and state securities law.

2a. In consideration of O'Sullivan's faithful performance of the above
duties to be carried out and the promises made and kept, Omega agrees to
provide O'Sullivan with an

<PAGE>

option, exercisable within two (2) years from the date hereof, to purchase
One Hundred Fifty Thousand (150,000) common shares of Omega ("Option
Shares"), pursuant to the Stock Option Agreement ("Option Agreement"),
attached hereto and marked "A," executed contemporaneously herewith, such
Option Agreement to expire upon the second anniversary hereof as to any
Option Shares not exercised and purchased by O'Sullivan by the date of such
second anniversary.

2b. In consideration for satisfactory performance of the above duties and
obligations, Omega agrees to pay Shamrock the sum of Seventy-Five Thousand
Dollars ($75,000), Thirty-Seven Thousand Five Hundred Dollars ($37,500)
payable upon signing of this agreement and a further Thirty-Seven Thousand
Five Hundred Dollars ($37,500) one year from the date of this Agreement.

3. Shamrock and O'Sullivan hereby release and forever discharge Omega
and its past and present officers, directors, shareholders, executors,
administrators, attorneys, representatives, subsidiaries, divisions, parent
companies, affiliated companies, successors, predecessors, assigns, agents,
employees and spouses, from any and all claims, causes of action, demands,
suits or liabilities of any kind (including but not limited to damages of any
sort, declaratory relief, attorneys' fees or costs) now existing or which
could arise in any manner in the future out of any acts and/or omissions of
Omega, as related to Shamrock and Omega's insurance carrier, O'Sullivan's
employment contract and the Acquisition Agreements, whether such acts and/or
omission are known or unknown, matured or not, fixed or contingent, up to and
including the date of this Agreement.

4. Omega hereby releases and forever discharges Shamrock and O'Sullivan,
their spouses and past and present agents, attorneys, successors and assigns,
from any and all claims, causes of action, demands, suits or liabilities of
any kind (including but not limited to damages of any sort, declaratory
relief, attorneys' fees or costs) now existing or which in any manner could
arise in the future out of any acts or omissions of Shamrock or O'Sullivan,
whether known or unknown, matured or not, fixed or contingent, up to and
including the date of this Agreement,

<PAGE>

as related to Shamrock and Omega's insurance carrier or O'Sullivan's
employment contract or under the Acquisition Agreements.

5. The parties to this Agreement hereby represent, warrant and covenant
that they have made no prior assignment, transfer, conveyance or other
disposition of any of the claims, causes of action, demands and/or interests
released under this Agreement.

6. The parties understand and agree that this is a compromise and
settlement of disputed claims and shall not be deemed or construed to be an
admission of liability or response of any kind. The parties further agree
that this Agreement shall not be admissible in evidence in any proceeding
except an action to enforce performance thereunder. Omega, Shamrock, and
O'Sullivan, deny that they have breached any duty, obligation or agreement,
or that they have engaged in any illegal, tortuous or wrongful activity, or
that they have any liability to one another and agree that the execution of
this Agreement by them shall not be deemed an admission or evidence of
liability.

7. This Agreement shall be binding upon and shall inure to the benefit
of the parties to it and their respective shareholders, officers, directors,
associates, partners, investors, agents, spouses, employees, beneficiaries,
spouses, heirs, representatives, subsidiaries, affiliates, predecessors,
successors and assigns.

8. The parties hereto agree and acknowledge that they have carefully
read this Agreement; that they have had its contents fully explained to them
by their respective counsel; or, if they have not retained counsel, that they
are fully aware of and understand all of its terms and the legal consequences
thereof; and that they have signed it voluntarily as their own free act and
of their own free will and accord.

9. This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter hereof, and it supersedes and replaces all
prior negotiations and proposals. The parties hereto agree and acknowledge
that, except as expressly stated in this Agreement, no promise, inducement,
representation or agreement has been made to them, expressly or

<PAGE>

impliedly, including by omission, in connection with the negotiation,
preparation and execution of this Agreement, or otherwise.

10. This Agreement has been executed in the State of Washington, and the
validity, interpretation, construction and enforcement of this Agreement shall
be governed by the laws of the State of Washington.

11. Omega, Shamrock, and O'Sullivan agree to keep the terms and any and
all monetary or other consideration herein and all correspondence, outlines,
drafts or proposals leading up to or concerning this Agreement, and all
negotiations leading up to or concerning this Agreement, strictly
confidential, and agree not to disclose the terms to anyone not a party to
the Agreement, except to the extent that disclosure by a party is required by
law or is necessary to obtain financial or legal advice or assistance, or by
the Board of Omega, or is required in connection with generally accepted
accounting principles ("Recipients of Confidential Information"). To the
extent the disclosure of payments or consideration made or received hereunder
or the other terms of this Agreement are required to Recipients of
Confidential Information, Omega, Shamrock, and O'Sullivan agree to inform the
Recipients of Confidential Information of the confidentiality of this
Agreement and secure their agreement to be bound thereby.

12. This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall together constitute
one and the same document, and it shall not be necessary in making proof of
this Agreement to produce or account for more than one such counterpart.

13. This Agreement shall not be modified except in writing signed by each
of the parties affected by such modification. Any notice by one party to the
other hereunder shall be given by first class registered mail as follows:

<PAGE>

OMEGA: To:

Omega Environmental, Inc.
19805 North Creek Parkway
Bothell WA 98011
Attention: Chairman Of The Board

O'SULLIVAN: To: SHAMROCK: To:

Edward J.O'Sullivan Edward J. O'Sullivan
Shamrock Services, Inc. Shamrock Services, Inc.
6533 Seaview N.W. 6533 Seaview N.W.
Seattle WA 98117 Seattle WA 98117

14. The parties agree to execute any and all additional documents
reasonably necessary to complete and carry out the terms of this Agreement.

15. The drafting and negotiation of this Agreement have been participated
in by each of the parties and for all purposes this Agreement shall be deemed
to have been drafted jointly by each of the parties.

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date set forth above.

"OMEGA" "O'SULLIVAN"
------------------------ ---------------------
OMEGA ENVIRONMENTAL, INC. EDWARD J. O'SULLIVAN

By /s/ LOUIS TEDESCO /s/ EDWARD J. O'SULLIVAN
------------------------------ -------------------------------

"SHAMROCK SERVICES, INC."
- ----------------------------------
EDWARD J. O'SULLIVAN

By /s/ EDWARD J. O'SULLIVAN
------------------------------

<PAGE>
EXHIBIT "A"

OMEGA ENVIRONMENTAL, INC.
NON-QUALIFIED INCENTIVE STOCK OPTION AGREEMENT

Date Granted: November 21,
Edward J. O'Sullivan 1996
- ------------------------------------ --------------
Name of Optionee

6533 Seaview NW, PH 2A No.: 79
- ------------------------------------ --------------
Residence Address

Seattle, WA 98199
- ------------------------------------
City, State and Zip Code

THIS AGREEMENT is made as of the date set forth above between Omega
Environmental, Inc., a Delaware corporation (hereinafter called the "Company"),
and the optionee named above (the "Optionee"). The option granted by this
Agreement is designated a "Non-Qualified Option" and is not intended to qualify
as an incentive stock option within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code").

The Board of Directors of the Company, or a duly appointed Stock Option or
Compensation Committee (the "Committee") thereof, has determined that it is to
the advantage and interest of the Company and its stockholders to grant the
option provided for herein to the Optionee. The parties hereto agree as
follows:

1. GRANT OF OPTION. The Company grants to the Optionee the right and
option (the "Non-Qualified Option") to purchase on the terms and conditions
hereinafter set forth all or any part of an aggregate of 150,000 shares (the
"Shares") of the presently authorized and unissued Common Stock, $0.0025 par
value, of the Company at the purchase price of $1.00 per share. Such Non-
Qualified Option shall become fully exercisable as follows:

(a) Shares shall become exercisable on on execution hereof.

Once any part of the Option becomes exercisable, it shall remain
exercisable until the Option terminates or such part is exercised.

2. METHOD OF EXERCISE. To the extent that the right to purchase Shares
has accrued hereunder, the Non-Qualified Option may be exercised from time to
time

<PAGE>

by written notice to the Company stating the number of Shares with respect
to which the Non-Qualified Option is being exercised, together with payment in
full, in cash or by certified or cashier's check payable to the order of the
Company, of the purchase price for the number of Shares being purchased. If
requested by the Committee, prior to the delivery of any Shares, the Optionee,
or any other person entitled to exercise the Non-Qualified Option, shall supply
the Committee with a representation that the Shares are not being acquired with
a view to distribution and will be sold or otherwise disposed of only in
accordance with applicable federal and state statutes, rules and regulations.
As a condition to the exercise of the Non-Qualified Option, in whole or in
part, the Committee may, in its sole discretion, require the Optionee to pay,
in addition to the purchase price for the Shares being purchased upon exercise
of this Non-Qualified Option, an amount equal to any federal, state or local
withholding or employment taxes that the Committee has determined are required
to be paid in connection with the exercise of this Non-Qualified Option in
order to enable the Company to claim a deduction in connection with such
exercise, or otherwise.

As soon after the notice of exercise as the Company is reasonably able to
comply, the Company shall, without payment of any transfer or issue tax by the
Optionee or any other person entitled to exercise the Non-Qualified Option,
deliver to the Optionee or any such other person, at the main office of the
Company or such other place as shall be mutually acceptable, a certificate or
certificates for the Shares being purchased upon exercise of the Non-Qualified
Option.

In the Committee's sole discretion, payment of the purchase price for
the number of Shares to be delivered, but not of the amount of any
withholding taxes, may be made in whole or in part with shares of Common
Stock. If payment is made with shares of Common Stock, the Optionee, or any
other person entitled to exercise the Non-Qualified Option, shall deliver to
the Company with the notice of exercise certificates representing the number
of shares of Common Stock tendered in payment for the Shares, duly endorsed
for transfer to the Company. If requested by the Committee, prior to the
acceptance of such certificates in payment for the Shares, the Optionee, or
any other person entitled to exercise the Non-Qualified Option, shall supply
the Committee with a written representation and warranty that he has good and
marketable title to the shares represented by the certificates, free and
clear of liens and encumbrances. The value of the shares of Common Stock
tendered in payment for the Shares being purchased shall be their fair market
value per share on the date of the Optionee's notice of exercise.

Notwithstanding the foregoing, the Company shall have the right to
postpone the time of delivery of the Shares for such period as may be required
for it with reasonable diligence to comply with any applicable listing
requirements of any national securities exchange or association or any federal,
state or local law. The Optionee may exercise the Non-Qualified Option for
less than the total number of Shares for which the Non-Qualified Option is then
exercisable, provided that a partial exercise may not be for less

<PAGE>

than 100 Shares, unless the remaining Shares exercisable under the
Non-Qualified Option is for less than 100 Shares. The Non-Qualified Option
may only be exercisable for whole Shares.

3. TERMINATION OF THE NON-QUALIFIED OPTION. The Non-Qualified Option
shall terminate and expire upon the earlier of:

(a) November 30, 1998;

(b) The termination of the Non-Qualified Option pursuant to
Section 5 hereof.

4. ADJUSTMENTS. If there is any stock dividend, stock split,
reclassification or recapitalization of the Common Stock of the Company, or the
Company has merged or consolidated with one or more other corporations (and
provided the Non-Qualified Option does not thereby terminate pursuant to
Section 5 hereof), then the number and kind of shares then subject to the Non-
Qualified Option and the price to be paid therefor shall be appropriately
adjusted by the Committee, provided, however, that in no event shall any such
adjustment result in the Company being required to sell or issue any fractional
shares. Any such adjustments shall be made without change in the aggregate
purchase price applicable to the unexercised portion of the Option but with an
appropriate adjustment in the price of each Share or other unit of any security
covered by this Option.

5. CESSATION OF CORPORATE EXISTENCE. Upon the dissolution or
liquidation of the Company, the reorganization, merger or consolidation of the
Company with one or more corporations as a result of which the Company is not
the surviving corporation, or the sale of substantially all the assets of the
Company or of more than eighty percent (80%) of the then outstanding stock of
the Company to another corporation or entity, the Non-Qualified Option granted
hereunder shall terminate; provided, however, that: (i) each Non-Qualified
Option for which no option has been tendered by the surviving corporation in
accordance with all of the terms and provisions of (ii) immediately below
shall, within thirty (30) days before the effective date of such dissolution or
liquidation, merger or consolidation in which the Company is not the surviving
corporation, or sale of assets or stock, become fully exercisable; or (ii) in
its sole and absolute discretion, the surviving corporation may, but shall not
be obligated to, tender to the Optionee holding a Non-Qualified Option, an
option or options to purchase shares of the surviving corporation or acquiring
corporation, and such new option or options shall contain such terms and
provisions as shall be required substantially to preserve the rights and
benefits of an Non-Qualified Option then outstanding under this Agreement.

<PAGE>

6. NON-TRANSFERABILITY. The Non-Qualified Option is not assignable or
transferable by the Optionee, either voluntarily or by operation of law,
otherwise than by will or by the laws of descent and distribution, and is
exercisable, during the Optionee's lifetime, only by the Optionee. Upon any
attempted transfer of this Non-Qualified Option contrary to the provisions
hereof, the Committee may, at its discretion, elect to terminate this Non-
Qualified Option.

7. NO STOCKHOLDER RIGHTS. The Optionee or other person entitled to
exercise this Non-Qualfied Option shall have no rights or privileges as a
stockholder with respect to any Shares subject hereto until the Optionee or
such person has become the holder of record of such Shares, and no adjustment
(except such adjustments as may be made pursuant to the provisions of Section 4
hereof) shall be made for dividends or distributions of rights in respect of
such Shares if the record date is prior to the date on which the Optionee or
such person becomes the holder of record.

8. CONDITIONS TO ISSUANCE OF SHARES. THE COMPANY'S OBLIGATION TO ISSUE
SHARES OF ITS COMMON STOCK UPON EXERCISE OF THE NON-QUALIFIED OPTION IS
EXPRESSLY CONDITIONED UPON (A) THE COMPLETION BY THE COMPANY OF ANY
REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES UNDER ANY STATE AND/OR
FEDERAL LAW OR RULINGS OR REGULATIONS OF ANY GOVERNMENT REGULATORY BODY OR
(B) THE MAKING OF SUCH INVESTMENT REPRESENTATIONS OR OTHER REPRESENTATIONS AND
AGREEMENTS BY THE OPTIONEE OR ANY PERSON ENTITLED TO EXERCISE THE OPTION IN
ORDER TO COMPLY WITH THE REQUIREMENTS OF ANY EXEMPTION FROM ANY SUCH
REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES WHICH THE COMMITTEE SHALL,
IN ITS SOLE DISCRETION, DEEM NECESSARY OR ADVISABLE. SUCH REQUIRED
REPRESENTATIONS AND AGREEMENTS MAY INCLUDE REPRESENTATIONS AND AGREEMENTS THAT
THE OPTIONEE, OR ANY OTHER PERSON ENTITLED TO EXERCISE THE OPTION (1) IS NOT
PURCHASING SUCH SHARES FOR DISTRIBUTION, AND (2) AGREES TO HAVE PLACED UPON THE
FACE AND REVERSE OF ANY CERTIFICATES FOR SUCH SHARES A LEGEND SETTING FORTH ANY
REPRESENTATIONS AND AGREEMENTS WHICH HAVE BEEN GIVEN TO THE COMMITTEE OR A
REFERENCE THERETO AND STATING THAT, PRIOR TO MAKING ANY SALE OR OTHER
DISPOSITION OF ANY SUCH SHARES, THE OPTIONEE, OR ANY OTHER PERSON ENTITLED TO
EXERCISE THE OPTION, WILL GIVE THE COMPANY NOTICE OF INTENTION TO SELL OR
DISPOSE OF THE SHARES NOT LESS THAN FIVE DAYS PRIOR TO SUCH SALE OR
DISPOSITION.

9. METHOD OF ACCEPTANCE. This Agreement is addressed to the Optionee in
duplicate and shall not be effective until the Optionee executes the acceptance
below and returns one copy to the Company, thereby acknowledging that he has
read and agrees to all the terms and conditions of this Agreement.

<PAGE>

EXECUTED by the Company this 11th day of November , 1996.
---------- ----------
OMEGA ENVIRONMENTAL, INC.

By: /s/ Louis J. Tedesco
----------------------------------
Louis J. Tedesco, President
ACCEPTED:

/s/ Edward J. O'Sullivan
- -------------------------
Edward J. O'Sullivan

11-21-96
- -------------------------
Date

<PAGE>

EXHIBIT 10(e)

OMEGA ENVIRONMENTAL, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT

Leo L. Azure, Jr. Date Granted: November 21, 1996
- -------------------------- ------------------
Name of Optionee

13 Eagles Nest No.: G
- -------------------------- ------------------
Residence Address

LaConnor, WA 98257
- --------------------------
City, State and Zip Code

The Board of Directors of the Company has determined that it is to the
advantage and interest of the Company and its stockholders to grant the option
provided for herein to the Optionee as an inducement to remain a director of
the Company. In consideration of the mutual covenants herein contained, the
parties hereto agree as follows:

1. GRANT OF OPTION. The Company grants to the Optionee the right and
option (the "Non-Qualified Option") to purchase on the terms and conditions
hereinafter set forth all or any part of an aggregate of 50,000 shares (the
"Shares") of the presently authorized and unissued Common Stock, $0.0025 par
value, of the Company at the purchase price of $1.00 per share. Such Non-
Qualified Option shall become fully exercisable as follows:

(a) 12,500 Shares shall become exercisable on November 21, 1997;
(b) an additional 12,500 Shares shall become exercisable on
November 21, 1998;
(c) an additional 12,500 Shares shall become exercisable on
November 21, 1999;
(d) an additional 12,500 Shares shall become exercisable on
November 21, 2000.

<PAGE>

Once any part of the Option becomes exercisable, it shall remain
exercisable until the Option terminates or such part is exercised.

2. METHOD OF EXERCISE. To the extent that the right to purchase Shares
has accrued hereunder, the Non-Qualified Option may be exercised from time to
time by written notice to the Company stating the number of Shares with respect
to which the Non-Qualified Option is being exercised, together with payment in
full, in cash or by certified or cashier's check payable to the order of the
Company, of the purchase price for the number of Shares being purchased. If
requested by the Committee, prior to the delivery of any Shares, the Optionee,
or any other person entitled to exercise the Non-Qualified Option, shall supply
the Committee with a representation that the Shares are not being acquired with
a view to distribution and will be sold or otherwise disposed of only in
accordance with applicable federal and state statutes, rules and regulations.
As a condition to the exercise of the Non-Qualified Option, in whole or in
part, the Committee may, in its sole discretion, require the Optionee to pay,
in addition to the purchase price for the Shares being purchased upon exercise
of this Non-Qualified Option, an amount equal to any federal, state or local
withholding or employment taxes that the Committee has determined are required
to be paid in connection with the exercise of this Non-Qualified Option in
order to enable the Company to claim a deduction in connection with such
exercise, or otherwise.

In the Committee's sole discretion, payment of the purchase price for the
number of Shares to be delivered, but not of the amount of any withholding
taxes, may be made in whole or in part with shares of Common Stock. If payment
is made with shares of Common Stock, the Optionee, or any other person entitled
to exercise the Non-Qualified Option, shall deliver to the Company with the
notice of exercise certificates representing the number of shares of Common
Stock tendered in payment for the Shares, duly endorsed for transfer to the
Company. If requested by the Committee, prior to the acceptance of such
certificates in payment for the Shares, the Optionee, or any other person enti
tled to exercise the Non-Qualified Option, shall supply the Committee with a
written representation and warranty that he has good and marketable title to
the shares represented by the certificates, free and clear of liens and
encumbrances. The value of the shares of Common Stock tendered in payment for
the Shares being purchased shall be their fair market value per share on the
date of the Optionee's notice of exercise.

<PAGE>

3. TERMINATION OF THE NON-QUALIFIED OPTION. The Non-Qualified Option
shall terminate and expire upon the earlier of:

(a) November 21, 2006;

(b) The date of Optionee's termination as a Director with the Company,
other than by reason of death or mental or physical disability;

(c) The expiration of twelve (12) months from the date of the Optionee's
termination as a Director with the Company by reason of death or mental or
physical disability as certified by a duly licensed physician; or

(d) The termination of the Non-Qualified Option pursuant to Section 5
hereof.

<PAGE>

tendered by the surviving corporation in accordance with all of the terms and
provisions of (ii) immediately below shall, within thirty (30) days before
the effective date of such dissolution or liquidation, merger or
consolidation in which the Company is not the surviving corporation, or sale
of assets or stock, become fully exercisable; or (ii) in its sole and
absolute discretion, the surviving corporation may, but shall not be
obligated to, tender to the Optionee holding a Non-Qualified Option, an
option or options to purchase shares of the surviving corporation or
acquiring corporation, and such new option or options shall contain such
terms and provisions as shall be required substantially to preserve the
rights and benefits of an Non-Qualified Option then outstanding under this
Agreement.

<PAGE>

TO THE COMMITTEE OR A REFERENCE THERETO AND STATING THAT, PRIOR TO MAKING ANY
SALE OR OTHER DISPOSITION OF ANY SUCH SHARES, THE OPTIONEE, OR ANY OTHER
PERSON ENTITLED TO EXERCISE THE OPTION, WILL GIVE THE COMPANY NOTICE OF
INTENTION TO SELL OR DISPOSE OF THE SHARES NOT LESS THAN FIVE DAYS PRIOR TO
SUCH SALE OR DISPOSITION.

EXECUTED by the Company this 20th day of December, 1996.

OMEGA ENVIRONMENTAL, INC.

By: /s/ Louis J. Tedesco
---------------------------
Louis J. Tedesco, President

ACCEPTED:

/s/ Leo L. Azure, Jr.
- -----------------------------
Leo L. Azure, Jr.

1/13/97
- -----------------------------
Date

<PAGE>
EXHIBIT 10(f)

OMEGA ENVIRONMENTAL, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT

Peter DeMay Date Granted: November 21, 1996
- ---------------------------------- -----------------
Name of Optionee

73555 Agave Lane No.: F
- ---------------------------------- -----------------
Residence Address

Palm Desert, CA 92260
- ----------------------------------
City, State and Zip Code

THIS AGREEMENT is made as of the date set forth above between Omega
Environmental, Inc., a Delaware corporation (hereinafter called the
"Company"), and the optionee named above (the "Optionee"). The option
granted by this Agreement is designated a "Non-Qualified Option" and is not
intended to qualify as an incentive stock option within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").

The Board of Directors of the Company has determined that it is to the
advantage and interest of the Company and its stockholders to grant the
option provided for herein to the Optionee as an inducement to remain a
director of the Company. In consideration of the mutual covenants herein
contained, the parties hereto agree as follows:

1. GRANT OF OPTION. The Company grants to the Optionee the right and
option (the "Non-Qualified Option") to purchase on the terms and conditions
hereinafter set forth all or any part of an aggregate of 50,000 shares (the
"Shares") of the presently authorized and unissued Common Stock, $0.0025 par
value, of the Company at the purchase price of $1.00 per share. Such
Non-Qualified Option shall become fully exercisable as follows:

<PAGE>

Once any part of the Option becomes exercisable, it shall remain
exercisable until the Option terminates or such part is exercised.

2. METHOD OF EXERCISE. To the extent that the right to purchase
Shares has accrued hereunder, the Non-Qualified Option may be exercised from
time to time by written notice to the Company stating the number of Shares
with respect to which the Non-Qualified Option is being exercised, together
with payment in full, in cash or by certified or cashier's check payable to
the order of the Company, of the purchase price for the number of Shares
being purchased. If requested by the Committee, prior to the delivery of any
Shares, the Optionee, or any other person entitled to exercise the
Non-Qualified Option, shall supply the Committee with a representation that
the Shares are not being acquired with a view to distribution and will be
sold or otherwise disposed of only in accordance with applicable federal and
state statutes, rules and regulations. As a condition to the exercise of the
Non-Qualified Option, in whole or in part, the Committee may, in its sole
discretion, require the Optionee to pay, in addition to the purchase price
for the Shares being purchased upon exercise of this Non-Qualified Option, an
amount equal to any federal, state or local withholding or employment taxes
that the Committee has determined are required to be paid in connection with
the exercise of this Non-Qualified Option in order to enable the Company to
claim a deduction in connection with such exercise, or otherwise.

As soon after the notice of exercise as the Company is reasonably able
to comply, the Company shall, without payment of any transfer or issue tax by
the Optionee or any other person entitled to exercise the Non-Qualified
Option, deliver to the Optionee or any such other person, at the main office
of the Company or such other place as shall be mutually acceptable, a
certificate or certificates for the Shares being purchased upon exercise of
the Non-Qualified Option.

In the Committee's sole discretion, payment of the purchase price for
the number of Shares to be delivered, but not of the amount of any
withholding taxes, may be made in whole or in part with shares of Common
Stock. If payment is made with shares of Common Stock, the Optionee, or any
other person entitled to exercise the Non-Qualified Option, shall deliver to
the Company with the notice of exercise certificates representing the number
of shares of Common Stock tendered in payment for the Shares, duly endorsed
for transfer to the Company. If requested by the Committee, prior to the
acceptance of such certificates in payment for the Shares, the Optionee, or
any other person enti tled to exercise the Non-Qualified Option, shall supply
the Committee with a written representation and warranty that he has good and
marketable title to the shares represented by the certificates, free and
clear of liens and encumbrances. The value of the shares of Common Stock
tendered in payment for the Shares being purchased shall be their fair market
value per share on the date of the Optionee's notice of exercise.

<PAGE>

3. TERMINATION OF THE NON-QUALIFIED OPTION. The Non-Qualified Option
shall terminate and expire upon the earlier of:

(a) November 21, 2006;

(b) The date of Optionee's termination as a Director with the
Company, other than by reason of death or mental or physical disability;

(c) The expiration of twelve (12) months from the date of the
Optionee's termination as a Director with the Company by reason of death
or mental or physical disability as certified by a duly licensed physician;
or

(d) The termination of the Non-Qualified Option pursuant to
Section 5 hereof.

4. ADJUSTMENTS. If there is any stock dividend, stock split,
reclassification or recapitalization of the Common Stock of the Company, or
the Company has merged or consolidated with one or more other corporations
(and provided the Non-Qualified Option does not thereby terminate pursuant to
Section 5 hereof), then the number and kind of shares then subject to the
Non-Qualified Option and the price to be paid therefor shall be appropriately
adjusted by the Committee, provided, however, that in no event shall any such
adjustment result in the Company being required to sell or issue any
fractional shares. Any such adjustments shall be made without change in the
aggregate purchase price applicable to the unexercised portion of the Option
but with an appropriate adjustment in the price of each Share or other unit
of any security covered by this Option.

<PAGE>

7. NO STOCKHOLDER RIGHTS. The Optionee or other person entitled to
exercise this Non-Qualfied Option shall have no rights or privileges as a
stockholder with respect to any Shares subject hereto until the Optionee or
such person has become the holder of record of such Shares, and no adjustment
(except such adjustments as may be made pursuant to the provisions of Section
4 hereof) shall be made for dividends or distributions of rights in respect
of such Shares if the record date is prior to the date on which the Optionee
or such person becomes the holder of record.

8. CONDITIONS TO ISSUANCE OF SHARES. THE COMPANY'S OBLIGATION TO
ISSUE SHARES OF ITS COMMON STOCK UPON EXERCISE OF THE NON-QUALIFIED OPTION IS
EXPRESSLY CONDITIONED UPON (A) THE COMPLETION BY THE COMPANY OF ANY
REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES UNDER ANY STATE AND/OR
FEDERAL LAW OR RULINGS OR REGULATIONS OF ANY GOVERNMENT REGULATORY BODY OR
(B) THE MAKING OF SUCH INVESTMENT REPRESENTATIONS OR OTHER REPRESENTATIONS
AND AGREEMENTS BY THE OPTIONEE OR ANY PERSON ENTITLED TO EXERCISE THE OPTION
IN ORDER TO COMPLY WITH THE REQUIREMENTS OF ANY EXEMPTION FROM ANY SUCH
REGISTRATION OR OTHER QUALIFICATION OF SUCH SHARES WHICH THE COMMITTEE SHALL,
IN ITS SOLE DISCRETION, DEEM NECESSARY OR ADVISABLE. SUCH REQUIRED
REPRESENTATIONS AND AGREEMENTS MAY INCLUDE REPRESENTATIONS AND AGREEMENTS
THAT THE OPTIONEE, OR ANY OTHER PERSON ENTITLED TO EXERCISE THE OPTION (1) IS
NOT PURCHASING SUCH SHARES FOR DISTRIBUTION, AND (2) AGREES TO HAVE PLACED
UPON THE FACE AND REVERSE OF ANY CERTIFICATES FOR SUCH SHARES A LEGEND
SETTING FORTH ANY REPRESENTATIONS AND AGREEMENTS WHICH HAVE BEEN GIVEN

<PAGE>

EXECUTED by the Company this 20th day of December, 1996.

OMEGA ENVIRONMENTAL, INC.

By: /s/ Louis J. Tedesco
---------------------------
Louis J. Tedesco, President

ACCEPTED:

/s/ Peter DeMay
- -----------------------
Peter DeMay

1-27-97
- -----------------------
Date

<PAGE>
EXHIBIT 10(g)

LETTER OF AGREEMENT

THIS LETTER OF AGREEMENT, is entered into by Omega Environmental, Inc.
("Omega") and Jeffery B. Weinress ("Weinress") on this 27th day of December,
1995.

1.0 EMPLOYMENT

Omega will employ Jeffery B. Weinress ("Weinress") as Senior Vice President.
His initial principal duties will be Marketing and Administration. Weinress
will report to the President and Chief Executive Officer of Omega and perform
such other duties as may be assigned to him from time to time by the President.

2.0 COMMENCEMENT OF EMPLOYMENT

Weinress shall commence employment on January 2, 1996.

3.0 COMPENSATION

Omega agrees to compensate Weinress as follows:

3.1 BASE SALARY. Base salary of $135,000 per year, before all customary
deductions, payable in equal biweekly installments.

3.2 BONUSES. In addition to his base salary, Weinress shall be eligible
to receive an annual bonus with a target payment of 30% of his base salary,
based upon performance of Omega as measure at the end of each fiscal year.
It is intended that Weinress will participate in the performance incentive
program being developed and will be subject to approval of the Board of
Directors. Weinress shall receive, in addition to any bonus paid reference
above, a hiring bonus of $15,000 payable with his first biweekly salary
installment.

3.3 STOCK OPTIONS. Weinress shall be entitled to a grant of options
pursuant to the terms of the Omega Environmental, Inc. 1990 Stock Option
Plan, to purchase 150,000 shares of Omega's common stock. Such options
shall be granted on January 5, 1996. The maximum term of the options shall
be ten (10) years. The exercisability of the options shall vest 25% per
year. The options to purchase shares shall be granted with an exercise
price equal to the closing price of Omega's common stock on the date of
grant, with the intent that such options shall be eligible for incentive
stock option treatment to the maximum extent permitted by law.

4.0 BENEFITS

Weinress shall be entitled to participate at Omega's expense, in all health care
and insurance plans generally available to executives of Omega consistent with
the terms of those plans as they may currently exist or be modified from time to
time. Health care coverage for Weinress's eligible dependents shall be provided
at Omega's expense pursuant to its plans. Weinress shall also be entitled to
four (4) weeks vacation, holidays, and participation in retirement and

<PAGE>

other fringe benefit plans provided by Omega policy to its executives, as
those policies may currently exist or be modified from time to time.
Further, Weinress shall be entitled to the following: $500 per month as an
automobile allowance, reimbursement of reasonable and necessary business
expenses pursuant to Omega policy, and two (2) round-trip airfares per month
between Seattle and San Diego for use by Weinress or his dependents.

5.0 RELOCATION EXPENSES

Omega shall reimburse Weinress to a maximum of $80,000 for expenses directly or
indirectly related to relocating himself and his family from Southern California
to the Seattle area. Such reimbursement shall include any taxes attributable to
the relocation reimbursement that are not deductible by Weinress. The
reimbursement offer shall remain open until January 2, 1999, with such
reimbursement to be adjusted in light of the Consumer Price Index using as a
base the fourth quarter of 1995. In the event Omega's corporate headquarters is
relocated outside the Seattle area during this period, Omega shall reimburse
moving expenses in the same manner.

6.0 COMPANY APARTMENT

Weinress shall have use of an apartment, maintained and paid for by Omega,
during periods when he is in the Seattle area.

7.0 SEVERANCE

Weinress may be terminated for cause, provided, however, that if his termination
is (a) without cause or (b) following a change in control of Omega, or a
leveraged buyout, merger or acquisition, Weinress shall receive severance pay
equal to twelve (12) months of his then current base salary. All stock options
shall become vested immediately in the event of termination other than for
cause. In the event that Weinress desires to resign from Omega, he shall not be
entitled to severance pay and agrees to provide sixty (60) days written notice
of his resignation.

8.0 CONFIDENTIALITY AND NONCOMPETITION

Weinress agrees to execute and be bound by the terms at the following Omega
policies: "Employee Confidential Information and Invention Agreement" and
"Compliance with Securities Laws."

Weinress further agrees that during the term of his employment with Omega and
for two (2) years following the date on which his employment with Omega ends, he
will not directly or indirectly be employed by, consult with, or otherwise
perform services for, own, manage, operate, join, control or participate in the
ownership, management, operation or control of or be connected in any manner
with any Competitor of Omega. A "Competitor" shall include any entity which
produces, markets or distributes any product or service which competes with any
product or service Omega produces, markets or distributes (or which Omega is
studying the feasibility or producing, marketing or distributing). This
noncompetition agreement shall survive the termination of this Letter of
Agreement and the termination of the employment relationship between Omega and
Weinress.

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<PAGE>

9.0 RELEASE OF CLAIMS

In order to receive severance payments described in Paragraph 7.0 above,
Weinress agrees to execute a separation agreement that shall include (a) a
release of claims against Omega, its directors, officers and agents, and (b) a
confidentiality provision regarding the terms of any such separation agreement.

10.0 APPLICABLE LAW

This Agreement shall in all respects, including all matters of construction
validity and performance, be governed by and construed and enforced in
accordance with the laws of the State of Washington.

IN WITNESS WHEREOF, the parties have executed and entered into this Letter of
Agreement, to be effective on the date first set forth above.

OMEGA ENVIRONMENTAL, INC.

/s/ LOUIS J. TEDESCO
- ------------------------------
By: Louis J. Tedesco
President and Chief Executive Officer

JEFFERY B. WEINRESS

/s/ JEFFREY B. WEINRESS
- ------------------------------

-3-

<PAGE>

EXHIBIT 10(h)

SEPARATION AGREEMENT AND GENERAL RELEASE

THIS SEPARATION AGREEMENT AND GENERAL RELEASE (the "Agreement") is entered
into by LEO L. AZURE JR. (hereinafter referred to as "Executive") and OMEGA
ENVIRONMENTAL, INC., its officers, directors, employees, agents, affiliates,
ventures and subsidiaries (hereinafter referred to as the "Company") as of
August 8, 1996.
RECITALS

A. Executive has been employed by the Company and will resign as an
employee, officer and Board Chairman of the Company effective August 8, 1996.

B. Executive and the Company wish to enter into an agreement to clarify
and resolve any matters that may exist between them arising out of the
employment relationship and its termination, and any continuing obligations of
the parties to one another following the end of the employment relationship.

C. The Company has advised Executive of his right to consult an attorney
prior to signing this Agreement and has provided him with at least 21 days to
consider its severance offer and to seek legal assistance. Executive has
consulted with an attorney of his choice and understands that he is waiving all
potential claims against the Company.

D. This Agreement is not and should not be construed as an admission or
statement by either party that it or any other party has acted wrongfully or
unlawfully. Both parties expressly deny any wrongful or unlawful action.

AGREEMENTS

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises and representations below, it is agreed as follows:

1. EMPLOYMENT: ENDING DATE AND RESPONSIBILITIES

Executive's employment with the Company and his positions as an officer and
Chairman of the Board will terminate effective August 8, 1996. Executive
confirms his resignation as an employee and from any and all positions and
titles other than Chairman Emeritus with the Company as of August 8, 1996.

Executive has no further duties or responsibilities to the Company after
August 8, 1996, except as specified herein or arise by virtue of his serving on
the Board of Directors of the Company .

2. SEVERANCE AND OTHER PAYMENTS

Upon execution of this Agreement by all parties, the Company agrees to
provide Executive one year's severance pay in the amount of $100,000. Such
severance pay shall be provided in one lump sum payment less any and all
applicable deductions.

-1-

<PAGE>

3. BENEFITS

The parties agree that Executive's COBRA rights to continue health
insurance benefits for Executive and his dependents shall commence August 8,
1996. The Company agrees to pay for such benefits through August 8, 1997 unless
Executive obtains equivalent coverage elsewhere. Furthermore, the Company agrees
to allow Executive to assume ownership of existing life insurance on his life,
provided, however, that all premiums on such policies are Executive's
responsibility after the date hereof.

4. PROPERTY

Executive confirms that upon termination of employment, he will turn over
to the Company all files, memoranda, records, credit cards, and other documents
or physical property which he received from the Company or its executives or
generated himself in the course of his employment with the Company, other than
those that are necessary for his functioning as a member of the Board of
Directors. The foregoing notwithstanding, the Company agrees to transfer to
Executive ownership and title to the 1990 Lexus LS400 automobile currently in
the Executive's possession (VIN # JT8UF11E1L0010037).

5. VALID CONSIDERATION

Executive and the Company agree that the Company's severance payments and
other undertakings herein are not required by the Company's policies or
procedures and are offered by the Company solely as consideration for the
Executive's execution of this Agreement.

6. EXPENSES

The Company shall reimburse Executive for valid expenses incurred on
the Company's behalf prior to August 8, 1996, upon presentation of properly
documented expense reports.

7. CONFIDENTIALITY

The terms of this Agreement shall be confidential, except to the extent
that disclosure by either party is required by law or is necessary to obtain
financial or legal advice or assistance or is required in connection with
generally accepted accounting principles (such recipients are hereby
"Recipients of Confidential Information"). The terms of this subparagraph 8.a.
shall be binding upon the parties hereto and Recipients of Confidential
Information.

8. AVAILABILITY AND CONSULTATION

Executive agrees to provide such advice and assistance as is reasonably
necessary for the Company to accomplish an effective transition of his duties;
such assistance to be provided from time to time at such times as shall be
mutually agreeable. He further agrees to make himself reasonably available to
the Company, its agents and advisors for the purpose of enabling the Company to
defend against or assert any legal actions in which the Company determines he
may have knowledge or

-2-

<PAGE>

information. All of Executive's expenses associated with this consultation,
testimony and/or preparation shall be borne by Company.

9. PROPRIETARY INFORMATION

Executive recognizes that he has had access to or been engaged in the
development of information (including all tangible and intangible
manifestations) regarding the patents, copyrights, trademark, trade secrets,
technology, clients, acquisitions, prospects, shareholders, business and
finances of the Company. All of this information, except information that is in
the public domain prior to the date of this Agreement, which comes into the
public domain after the date of this Agreement through no fault of Executive or
that would have been readily ascertainable by Executive using proper means is
collectively referred to as "Proprietary Information." For the three year
period ending on March 31, 1999, Executive shall keep in confidence and trust
all Proprietary Information and shall not disclose any Proprietary Information
without the prior written consent of the Company, except as may be required by
law.
10. GENERAL RELEASE OF CLAIMS BY EXECUTIVE

Executive, individually and for and on behalf of his heirs, spouse,
assigns, executors, administrators, agents and representatives, hereby fully,
completely and finally waive, release and forever discharge the Company and its
former and current assigns, executors, administrators, officers, directors,
shareholders, agents, representatives, attorneys, employees, predecessors,
subsidiaries, and affiliated companies from any and all claims, demands, suits,
liabilities, debts and obligations of any kind or nature, known or unknown, that
he has had, now has, or may have in the future as to matters in any way
connected with his employment with the Company (including his service as an
officer and director) and the termination thereof. It is understood that this
release includes, but is not limited to, any form of shareholder claims or
actions and any claims for wages, bonuses, employment benefits, or damages of
any kind whatsoever, arising out of any contracts, express or implied, any
covenant of good faith and fair dealing, express or implied, any theory of
wrongful discharge, any legal restriction on the Company's right to terminate
employees, or any federal, state or other governmental statute or ordinance,
including, without limitation, Title VII of the Civil Rights Act of 1964, the
Federal Age Discrimination in Employment Act, the Washington Law Against
Discrimination, or any other legal limitation on the employment relationship.
Executive represents that he has not filed any complaints, charges or lawsuits
against the Company with any governmental agency, any court, or in any other
forum, and agrees that he will not initiate, assist or encourage any such
actions. This waiver and release shall not waive or release claims where the
events in dispute first arise after execution of this Agreement, nor shall it
preclude Executive from filing a lawsuit for the exclusive purpose of enforcing
his rights under this Agreement. If litigation becomes necessary to enforce any
provision of this Agreement, the prevailing party shall be entitled to receive,
as an additional award to any damages hereunder, reasonable attorneys' fees, and
costs of litigation.

-3-

<PAGE>

11. GENERAL RELEASE OF CLAIMS BY THE COMPANY

The Company expressly waives any claims that it may have against Executive
and releases Executive from any claims for damages of any kind whatsoever that
may exist as of the date of execution of this Agreement.

This provision shall not operate to waive or release claims where the
act(s) forming the basis for liability to the Company constitute a criminal act
under either federal or Washington law. Nothing herein shall preclude the
Company from filing a lawsuit for the exclusive purpose of enforcing its rights
under this Agreement.

12. INDEMNIFICATION

Company shall defend and indemnify Executive and hold Executive harmless
from and against any and all claims that may be asserted against Executive by
third parties (including derivative claims asserted by third parties on behalf
of Company) that are connected with Executive's employment by Company (including
his service as an officer and director) to the extent permitted by applicable
law. The foregoing rights are in addition to any other rights to which
Executive may be entitled under any other agreement, policy, bylaw, insurance
policy, ordinance, statute or other provision.

13. REVIEW AND REVOCATION PERIOD; EFFECTIVE DATE

Executive and the Company agree that Executive shall have 21 days to review
this Agreement and consult legal counsel if he so chooses, during which time the
proposed terms of this Agreement shall not be amended, modified or revoked by
the Company. Executive may revoke this Agreement if he so chooses by providing
notice of his decision to revoke the Agreement to the Company within seven days
following the date he signs this Agreement. This Agreement shall become
effective and enforceable upon expiration of this seven-day revocation period.

14. SEVERABILITY

The provisions of this Agreement are severable, and if any part of it is
found to be unlawful or unenforceable, the other provisions of this Agreement
shall remain fully valid and enforceable to the maximum extent consistent with
applicable law.

15. KNOWING AND VOLUNTARY AGREEMENT

Executive represents and agrees that he has read this Agreement,
understands its terms and the fact that it releases any claim he might have
against the Company, understands that he has consulted counsel of his choice,
and enters into this Agreement without duress or coercion from any source.

16. ENTIRE AGREEMENT

This Agreement sets forth the entire understanding between Executive and
the Company on these subjects and supersedes any prior agreements or
understandings, express or implied, pertaining to the terms of his employment
with the Company and the termination of the employment relationship. Executive
acknowledges that in executing

-4-

<PAGE>

this Agreement, he does not rely upon any representation or statement by any
representative of the Company concerning the subject matter of this Agreement,
except as expressly set forth in the text of this Agreement.

17. ARBITRATION

Any controversy or claim arising out of or relating to this Agreement, or
the breach thereof, shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment upon the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof. The arbitration shall be held in Seattle,
Washington, unless the parties mutually agree otherwise.

In the event any party to this Agreement institutes any legal action or
arbitration in connection with any claim or controversy arising out of or
related to this Agreement, the arbitrators may, in their discretion, award
costs, including reasonable attorneys' fees, expert witness fees, and other
expenses in such proportion as the tribunal deems proper.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
dates indicated below.

OMEGA ENVIRONMENTAL, INC. EXECUTIVE

By: /s/ Louis J. Tedesco /s/ Leo L. Azure, Jr.
-------------------------------- --------------------------------
Louis J. Tedesco Leo L. Azure, Jr.
Title: President & CEO

Dated: 9/5/96 Dated: 9/11/96
----------------------------- -------------------------

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<PAGE>

OMEGA ENVIRONMENTAL, INC. EXHIBIT 11
STATEMENT RE: COMPUTATION OF PER SHARE LOSS
FOR THE NINE MONTHS ENDED DECEMBER 31, 1996
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

Number Weighted
Number of Days Average Shares
of Shares O/S (275 Day Period)
----------- -------- ---------------
<S> <C> <C> <C> <C> <C>
Non-Escrow Shares at March 31, 1996 37,963,585 275 37,963,585
April - Preferred Stock 859,421 272 850,045
April - C Warrants 140,400 263 134,511
April - Other 78,617 245 70,040
May - Class action lawsuit settlement 1,737,063 239 1,509,666
May - Other 26,087 221 20,964
June - Unit Options 1,345,991 189 925,063
June - Other 31,549 202 23,189
July - Unit Options 450,845 168 275,926
July - Preferred Stock Conversion 54,090 153 30,094
July - Other 35,416 172 22,169
August - Preferred Stock Conversion 57,388 145 30,259
August - Other 27,198 135 13,344
September - Preferred Stock Conversion 134,485 98 47,926
September - Other 68,547 92 22,932
October - Preferred Stock Conversion 289,108 81 85,055
October - Other 9,936 87 3,143
November - Preferred Stock Conversion 3,315,712 36 432,759
December - Preferred Stock Conversion 1,287,739 21 98,733
December - Other 161,677 29 16,844 Historical Historical
Loss Loss Per Share
----------- ---------------------------------------
Total Historical Non-Escrow or Treasury Shares 48,074,854 42,576,247 (13,644,338) (0.32)
---------------------------------------
---------------------------------------

Parks escrowed shares 75,000
Fedco escrowed shares 26,087
Gurr escrowed shares 133,883
Treasury Shares 100,000

-----------
Total Issued & Outstanding Shares 48,409,824
-----------
-----------

</TABLE>

<PAGE>

EXHIBIT 11
OMEGA ENVIRONMENTAL, INC.
STATEMENT RE: COMPUTATION OF PER SHARE LOSS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING

Number Weighted
Number of Days Average Shares
of Shares O/S (92 Day Period)
----------- ------- ---------------

<S> <C> <C> <C> <C> <C>
Non-Escrow Shares at September 30, 1996 43,010,682 92 43,010,682
October - Preferred Stock Conversion 289,108 81 254,242
October - Other 9,936 87 9,396
November - Preferred Stock Conversion 3,315,712 38 1,355,324
December - Preferred Stock Conversion 1,287,739 21 295,122
December - Other 161,677 10 17,476 Historical Historical
Loss Loss Per Share
----------- ---------------------------------------
Total Historical Non-Escrow or Treasury Shares 48,074,854 44,942,242 (12,639,133) (0.28)
---------------------------------------
---------------------------------------

Parks escrowed shares 75,000
Fedco escrowed shares 26,087
Gurr escrowed shares 133,883
Treasury Shares 100,000

-----------
Total Issued & Outstanding Shares 48,409,824
-----------
-----------

</TABLE>

<PAGE>

Exhibit 15

Omega Environmental, Inc.
Bothell, Washington

Re: Registration Statements Nos. 33-81730, 33-73950, 33-45044, 33-62546,
33-03617, 33-68812, 33-03615, 33-03625, 333-13397

Ladies and Gentlemen:

With respect to the subject registration statements, we acknowledge our
awareness of the use therein of our report dated February 13, 1997 related to
our review of interim financial information.

Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of sections 7 and 11 of the Act.

/s/ KPMG Peat Marwick LLP
- ---------------------------
KPMG Peat Marwick LLP
Seattle, Washington
February 13, 1997

<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from:
The consolidated balance sheet, consolidated statements of operations and cash
flows as of and for the three months and nine moths ended December 31, 1996
</LEGEND>
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,954
<SECURITIES> 0
<RECEIVABLES> 36,778<F1>
<ALLOWANCES> 0
<INVENTORY> 12,624
<CURRENT-ASSETS> 70,202
<PP&E> 8,748<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 99,329
<CURRENT-LIABILITIES> 50,110
<BONDS> 0
0
0
<COMMON> 121
<OTHER-SE> 73,816
<TOTAL-LIABILITY-AND-EQUITY> 99,329
<SALES> 120,855
<TOTAL-REVENUES> 120,855
<CGS> 99,668
<TOTAL-COSTS> 99,668
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,088
<INCOME-PRETAX> (13,644)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,644)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,644)
<EPS-PRIMARY> (0.32)
<EPS-DILUTED> (0.32)
<FN>
<F1>This amount is net of allowances for doubtful accounts.
<F2>This amount is net of accumulated depreciation.
</FN>

</TABLE>