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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended: DECEMBER 31, 1999
Commission File No. 1-13852
CET ENVIRONMENTAL SERVICES, INC.
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(Exact Name of Registrant as Specified in its Charter)
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CALIFORNIA 33-0285964
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(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification Number)
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7032 SOUTH REVERE PARKWAY, ENGLEWOOD, COLORADO 80112
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(Address of Principal Executive Offices, Including Zip Code)
Issuer's telephone number, including area code: (720) 875-9115
Securities registered pursuant to Section 12(b) of the Act: COMMON STOCK
Securities registered pursuant to Section 12(g) of the Act: NONE
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 ,
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As of March 21, 2000, there were 6,284,288 shares of Common Stock outstanding.
The aggregate market value of voting stock held by nonaffiliates of the
Registrant on that date was approximately $5,635,000.
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K contained in this form, and no disclosure will be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. []
DOCUMENTS INCORPORATED BY REFERENCE:
The information required by Part III is incorporated by reference from the
Registrant's definitive proxy statement to be filed with the Commission pursuant
to Regulation 14A not later than 120 days after the end of the fiscal year
covered by this report.
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PART I
ITEM 1. BUSINESS.
The Company
The Company was incorporated in February 1988 under the name "Thorne
Environmental, Inc." to conduct business in environmental consulting,
engineering, remediation, and construction. The Company's initial growth
resulted from its successful performance of emergency response cleanup services
in certain western states and the Trust Territory of the Pacific Islands for the
U.S. Government and various commercial clients. The Company has developed a
broad range of expertise in non-proprietary technology-based environmental
remediation and water treatment techniques for both the public and private
sectors.
The Company was suspended by the Environmental Protection Agency in
August, 1999. This action caused significant short-term revenue loss. Shortly
after the notice of suspension was received, the Company was notified by its
bank, National Bank of Canada, that it required full repayment of the Company's
loan. These events necessitated that the Company rapidly downsize its operations
and change the focus of its ongoing operations.
The Company is completing its existing government programs contractual
obligations. However, the Company has decided not to pursue any further
contracting relationship with the Environmental Protection Agency and the
Department of Defense. As described in detail further in this Section, the
Company is attempting to assign and sell this portion of the Company's business
operations.
The Company's strategy has been to distinguish itself in the market by
providing full-service environmental contracting, water and wastewater
treatment, and emergency response services. Through several major government
contracts and a diversified commercial client base, the Company provides turnkey
waste management for a complete range of water, soil, and air pollution issues.
The Company's personnel have developed expertise in a broad range of remediation
techniques such as bioremediation, bioventing, vapor extraction, gas/air
sparging, thermal desorption, soil washing, and groundwater remediation systems.
The Company also offers a variety of services in support of municipal and
industrial water and wastewater treatment, military base closures, and other
operations with significant environmental components. The Company believes it
has gained a solid reputation for promptly providing cost-effective and
innovative remediation and treatment solutions.
In July 1995, the Company completed an initial public offering of 1.2
million shares of its Common Stock, and in August 1995, sold an additional 0.2
million shares pursuant to an overallotment option. The net proceeds to the
Company from the public offering were approximately $5.8 million. Concurrent
with the IPO, the Company became listed on the American Stock Exchange under the
symbol "ENV." In conjunction with the offering, warrants for an additional
120,000 shares of Common Stock were issued as partial compensation for
underwriting services. These warrants are exercisable at a price of $6.00 per
share subject to certain price adjustments for five years from the date of the
offering.
In December 1996, the Company commenced a Private Placement Offering of
Common Stock. This offering was completed in January 1997, and resulted in the
issuance of 0.7 million shares with net proceeds to the Company totaling $2.0
million. The Common Stock sold via this offering was registered for resale in a
Form S-3 Registration Statement which became effective January 7, 1998. In
conjunction with the offering, warrants for an additional 72,925 shares of
Common Stock were issued as partial compensation for underwriting services.
These warrants are exercisable at a price of $3.60 per share for five years from
the date of the offering.
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In August 1997, the Company acquired all of the outstanding stock of
Water Quality Management Corporation, a Colorado corporation ("WQM"), in a cash
transaction. WQM was engaged in the operation and maintenance of municipal and
industrial water and wastewater treatment facilities. WQM was operated as a
wholly owned subsidiary of the Company.
In January 1998, the Company acquired all of the outstanding stock of
H2O Construction and Maintenance, Inc. a Colorado corporation ("H2O"), for cash
and notes. H2O was engaged in the construction, operation and maintenance of
water and wastewater treatment, collection and distribution facilities. H2O
provides services to both public and private sector clients. As a result of the
purchase, H20 was merged with WQM, a wholly owned subsidiary of the Company.
In December 1998, the Company sold all of the outstanding stock of WQM
and H2O for $12.5 million to AquaSource Services and Technologies, Inc. In
addition to the $12.5 million, additional consideration may be paid based on the
final audit of working capital levels. The Company recorded a gain of $10.2
million and received $11.3 million at the date of sale, and in the first quarter
of 1999 received an additional $1.25 million. As of December 31, 1999, the
Company has included in other receivables approximately $1.5 million remaining
from amounts due on the sale of WQM. In February 2000, the Company and
AquaSource signed a settlement agreement resolving the amounts due between the
parties (see Item 3. Legal Proceedings).
In August 1998, the Company completed a private financing, raising $1.9
million of net proceeds in a placement of convertible preferred stock and
warrants. The preferred shares could be converted into shares of the Company's
Common Stock at a 15 percent discount to the price of the Common Stock at the
time of conversion with a maximum conversion price of $3.35. Three-year warrants
to purchase an aggregate of 35,000 shares of the Company's Common Stock at a
price of $3.00 per share were also issued. Through January 1999, a total of 430
shares of the preferred securities were converted into 472,803 shares of Common
Stock by the holders. The Common Stock issued upon conversion was registered for
resale in a Form S-3 Registration Statement which became effective August 13,
1998.
In January 1999, the Company redeemed the remaining shares of Preferred
Stock for $1,927,400 plus $4,873 of unpaid dividends through the date of
redemption. The warrants issued in connection with the preferred stock remain
outstanding.
In August, 1999, the Company received a notice of suspension, pending
further review, from the Environmental Protection Agency ("EPA"). The suspension
resulted from EPA allegations that the Company engaged in intentional misconduct
with respect to billing for services provided under various EPA contracts. Under
the suspension, the Company was prohibited from receiving additional government
contracts under the provisions of 48 C.F.R Subpart 9.4 of the Federal
Acquisitions Regulations. The suspension did, however, allow the Company to
continue performance on existing government contracts.
In November 1999, following consideration of certain information
provided by the Company to the EPA, the EPA's suspension was terminated; and an
Administrative Agreement ("Administrative Agreement") between the EPA and the
Company was executed. Upon execution of the Administrative Agreement, the
Company became immediately eligible to bid for, receive, and perform any Federal
contract or subcontract, or participate in any assistance, loan or benefit
without restriction. In the Administrative Agreement, the Company agreed to
cooperate in full with further investigations into the EPA allegations including
access to records, availability of Company personnel, certain reporting
requirements, audit of EPA billing prior to submission, and certain restrictions
of Company assets.
After review of available information and consultation with its legal
counsel, management believes that the allegations brought against the Company
did not warrant suspension. Additionally,
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management intends to cooperate in full but also vigorously defend itself in the
EPA's further investigation into the allegations. However, there can be no
assurance that further suspension will not occur or that the Company will
prevail in this matter. If further suspension occurs, it will have a material
effect on the Company's financial position, results of operations and liquidity.
In August 1999, following the EPA suspension, the Company initiated a
restructuring plan ("Restructuring Plan") to reduce operating costs and gain
efficiencies through sale, downsizing and closure of regional offices. In
September 1999, under the Restructuring Plan, the Company sold substantially all
its assets in the Mobile and Jackson regions for proceeds totaling $0.5 million.
Also under the Restructuring Plan, in October 1999, the Company closed its
regional offices located in New Orleans and Houston.
In October 1999, the Company entered into an Asset Purchase and
Assignment Agreement (the "IT Purchase Agreement") with IT Corporation to sell
or assign substantially all of the assets in the Company's Seattle Regional
office for a sales price of $1.3 million. The IT Purchase Agreement provides for
the assignment of the Company's remaining EPA contract dated January 9, 1997
(the "EPA Contract") and the sale of certain assets and the assumption of
certain liabilities and obligations used in, directly associated with, and
necessary in the performance of the EPA Contract. Closing of the IT Purchase
Agreement is contingent upon the execution of a novation agreement by and
between the Company, IT Corporation and the EPA consenting to the assignment of
the EPA Contract. The closing of this IT Purchase Agreement is also contingent
on the normal closing conditions including the continued accuracy of
representation and warranties, no material adverse changes, and the receipt of
necessary consents from other parties. As discussed in Note C to the Company's
Consolidated Financial Statements, EPA revenue represents approximately 60%, 50%
and 39%, respectively, of the Company's revenue for the years ending December
31, 1999, 1998 and 1997. Upon novation of the EPA contract, the Company would
receive no further EPA revenue. However, there can be no assurance that approval
of the novation will be received from the EPA or that the subsequent closing of
the IT Purchase Agreement will occur. At the date of this report, the parties
are still in discussions with the EPA concerning the proposed novation.
In December 1999, the Company entered into an Asset Purchase Agreement
(the "CAPE Purchase Agreement ") with Cape Environmental Management, Inc.
("CAPE") to sell or assign substantially all of the assets in the Company's
Tustin, California operations for a sale price of $2.1 million. The CAPE
Purchase Agreement provides for the assignment of certain federal/non-EPA and
commercial contracts, the sale of certain assets, and the assumption of certain
liabilities directly associated with the performance of the contracts. Closing
of the CAPE Purchase Agreement is contingent upon the execution of a novation
agreement by and between the Company, CAPE, and the U.S. Defense Contract
Management Command ("DCMC") consenting to the assignment of the federal
contracts. The related federal contracts consist of the Pre-Placed Remedial
Action Contracts ("PRAC"), the Air Force Center for Environmental Excellence
("AFCEE"), the Total Environmental Restoration Contract ("TERC"), and the
McClellan Environmental Technologies Remediation Implementation Contract
("METRIC"). The closing of this CAPE Purchase Agreement is also contingent on
the normal closing conditions including the continued accuracy of representation
and warranties, no material adverse changes, and the receipt of necessary
consents from other parties. Upon novation, the Company would receive no further
federal revenue which consisted of approximated 8%, 12% and 9% for the years
ending December 31, 1999, 1998 and 1997. In addition, the Company will enter
into a non-compete agreement with CAPE which would prohibit the Company from
performing environmental remediation services for the Department of Defense,
with certain limited exceptions, anywhere in the United States, or for certain
customers in California. The non-compete agreement would be for a term of four
years. However, there can be no assurance that approval of the novation will be
received from the DCMC or that the subsequent closing of the CAPE Purchase
Agreement will occur. At the date of this report, the parties are still in
discussions with the DCMC concerning the proposed novation.
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In February 2000, the Company closed its Richmond, California office
and transferred field equipment, office equipment and other assets to the
Company's other locations, primarily to a project located near Hercules,
California.
The Environmental Industry
Various analysts have recently estimated that the total United States
environmental services industry generates revenues of $180-200 billion per year.
Environmental Business Journal has indicated that the remediation industry
accounted for approximately $6.1 billion of revenue in 1998. Driven largely by
legislation passed during the late 1970's and early 1980's in response to
widespread public concern regarding clean air and water, the environmental
services business has expanded rapidly during the past decade. The Company is
involved primarily in the remediation segment of the industry, which is focused
on cleanup of existing environmental problems.
The remediation business consists of three phases: site assessment,
remediation program design, and the actual site remediation. The first phase is
largely investigative and can involve substantial chemical analysis to
understand the nature and extent of the problem. The design phase involves
detailed engineering to develop the optimal solution for cleaning the site. The
third phase is the true implementation of the site remediation plan and involves
various onsite treatment procedures for contaminated materials or the excavation
and containment or offsite transportation of toxic materials. The Company
provides an extensive full-service offering in all phases of contaminated site
remediation.
Innovative onsite remediation technologies are in high demand to
provide an alternative to offsite disposal of hazardous waste. These
technologies have been provided to various Company clients in order to minimize
and/or eliminate our clients' cradle-to-grave liability. Onsite technologies
such as bioremediation, bioventing, vapor extraction, gas/air sparging,
low-temperature thermal desorption, chemical fixation, and soil washing are
gaining wide-spread regulatory acceptance. The Company strives to use these
remediation techniques more efficiently than its competitors.
The never ending need for clean pure water, the aging of the U.S. water
and wastewater treatment facilities, the trend of public municipalities towards
privatization, and recent regulatory pressure, has expanded the U.S. water
market to new highs. The Environmental Review, the EPA's first survey of
drinking-water utilities after reauthorization of the Safe Drinking Water Act in
1997, suggested that communities nationwide will need to spend around $12.1
billion "in the immediate future" to protect drinking water supplies. The EPA
has also estimated that, over the next two decades, some $137 billion will need
to be spent to build new wastewater-treatment plants or to improve existing
ones. And the Water Environment Federation, a trade group, projects that the
roughly 55,000 community water systems in the U.S. will need to spend some $330
billion over the next two decades to improve their water infrastructure. Public
municipalities are becoming aware that considerable savings can be obtained by
outsourcing the operations, management, and maintenance of their water-treatment
facilities to private water-specialty firms. There remains approximately 24,000
government-owned-and-operated water authorities in the U.S. serving almost 80%
of U.S. citizens.
Since 1994, increased pressure to create uses for contaminated and idle
properties has driven a rise in industrial redevelopment or "Brownfield" site
remediation programs. The term "Brownfield" comes from an EPA-sponsored program
to study the redevelopment of "abandoned, idled, or underused industrial
facilities where expansion or redevelopment is complicated by real or perceived
environmental contamination" (U.S. EPA). The exact number of Brownfield sites is
unclear; however, their existence and a governmental effort to facilitate their
cleanup have created an opportunity for full service remediation as well as
financial participation in the redevelopments.
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Organization of the Company
The Company is organized into three primary business lines: industrial
services, which includes water and wastewater treatment, facility cleaning,
operation, maintenance, construction, closures, and emergency response;
environmental remediation; and government programs. This is overlaid with a
geographic structure in which each office is able to provide manpower and
equipment to support projects in each of the business lines.
The Company uses the following resources to provide turnkey services to
its customers:
o Registered engineers, geologists, and environmental scientists
for performing investigations and remediation feasibility
studies.
o Engineers, scientists, and construction managers to design
remediation and water/wastewater treatment systems from the
conceptual stage through final design.
o Manpower and equipment for performing site preparation such as
excavation, grading, berming and hauling soil; removal of
obstacles (i.e., drums, transformers, USTs, and piping); and
dismantling ASTs.
o Manpower and specialized equipment for erecting or installing
remediation equipment, support buildings, and enclosures for
remediation of contaminated soil, water, sludge or sediment.
Services and Products Provided by the Company
The Company provides full turnkey environmental services for
remediation of non-hazardous, hazardous, and toxic waste on a planned and
emergency basis, industrial services, and water and wastewater treatment. This
can include assessment and characterization studies, conceptual design, detail
design, construction and installation, decontamination and demolition, and
operation and maintenance. By offering turnkey services, the Company believes it
enjoys a competitive advantage in soliciting new customers, as well as in
obtaining follow-on contracts that may be tangential or unrelated to the
original scope of work.
Industrial Services. The Company performs a variety of industrial
services, including maintenance and construction work for numerous groundwater
treatment and remediation systems. The Company has also provided clients with a
range of water, wastewater, and industrial wastewater treatment services.
Detailed services include preventive and corrective maintenance, as well as
replacement and emergency maintenance; industrial vacuuming of wet/dry
materials; and construction of full-scale facilities, installation of
off-the-shelf systems, and retrofitting of existing systems.
The Company provides plant services to industrial clients as an outside
contractor, or by offering full- or part-time onsite personnel on a contract
basis. These services include:
o Tank and sump services
o Water and wastewater treatment
o Specialty construction
o Plant operation and maintenance
o Waste management and removals
o Regulatory agency coordination and permitting, regulatory
management outsourcing, and compliance audits
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o Waste area construction/closures
o Facility closures
o Emergency response
Environmental Remediation Services. The Company provides full-scale
turnkey environmental remediation services that range from Phase I environmental
assessments and remedial investigation/feasibility studies (RI/FSs) to the
design, construction, and operation of remediation systems. The Company does not
promote a single technology but recommends the remediation methods that provide
the most cost-effective and timely mitigation.
The Company has developed a Brownfields Redevelopment Program that has
proven success in quickly and cost-effectively returning underutilized
properties to productive use. The cornerstone of this Program is CET's
integrated expertise in site assessment, remediation, and regulatory approval.
Government Programs. The Company works with government agencies at all
levels: federal, state, county, municipal, and special districts. These
contracts are performed with the Company as the prime contractor, a teaming
partner, or a subcontractor. The services provided to the government are similar
to those provided to the private sector and include emergency response and
remediation services.
The Company continues to perform work for the Environmental Protection
Agency and the Department of Defense. As previously discussed in this Section
under the heading "The Company", the Company has contracted for the sale of the
government programs business. While the Company will complete its existing
government program contractual obligations, it does not intend to procure new
environmental contracts with either the Environmental Protection Agency or the
Department of Defense.
Customers
The Company's customers include federal, state, and local government
agencies and commercial enterprises including Fortune 500 companies.
In August 1999, the Company secured a $16.0 million "brownfield"
remediation contract at a former explosives manufacturing plant near Hercules,
California. The project involves multiple phases including soil removal &
disposal; commercial development consisting of sewer, storm drain, roadway, and
sanitary sewer lift station construction; and wetland restoration. There remains
approximately $13.0 million of work to be completed in 2000.
The Company continues to perform work for the Environmental Protection
Agency and the Department of Defense. As previously discussed in this Section
under the heading "The Company", the Company has contracted for the sale of the
government programs business. While the Company will complete its existing
government program contractual obligations, it does not intend to procure new
environmental contracts with either the Environmental Protection Agency or the
Department of Defense.
Business Strategy
The Company plans to capitalize on the following trends:
o The demand for consultation and construction to upgrade
existing water and wastewater treatment facilities within the
U.S. presents an opportunity for the Company.
o The privatization or outsourcing of public municipalities'
water and wastewater treatment facilities operation and
maintenance offers untapped areas of growth within the
industry.
o The U.S. EPA's Brownfields Economic Redevelopment Initiative,
various state voluntary cleanup programs, and a maturing of
the environmental marketplace have reduced the risk
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and uncertainty of selling, buying, and financing
underutilized or Brownfield sites, creating an opportunity to
redevelop prime land that was previously "untouchable" due to
contamination.
o Remediation at active industrial sites under the RCRA
corrective action program represents an important private
sector segment in an early stage of development.
o To meet special requirements and budget constraints,
industrial facilities are increasingly outsourcing
environmental-related maintenance and construction services.
The Company is targeting these facilities to perform this work
on a contract basis or offering full- or part-time personnel
on site.
The Company's strategy to capitalize on these trends emphasizes the
following key elements:
Diversification through Controlled Expansion. The Company seeks
controlled growth and diversification by providing its services to additional
industries and by broadening the mix of related services performed for each
client. Management has identified several areas of interest for expansion
including additional work in the areas of water and wastewater treatment
facilities' construction, operation and maintenance, U.S. military base closure
services, in-plant services for industrial clients, and redevelopment of
Brownfield properties.
Emphasis on Recurring Revenue. The Company seeks to expand its base of
recurring revenue sources to mitigate the cyclical nature of the environmental
remediation services industry. The Company is on appropriate approved-contractor
lists with its large corporate customers whereby the Company is invited to bid
on future environmental engineering/remediation projects. Inclusion on such
lists is a result of the Company having completed prior contracts to the
satisfaction of these customers. The Company also intends to increase the number
of operations and maintenance contracts, both for industrial services and
water/wastewater facilities. These contracts are generally longer term,
providing a more sustainable revenue base.
Commitment to Quality. Management believes that the long-term success
of the Company depends upon its reputation with customers and government
regulators for performing top quality turnkey services. The Company must
continue to distinguish itself with private and government sector customers by
maintaining competence in various state-of-the-art, technology-based remediation
and treatment alternatives, and by efficient and effective jobsite performance.
Professional Marketing and Management. The Company is committed to
maintaining a professional marketing and project management staff that
understands the needs and requirements of its various customers, that can
accurately evaluate requests for proposals and invitations to bid, and that
responds in a timely manner with high-quality comprehensive formal proposals.
This includes understanding the intricacies of the detailed and time-consuming
process associated with bidding and managing projects. The Company uses
non-proprietary specialized software for job cost accounting to assist with both
bidding and managing projects.
Stable Work Force. The Company strives to maintain a stable, dedicated
work force of experienced professionals, managers, administrative personnel, and
trained operators and laborers. The Company seeks to attract and retain such
employees by providing fair compensation, incentives, and a dynamic work
environment. The Company maintains a comprehensive program for providing health
and safety training related to hazardous material exposure, in full compliance
with the highest standards set forth by federal and other applicable regulatory
agencies. Management believes that the Company's experienced work force will
continue to contribute to the Company's excellent safety record, reducing
insurance costs, and increasing customer satisfaction.
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Ownership of Equipment. The Company attempts to purchase specialized
emergency response and remediation equipment, thereby providing the Company with
key business advantages, including reduced operating costs, greater flexibility
in scheduling the use of resources (equipment, personnel, etc.) and greater
reliability in meeting contractually-defined performance timetables and
deadlines. The Company typically rents non-specialized equipment such as
backhoes and excavators.
Marketing
The Company has a dedicated marketing staff of sales professionals,
proposal writers, technical editors, and project estimators. A significant
portion of new business is derived from current customers seeking services for
additional sites and new needs. The Company has developed ongoing relations with
a broad range of customers in various industries and geographical sites.
The marketing organization is primarily decentralized. Sales leads and
customer relationships are developed on a regional basis by the Regional
Manager, Project Managers, or the Business Development Manager. Individual
contracts have an award value of $25,000 to $100,000 for the performance of
specific tasks, and from $125,000 to $7,000,000 for comprehensive turnkey
services.
The Company's contracts are primarily obtained through competitive
bidding and through negotiations with long-standing customers. The Company is
typically invited to bid on projects undertaken by recurring customers who
maintain pre-qualified contractor bid lists. Bidding activity, backlog, and
revenue resulting from the award of contracts to the Company vary significantly
from period to period.
Competition
The environmental industry in the United States has developed rapidly
since the passage of RCRA in 1976 and is highly competitive. The industry is
going through a rapid transition resulting from several mergers and
consolidations during the last two years. Several key players have emerged but
the industry still has numerous small- and medium-sized companies serving niche
markets according to geography, industry, media (air, water, soil, etc.), and
technological specialization (bioremediation, etc.).
Because the Company operates in many sectors of the environmental
industry, the Company can adapt to changes in the marketplace by allocating its
resources to the industry sector in which the business opportunities exist.
Management believes that the keys to success in the industry today are service
and capabilities. The Company will continue to focus on the application of new
technology, as well as innovative applications of existing technologies, and
continue providing high quality services to its customers.
Management believes that the primary factors of competition are price,
technological capabilities, reputation for quality and safety, relevant
experience, availability of machinery and equipment, financial strength,
knowledge of local markets and conditions, and estimating abilities. Management
believes that the Company has competed and will continue to compete favorably on
the basis of the foregoing factors. However, many of the Company's competitors
have financial and capital equipment resources greater than that of the Company.
Additionally, at any time and from time to time, the Company may face
competition from new entrants into the industry. The Company may also face
competition from technologies that may be introduced in the future, and there
can be no assurance that the Company will be successful in meeting the
challenges that will be posed by its competition in the future.
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Government Regulation
The Company is presently regulated by a myriad of federal, state, and
local environmental and transportation regulatory agencies, including but not
limited to the EPA, which regulates the generation and disposal of hazardous
waste; the U.S. Department of Labor, which sets safety and training standards
for workers; the U.S. Department of Transportation, which regulates
transportation of hazardous materials and hazardous waste; and similar state and
local agencies.
The need for governments and business to comply with the complex scheme
of federal and state regulations governing their operations is the market in
which the Company operates, although the Company itself must operate under and
in conformance with applicable federal and state laws and regulations. The
Company attempts to pass the cost of compliance on to the customer through the
prices paid by customers for the Company's services.
Environmental Laws
Most environmental laws and regulations are promulgated by the U.S.
Congress and federal departments and agencies. For example, the National
Environmental Policy Act compels federal governmental agencies at all levels to
make decisions with environmental consequences in mind. The EPA and the U.S.
Occupational Safety and Health Administration ("OSHA") are responsible for
protecting and monitoring certain natural resources (such as air, water, and
soil) and working conditions. These laws and regulations establish a
comprehensive regulatory framework consisting of permitting processes, systems
construction, monitoring and reporting procedures, and administrative, civil,
and criminal enforcement mechanisms.
Many of the federal laws and regulations contemplate enforcement by
state agencies and adoption by the states of similar environmental laws and
regulations that must meet minimum federal requirements. In areas of
environmental law where federal regulation is silent, the states may adopt their
own environmental laws.
Local governments such as counties and municipalities may also enact
and enforce environmental laws that address local concerns that may be more
stringent than applicable state laws.
The Company's ability to assist customers to comply with these
environmental laws and regulations forms the basis for the current and future
environmental consulting, engineering, remediation, laboratory, and other
services provided by the Company. Enforcement of such laws and regulations, such
as EPA mandated registration and upgrade of USTs, also leads to business for the
Company.
The federal laws and regulations described below constitute the major
actions that have caused growth in the environmental and water/wastewater
service industries.
Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("CERCLA"). This legislation, as amended by the Superfund Amendments and
Reauthorization Act of 1986, established the Superfund program to identify and
clean up existing contaminated hazardous waste sites and other releases of
hazardous substances into the environment. While federal funds of approximately
$8.5 billion exist to pay for the cleanup, CERCLA gives the EPA authorization to
compel private parties to undertake the cleanup and enforcement incentives
including the imposition of penalties and punitive damages.
Resource Conservation and Recovery Act of 1976 ("RCRA"). This
legislation, as amended by the Hazardous and Solid Waste Amendments of 1984
("HSWA"), provides for the regulation of
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hazardous waste from the time of generation to its ultimate disposal as well as
the regulation of persons engaged in generation, handling, transportation,
treatment, storage, and disposal of hazardous waste. Hydrocarbon-based hazardous
waste as defined by RCRA can include leaked/spilled crude oil, refined oil,
gasoline, kerosene, and industrial solvents (used, for example, in the
transportation and manufacturing industries). Hazardous waste also includes the
by-products of virtually any business, including the production of plastics,
pesticides, fertilizers, soaps, medicines, explosives, etc. These wastes can
contain heavy metals, organic chemicals, dioxin, PCBs, cyanide, and other toxic
substances.
EPA UST Regulations. The EPA has mandated that USTs that are used to
store gasoline, diesel fuel, fuel oil, waste oil and hazardous materials be
registered with the appropriate state regulatory agency, designed or upgraded to
meet construction and operational standards, and monitored to insure against
groundwater and soil contamination from leaking. Owners and operators are
further required to report leaks and undertake appropriate corrective action,
including testing and monitoring to identify the extent of the contamination,
removal and disposal of contaminated soil, or on-site treatment of contaminated
soil or groundwater. The EPA has delegated the administration of UST regulations
to state agencies. To assist the remediation process when leaking USTs are
identified, many state legislatures have created reimbursement programs funded
by gasoline taxes or other taxes and fees.
Clean Water Act ("CWA"). The CWA established a system of standards,
permits and enforcement procedures for the discharge of pollutants into
navigable waters from industrial, municipal and other wastewater sources. The
CWA requires, under certain circumstances, pretreatment of industrial wastewater
before discharge into municipal treatment facilities. The EPA and delegated
state agencies are also placing some non-complying municipalities under
enforcement schedules. These regulations are creating the need for the upgrade
or construction of new treatment facilities by both industrial and municipal
entities.
Safe Drinking Water Act ("SDWA"). Under the SDWA and its subsequent
reauthorization, the EPA is empowered to set drinking water standards for public
water systems in the United States. The SDWA requires that the EPA set maximum
permissible contamination levels for over 80 substances and also requires the
EPA to establish a list every 3 years of contaminants that may cause adverse
health effects and may require regulation. Enforcement responsibility is placed
on the states and includes water supply systems monitoring. The SDWA also
requires that the EPA set criteria for the use of treatment techniques including
when filtration should be used for surface water supplies and when to require
utilities to disinfect their water. The EPA regulations under the SDWA are
expected to result in significant expenditures by public water systems for
evaluation and, ultimately, for upgrading of many facilities.
Bolstering federal laws are stringent state laws, such as California's
Safe Drinking Water and Toxic Enforcement Act of 1986 ("Prop 65"), which took
full legal effect in 1992. To cite just one facet of Prop 65, California's
drinking water must not have concentrations of more than one part per billion of
benzene. However, one tablespoon of gasoline contains enough benzene to render
50,000 gallons of water undrinkable by California's standards.
OSHA and OSHA Reform Act. OSHA has promulgated various regulations
setting forth standards for disclosure of health hazards in the work place and
for response thereto. The Hazard Communication Standard, for example, requires
manufacturers and importers of chemicals to assess the hazards of their products
and disclose the same through material data safety sheets and label warnings. In
1990, in an effort in part to create a self-funding administration, Congress
increased the ceiling for certain OSHA-imposed penalties.
10
<PAGE> 12
Potential Liability and Insurance
The Company maintains quality assurance, quality control, and health
and safety programs to reduce the risk of damage to persons and property.
However, in providing environmental remediation services to the Company's
customers, the Company faces substantial potential liability for environmental
damage, personal injury, property damage, economic losses, and fines and costs
imposed by regulatory agencies. Furthermore, it is possible that one or more of
the Company's customers may assert a claim against the Company for negligent
performance of services. The Company's potential environmental liability arises,
in part, because some of its services involve the cleanup of petroleum products
and other hazardous substances for its customers.
The scope of liability under existing law for environmental damage is
potentially very broad and could apply to the Company in a number of ways. For
example, the Company may be exposed to liability under CERCLA when it conducts a
cleanup operation that results in a release of hazardous substances, or when it
arranges for disposal of such substances. Other liabilities may arise if the
Company creates or exacerbates a contamination problem through errors or
omissions in its cleanup work, potentially giving rise to, among other things,
tort actions for resulting damages and Superfund liability for any resulting
cleanup. Finally, it is possible that one or more of the Company's customers
will assert a claim against the Company for an allegedly incomplete or
inadequate cleanup.
Many state and federal environmental laws apply to the Company's
activities, and the potential for liability exists depending on the
circumstances and substances involved in each cleanup operation. Moreover, the
law in this area is developing rapidly and is thus subject to considerable
uncertainty.
The Company maintains comprehensive general liability insurance and
worker's compensation insurance that provide $5 million of coverage each. In
addition, the Company maintains pollution liability and errors and omissions
insurance that provides $2 million of coverage each. Because there are various
exclusions and retentions under the insurance policies described above, not all
liabilities that may be incurred by the Company will necessarily be covered by
insurance. In addition, certain of the policies are "claims made" policies that
only cover claims made during the term of the policy. If a policy terminates and
retroactive coverage is not obtained, a claim subsequently made, even a claim
based on events or acts that occurred during the term of the policy, might not
be covered by the policy. In the event the Company expands its services into a
new market, no assurance can be given that the Company will be able to obtain
insurance coverage for such activities or, if insurance is obtained, that the
dollar amount of any liabilities incurred in connection with the performance of
such services will not exceed policy limits.
The market for liability insurance has been severely constrained at
times, due in part to high losses experienced by the insurance industry from
environmental impairment liability claims, including claims associated with
hazardous materials and toxic wastes. Consequently, the available insurance
coverage for enterprises such as the Company may be reduced, eliminated entirely
or priced beyond the reach of many companies. To date, the Company has been able
to obtain any insurance required by a customer. However, there can be no
assurance that the Company will be able to maintain adequate liability insurance
in the future.
Bonding Requirements
Commercial remediation projects, as well as federal, state, and
municipal projects, often require contractors to post both performance and
payment bonds at the execution of a contract. Performance bonds guarantee that
the project will be completed, and payment bonds guarantee that vendors will be
paid for equipment and other purchases. Contractors without adequate bonding may
be ineligible to bid or negotiate on many projects. The Company has frequently
been required to obtain such bonds, and it
11
<PAGE> 13
should be assumed that the Company will continue to be required to obtain such
bonds in the future. The Company obtains required bonds on a case-by-case basis
as needed and has not experienced any problems in obtaining necessary bonds. The
Company could experience such difficulties in the future if its total amount of
bonds outstanding exceeds the limits imposed by bonding companies based on the
financial condition of the Company at any given time. Bonds typically cost
between 1% and 3% of the cost of a project. To date, no payments have been made
by any bonding company for bonds issued for the Company.
Employees
As of March 2000, the Company employed approximately 73 employees
full-time and 71 part-time at its four offices, including three Company
officers. If the Asset Purchase and Assignment Agreement for the Seattle office
and Environmental Protection Agency contract is completed, the total of full
time employees will be decreased by 15 and the total of part-time employees will
be decreased by 30. In addition, if the Asset Purchase Agreement for the Tustin
office, certain commercial contracts, and the Department of Defense contracts is
completed, the total of full-time employees will be decreased by 26 and the
total of part-time employees total will be decreased by 26. The Company's
employees are not represented by a labor union or covered by a collective
bargaining agreement, and the Company believes it has good relations with its
employees.
While all of the Company's projects are performed under the supervision
and direction of the Company's supervisors and foremen, and the Company attempts
to utilize as many of the Company's regular laborers as possible to staff
projects, the location and other factors affecting projects performed away from
the immediate vicinity of the Company's permanent offices result in the Company
occasionally hiring temporary workers on site. The Company carefully reviews the
training and qualifications of all temporary workers hired to assure that all
such personnel are qualified to perform the work in question. However, due to
the temporary nature of such employment, there is no assurance that all such
temporary workers will perform at levels acceptable to the Company and its
customers.
The operations of the Company are substantially dependent upon its
executive officers. The Company has no employment contracts with these persons,
and the loss of their services could have a material adverse effect on the
Company. The Company's further success will also depend significantly on its
ability to attract and retain additional skilled personnel, including highly
trained technical personnel, project managers and supervisors. The Company
believes it currently has adequate qualified supervisory personnel, but there is
no assurance that experienced and qualified management level personnel will be
available to the Company in the future to fill positions as needed.
ITEM 2. PROPERTIES.
The Company headquarters and administrative facilities are located at
7032 S. Revere Parkway, Englewood, Colorado, in approximately 12,027 square feet
of leased office space. The lease expires May 31, 2004. The Company's corporate
and administrative functions are conducted from these facilities.
12
<PAGE> 14
The Company's services are conducted from the following locations:
<TABLE>
<CAPTION>
CURRENT
LEASE MONTHLY
SQ. FT EXPIRATION RENT
----------------------------------------------------- ---------- ------------------------ ---------------
<S> <C> <C> <C>
14761 BENTLEY CIRCLE
TUSTIN, CALIFORNIA *** 18,490 April 14, 2002 $ 10,909.00
----------------------------------------------------- ---------- ------------------------ ---------------
170 WEST DAYTON, STE. 106A
EDMONDS, WASHINGTON
(OFFICE) ** 6,920 March 31, 2001* 7,519.00
----------------------------------------------------- ---------- ------------------------ ---------------
170 WEST DAYTON, STE. 106 B-D
EDMONDS, WASHINGTON
(WAREHOUSE) ** 5,568 March 31, 2001* 3,822.00
----------------------------------------------------- ---------- ------------------------ ---------------
7032 S. REVERE PARKWAY
ENGLEWOOD, COLORADO 12,027 May 31, 2004 11,025.00
----------------------------------------------------- ---------- ------------------------ ---------------
100 N. E. LOOP 410, STE. 1200
SAN ANTONIO, TEXAS *** 150 Month to Month 414.00
----------------------------------------------------- ---------- ------------------------ ---------------
</TABLE>
* CONTAINS AN OPTION TO RENEW OR EXTEND THE LEASE.
** INCLUDED IN THE ASSETS UNDER THE IT PURCHASE AGREEMENT.
*** INCLUDED IN THE ASSETS UNDER THE CAPE PURCHASE AGREEMENT.
ITEM 3. LEGAL PROCEEDINGS.
Except as set forth below, the Company is not a party to any material
legal proceedings which are pending before any court, administrative agency or
other tribunal. Further, the Company is not aware of any material litigation
which is threatened against it in any court, administrative agency or other
tribunal. Management believes that no pending litigation in which the Company is
named as a defendant is likely to have a material adverse effect on the
Company's financial position or results of operations.
In 1998, the Company filed suit in the United States District Court for
the District of Oregon against Road Runner Oil, Inc. and Bernard J. Roscoe,
alleging breach of contract for non-payment of services performed by the Company
at an oil field in Utah. The amount of unpaid invoices, including interest and
collection costs, is approximately $2.1 million. In August 1998 the Oregon court
determined that the venue for the United States District Court action should be
in Utah, and venue for the action was changed accordingly. Road Runner also
filed a claim in this action against the Company for breach of contract seeking
unspecified damages. The Company has also filed mechanic's liens on certain
equipment at the site and against Road Runner's rights in the oil field. The
Default Judgments against Road Runner have been awarded in the Tribal Court and
Utah state court, and foreclosure proceedings and corresponding asset
investigation are in progress. This account receivable was written off in 1998.
In 1998, the Company filed for arbitration against Environmental
Chemical Corporation ("ECC") for various claims related to a Subcontractor
Agreement under an Environmental Protection Agency ("EPA") contract. A
Settlement Agreement was executed by the parties on November 30, 1999 which
required the Company to pay to ECC $826,000 for work performed under the EPA
contract. The EPA Administrative Agreement established a Financial Reserve of
$700,000 in order to make certain that ECC was paid these monies. The first
payment of $413,000 was due on December 31, 1999, and the EPA refused to release
the funds to the Company. ECC has filed a lawsuit against the Company for the
collection of all monies owed. The Company has paid $413,000; however, the EPA
continues to refuse to release the Financial Reserve. The Company believes that
the Financial Reserve is sufficient to pay the balance owed to ECC.
13
<PAGE> 15
In 1998, the Company initiated a lawsuit in the U.S. District Court for
the Southern District of Texas - Houston Division against PTS Properties, Inc.,
the building owner, Allchem Industries, Inc. and Fertilizers and Chemicals,
Ltd., the chemical owners, and Aqua-Pak, Inc. for collection of an outstanding
receivable of approximately $400,000 from performance of an emergency response
in 1997 for Aqua-Pak, Inc. The Company has written off this account receivable.
In 1999, two of the defendants settled with the Company for a total received by
the Company of $200,000. And in February, 2000, the Company settled with the
remaining defendant for a total sum received of $43,000.
On July 15, 1999, the Company filed a Complaint and Jury Demand against
AquaSource Services and Technologies, Inc. ("AquaSource"), a Texas corporation,
for additional amounts due under the Water Quality Management Stock Purchase
Agreement. On February 22, 2000, AquaSource and the Company signed a Settlement
and Mutual Release Agreement. The Settlement Agreement states that AquaSource
will pay the Company approximately $500,000 and release all claims is has
against the approximately $698,000 of retention related to a project that was
completed by the Company. The Company has agreed to indemnify AquaSource on
certain projects that have been completed by the Company, which were transferred
to AquaSource as part of the sale of WQM. In addition, the Company retained
$219,000 for certain amounts collected on behalf of WQM.
The Company is currently under investigation by the Office of the
Inspector General (OIG) of the Environmental Protection Agency due to a past
suspended audit. To date no claims have been made against the Company arising
from this investigation, and subsequent independent audits by the Defense
Contract Audit Agency (DCAA) have not been adverse and have not resulted in
claims against the Company. The Company is cooperating with the OIG to complete
its investigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the Company's security holders
during the quarter ended December 31, 1999.
14
<PAGE> 16
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
(a) Principal Market or Markets. Since July 18, 1995, the
Company's Common Stock has been listed on the American Stock
Exchange ("AMEX") under the symbol "ENV". The following table
sets forth the high and low sale prices for the Company's
Common Stock as reported on the AMEX for the periods
indicated:
<TABLE>
<CAPTION>
QUARTER ENDED HIGH LOW
-------------------------------- ------------- -------------
<S> <C> <C>
March 31, 1998 $ 7.25 $ 5.4375
-------------------------------- ------------- -------------
June 30, 1998 6.375 2.50
-------------------------------- ------------- -------------
September 30, 1998 2.8125 1.50
-------------------------------- ------------- -------------
December 31, 1998 2.0625 .50
-------------------------------- ------------- -------------
March 31, 1999 2.00 1.125
-------------------------------- ------------- -------------
June 30, 1999 1.625 1.125
-------------------------------- ------------- -------------
September 30, 1999 1.50 .25
-------------------------------- ------------- -------------
December 31, 1999 $ 2.125 $ .3125
</TABLE>
(b) Approximate Number of Holders of Common Stock. The number of
record holders of the Company's common stock at March 21, 2000
was 52. This does not include approximately 800 shareholders
who hold their shares in street name.
(c) Dividends. The Board of Directors does not anticipate paying
cash dividends on the Company's Common Stock in the
foreseeable future as it intends to retain future earnings to
finance the growth of the business. The payment of future cash
dividends will depend on such factors as earnings levels,
anticipated capital requirements, the operating and financial
conditions of the Company and other factors deemed relevant by
the Board of Directors. The California Corporations Code
provides that a corporation may not pay dividends if the
corporation is, or as a result of the distribution would
likely be, unable to meet its liabilities as they mature.
(d) Sales of Unregistered Securities. None
15
<PAGE> 17
ITEM 6. SELECTED FINANCIAL DATA.
SELECTED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Following is a summary of the quarterly results of operations for the years
ended December 31, 1999 and 1998.
<TABLE>
<CAPTION>
Fiscal Quarter
$ in thousands, except per share amounts March 31 June 30 September 30 December 31 Total
-------- -------- ------------- ------------- --------
<S> <C> <C> <C> <C> <C>
1998:
Revenues $ 11,455 $ 16,005 $ 17,125 $ 21,912 $ 66,497
Project costs 10,820 15,211 18,212 20,958 65,201
-------- -------- ------------- ------------- --------
Gross profit (loss) 635 794 (1,087) 954 1,296
-------- -------- ------------- ------------- --------
Selling 447 481 431 631 1,990
General and administrative (a) 664 665 729 5,478 7,536
Other (income) loss, net (b) 190 252 356 (9,745) (8,947)
-------- -------- ------------- ------------- --------
Income (loss) before income tax (666) (604) (2,603) 4,590 717
-------- -------- ------------- ------------- --------
Income tax -- -- -- -- 183
-------- -------- ------------- ------------- --------
Net income (loss) $ (666) $ (604) $ (2,603) $ 4,590 $ 534
======== ======== ============= ============= ========
Basic earning (loss) per common share $ (0.11) $ (0.10) $ (0.45) $ 0.75 $ 0.09
Diluted earning (loss) per common share $ (0.11) $ (0.10) $ (0.45) $ 0.75 $ 0.09
1999:
Revenues $ 12,945 $ 8,503 $ 13,939 $ 7,802 $ 43,189
Project costs 11,289 8,299 13,797 6,745 40,130
-------- -------- ------------- ------------- --------
Gross profit (loss) 1,656 204 142 1,057 3,059
======== ======== ============= ============= ========
Selling 308 404 560 131 1,403
General and administrative 678 968 910 974 3,530
Restructuring -- -- 913 (56) 857
Other (income) loss, net 105 325 133 (117) 446
-------- -------- ------------- ------------- --------
Income (loss) before income tax 565 (1,493) (2,374) 125 (3,177)
-------- -------- ------------- ------------- --------
Income tax 215 (215) -- -- --
-------- -------- ------------- ------------- --------
Net income (loss) $ 350 $ (1,278) $ (2,374) $ 125 $ (3,177)
======== ======== ============= ============= ========
Basic earning (loss) per common share $ 0.06 $ (0.20) $ (0.38) $ 0.02 $ (0.51)
Diluted earning (loss) per common share $ 0.06 $ (0.20) $ (0.38) $ 0.02 $ (0.51)
</TABLE>
(a) Includes fourth quarter $4.1 million of audit adjustments
(b) Includes fourth quarter gain on sale of subsidiary of $10.2 million.
16
<PAGE> 18
The following selected financial information for the years ended
December 31, 1999, 1998, 1997, 1996, and 1995 is derived from financial
statements of the Company audited by Grant Thornton LLP, independent certified
public accountants.
Balance Sheet Data (in thousands):
<TABLE>
<CAPTION>
-----------------------------------------------
AT DECEMBER 31,
-----------------------------------------------
1999 1998 1997 1996 1995
- ---------------------------------------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS $11,132 $26,670 $25,089 $18,424 $21,245
- ---------------------------------------- ------- ------- ------- ------- -------
TOTAL ASSETS 13,805 30,202 29,883 23,795 25,708
- ---------------------------------------- ------- ------- ------- ------- -------
CURRENT LIABILITIES 7,619 18,835 12,970 15,121 12,921
- ---------------------------------------- ------- ------- ------- ------- -------
WORKING CAPITAL 3,513 7,835 12,119 3,303 8,324
- ---------------------------------------- ------- ------- ------- ------- -------
LONG TERM DEBT 179 251 8,204 1,700 2,077
- ---------------------------------------- ------- ------- ------- ------- -------
TOTAL LIABILITIES 7,798 19,086 21,174 16,821 14,998
- ---------------------------------------- ------- ------- ------- ------- -------
SHAREHOLDERS' EQUITY $ 6,007 $11,116 $ 8,709 $ 6,974 $10,710
- ---------------------------------------- ------- ------- ------- ------- -------
</TABLE>
Statement of Operations Data (in thousands, except earnings per share data):
<TABLE>
<CAPTION>
-----------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
- ---------------------------------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
REVENUES $ 43,189 $ 66,497 $ 54,170 $ 54,919 $ 47,872
- ---------------------------------------- ---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES 45,920 74,727 54,047 58,096 44,858
- ---------------------------------------- ---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS)
FROM CONTINUING
OPERATIONS (3,177) 538 (347) (3,756) 2,035
- ---------------------------------------- ---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) FROM
CONTINUING OPERATIONS PER
COMMON SHARE $ (0.51) $ 0.09 $ (0.06) $ (0.74) $ 0.49
- ---------------------------------------- ---------- ---------- ---------- ---------- ----------
WEIGHTED AVERAGE SHARES 6,282,346 5,828,537 5,785,264 5,066,537 4,113,725
- ---------------------------------------- ---------- ---------- ---------- ---------- ----------
CASH DIVIDENDS PER
COMMON SHARE -0- -0- -0- -0- -0-
- ---------------------------------------- ---------- ---------- ---------- ---------- ----------
</TABLE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Annual Report on Form 10-K contains forward-looking statements (as
such term is defined in the private Securities Litigation Reform Act of 1995),
and information relating to the Company that is based on beliefs of management
of the Company, as well as assumptions made by and information currently
available to management of the Company. When used in this Report, the words
"estimate," "project," "believe," "anticipate," "intend," "expect," and similar
expressions are intended to identify forward-looking statements. Such statements
reflect the current views of the Company with respect to future events based on
currently available information and are subject to risks and uncertainties that
could cause actual results to differ materially from those contemplated in such
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements, which speak only as of the date hereof. The
Company does not undertake any obligation to release publicly any revisions to
these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
General
The Company provides comprehensive environmental remediation services
of hazardous and toxic waste on a planned and emergency basis to both government
and private sector customers. It also provides water and wastewater treatment
facilities and services to municipal and industrial clients. The Company
provides these services from its offices in: Denver, Colorado; Edmond,
Washington; Tustin, California; and San Antonio, Texas.
17
<PAGE> 19
Business Strategy
The Company is focused on basic strategies that should lead to improved
profitability, specifically to focus on the completion of more profitable
contracts, overall direct and indirect cost reductions, and administrative
efficiencies. The Company continues to focus on business relationships where it
can assure high quality and operate profitably. Cost reduction efforts will
continue to focus on improved program management, field consolidation, reduction
of corporate expenses, and assessment of field location efficiencies. Delivery
of quality service has been and will continue to be closely monitored. While
management believes that implementation of this strategy will improve operating
performance, no assurances can be given as to its ultimate success.
Future strategic alternatives currently being considered by the Company
include, among others, (i) the pursuit of opportunities in its core
environmental remediation business; (ii) expansion into water and wastewater
treatment construction, operation and maintenance through direct investment or
acquisitions; (iii) the proposed sales of the Edmond, Washington and Tustin,
California offices and related EPA and federal contracts; and (iv) continued
focus on the improvement of contract profitability.
Results of Operations
The following table presents, for the periods indicated, the percentage
relationship which certain items of the Company's statements of income bear to
project revenue and the percentage increase or (decrease) in the dollar amount
of such items:
<TABLE>
<CAPTION>
PERCENTAGE RELATIONSHIP TO
PROJECT REVENUE PERIOD TO PERIOD
YEAR ENDED CHANGE
------------------------- -----------------
1999 1998
VS. VS.
1999 1998 1997 1998 1997
----- ----- ----- ----- -------
<S> <C> <C> <C> <C> <C>
Project Revenue 100.0% 100.0% 100.0% (35.1)% 22.8%
Project Costs:
Direct 78.5 87.7 79.9 (41.8) 34.7
Indirect 14.4 10.4 10.4 (9.9) 22.3
----- ----- ----- ----- -------
Gross profit 7.1 1.9 9.7 136.0 (75.3)
Other operating expense (income):
Selling 3.2 3.0 3.8 (29.5) (3.9)
General and administrative expense 10.2 11.3 5.6 (41.8) 147.6
----- ----- ----- ----- -------
Operating income (loss) (6.3) (12.4) 0.3 (66.8) (6,790)
Other income (expense) (1.0) 13.5 (1.1) 781.0 1,632.7
----- ----- ----- ----- -------
Income (loss) before income taxes (7.4) 1.1 (0.8) (539.9) 256.6
Income tax (benefit) 0.3 (0.2) (260.5)
----- ----- ----- ----- -------
Net income (loss) (7.4) 0.8% (0.6)% (689.2) 255.3%
----- ----- ----- ----- -------
</TABLE>
18
<PAGE> 20
1999 COMPARED TO 1998
Project revenues. Project revenues decreased $23.3 million or 35%, from
$66.5 million in 1998 to $43.2 million in 1999. The decrease is primarily
attributed to (i) an $8.0 million decrease in revenues due to the sale of WQM in
December 1998 (see Note E to the Company's Consolidated Financial Statements);
(ii) a decline of $6.1 million in commercial contract revenue as a result of an
overall decrease in the Company's commercial business in 1999; (iii) a decrease
in EPA contract revenues of $6.9 million due to the suspension issued by the EPA
against the Company for the months August through November of 1999. During the
suspension period, the Company was not allowed to secure or bid on additional
EPA or other government projects, which disrupted the normal flow of business,
reducing EPA revenues by approximately $10.0 million dollars in the fourth
quarter of 1999 compared to the fourth quarter of 1998 (see Note C to the
Company's Consolidated Financial Statements); (iv) a $1.9 million reduction of
other government contract revenues as a result of the EPA Suspension, which
precluded the Company from bidding on any governmental projects; (v) and a
decline of $2.6 million in revenues provided to the Company in 1998 under a
Pre-Placed Remedial Actions Contract ("PRAC") with the US Army Corp of
Engineers. These decreases were off-set by an increase of $2.2 million in
project revenues from the Hercules project started in August 1999.
The Following table sets forth the percentages of the Company's
revenues attributable to the EPA vs. non-EPA public and private sector
customers:
<TABLE>
<CAPTION>
Year Ended December 31,
===================================================================================
1999 1998 1997
------------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Non-EPA $17,231,604 39.9% $33,569,412 50.5% $33,125,032 61.2%
EPA $25,957,715 60.1% $32,927,870 49.5% $21,044,721 38.8%
----------- ----------- ----------- ----------- ----------- -----------
Total $43,189,319 100.0% $66,497,282 100.0% $54,169,753 100.0%
=========== =========== =========== =========== =========== ===========
</TABLE>
DIRECT PROJECT COSTS. Direct costs decreased $24.4 million or 42%, from
$58.3 million or 88% of project revenues in 1998 to $33.9 million or 79% or
project revenues in 1999. The overall reduction in direct costs is commensurate
with the overall decrease in project revenues noted above. However, the
improvement of directs costs as a percentage of project revenues in 1999 results
primarily from project cost overruns experienced in 1998. Specifically, the
State of Washington and Monfort of Colorado, Inc. projects experienced $2.2
million in costs overruns or 3.3% of revenues in 1998. Other negative revenue
adjustments of $.8 million or 1.3% of revenues were also experienced in 1998. In
1999, the Company had no significant project cost overruns. In addition, certain
typical direct labor costs were charged to indirect costs as a result of the EPA
Suspension as noted below.
INDIRECT PROJECT COSTS. Indirect project costs decreased approximately
$.68 million or 10%, from $6.93 million or 10.4% of project revenues in 1998, to
$6.22 million or 14.4% of project revenues in 1999. The overall decrease is
commensurate with the reduction in project revenues as noted above. However, the
increase as a percentage of revenues is primarily attributed to retaining
certain key project manager/employees during the EPA Suspension, which labor
costs were not chargeable to direct projects. Total indirect labor costs
increased slightly from $1.85 million in 1998 to $1.89 million in 1999. As a
result, certain typical direct project labor costs were charged to indirect
project costs due to the steady reduction in EPA projects during this period. In
addition, there were increases in other indirect project costs related to
employee training and relocation and certain non-recurring project costs related
to the EPA Suspension.
19
<PAGE> 21
SELLING EXPENSE. Sales and marketing expenses decreased approximately
$.59 million or 30%, from $1.99 million or 3.0% of project revenues in 1998, to
$1.40 million or 3.2% of project revenues in 1999. As a percentage of revenues,
sales and marketing remained relatively constant between 1998 and 1999. The
decrease in sales and marketing expenses is attributed to the significant
restructuring of the Company during 1999, which resulted in the sale or closure
of several operating regions/locations within the U.S. In addition, the Company
reduced certain marketing expenses as an overall cost reduction policy for 1999
related to the Restructuring Plan (See Note D regarding discussion of the
"Restructuring" in the Company's Consolidated Financial Statements).
GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expenses
decreased by approximately $3.15 million or 42%, from $7.54 million or 11.3% of
project revenues in 1998 to $4.39 million or 10.2% of project revenues in 1999.
The decrease is primarily attributed to certain non-recurring adjustments
related to the write off of receivables of $2.4 million and provisions for bad
debt allowances of $1.3 million is 1998. For comparative purposes, disregarding
the $3.7 million of non-recurring adjustments in 1998, general and
administrative expenses increased by approximately $.59 million, from $3.80
million in 1998 to $4.39 million in 1999. This increase is primarily attributed
to the restructuring charge of approximately $.9 million incurred in September
1999 as a result of the EPA Suspension (See Note D regarding discussion of the
"Restructuring" in the Company's Consolidated Financial Statements). The
restructuring charges were off-set by cost savings in general and administrative
expenses in the fourth quarter by implementation of the Restructuring Plan.
RESTRUCTURING CHARGE. Following the EPA suspension, the Company
initiated a restructuring plan ("Restructuring Plan") to reduce operating costs
and gain efficiencies through sale, downsizing and closure of regional offices.
In September 1999, under the Restructuring Plan, the Company sold substantially
all its assets in the Mobile and Jackson regions for proceeds totaling $0.5
million. Also under the Restructuring Plan, in October 1999, the Company closed
its regional office located in New Orleans and Houston. As a result, the Company
recorded a total restructuring charge of approximately $0.9 million, including a
$0.3 million non-cash charge for loss on the sale of the regional offices.
OTHER INCOME (EXPENSE). Other income/expense decreased $9.4 million,
from $8.95 million of income in 1998 to $.45 million of net expense in 1999. The
decrease in attributed to the non-recurring gain of $10.2 million on the sale of
WQM in 1998. In addition, interest expense decreased approximately $.42 million,
from $.89 million in 1998 to $.47 million in 1999. This reduction is attributed
to the Company reducing its line of credit and other debt during 1999.
INCOME TAX EXPENSE (BENEFIT). During 1999 the Company did not record an
income tax expense or benefit due to the net loss. During 1998 the Company
recorded income tax expense of $0.2 million. The 1998 income tax expense is
related to the gain on sale of WQM.
NET INCOME (LOSS). Net loss for the year ended December 31, 1999 was
$3.18 million compared to a net income of $.5 million for 1998. As discussed
above, the income which was generated in 1998 was primarily the result of a
$10.2 million gain from the sale of WQM, off-set by project cost overruns of
$2.2 million, non-recurring general and administrative charges of $3.7 million,
and the additional interest expense of approximately $.4 million.
1998 COMPARED TO 1997
PROJECT REVENUE. Project revenues increased 22.8% from $54.2 million in
1997 to $66.5 million in 1998. The increase was primarily due to (i) an increase
of $11.9 million in revenue provided by EPA contracts (see table below); (ii) an
increase of $2.0 million in revenue provided by WQM; and (iii) an increase
resulting from the acquisition of H20 in January 1998 providing for revenues of
approximately $1.5 million in 1998. See also, Item 1. Business - "The Company"
and Note E to Company's
20
<PAGE> 22
Consolidated Financial Statements.
The following table sets forth the percentages of the Company's
revenues attributable to the EPA vs. non-EPA public and private sector
customers:
<TABLE>
<CAPTION>
Year Ended December 31,
===================================================================================
1998 1997 1996
------------------------- ------------------------- -------------------------
<S> <C> <C> <C> <C> <C> <C>
Non-EPA 33,569,412 50.5% $33,125,032 61.2% $44,065,990 80.2%
EPA 32,927,870 49.5% $21,044,721 38.8% $10,852,530 19.8%
----------- ----------- ----------- ----------- ----------- -----------
Total 66,497,282 100.0% $54,169,753 100.0% $54,918,520 100.0%
=========== =========== =========== =========== =========== ===========
</TABLE>
DIRECT COSTS. Direct costs increased from 79.9% of revenue in 1997 to
87.7% of revenue in 1998. The increase was primarily due to cost overruns
incurred on the following projects: (i) State of Washington resulting in a
negative margin of $0.9 million or 1.3% of revenue in 1998 compared to a
negative margin of $0.1 million or 0.1% of revenue in 1997; (ii) Monfort of
Colorado, Inc. resulting in a negative margin of $1.3 million or 2.0% of revenue
in 1998 compared to a margin of $0.7 million or 1.3% of revenue in 1997; (iii)
various revenue adjustments related to closure of certain branch offices
resulting in a negative margin of $0.8 million or 1.3% of revenue in 1998
compared to no adjustment in 1997; and (iv) other low margin projects finalized
in 1998.
INDIRECT COSTS. Indirect costs increased $1.3 million from $5.6 million
in 1997 to $6.9 million in 1998. Indirect costs as a percentage of revenue
remained constant at 10.4% in 1997 and 1998. Therefore, the increase in indirect
costs was directly attributable to the increase in revenue described above.
SELLING EXPENSE. Selling expense remained relatively constant from 1997
to 1998, while revenue increased 22.8%. Selling expense decreased to 3.0% of
revenue 1998 from 3.8% of revenue in 1997.
GENERAL AND ADMINISTRATIVE EXPENSE. General and administrative expense
increased $4.5 million from $3.0 million in 1997 to $7.5 million in 1998. The
increase was due primarily to a non-recurring adjustment of $2.4 million to
write off amounts due under contracts. See also Item 3. Legal Proceedings.
Additionally, non-recurring adjustments of $1.3 million were recorded in 1998 to
provide allowances for accounts receivable, contracts in process, and
disallowance of cost incurred on government contracts.
OTHER INCOME (EXPENSE). Other income increased $9.5 million from $0.6
million other expense in 1997 to $8.9 million other income in 1998. The increase
was due primarily to a non-recurring gain of $10.2 million on the sale of WQM in
December 1998. See also Item 1. Business - "The Company" and Note E to Company's
Consolidated Financial Statements.
INCOME TAX EXPENSE (BENEFIT). During 1998 the Company recorded income
tax expense of $0.2 million compared to an income tax benefit of $0.1 million in
1997. The 1998 income tax expense is related to the gain on sale of WQM. The
1997 benefit was based on an estimate of 1995 carryback benefits available.
NET INCOME (LOSS). Net income for the year ended December 31, 1998 was
$0.5 million compared to a net loss of $0.3 million in the year ended December
31, 1997. As discussed above, the improvement in net income was due primarily to
the non-recurring gain on sale of business of $10.2 million offset by a decrease
in gross profit of $3.9 million and increase in general and administrative
expense of $4.5 million.
21
<PAGE> 23
Liquidity and Capital Resources
The Company's sources of liquidity and capital resources historically
have been net cash provided by operating activities, funds available under its
financing arrangements, proceeds from offerings of equity securities, and loans
from shareholders. In the past, these sources have been sufficient to meet its
needs and finance the Company's business. The Company can give no assurance that
the historical sources of liquidity and capital resources will be available for
future development and acquisitions, and it may be required to seek alternative
financing sources not necessarily favorable to the Company. Other sources of
liquidity included the sale of WQM in which proceeds for $11.3 million were
received in 1998, with an additional payment of $1.3 million in January 1999.
Additionally, the Company has entered into letters of intent for the sale of the
EPA contract and related Edmond, Washington office and the sale of non-EPA
federal contracts, its non-RFI commercial contracts and related Tustin,
California office for amounts approximating $3.4 million in gross proceeds.
These transactions are expected to close in the second quarter of 2000, subject
to novation of the EPA and federal contracts, normal closing conditions
including the continued accuracy of representation and warranties, no material
adverse changes, and the receipt of necessary consents from other parties. The
net proceeds will be used for working capital requirements and further expansion
into the maintenance and construction of waste/water treatment facilities
through either direct investment or through possible industry acquisitions. The
Company's future growth will be dependent upon expansion into the maintenance
and construction of waste/water treatment facilities, optimizing margins on its
EPA and non-EPA environmental remediation projects, marketing, and its ability
to obtain financing at favorable terms.
In January 2000, the Company satisfied the repayment terms of its line
of credit with the National Bank of Canada, which has now released all claims
against the Company. The Company is currently exploring new financing
arrangements; however, due to the recent EPA Suspension and continued Office of
Inspector General's investigation, the Company can give no assurance that it
will be able to obtain financing at favorable terms.
Management believes that it will be successful in obtaining alternate
sources of financing and that future cash flows from operations, the sale of the
Tustin, California or Edmond, Washington offices and related EPA and Non-EPA
federal contracts, and the funds available under new financing arrangements,
will be sufficient to fund the Company's immediate needs for working capital.
However, there can be no assurance that alternate financing sources can be
successfully negotiated, which if not obtained, could have a material effect on
the Company's financial position, operating activities and liquidity.
The Company's financial position declined in 1999 as a result of the
continued losses from operations in 1998 and 1999. The Company's working capital
declined $4.3 million from $7.8 million as of December 31, 1998 to $3.5 million
as of December 31, 1999. The change in working capital results from a decrease
in current assets of $15.5 million compared to a decrease in current liabilities
of $11.2 million. The decrease in current assets results from a continued
reduction in combined receivables of $14.0 million and a decrease in other
current assets of $1.5 million resulting from the collection of $1.3 million on
the sale of WQM. The decrease in current liabilities results primarily from a
reduction of cash overdrafts, accounts payable, taxes payable and accrued
liabilities of $10.3 million and the reduction of short-term debt of $.9
million.
The Company's total obligations decreased by $11.3 million from $19.1
million at December 31, 1998 to $7.8 million at December 31, 1999. However, the
Company's shareholders equity declined by $5.1 million as a result of the
redemption of the convertible preferred stock for $1.9 million and the $3.2
million loss for the year. The Company has continued to reduce its combined
receivables by $14.0
22
<PAGE> 24
million, from $21.9 million or 120 days sales outstanding at December 31, 1998
to $7.9 million or 66 days sales outstanding at December 31, 1999.
The Company's cash and cash equivalents increased $480,000, from
$25,000 at December 31, 1998 to $505,000 at December 31, 1999. The increase in
cash and cash equivalents results from cash provided from operating activities
and investing activities of $5.6 million and $0.3 million, respectively. The
cash provided by operating and investing activities is offset by cash used in
financing activities of $5.4 million. Cash provided by operating activities of
$5.6 million results primarily from a decrease in combined receivables of $14.0
million. This increase in cash is offset by a reduction of accounts payable and
accrued expenses of $8.4 million. Cash provided by investing activities of $0.3
million results from the receipt of $1.2 million additional proceeds on the sale
of WQM offset by $0.9 million in net equipment additions during 1999. Cash used
in financing activities of $5.4 million results primarily from a payment of $1.9
million for the redemption of the Company's preferred stock (see also Note K to
the Company's Consolidated Financial Statements), a reduction of $1.8 million in
the Company's cash overdraft and payments on the Company's debt of $1.7 million.
DEBT FINANCING. Beginning in January 1995, the Company borrowed funds
from related parties. As of January 1999, all funds had been repaid, and the
Company does not anticipate borrowing from these sources in the future.
In January 2000, the Company satisfied its repayment terms with the
National Bank of Canada, which has now released all claims against the Company.
The Company is currently exploring new financing arrangements. However, due to
the recent EPA Suspension and continued Office of Inspector General's
investigation, the Company can give no assurance that it will be able to obtain
financing at favorable terms.
The Company has also financed vehicles and equipment using long term
capital leases from various entities. As of December 31, 1999, the combined
balance due on these leases was $0.3 million.
In June 1999, the Company financed its insurance premiums over the next
two years by issuing a subordinated note, with monthly payments of $41,374
through June 2000, changing to $10,021 thereafter until maturity. The note pays
interest of 6.55% and matures on April 1, 2002.
EQUITY FINANCING. In connection with the Company's initial public
offering in July 1995, the Company issued 120,000 warrants to the underwriters
as part of the Underwriters Agreement. Each warrant is convertible into one
share of Common Stock at an exercise price of $6.00 subject to certain purchase
price adjustments. The warrants may be exercised in whole or in part at any time
until the expiration date of July 25, 2000. All of the warrants remain
outstanding at December 31, 1999.
In December, 1996, the Company commenced a Private Placement Offering
of Common Stock. This offering was completed in January 1997, and resulted in
the issuance of 0.7 million shares with net proceeds to the Company totaling
$2.0 million. The shares issued pursuant to this offering were classified as
"restricted securities" as such term is defined in Rule 144 of the Securities
Act of 1933. The Company completed an S-3 registration of these shares for
resale which was effective January 7, 1998. In conjunction with the offering,
warrants for an additional 72,925 shares of Common Stock were issued as partial
compensation for underwriting services. These warrants are exercisable at a
price of $3.60 per share for five years from the date of the offering.
In August 1998, the Company completed a private financing, raising $1.9
million of net proceeds in a placement of convertible preferred stock and
warrants. The preferred shares could be converted into shares of the Company's
common stock at a 15 percent discount to the price of the common shares at the
time of conversion with a maximum conversion price of $3.35. An aggregate of
three-year warrants to
23
<PAGE> 25
purchase 35,000 shares of the Company's common stock at a price of $3.00 per
share was also issued. A total of 430 shares of the preferred securities were
converted into 472,803 shares of common stock by the holders. In January 1999,
the Company redeemed the remaining 1,570 preferred shares for $1.9 million in
cash. The warrants issued remain outstanding at December 31, 1999.
In December 1998, the Company sold all of the outstanding stock of WQM
for $12.5 million to AquaSource Services and Technologies, Inc. On the date of
closing, $11.3 million was paid in cash and another $1.3 million was received in
January 1999.
CAPITAL COMMITMENTS. The Company has entered into leases for its
existing facilities with such leases expiring at various dates through 2004.
Monthly rentals currently are approximately $33,689 in the aggregate. Management
anticipates some capital expenditures in 2000 which will be funded from working
capital, term loans and equipment leases.
COMMONS STOCK DIVIDEND POLICY. Since the capitalization of the Company
in 1995, the Company has not paid, and does not currently intend to pay in the
foreseeable future, cash dividends on its Common Stock. Future earnings, if any,
are expected to be retained for the development of the business of the Company.
Year 2000 Compliance
A comprehensive, company-wide, Year 2000 program was initiated in late
1998 to identify and remediate potential Year 2000 problems. The Year 2000
program was implemented over several stages which included assessment, testing,
renovation and validation. The Company incurred approximately $350,000 during
1999, which of approximately $250,000 was capitalized for the purchase of new
software and equipment. Future spending for remaining system remediation and
implementation is currently estimated to be about $25,000.
As of the date of this report, the Company has experienced no
significant problems related to the Year 2000 conversion. After system
verification and testing, all computerized information and project control
systems are operating normally. The performance of EPA and non-EPA customers and
critical suppliers continues without notable change. Production and business
activities are normal at all locations. The Company also has not received any
material complaint regarding any Year 2000 issue related to its services.
However, the Company cannot provide assurance that problems will not arise.
The Company continues to monitor the status of its operations,
suppliers and customers to ensure no significant interruptions.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not Applicable.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Please see pages F-1 through F-27.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
24
<PAGE> 26
PART III
ITEM 10, 11, 12 AND 13. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT;
EXECUTIVE COMPENSATION; SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT; AND CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information required by these Items is incorporated herein by
reference to the Company's definitive Proxy Statement relating to the Annual
Meeting of Shareholders to be held June 1, 2000.
25
<PAGE> 27
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) 1. The following financial statements are filed herewith:
<TABLE>
<CAPTION>
- -------------------------------------------------------------- ---------------
PAGES
- -------------------------------------------------------------- ---------------
<S> <C>
Report of Independent Certified Public Accountants F-1 - F-2
- -------------------------------------------------------------- ---------------
Consolidated Balance Sheets F-3 - F-4
- -------------------------------------------------------------- ---------------
Consolidated Statements of Operations F-5
- -------------------------------------------------------------- ---------------
Consolidated Statements of Stockholders' Equity F-6
- -------------------------------------------------------------- ---------------
Consolidated Statements of Cash Flows F-7 - F-8
- -------------------------------------------------------------- ---------------
Notes to Consolidated Financial Statements F-9 - F-27
- -------------------------------------------------------------- ---------------
</TABLE>
2. Schedules have been omitted because they are not applicable,
are not required or the information required to be set forth
therein is included in the Consolidated Financial Statements
or notes thereto.
3. Exhibits. The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION LOCATION
- ------------ -------------------------------------------------- ---------------------------------------------
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation Incorporated by reference to Exhibit 3.1 to
the Company's Form SB-2 Registration
Statement No. 33-91602
3.2 Bylaws Incorporated by reference to Exhibit 3.2 to
the Company's Form SB-2 Registration
Statement No. 33-91602
10.1 Incentive Stock Option Plan Incorporated by reference to Exhibit 10.1
to the Company's Form SB-2 Registration
Statement No. 33-91602
10.2 Form of Incentive Stock Option Agreement Incorporated by reference to Exhibit 10.2
to the Company's Form SB-2 Registration
Statement No. 33-91602
10.3 Loan Documents Between National Bank of Canada and Incorporated by reference to
the Company Exhibit 10.3 to the Company's
Annual Report on Form 10-K for the year
ended December 31, 1997.
10.4 Amendment to Loan and Security Agreement and Loan Incorporated by reference to
Documents between National Bank of Canada Exhibit 10.4 to the Company's
and the Registrant Annual Report on Form 10-K for the year
ended December 31, 1998.
10..5 Second Amendment to Loan and Security Agreement and Incorporated by reference to
Loan Documents between National Bank of Canada Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the year
ended December 31, 1998.
</TABLE>
26
<PAGE> 28
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION LOCATION
<S> <C> <C>
10.6 Third Amendment to Loan and Security Incorporated by reference to
Agreement and Loan Documents between Exhibit 10.6 to the Company's
National Bank of Canada and the Registrant Annual Report on Form 10-K for the year
ended December 31, 1998.
10.7 Stock Purchase Agreement with AquaSource Services Incorporated by reference to Exhibit 10.1
and Technologies, Inc. to the Company's report on Form 8K dated
December 17, 1998.
10.8 Administrative Agreement between United States Incorporated by reference to Exhibit 10.1
Environmental Protection Agency and the Registrant to Company's Form 10-Q for the nine months
ended September 30, 1999.
10.9 Seventh Amendment to Loan and Security Incorporated by reference to Exhibit 10.2
Agreement and Loan Documents between to Company's Form 10-Q for the nine
National Bank of Canada and the Registrant months ended September 30, 1999.
10.10 Ninth Amendment to Loan and Security Incorporated by reference to Exhibit 10.3
Agreement and Loan Documents between to Company's Form 10-Q for the nine months
National Bank of Canada and the Registrant ended September 30, 1999.
10.11 Eleventh Amendment to Loan and Security Agreement Incorporated by reference to Exhibit 10.4
and Loan Documents between to Company's Form 10-Q for the nine
National Bank of Canada and the Registrant months ended September 30, 1999.
10.12 Thirteenth Amendment to Loan and Security Incorporated by reference to Exhibit
Agreement and Loan Documents between 10.5 to Company's Form 10-Q for the
National Bank of Canada and the Registrant nine months ended September 30, 1999.
10.13 Fourteenth Amendment to Loan and Security Incorporated by reference to Exhibit
Agreement and Loan Documents between 10.6 to Company's Form 10-Q for the
National Bank of Canada and the Registrant nine months ended September 30, 1999.
10.14 Sixteenth Amendment to Loan and Security Agreement Filed herewith electronically
and Loan Documents between National Bank of Canada
and the Registrant
10.15 Asset Purchase and Assignment Agreement by and Filed herewith electronically
between the Company and IT Corporation
10.16 Asset Purchase and Assignment Agreement by and Filed herewith electronically
between the Company and CAPE Environmental
Management, Inc.
10.17 Lease Agreement by and between the Company and Sky Filed herewith electronically
Harbor Associates Limited Partnership
21 Subsidiaries of the Registrant Filed herewith electronically
23 Consent of Grant Thornton LLP Filed herewith electronically
</TABLE>
27
<PAGE> 29
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION LOCATION
<S> <C> <C>
27 Financial Data Schedule Filed herewith electronically
</TABLE>
(b) Reports on Form 8-K.
None.
28
<PAGE> 30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CET ENVIRONMENTAL SERVICES, INC.
Dated: March 24, 2000 By /s/ Steven H. Davis
-------------------
Steven H. Davis
President and Chief Executive Officer
Pursuant to the requirement of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Company and in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/ Steven H. Davis President, March 24, 2000
- ------------------------------------- Chief Executive Officer,
Steven H. Davis Secretary and Director
/s/ Douglas W. Cotton Executive Vice President March 24, 2000
- ------------------------------------- and Director
Douglas W. Cotton
/s/ Craig C. Barto Director March 24, 2000
- -------------------------------------
Craig C. Barto
/s/ George Pratt Director March 24, 2000
- -------------------------------------
George Pratt
/s/ Dale W. Bleck Interim Chief Financial Officer March 24, 2000
- ------------------------------------- and Assistant Secretary
Dale W. Bleck
</TABLE>
29
<PAGE> 31
CET ENVIRONMENTAL SERVICES, INC.
FINANCIAL STATEMENTS AND REPORT OF INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS
December 31, 1999 and 1998
F-1
<PAGE> 32
[GRANT THORNTON LETTERHEAD]
REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Environmental Services, Inc.
We have audited the accompanying consolidated balance sheets of CET
Environmental Services, Inc. as of December 31, 1999, and 1998, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above, present fairly, in
all material respects, the consolidated financial position of CET Environmental
Services, Inc. as of December 31, 1999, and 1998, and the consolidated results
of its operations and its cash flows for each of the three years in the period
then ended, in conformity with generally accepted accounting principles.
/s/ GRANT THORNTON LLP
Denver, Colorado
March 1, 2000
F-2
<PAGE> 33
CET ENVIRONMENTAL SERVICES, INC.
BALANCE SHEETS
December 31,
ASSETS
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
CURRENT ASSETS
Cash $ 504,583 $ 25,192
Accounts receivable, less allowance for
doubtful accounts; $359,648 in 1999 and
$721,857 in 1998 6,086,086 11,781,212
Contracts in process less allowance for doubtful
accounts of $118,907 in 1999 and $284,128 in 1998 1,770,954 10,154,501
Retention receivable 318,883 663,998
Income tax receivable 90,542 --
Due from related party 104,036 124,036
Other receivables 1,612,962 3,371,828
Inventories 73,601 267,491
Prepaid expenses 570,532 281,935
------------ ------------
Total current assets 11,132,179 26,670,193
------------ ------------
EQUIPMENT AND IMPROVEMENTS
Field equipment 3,059,206 3,752,213
Vehicles 890,193 2,009,267
Furniture & fixtures 84,543 100,237
Office equipment 815,278 495,307
Leasehold improvements 49,861 6,300
------------ ------------
4,899,081 6,363,324
Less allowance for depreciation and amortization (2,262,736) (2,883,021)
------------ ------------
Equipment and improvements - net 2,636,345 3,480,303
DEPOSITS 36,656 51,318
------------ ------------
$ 13,805,180 $ 30,201,814
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-3
<PAGE> 34
CET ENVIRONMENTAL SERVICES, INC.
BALANCE SHEETS
December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
1999 1998
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES
Cash overdraft $ 118,348 $ 1,936,741
Accounts payable 4,959,733 11,383,109
Accrued expenses 586,612 709,580
Accrued contract costs 364,573 1,456,850
Accrued payroll and benefits 361,443 846,184
Current obligations under capital leases 119,091 316,798
Income taxes payable -- 158,958
Current portion of long-term debt 290,982 986,405
Line of credit 818,152 1,039,925
------------ ------------
Total current liabilities 7,618,934 18,834,550
OBLIGATIONS UNDER CAPITAL LEASES 25,669 250,784
LONG-TERM DEBT 153,127 --
COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Common stock (no par value) - authorized 20,000,000
shares; 6,284,288 and 6,129,271 shares
issued and outstanding at December 31, 1999 and 1998, respectively 8,671,261 8,539,716
4% convertible preferred stock (no par value) -
authorized 5,000,000 shares; -0- and 1,710
shares issued and outstanding at December 31,
1999 and 1998, respectively -- 1,589,102
Paid-in capital 104,786 574,629
Retained earnings (accumulated deficit) (2,768,597) 413,033
------------ ------------
Total stockholders' equity 6,007,450 11,116,480
------------ ------------
$ 13,805,180 $ 30,201,814
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-4
<PAGE> 35
CET ENVIRONMENTAL SERVICES, INC.
STATEMENTS OF OPERATIONS
Years ended December 31,
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
PROJECT REVENUE $ 43,189,319 $ 66,497,282 $ 54,169,753
PROJECT COSTS
Direct 33,909,701 58,298,144 43,286,506
Indirect 6,219,975 6,902,927 5,645,781
------------ ------------ ------------
40,129,676 65,201,071 48,932,287
------------ ------------ ------------
Gross profit 3,059,643 1,296,211 5,237,466
------------ ------------ ------------
OTHER OPERATING EXPENSES
Selling 1,403,149 1,989,584 2,070,130
General and administrative 3,529,675 7,535,966 3,044,045
Restructuring expense 857,469 -- --
------------ ------------ ------------
5,790,293 9,525,550 5,114,175
------------ ------------ ------------
Operating income (loss) (2,730,650) (8,229,339) 123,291
------------ ------------ ------------
OTHER INCOME (EXPENSE)
Loss on sale of equipment (89,167) -- --
Gain on sale of subsidiary -- 10,154,028 --
Interest expense, net (475,504) (892,213) (704,575)
Other income (expense) 118,564 (310,722) 120,446
------------ ------------ ------------
(446,107) 8,951,093 (584,129)
------------ ------------ ------------
Income (loss) before taxes on income (3,176,757) 721,754 (460,838)
(Benefit) taxes on income -- 183,276 (113,547)
------------ ------------ ------------
NET INCOME (LOSS) $ (3,176,757) $ 538,478 $ (347,291)
============ ============ ============
Weighted average number of
shares outstanding 6,282,346 5,828,537 5,785,264
Earnings (loss) per common share $ (0.51) $ 0.09 $ (0.06)
============ ============ ============
Earnings (loss) per common share--
assuming dilution $ (0.51) $ 0.09 $ (0.06)
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-5
<PAGE> 36
CET ENVIRONMENTAL SERVICES, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Years ended December 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Retained
Common stock Preferred stock earnings Total
----------------------- --------------------- Paid-in (accumulated stockholders'
Shares Amount Shares Amount capital deficit) equity
--------- ----------- ------ ----------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997 5,066,537 $ 6,165,977 -- $ -- $ 555,530 $ 252,466 $ 6,973,973
Shares issued in private
placement 729,248 2,035,662 -- -- -- -- 2,035,662
Exercise of stock options 9,700 33,950 -- -- -- -- 33,950
Issuance of stock options
at exercise price below
market value -- -- -- -- 12,423 -- 12,423
------------
Net (loss) for the year -- -- -- -- -- (347,291) (347,291)
--------- ----------- ------ ----------- --------- ------------ ------------
Balance at December 31, 1997 5,805,485 8,235,589 -- -- 567,953 (94,825) 8,708,717
Exercise of stock options
and other 6,000 14,000 -- -- 6,676 -- 20,676
Issuance of preferred stock -- -- 2,000 1,879,229 -- -- 1,879,229
Conversion of preferred stock 317,786 290,127 (290) (290,127) -- -- --
Dividends on preferred stock -- -- -- -- -- (30,620) (30,620)
Net income for the year -- -- -- -- -- 538,478 538,478
--------- ----------- ------ ----------- --------- ------------ ------------
Balance at December 31, 1998 6,129,271 8,539,716 1,710 1,589,102 574,629 413,033 11,116,480
Conversion of preferred stock 155,017 131,545 (140) (131,545) -- -- --
Redemption of preferred stock -- -- (1,570) (1,457,557) (469,843) -- (1,927,400)
Dividends on preferred stock -- -- -- -- -- (4,873) (4,873)
Net (loss) for the year -- -- -- -- -- (3,176,757) (3,176,757)
--------- ----------- ------ ----------- --------- ------------ ------------
Balance at December 31, 1999 6,284,288 $ 8,671,261 -- $ -- $ 104,786 $ (2,768,597) $ 6,007,450
========= =========== ====== =========== ========= ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-6
<PAGE> 37
CET ENVIRONMENTAL SERVICES, INC.
STATEMENTS OF CASH FLOWS
Years ended December 31,
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (3,176,757) $ 538,478 $ (347,291)
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation and amortization 989,732 1,453,900 1,573,085
Gain on sale of subsidiary -- (10,154,028) --
Restructuring charge 390,324 -- --
Provision for bad debts (527,430) 333,268 104,010
Loss on disposal of equipment 89,167 216,007 --
Employee stock option plan -- 6,676 12,423
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 6,057,335 (3,348,937) (2,692,133)
Decrease (increase) in contracts in process 8,548,768 2,905,590 (6,687,357)
Decrease (increase) in income tax, retention
and other receivables 1,040,654 (1,942,137) 1,037,665
Decrease (increase) in prepaid expenses 347,112 (370,848) 47,686
Decrease (increase) in inventory and deposits 88,159 403,074 (421,828)
Increase (decrease) in accounts payable (6,423,376) 3,152,811 1,215,834
Increase (decrease) in accrued expenses
and income taxes (1,858,944) 619,832 2,199,847
------------ ------------ ------------
Net cash provided by (used in)
operating activities 5,564,744 (6,186,314) (3,958,059)
------------ ------------ ------------
INVESTING ACTIVITIES:
Purchase of equipment (1,190,209) (1,381,135) (462,947)
Proceeds from sale of equipment 251,649 -- --
Proceeds from sale of subsidiary 1,250,000 11,250,000 --
Net purchase of subsidiary -- (803,845) (186,798)
------------ ------------ ------------
Net cash provided by (used in)
investing activities 311,440 9,065,020 (649,745)
------------ ------------ ------------
FINANCING ACTIVITIES:
Bank overdraft (1,818,393) 1,936,741 --
Proceeds from issuance of long-term debt -- -- 1,286,476
Payments on long-term debt (1,178,005) (754,877) (1,475,158)
Payments on capital leases (266,349) (411,359) (327,230)
Net (payments) proceeds from credit line loan (221,773) (5,158,706) 1,997,981
Payment of dividends on preferred stock (4,873) (30,620) --
Proceeds from issuance of preferred stock -- 1,879,229 2,035,662
Proceeds from exercise of stock options -- 14,000 33,950
Proceeds from loans from shareholders -- 500,000 --
Payments on loans from shareholders -- (500,000) (545,000)
Net payments from related party 20,000 -- 58,000
Preferred stock redemption (1,927,400) -- --
</TABLE>
The accompanying notes are an integral part of these statements.
F-7
<PAGE> 38
CET ENVIRONMENTAL SERVICES, INC.
STATEMENTS OF CASH FLOWS
Years ended December 31,
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Payments on subordinated notes payable $ -- $ (671,800) $ --
------------ ------------ ------------
Net cash provided by (used in)
financing activities (5,396,793) (3,197,392) 3,064,681
------------ ------------ ------------
INCREASE (DECREASE) IN CASH 479,391 (318,686) (1,543,123)
Cash at beginning of year 25,192 343,878 1,887,001
------------ ------------ ------------
Cash at end of year $ 504,583 $ 25,192 $ 343,878
============ ============ ============
Supplemental disclosures of cash flow information:
Cash paid during the year
Interest $ 482,707 $ 1,060,211 $ 717,980
Income taxes -- -- --
Noncash investing and financing activities:
Issuance of note payable for financing of
insurance premiums $ 635,709 $ 485,818 $ 301,965
============ ============ ============
Conversion of preferred stock to common $ 131,546 $ 290,127 $ --
============ ============ ============
Transfer of CIP from deposits to fixed assets $ -- $ 368,452 $ --
============ ============ ============
Return of leased equipment $ 215,820 $ -- $ --
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
F-8
<PAGE> 39
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31 1999, 1998 and 1997
NOTE A - ORGANIZATION AND DESCRIPTION OF COMPANY
CET Environmental Services, Inc. (the Company) was incorporated on
February 9, 1988 under the laws of the State of California. On November
29, 1991, Environmental Operations, Inc., purchased 100% of the Company's
outstanding stock from Consolidated Environmental Technologies, Inc. In
August 1992, Environmental Operations, Inc. was merged into CET
Environmental Services, Inc. In August 1997, the Company acquired all of
the outstanding stock of Water Quality Management Corporation (WQM). WQM
was operated as a wholly owned subsidiary of the Company. WQM was sold in
December 1998 (see Note E).
In December 1999, the Company formed a wholly owned subsidiary,
Cleanwater Contracting, Inc. (Cleanwater). Cleanwater had no activity for
1999.
The Company provides a variety of consulting and technical services to
resolve environmental and health risk problems in the air, water and
soil. The Company has developed a broad range of expertise in
non-proprietary technology-based environmental remediation and water
treatment techniques for both the public and private sectors throughout
North America and the Trust Territory of the Pacific Islands.
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash
For purposes of the statement of cash flows, the Company considers all
highly liquid cash investments with an original maturity of three months
or less to be cash.
Contracts
A majority of the Company's revenue is generated from time-and-material
contracts whereby the Company provides services, as prescribed under the
various contracts, for a specified fixed hourly rate for each type of
labor hour and receives reimbursement for material, inventories and
subcontractor costs. Many of the contracts also have a fixed mark-up to
be applied to material, inventories and subcontract costs. In addition,
many of the time and material contracts have a stated maximum contract
price, which cannot be exceeded without an authorized change order.
Revenue is recorded on contracts based upon the labor hours and costs
incurred. Provision for losses on uncompleted contracts are made in the
period in which such losses are determined. Claims are recorded in
revenue when received.
F-9
<PAGE> 40
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Contracts (Continued)
Contracts in process consist of the accumulated unbilled labor at
contracted rates, material, subcontractor costs and other direct and
indirect job costs and award fees related to projects in process.
Inventories
Inventories consist of various supplies and materials used in the
performance of the services related to the Company's projects and are
stated at the lower of cost or market.
Equipment and Improvements
Equipment and improvements are recorded at cost. Depreciation and
amortization are provided on a straight-line method over the estimated
useful lives of the respective assets, usually between three to seven
years. Leasehold improvements are amortized over the lives of the
respective leases or the service lives of the improvements, whichever is
shorter.
Income Taxes
The Company accounts for income taxes on the liability method, which
requires that deferred tax assets and liabilities be recorded for expense
and income items that are recognized in different periods for financial
and income tax reporting purposes.
Estimated Fair Value Information
Statement of Financial Accounting Standards (SFAS) No. 107, Disclosure
about Fair Value of Financial Instruments, requires disclosure of the
estimated fair value of an entity's financial instrument assets and
liabilities, as defined, regardless of whether recognized in the
financial statements of the reporting entity. The fair value information
does not purport to represent the aggregate net fair value of the
Company.
The following methods and assumptions were used to estimate the fair
value of each class of financial instruments for which it is practicable
to estimate that value:
Cash and other receivables: The carrying amount approximates fair value
due to the short-term maturity.
Due from related party: The carrying amount approximates the fair value
because it is due on demand.
F-10
<PAGE> 41
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Estimated Fair Value Information (Continued)
Note Payable - Line of Credit: The carrying amount approximates fair
value as the line of credit has a variable interest rate which is
considered to approximate the market rate.
Long-Term Debt / Obligations Under Capital Leases: The carrying value
approximates fair value as the interest rate at December 31, 1999 and
1998 is considered to approximate the market rate.
Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities,
the disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those
estimates.
Impairment of Long-lived Assets
In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards 121, Accounting for the Impairment of
Long-lived Assets and for Long-lived Assets to be Disposed of (SFAS 121).
SFAS 121 requires that long-lived assets and certain identifiable
intangibles held and used by an entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. If the sum of the expected
future cash flows (undiscounted and without interest) is less than the
carrying amount of the asset, an impairment loss is recognized.
Measurement of that loss would be based on the fair value of the asset.
SFAS 121 also generally requires that long-lived assets and certain
identifiable intangibles to be disposed of be reported at the lower of
the carrying amount or the fair value, less cost to sell. SFAS 121 is
effective for the Company's 1997 fiscal year-end. Any impairment
provisions recognized in accordance with SFAS 121 are permanent and may
not be restored in the future. No impairment expense was recognized in
the years ended December 31, 1999, 1998 and 1997.
Earnings per Share
The Financial Accounting Standards Board recently issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share (SFAS 128).
SFAS 128 requires the presentation of basic earnings per share (EPS) and,
for companies with potentially dilutive securities such as convertible
debt, options and warrants, diluted EPS.
F-11
<PAGE> 42
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Earnings per Share (Continued)
The following table sets forth the computation of basic and diluted
earnings per share (in thousands):
<TABLE>
<CAPTION>
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Numerator
Net income (loss) $(3,177) $ 539 $ (347)
Preferred stock dividends (5) (31) --
------- ------- -------
Numerator for basic earnings per share -
income available to common stockholders (3,182) 508 (347)
Effect of dilutive securities:
Preferred stock dividends -- -- --
------- ------- -------
Numerator for diluted earnings per share -
income available to common stockholders
after assumed conversions $(3,182) $ 508 $ (347)
======= ======= =======
Denominator:
Denominator for basic earnings per share -
weighted average shares outstanding 6,282 5,829 5,785
Effect of dilutive securities:
Warrants -- 24 --
Convertible preferred stock -- -- --
Stock options -- 22 --
------- ------- -------
Dilutive potential common shares -- 46 --
Denominator for diluted earnings per share -
adjusted weighted average share and
assumed conversion 6,282 5,875 5,785
======= ======= =======
Basic earnings (loss) per share $ (0.51) $ 0.09 $ (0.06)
======= ======= =======
Diluted earnings (loss) per share $ (0.51) $ 0.09 $ (0.06)
======= ======= =======
</TABLE>
F-12
<PAGE> 43
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In 1999 and 1997, basic earnings per share data was computed by dividing
net loss, by weighted average number of common shares outstanding during
the period. Diluted earnings per share computations do not give effect to
potentially dilutive securities including stock options and warrants as
their effect would have been anti-dilutive.
In 1998, basic earnings per share data was computed by dividing net
income, less preferred stock dividends, by the weighted average number of
common shares outstanding during the period. Diluted earnings per share
were adjusted for the assumed conversion of potentially dilutive
securities including stock options and warrants to purchase common stock.
However, dilutive earnings per share computation does not give effect to
the assumed conversion of convertible preferred stock as its effect would
have been anti-dilutive.
Reclassifications
Certain financial statement reclassifications have been made in 1998 and
1997 to conform to presentations used in 1999.
NOTE C - EPA SUSPENSION AND SUBSEQUENT LIFTING OF SUSPENSION
On August 10, 1999, the Company received a notice of suspension, pending
further review, from the Environmental Protection Agency (EPA). The
suspension resulted from EPA allegations that the Company engaged in
intentional misconduct with respect to billing for services provided
under various EPA contracts. Under the suspension, the Company was
prohibited from receiving additional government contracts under the
provisions of 48 C.F.R. Subpart 9.4 of the Federal Acquisitions
Regulations. The suspension did however allow the Company to continue
performance on existing government contracts.
In November 1999, following consideration of certain information provided
by the Company to the EPA, the EPA's suspension was terminated and an
Administrative Agreement (Administrative Agreement) between the EPA and
the Company was executed. Upon execution of the Administrative Agreement,
the Company became immediately eligible to bid for, receive, and perform
any federal contract or subcontract, or participate in any assistance,
loan or benefit without restriction. In the Administrative Agreement, the
Company agreed to cooperate in full with further investigations into the
EPA allegations including access to records, availability of Company
personnel, certain reporting requirements, audit of EPA billing prior to
submission and certain restrictions of Company assets without
notification to the EPA. In addition, the Administrative Agreement
provides for a financial reserve of $700,000. Management has been advised
that this reserve relates to the resolution of claims filed against the
F-13
<PAGE> 44
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE C - EPA SUSPENSION AND SUBSEQUENT LIFTING OF SUSPENSION (CONTINUED)
Company related to the Company's Subcontractor Agreement with
Environmental Chemical Corporation (ECC) in which work was performed
under an EPA contract. The financial reserve shall be established by
funds withheld by the EPA from current and future EPA invoices, estimated
base fees and determined award fees. The Company had accrued sufficient
reserves for these claims at December 31, 1998, in accordance with normal
operating procedures of the Subcontractor Agreement for work performed on
the EPA contract during 1998 (see Note R).
In certain circumstances of non-compliance, the EPA has the right under
the Administrative Agreement to terminate the agreement and reinstate the
Company's suspension. In addition, as defined in the Administrative
Agreement, in the case of misconduct by the Company during the EPA's
continued investigation, the EPA may immediately terminate EPA contracts,
subcontracts or further award fees. EPA revenue represents approximately
60%, 50% and 39%, respectively, of the Company's revenue for the years
ended December 31, 1999, 1998 and 1997.
Following the notice of suspension, the Company initiated a Restructuring
Plan, which downsized its operations as a decline in revenues occurred.
The Restructuring Plan includes the sale, downsizing and closure of
certain regional offices. Following completion of the Restructuring Plan,
the Company will maintain offices in Denver, Colorado, Edmond,
Washington, Tustin, California and San Antonio, Texas.
After review of available information and consultation with its legal
counsel, management believes that the allegations brought against the
Company did not warrant suspension. Additionally management intends to
cooperate in full but also vigorously defend itself in the EPA's further
investigation into the allegations. However, there can be no assurance
that further suspension will not occur or that the Company will prevail
in this matter. If further suspension occurs, it will have a material
effect on the Company's financial position, results of operations and
liquidity.
NOTE D - RESTRUCTURING
In August 1999, following the EPA suspension discussed in Note C, the
Company initiated a Restructuring Plan to reduce operating costs and gain
efficiencies through the sale, downsizing and closure of regional
offices. Under the Restructuring Plan, the Company sold substantially all
its assets in the Mobile and Jackson regions and closed its regional
offices located in New Orleans and Houston. The Company recorded a
restructuring charge of $857,469 in September 1999, consisting of
facility reduction costs and asset disposals of $390,324, costs of
$226,599 to fulfill and buy out existing lease commitments and personnel
reduction costs of $240,546.
F-14
<PAGE> 45
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE E - SALE OF SUBSIDIARY
Effective December 1, 1998, the Company sold all of the outstanding
shares of its subsidiary, Water Quality Management Corporation (WQM) for
a sale price of $12.5 million plus an adjustment for net working capital
of WQM at November 30, 1998. The Company recorded a gain on the sale of
$10.2 million in 1998. The Company received $11.3 million at the date of
sale and in the first quarter of 1999 received an additional $1.25
million. As of December 31, 1999, the Company has included in other
receivables approximately $1.5 million remaining from amounts due on the
sale of WQM. See Note S.
NOTE F - PENDING ASSET DISPOSITIONS
In October 1999, the Company entered into an Asset Purchase and
Assignment Agreement (the Purchase Agreement) with IT Corporation to sell
or assign substantially all of the assets in the Company's Seattle
Regional office for sales price of $1.3 million. The Purchase Agreement
provides for the assignment of the Company's remaining EPA contract dated
January 9, 1997 (the EPA Contract), the sale of certain assets, the
assumption of certain liabilities and obligations used in, directly
associated with and necessary in the performance of the EPA Contract.
Closing of the Purchase Agreement is contingent upon the execution of a
novation agreement by and between the Company, IT Corporation and the EPA
consenting to the assignment of the EPA Contract. Upon novation of the
EPA contract, CET would receive no further EPA revenue. However, there
can be no assurance that approval of the novation will be received from
the EPA or that the subsequent closing of the Purchase Agreement will
occur.
In December 1999, the Company entered into an Asset Purchase Agreement
(the CAPE Purchase Agreement) with Cape Environmental Management, Inc. to
sell or assign substantially all of the assets in the Company's Tustin,
California operations for a sales price of $2.1 million. The CAPE
Purchase Agreement provides for the assignment of certain Federal and
Commercial contracts, the sale of certain assets and assumption of
certain liabilities directly associated with the performance of the
contracts.
NOTE G - SIGNIFICANT CUSTOMERS
A significant portion of the Company's business is from contracts with
the EPA. A new contract was awarded by the EPA in January 1997, with
estimated maximum revenue of $292 million over five years. As of December
31 1999 and 1998, the net balance of accounts receivable from the EPA was
$2,393,956 and $8,359,389, respectively. Revenue from the EPA in 1999,
1998, and 1997
F-15
<PAGE> 46
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE G - SIGNIFICANT CUSTOMERS (CONTINUED)
amounted to approximately $26 million, $30 million, and $21 million, or
60%, 50% and 39% of annual gross revenues, respectively.
The Company also performs work for the U.S. Army Corps of Engineers and
other governmental agencies that accounted for 8%, 10% and 7% of revenue
in 1999, 1998, and 1997, respectively.
In August of 1999, the Company secured a new commercial account, which
accounted for 5% of revenue in 1999.
Contracts in process consist of the following at December 31,:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Government - EPA contracts $ 1,543,442 $ 1,971,002
Non-EPA contracts 227,512 8,183,499
----------- -----------
Total $ 1,770,954 $10,154,501
=========== ===========
</TABLE>
The EPA awards the Company an award fee for work performed based upon a
percentage of sub-contract and material costs incurred plus a percentage
of program management fees billed.
NOTE H - OTHER EQUIPMENT DISPOSALS
Additional equipment dispositions and write-offs, not related to the
Restructuring Plan noted in Note D above, consisted of $23,810 of net
equipment disposals for cash proceeds of $2,254. The Company recorded a
loss of $21,556 on the disposals plus an additional loss of $67,611 for
other equipment write-offs.
NOTE I - CAPITAL LEASES
Vehicles and equipment recorded under capital leases consist of the
following at December 31:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Vehicles $ 668,053 $ 1,363,960
Equipment 32,736 202,123
----------- -----------
700,789 1,566,083
Less accumulated depreciation (501,934) (751,693)
----------- -----------
Total $ 198,855 $ 814,390
=========== ===========
</TABLE>
F-16
<PAGE> 47
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE I - CAPITAL LEASES (CONTINUED)
The following is a schedule by year of the future minimum lease payments
under capital leases together with the present value of the net minimum
lease payments as of December 31, 1999:
<TABLE>
<S> <C>
2000 $ 135,707
2001 29,273
---------
Total minimum lease payments 164,980
Less amounts representing estimated
executory costs (taxes) (10,195)
---------
Net minimum lease payments 154,785
Less amount representing interest (10,025)
---------
Present value of net minimum lease payments $ 144,760
=========
Current portion $ 119,091
Non-current portion 25,669
---------
$ 144,760
=========
</TABLE>
NOTE J - RELATED PARTY TRANSACTIONS
The Company, from time to time, borrows funds on a short-term basis from
affiliates of the Company or from a trust fund of a relative of the
President. In 1997, the Company borrowed $671,800, from relatives of
Steven H. Davis, President, pursuant to one-year subordinated notes,
which bear interest at the rate of 10% per annum. The Company repaid
these notes in December 1998. Interest expense attributable to these
related party borrowings amounted to $-0-, $95,761, and $73,544 for 1999,
1998, and 1997, respectively.
A director and 11.5% owner of the Company is a 50% owner in Signal Hill
Petroleum, Inc., Paramount Petroleum Corp. and Fletcher Oil. The Company
provided services to these companies during the years ended December 31,
1999, 1998, and 1997 for fees amounting to approximately $39,003,
$273,000, and $835,000, respectively.
In 1997, the Company made advances to a former officer and director of
the Company. The balance due was $104,036 and $124,036 at December 31,
1999 and 1998, respectively. Interest is payable monthly at 10% per
annum, and principal is due on demand.
F-17
<PAGE> 48
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE K - LINE OF CREDIT AND LONG-TERM DEBT
In May 1997, the Company entered into a financing agreement (the
Agreement) with the National Bank of Canada. The Agreement provided a
line of credit up to $9 million, including a $500,000 stand-by letter of
credit to the Company based upon a percentage (80%) of eligible
receivables (as defined in the loan agreement). In addition, the Company
borrowed $1 million from the Bank under a term loan. Originally, interest
under the Agreement and the term loan was payable monthly at the Bank's
Reference Rate plus .25%.
In January 1999, the Company reduced the maximum available under this
financing Agreement to $7.5 million comprised of a line of credit of
$6.75 million and an equipment term loan of $750,000. The Agreement had
an expiration date of May 30, 1999 upon which amounts outstanding under
the line of credit and term loan were due and payable.
Pursuant to subsequent amendments to the Agreement, the maturity date of
the Agreement was extended to January 28, 2000 combined with certain
repayments due weekly until maturity.
As of December 31, 1999, the Company's remaining debt under its Agreement
with National Bank of Canada consisted of $818,152 outstanding under its
line of credit. Beginning September 1, 1999 interest is payable under the
Agreement at Bank's Reference Rate plus 2% (10.5% at December 31, 1999).
On January 27, 2000, the Company completed the terms of repayment under
the Agreement. The National Bank of Canada has now released all claims
against the Company.
Long-term debt consists of the following at December 31:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Note payable for annual insurance premium, interest at
6.25%, with monthly payments of $46,989 due June
30, 1999 $ -- $236,405
Note payable for annual insurance premium, interest at
6.55%, with monthly payments of $41,374 through
June 2000, changing to $10,021 thereafter until maturity,
balance due April 1, 2002 444,109 --
</TABLE>
F-18
<PAGE> 49
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE K - LINE OF CREDIT AND LONG-TERM DEBT (CONTINUED)
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Note payable to a bank, collateralized by equipment,
payable in monthly installments of $16,667 including
interest at 9%, balance due May 30, 1999 -- 750,000
-------- --------
444,109 986,405
Less current portion 290,982 986,405
-------- --------
$153,127 $ --
======== ========
</TABLE>
NOTE L - STOCKHOLDERS' EQUITY
In connection with the Company's initial public offering in July 1995,
the Company issued 120,000 warrants to the underwriters as part of the
Underwriters Agreement. Each warrant is convertible into one share of
Common Stock at an exercise price of $6.00 subject to certain purchase
price adjustments. The warrants may be issued in whole or in part at any
time until the expiration date of July 25, 2000. All the warrants remain
outstanding at December 31, 1999.
In January 1997, the Company completed a private offering of 729,248
shares of its common stock. The net proceeds to the Company from this
offering were approximately $2,035,000. In connection with this offering,
the Company issued warrants to the representatives of the underwriters in
this offering to collectively purchase up to 10% of the number of shares
sold in the offering of the Company's common stock. The purchase price of
such warrants was $100, and the exercise price under such warrants is
$3.60 per share. The 72,925 warrants issued may be exercised in whole or
in part at any time or from time to time until the expiration date of
December 31, 2001.
The Company also issued warrants to purchase 100,000 shares of common
stock at $4.25 per share to a management services firm as consideration
for its assistance on the private offering. The warrants could be
exercised from July 1, 1998 through December 31, 1999. These warrants
were considered stock issuance costs, with a value of approximately
$235,000 based on the fair value at the grant date as required by
Financial Accounting Standards 123. There were no conversions, and the
warrants expired in full on December 31, 1999.
F-19
<PAGE> 50
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE L - STOCKHOLDERS' EQUITY (CONTINUED)
In July 1998, the Company completed a private placement of 2,000 shares
of 4% convertible preferred stock (the Preferred Stock). The net proceeds
were approximately $1,879,000. The Preferred Stock was convertible into
shares of common stock based on the stated value of $1,000 per share of
Preferred Stock divided by conversion price on the conversion date. The
conversion price was equal to 85% of the lowest closing price of the
common stock during the six days immediately preceding the conversion
date, not to exceed $3.35. A total of 290 shares of the Preferred Stock
were converted into 317,786 shares of common stock during 1998, and a
total of 140 shares of Preferred Stock were converted into 155,017 shares
of common stock in 1999.
The holders of 4% convertible preferred stock were entitled to receive
dividends when declared by the Board of Directors, payable in cash or
common stock of $40 per share. Such dividends were payable in quarterly
installments on March 31, June 30, September 30 and December 31 of each
year commencing September 30, 1998.
In connection with this offering, the Company issued warrants to the
representatives of the underwriters in this offering to purchase up to
35,000 shares of the Company's common stock at $3.00 per share. The
warrants may be exercised during the period commencing July 24, 1999 and
ending on December 31, 2001.
In January 1999, the Company redeemed the remaining shares of Preferred
Stock for $1,927,400 plus $4,873 of unpaid dividends through the date of
redemption. The warrants issued in connection with the preferred stock
remain outstanding.
NOTE M - PROFIT SHARING AND 401(K) PLAN
The Company maintains a Profit Sharing and a 401(k) Plan covering certain
qualified employees, which includes employer participation in accordance
with the provisions of Section 401(k) of the Internal Revenue Code. The
Plan allows participants to make pretax contributions and the Company is
required to match 25% of the first 6% of all elective deferrals. The
profit sharing portion of the Plan is discretionary and noncontributory.
All amounts contributed to the plan are deposited into a trust fund
administered by an independent trustee.
F-20
<PAGE> 51
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE M - PROFIT SHARING AND 401(K) PLAN (CONTINUED)
The Company's matching 401(k) contributions required by the 401(k) plan
were $79,289, $82,103, and $65,206 for the years ended December 31, 1999,
1998, and 1997, respectively. The Company has not made any discretionary
contributions under the profit sharing portion of the Plan.
NOTE N - STOCK OPTIONS
On March 1, 1995, the Company adopted an Incentive Stock Option Plan (the
Plan) for key personnel. A total of 550,000 shares of the Company's
common stock are reserved for issuance pursuant to the exercise of stock
options (the Options) which may be granted to full-time employees,
including officers and directors who are also employees of the Company.
The Plan is administered by the Board of Directors. In addition to
determining who will be granted Options, the Board of Directors has the
authority and discretion to determine when Options will be granted and
the number of Options to be granted. The Board of Directors may grant
Options intended to qualify for special treatment under the Internal
Revenue Code of 1986, as amended (Incentive Stock Options) and may
determine when each Option becomes exercisable, the duration of the
exercise period for Options and the form of the instruments evidencing
Options granted under the Plan.
The maximum aggregate fair market value (determined as of the date of
grant) of the shares as to which the Incentive Stock Options become
exercisable for the first time during any calendar year may not exceed
$100,000. The Plan provides that the purchase price per share for each
Incentive Stock Option on the date of grant may not be less than 100
percent of the fair market value of the Company's common stock on the
date of grant. However, any Option granted under the Plan to a person
owning more than 10 percent of the Company's common stock shall be at a
price of at least 110 percent of such fair market value.
The Plan is accounted for under APB Opinion 25 and related
interpretations. The Options generally have a term of 10 years when
issued and vest over three to five years. Had compensation cost for the
Plan been determined based on the fair value of the Options at the grant
date consistent with the method of Statement of Financial Accounting
Standards 123, Accounting for Stock-Based Compensation, the Company's net
income (loss) and earnings (loss) per common share would have been:
F-21
<PAGE> 52
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE N - STOCK OPTIONS (CONTINUED)
<TABLE>
<CAPTION>
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Net income (loss)
As reported $ (3,176,757) $ 538,478 $ (347,291)
Pro forma (3,236,694) 454,233 (495,586)
Earnings (loss) per common share
As reported $ (.51) $ 0.09 $ (0.06)
Pro forma (.52) 0.08 (0.09)
</TABLE>
The fair value of each option grant is estimated on the date of grant
using the Black-Scholes options-pricing model with the following
weighted-average assumptions for grants used in 1999, 1998 and 1997: no
expected dividends; expected volatility of 74.5%; risk-free interest rate
of 6.0% to 8%; and expected lives of 10 years.
<TABLE>
<CAPTION>
Average price
Shares per share
-------- -------------
<S> <C> <C>
Outstanding at January 1, 1997 214,000 $5.60
Granted 96,900 7.00
Exercised (9,700) 3.50
Canceled (70,400) 9.04
-------- -----
Outstanding at December 31, 1997 230,800 5.10
-------- -----
Total exercisable at December 31, 1997 80,375 $4.27
======== =====
Outstanding at January 1, 1998 230,800 $5.10
Granted -- --
Exercised (4,000) 3.50
Canceled (114,700) 4.45
-------- -----
Outstanding at December 31, 1998 112,100 5.08
-------- -----
Total exercisable at December 31, 1998 51,950 $4.75
======== =====
</TABLE>
F-22
<PAGE> 53
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE N - STOCK OPTIONS (CONTINUED)
<TABLE>
<CAPTION>
Average price
Shares per share
-------- -------------
<S> <C> <C>
Outstanding at January 1, 1999 112,100 $5.08
Granted 220,500 1.70
Exercised -- --
Canceled (138,000) 4.10
-------- -----
Outstanding at December 31, 1999 194,600 1.98
-------- -----
Total exercisable at December 31, 1999 56,800 $2.46
======== =====
</TABLE>
<TABLE>
<CAPTION>
Weighted
average
Range Options Proceeds exercise price
----- ------- -------- --------------
<S> <C> <C> <C> <C>
Exercisable at
December 31, 1999 $1.31 - 3.50 56,800 $128,255 $2.46
</TABLE>
The following information applies to options outstanding at December 31,
1999:
<TABLE>
<CAPTION>
Weighted average
Range of Options Weighted average Remaining
exercisable prices outstanding exercise price contractual life
- ------------------ ----------- ------------------- ----------------
<S> <C> <C> <C>
$1.31 - 3.50 194,600 $ 1.98 7.9 years
</TABLE>
In May 1995, options for 181,000 shares of common stock were granted
under the Plan of which options for 90,500 shares will vest only upon the
occurrence of certain circumstances. On December 31, 1995, 13,500 of such
remaining options were granted as events upon which these options were
contingent occurred. The Company recorded compensation expense of $-0-,
$6,676, and $12,423 in 1999, 1998, and 1997, respectively, relating to
these options. Compensation expense of $3,172 will be recorded in future
periods as these options vest over a five-year period commencing December
31, 1996.
F-23
<PAGE> 54
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE O - TAXES ON INCOME
The provision (benefit) for taxes on income includes the following for
the year ended December 31:
<TABLE>
<CAPTION>
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
CURRENT
Federal $ -- $ 183,276 $ (20,342)
State -- -- --
--------- --------- ---------
-- 183,276 (20,342)
--------- --------- ---------
DEFERRED
Federal $ -- $ -- $ (79,650)
State -- -- (13,555)
--------- --------- ---------
-- -- (93,205)
--------- --------- ---------
Total $ -- $ 183,276 $(113,547)
========= ========= =========
</TABLE>
A reconciliation between the expected federal income tax expense computed
by applying the Federal statutory rate to income before income taxes and
the actual provision (benefit) for taxes on income for the year ended
December 31, is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Provision (benefit) for income
taxes at statutory rate $(1,112,000) $ 281,484 $ (180,000)
Change in valuation reserve 764,000 (1,016,400) 102,134
Use of operating loss carry
forwards -- 907,700 --
Stock options 1,000 2,700 6,900
Other 26,000 32,200 13,342
Change in prior year estimate 321,000 (24,408) (55,923)
----------- ----------- -----------
$ -- $ 183,276 $ (113,547)
=========== =========== ===========
</TABLE>
F-24
<PAGE> 55
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE O - TAXES ON INCOME (CONTINUED)
Deferred tax assets and liabilities consist of the following at December
31:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Alternative minimum tax credit $ -- $ 202,000
Deferred gain on sale (519,900) (1,000,900)
Accrued salary expense -- 211,900
Allowance for doubtful accounts 187,500 377,200
Other reserves 264,000 243,100
NOL carryforward 1,184,000 --
Other (189,000) 128,800
----------- -----------
926,100 162,100
Valuation reserve (926,100) (162,100)
----------- -----------
$ -- $ --
=========== ===========
</TABLE>
Realization of the deferred tax asset depends on achieving future taxable
income. The Company incurred losses in recent years and does not consider
it likely that the Company will realize the benefit of the deferred tax
asset and, accordingly, has recorded a valuation allowance equal to the
deferred tax asset.
NOTE P - LEASE COMMITMENTS
The Company is obligated under certain operating leases for its
facilities. The leases expire at various dates through 2004, with
appropriate rentals as set forth below. Some leases also provide for
payments of taxes and certain common area costs and expenses.
The following is a summary at December 31, 1999, of the future minimum
rents due under noncancelable operating leases:
<TABLE>
<CAPTION>
Year ending December 31,
<S> <C>
2000 $ 431,669
2001 307,009
2002 176,485
2003 143,320
2004 48,106
----------
Total $1,106,589
==========
</TABLE>
Total rent expense under operating leases for the years ended December
31, 1999, 1998, and 1997, was approximately $670,179, $839,514 and
$723,900, respectively.
F-25
<PAGE> 56
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE Q - DISCLOSURE ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
All of the Company's financial instruments are held for purposes other
than trading. The carrying amounts in the table below are the amounts at
which the financial instruments are reported in the financial statements.
The estimated fair values of the Company's financial instruments at
December 31, 1999, and 1998, are as follows:
<TABLE>
<CAPTION>
1999 Carrying amount Estimated fair value
---- --------------- --------------------
<S> <C> <C>
Cash $ 504,583 $ 504,583
Due from related party 104,036 104,036
Other receivables 1,612,962 1,612,962
Note payable - line of credit 818,152 818,152,
Long-term debt 444,109 444,109
Capitalized lease obligations 144,760 144,760
</TABLE>
<TABLE>
<CAPTION>
1998 Carrying amount Estimated fair value
---- --------------- --------------------
<S> <C> <C>
Cash $ 25,192 $ 25,192
Due from related party 124,036 124,036
Other receivables 3,371,828 3,371,828
Note payable - line of credit 1,039,925 1,039,925
Long-term debt 986,405 986,405
Capitalized lease obligations 567,582 567,582
</TABLE>
NOTE R - CONTINGENCIES
On February 13, 1998, the Company filed suit in the United States
District Court for the District of Oregon against Road Runner Oil, Inc.
and Bernard J. Roscoe, alleging breach of contract for non-payment of
services performed by the Company at an oil field in Utah. The amount of
unpaid invoices, including interest and collection costs, is
approximately $2.1 million. The Default Judgments against Road Runner
have been awarded in the Tribal Court and Utah state court, and
foreclosure proceedings and corresponding asset investigation are in
progress. The Company wrote off this account receivable in 1998.
In 1998, Environmental Chemical Corporation (ECC) filed for arbitration
against the Company for various claims related to the Company's
Subcontractor Agreement under an
F-26
<PAGE> 57
CET ENVIRONMENTAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
December 31 1999, 1998 and 1997
NOTE R - CONTINGENCIES (CONTINUED)
EPA contract. As discussed in Note C, in November 1999, the Company
executed an Administrative Agreement, which provides for a financial
reserve of $700,000. Management has been advised that this reserve
relates to the resolution of the claims filed by ECC. The financial
reserve has been established by funds withheld by the EPA from current
and future EPA invoices, estimated base fee and determined award fees.
The Company is party to various legal actions arising out of the normal
course of its business. Management believes that the ultimate resolution
of such actions, except as previously disclosed, will not have a material
adverse effect on the Company's financial position, results of operations
and liquidity of the Company.
NOTE S - SUBSEQUENT EVENTS
On February 22, 2000, AquaSource and the Company signed a Settlement and
Mutual Release Agreement. The Settlement Agreement states that AquaSource
will pay the Company approximately $500,000 and release all claims is has
against the approximately $698,000 of retention related to a certain
project that was completed by the Company. The Company has agreed to
indemnify AquaSource on certain projects that have been completed by the
Company, which were transferred to AquaSource as part of the sale of WQM.
In addition, the Company retained $219,000 for certain amounts collected
on behalf of WQM.
In February 2000, the Company closed its Richmond, California office and
transferred field equipment, office equipment and other assets to the
Company's other locations, primarily to a project located near Hercules,
California.
In March 2000, the Company received approximately $36,000 on a note
receivable from a related party.
F-27
<PAGE> 58
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION LOCATION
- --------------- -------------------------------------------------- ---------------------------------------------
<S> <C> <C>
3.1 Amended and Restated Articles of Incorporation Incorporated by reference to Exhibit 3.1 to
the Company's Form SB-2 Registration
Statement No. 33-91602
3.2 Bylaws Incorporated by reference to Exhibit 3.2 to
the Company's Form SB-2 Registration
Statement No. 33-91602
10.1 Incentive Stock Option Plan Incorporated by reference to Exhibit 10.1
to the Company's Form SB-2 Registration
Statement No. 33-91602
10.2 Form of Incentive Stock Option Agreement Incorporated by reference to Exhibit 10.2
to the Company's Form SB-2 Registration
Statement No. 33-91602
10.3 Loan Documents Between National Bank of Incorporated by reference to
Canada and the Company Exhibit 10.3 to the Company's
Annual Report on Form 10-K for the year
ended December 31, 1997.
10.4 Amendment to Loan and Security Agreement and Loan Incorporated by reference to
Documents between National Bank of Canada Exhibit 10.4 to the Company's
and the Registrant Annual Report on Form 10-K for the year
ended December 31, 1998.
10..5 Second Amendment to Loan and Security Agreement Incorporated by reference to
and Loan Documents between Exhibit 10.4 to the Company's
National Bank of Canada Annual Report on Form 10-K for the year
ended December 31, 1998.
</TABLE>
<PAGE> 59
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION LOCATION
- --------------- -------------------------------------------------- ---------------------------------------------
<S> <C> <C>
10.6 Third Amendment to Loan and Security Incorporated by reference to
Agreement and Loan Documents between Exhibit 10.6 to the Company's
National Bank of Canada and the Registrant Annual Report on Form 10-K for the year
ended December 31, 1998.
10.7 Stock Purchase Agreement with AquaSource Incorporated by reference to Exhibit 10.1
Services and Technologies, Inc. to the Company's report on Form 8K
dated December 17, 1998.
10.8 Administrative Agreement between United States Incorporated by reference to Exhibit 10.1
Environmental Protection Agency and the to Company's Form 10-Q for the nine
Registrant months ended September 30, 1999.
10.9 Seventh Amendment to Loan and Security Incorporated by reference to Exhibit 10.2
Agreement and Loan Documents between to Company's Form 10-Q for the nine
National Bank of Canada and the Registrant months ended September 30, 1999.
10.10 Ninth Amendment to Loan and Security Incorporated by reference to Exhibit 10.3
Agreement and Loan Documents between to Company's Form 10-Q for the nine
National Bank of Canada and the Registrant months ended September 30, 1999.
10.11 Eleventh Amendment to Loan and Security Incorporated by reference to Exhibit 10.4
months and Loan Documents between to Company's Form 10-Q for the nine
National Bank of Canada and the Registrant months ended September 30, 1999.
10.12 Thirteenth Amendment to Loan and Security Incorporated by reference to Exhibit 10.5
Agreement and Loan Documents between to Company's Form 10-Q for the
National Bank of Canada and the Registrant nine months ended September 30, 1999.
10.13 Fourteenth Amendment to Loan and Security Incorporated by reference to Exhibit 10.6
Agreement and Loan Documents between to Company's Form 10-Q for the
National Bank of Canada and the Registrant nine months ended September 30, 1999.
10.14 Sixteenth Amendment to Loan and Security Filed herewith electronically
Agreement and Loan Documents between
National Bank of Canada and the Registrant
10.15 Asset Purchase and Assignment Agreement by Filed herewith electronically
and between the Company and IT Corporation
10.16 Asset Purchase and Assignment Agreement by Filed herewith electronically
and between the Company and CAPE
Environmental Management, Inc.
10.17 Lease Agreement by and between the Company Filed herewith electronically
and Sky Harbor Associates Limited Partnership
21 Subsidiaries of the Registrant Filed herewith electronically
23 Consent of Grant Thornton LLP Filed herewith electronically
</TABLE>
<PAGE> 60
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION LOCATION
NUMBER
- --------------- -------------------------------------------------- ---------------------------------------------
<S> <C> <C>
27 Financial Data Schedule Filed herewith electronically
</TABLE>
<PAGE> 1
SIXTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
AND LOAN DOCUMENTS
THIS SIXTEENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT AND LOAN DOCUMENTS (this
"Amendment"), dated as of December 29, 1999, is between NATIONAL BANK OF CANADA,
a Canadian chartered bank ("Lender"), and CET ENVIRONMENTAL SERVICES, INC., a
California corporation ("Borrower").
Recitals
A. Lender and Borrower entered into a Loan and Security Agreement dated
May 29, 1997, as amended by the first through fifteenth amendments (as
amended, the "Loan Agreement"). Defined terms used herein and not
defined herein shall have the meaning set forth in the Loan Agreement
(as amended).
B. The Loans are secured by the Collateral.
C. Under the Fourteenth and Fifteenth Amendments to Loan Agreement,
Borrower was required to make a payment on December 26, 1999 in
connection with a permanent reduction in the Maximum Loan Availability.
Borrower has failed to make such payment and such failure constitutes
an Event of Default (the "Payment Default").
E. Borrower has requested that Lender waive the Payment Default and modify
the Set Reduction Amount and extend the Maturity Date and Lender has
agreed to do so subject to the terms and conditions set forth herein.
Agreement
IN CONSIDERATION of the foregoing and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Lender and Borrower
agree as follows:
1. Waiver of Payment Default. Subject to Borrower's performance of all of
the obligations hereunder and under the Loan Agreement, including
without limitation, the payment of all amounts due under the Loan
Agreement, including without limitation the amounts described in
paragraph 2(c) below, Lender agrees to waive the Payment Default; on
the conditions that: (a) if Borrower fails to perform any of its
obligations, Lender's waiver shall be null and void and of no force and
effect whatsoever; (b) Lender is not waiving any other defaults or
Events of Default that may have occurred or may hereinafter occur, and
(c) Lender's waiver of the Payment Default or any other defaults or
failure to or delay in exercising any rights or remedies shall not be
deemed a waiver of any subsequent Event of Default or a waiver of its
right to execute its rights or remedies at any time.
<PAGE> 2
2. Loan Amount Modification.
(a) Section 1 of the Loan Agreement is hereby amended by amending and
restating Section 1(u) of the Loan Agreement to read as follows:
1(u) "Maximum Loan Availability" shall mean the lesser of
(a) $l,500,000 minus the Required Reductions or (b)
the Revolving Loan Availability, minus (a) the
aggregate undrawn face amount of all Letters of
Credit and (b) the aggregate amount of all Revolver
Reductions.
(b) Section 1 of the Loan Agreement is hereby amended by amending and
restating Section 1(hh) of the Loan Agreement (added pursuant to the
Fourteenth Amendment) to read as follows:
1(hh) "Required Reductions" shall mean the sum of (a) the
Set Reduction Amount, plus (b) the Collection
Reduction Amount.
(c) Section 1 of the Loan Agreement is hereby further amended by
amending and restating Section 1 (ii) of the Loan Agreement (added
pursuant to the Fourteenth Amendment) to read as follows:
1(ii) "Set Reduction Amount" shall mean the following
amounts commencing on the initial dates and
continuing during the periods opposite such figures:
<TABLE>
------------------------------------- ----------
<S> <C>
December 29, 1999 through $250,000
January 6, 2000
------------------------------------- ----------
January 7, 2000 through $750,000
January 13, 2000
------------------------------------- ----------
January 14, 2000 through $1,000,000
January 20, 2000
------------------------------------- ----------
January 21, 2000 through $1,300,000
January 27, 2000
------------------------------------- ----------
</TABLE>
(c) Section 1 of the Loan Agreement is hereby further amended by
amending and restating Section 1(jj) of the Loan Agreement
(added pursuant to the Fourteenth Amendment) to read as
follows:
-2-
<PAGE> 3
1(jj) "Collection Reduction Amount" shall mean an amount
equal to 20% of the amount of Accounts collected or
payments received on Accounts from December 29, 1999
up to and including the business days prior to the
date such amount is determined.
(d) Borrower acknowledges that the purpose of the Required
Reductions and Revolving Reductions is to cause the Revolving
Loan to be fully repaid on or before January 28, 2000.
Accordingly, the definition of "Maturity Date" set forth in
Section 1(t) of the Loan Agreement is amended in its entity to
read as follows:
"Maturity Date" shall mean the earlier of (a) the date the
Liabilities are accelerated pursuant to Section 14 or (b)
January 28, 2000.
(c) Borrower acknowledges that on each date that there is a
decrease in the Maximum Loan Availability as a result of an
increase in the Set Reduction Amount, the Collection Reduction
Amount or the Revolver Reduction Amount, Borrower must repay
the amount by which the outstanding amount of the Revolving
Loan exceeds the revised Maximum Loan Availability, including
without limitation as a result of the increases in the Set
Reduction Amount which takes place on December 30, 1999,
January 7, 2000, January 14, 2000, and January 21, 2000, and
acknowledges that payments are due on such dates.
(d) Borrower agrees that the Borrower's failure to pay any amounts
due under the Loan Agreement, including without limitation,
any amounts described in paragraph 2(c) above shall constitute
an Event of Default under the Loan Agreement and Lender shall
be entitled to exercise all remedies in connection therewith.
3. Assignment of Claims. As a condition of Lender's waiver of the
Defaults, Borrower agrees, immediately upon request of Lender to
execute all assignments, confirmations and other agreements necessary
to comply with the Assignment of Claims Act with respect to Contract
numbers DACA45-97-D0022, F04699-D-0024, and F41624-97-D-8010 and any
other contracts requested by Lender.
4. Loan Documents.
a. Lender and Borrower agree that any and all notes or other
documents executed in connection with the Loans (collectively,
the "Loan Documents") are hereby amended to reflect the
amendments set forth herein and that no further amendments to
any Loan Documents are required to reflect the foregoing.
-3-
<PAGE> 4
b. All references in any document to the Loan Agreement or any
other Loan Document shall refer to the Loan Agreement or such
Loan Document as amended pursuant to this Amendment.
5. Amendment Fee. As a condition to Lender's performing its obligations
under this Amendment, Borrower shall pay to Lender an amendment fee
equal to $15,000 payable immediately upon the execution of this
Amendment. Such amendment fee shall be fully earned as of the date
hereof, but $10,000 of such fee will be refunded to Borrower upon
payment in full of the Loan and all other amounts due Lender on or
prior to January 28, 2000.
6. Representations and Warranties. Borrower hereby certifies to the Lender
that as of the date of this Amendment (taking into consideration the
transactions contemplated by this Amendment), all of Borrower's
representations and warranties contained in the Loan Agreement and all
Loan Documents are true, accurate and complete in all material
respects, and no Event of Default (other than the Defaults) or event
that with notice or the passage of time or both would constitute an
Event of Default has occurred under the Loan Agreement or any Loan
Document. Without limiting the generality of the foregoing, Borrower
represents and warrants that the execution and delivery of this
Amendment has been authorized by all necessary action on the part of
Borrower, that the person executing this Amendment on behalf of
Borrower is duly authorized to do so and that this Amendment
constitutes the legal, valid, binding and enforceable obligation of
Borrower.
7. Additional Documents. Borrower shall execute and deliver to Lender at
any time and from time to time such additional amendments to the Loan
Agreement and the Loan Documents as the Lender may request to confirm
and carry out the transactions contemplated hereby or to confirm,
correct and clarify the security for the Loan.
8. Continuation of the Loan Agreement, Etc. Except as specified in this
Amendment, the provisions of the Loan Agreement and the Loan Documents
(as previously amended) shall remain in full force and effect, and if
there is a conflict between the terms of this Amendment and those of
the Loan Agreement or the Loan Documents (as previously amended), the
terms of this Amendment shall control.
9. Miscellaneous.
a. This Amendment shall be governed by and construed under the
laws of the State of Colorado and shall be binding upon and
inure to the benefit of the parties hereto and their
successors and permissible assigns.
b This Amendment may be executed in two or more counterparts,
each of which shall be deemed an original and all of which
together shall constitute one instrument.
-4-
<PAGE> 5
c. This Amendment and all documents to be executed and delivered
hereunder may be delivered in the form of a facsimile copy,
subsequently confirmed by delivery of the originally executed
document.
d. This Amendment constitutes the entire agreement between
Borrower and the Lender concerning the subject matter of this
Amendment and supercedes the Forbearance Letter, which
Forbearance Letter is no longer of any force or effect. This
Amendment may not be amended or modified orally, but only by a
written agreement executed by Borrower and the Lender and
designated as an amendment or modification of the Loan
Agreement as amended by this Amendment.
EXECUTED as of the date first set forth above.
BORROWER
CET ENVIRONMENTAL SERVICES,
INC., a California corporation
By: /s/ DALE W. BLECK
--------------------------------------
Name: Dale W. Bleck
------------------------------------
Title: CFO
-----------------------------------
LENDER:
NATIONAL BANK OF CANADA, a
Canadian chartered bank
By:
--------------------------------------
Allen C. Balk
Vice President
By:
--------------------------------------
Name:
---------------------------------
Title:
--------------------------------
-5-
<PAGE> 1
ASSET PURCHASE AND ASSIGNMENT AGREEMENT
DATED AS OF OCTOBER 21, 1999
BY AND AMONG
CET ENVIRONMENTAL SERVICES, INC.
AND
IT CORPORATION
<PAGE> 2
ASSET PURCHASE AND ASSIGNMENT AGREEMENT, dated as of October 21, 1999, by and
among CET ENVIRONMENTAL SERVICES, INC., a California corporation ("CET")
("Seller"), and IT CORPORATION, a California corporation ("Purchaser").
WITNESSETH
WHEREAS, the Seller is in the business of providing environmental
remediation services and related services to public and private customers (the
"Business");
WHEREAS, the Seller desires to sell and assign to Purchaser, and Purchaser
desires to purchase and assume from the Seller, certain of the assets associated
with the Business, upon the terms and conditions herein set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Assets, Contracts and Rights to be Acquired. Subject to the terms and
conditions herein set forth, at the closing (as hereinafter defined in
Section 3.B), Seller agrees to sell, assign, transfer and convey to
Purchaser, free and clear of all liens, claims rights, interests,
charges, pledges and encumbrances (collectively, "Liens") of every
kind, nature and description, and Purchaser agrees to purchase,
acquire and assume from Seller as of the Closing (but subject to
satisfaction of the Condition Precedent, as hereinafter defined) all
right, title and interest of Seller in and to the following assets,
contracts and rights used in or pertaining to part of the Business:
A. Contract 68-W7-0016 (effective January 9, 1997) with the United
States Environmental Protection Agency ("EPA") related to the
provisions of Emergency and Rapid Response Services for Regions
6, 8 and 9 of the EPA, together with applicable delivery orders,
purchase orders, and other agreements, if any, entered into in
the ordinary course in connection with the performance of the
work under such contracts and listed on Schedule "1-A." and
copies of which have or shall be delivered to the Purchaser on or
before the Closing (collectively, the "EPA Contracts") including
the right to Gross Revenues thereunder from the date of closing;
B. The right of Purchaser to enter into a subcontract with Seller to
perform on behalf of Seller the work remaining under Delivery
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<PAGE> 3
Order 01-10-016 of U.S. EPA Contract 68-S7-000l should Purchaser
so elect at the time of Closing.
C. Sellers' owned machinery, equipment, tools, uniforms, protective
gear, office furniture and equipment, wherever located, used in
connection with and necessary for the performance of the EPA
Contracts, a schedule of which is annexed hereto as Schedule
"1.C." (the "EPA Contract Equipment");
D. Except as set forth in Section 2 below,
(i) To the extent assignable, any and all rights of Seller to
seek indemnification, reimbursement, contribution,
insurance for or other recourse against third parties
(including insurers), with respect to any environmental,
products, workers compensation or other liability
relating to or arising from the performance by the Seller
or their subcontractors of the EPA Contracts prior to the
Closing or, the ownership, possession, use or operation
of any Acquired Asset (including, any damage thereto)
(collectively, the "Insurance and Indemnity Rights");
(ii) All unliquidated and liquidated claims and causes of
action of every kind and description which Seller may
have against any third party arising out of, in
connection with, or relating to any item included within
the definition of Acquired Assets for damages actually
suffered by, or claims brought against, Purchaser at or
after the Closing notwithstanding when the event giving
rise to such damages or claims occurred (including any
damage to any of the Acquired Assets) (collectively, the
"Claim Rights");
(iii) To the extent transferable, all governmental permits,
licenses and other related agreements or instruments
held by Seller to which Seller is a party, in each case
which are material to, or are used or materially useful
in, the ownership or operation of the Acquired Assets;
E. Certain ancillary assets needed in connection with or, necessary
for the performance of the EPA Contracts, and other similar
assets used in the performance of the EPA Contracts, a schedule
of which is annexed hereto as Schedule "1.E." (the "Ancillary
Assets"). Purchaser agrees to provide Seller reasonable access to
such assets in connection with performance of its obligations
relating to the EPA Contracts and the other assets transferred;
and
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<PAGE> 4
F. The right to assume upon closing (as defined in Section 3.B) the
lease for Seller's facility at 170 West Dayton, Edmonds,
Washington annexed at Schedule 1.F hereto.
The assets, contracts and rights to be sold and assigned by Seller to
Purchaser pursuant to this Section 1 are hereinafter collectively referred
to as the "Acquired Assets."
2. Excluded Assets. Except for the Acquired Assets set forth in Section 1
above or as otherwise specifically provided for herein, Purchaser
shall not purchase, assume, acquire, or otherwise obtain rights in and
to any other assets of the Seller, including, without limitation:
A. Any and all of Seller's other machinery, equipment, inventory,
tools, uniforms, protective gear, office furniture and equipment,
real property, patents, trade names, and general intangibles,
wherever located, not described in Section 1, specifically
equipment used by Seller's offices in Regions 6, 8, and 9; and
B. All cash, funds in accounts, security deposits, revenues and
receivables, including, without limitation, any unbilled
receivables due from the EPA under the EPA Contracts for any work
performed, services rendered or expenses or costs incurred up to
and including, the day of the Closing together with claims,
refunds, reimbursements or credits under other contracts (the
"Seller Receivables"); and
C. Any premium refunds or credits owed under the Seller's insurance
or indemnity policies or any tax refunds owed to the Seller
whether or not related to the EPA Contracts.
In addition, Seller shall retain any Insurance and Indemnity
Rights and/or Claim Rights which the Seller needs or requires, or
are materially useful, in (a) recovering, collecting, receiving
or obtaining reimbursement from or by the EPA or any third party
for expenses incurred prior to the Closing by Seller related to
the Acquired Assets, (b) collection of Seller Receivables, but
only to the extent so needed, required or materially useful, or
(c) defending and/or paying and/or satisfying any Non-Assumed
Liability Claim (defined in Section 3.D. below) or other
liability.
The excluded assets, contracts and rights set forth in this
Section 2 are hereinafter collectively referred to as the
"Excluded Assets." The Parties acknowledge that the EPA may make
payments to Purchaser or Seller to which the other Party is
entitled. In such case, the party receiving the payment shall
hold in trust the portion
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<PAGE> 5
of such payment properly payable to the other party and shall
promptly forward such sums to the party entitled thereto.
3. Acquisition of Acquired Assets and Acquired Liabilities; Retention of
Liabilities by Seller.
A. At the Closing, Seller and Purchaser shall execute:
(i) A Bill of Sale, Assignment and Assumption Agreement for
the Acquired Assets, substantially in the form annexed
hereto as Schedule "3.A.(i)"
(ii) Such other instruments of transfer as Purchaser may
reasonably deem necessary to vest in Purchaser sufficient
title to the Acquired Assets free and clear of Liens.
B. Closing. The closing of this transaction (the "Closing") shall
occur not more than five (5) business days after receipt by the
Parties of written notification from the EPA of the approval of
the Novation of EPA Contract 68-W7-0016, or at such other date,
time and place as may be mutually agreed upon by the parties
hereto (the "Closing Date") at the offices of the IT Corporation,
Englewood, CO. The parties hereto agree that time is of the
essence with respect to the Closing.
C. Assumed Obligations. Purchaser shall not assume or become liable
for the payment of any debts, liabilities, obligations, setoffs,
defenses, losses, wages, employee benefits, COBRA payments,
claims, if any, under the Workers Adjustment, Retraining and
Notification Act, 29 U.S.C. Section 2101, et seq. or other
applicable law, benefit plans, 401k pension plans or collective
bargaining agreements (collectively, "Workers' Claims"), accounts
payable, bank indebtedness, mortgages, warranties, fines,
penalties, or any other obligations of the Seller or any
affiliate of the Seller, whether the same are known or unknown,
now existing or hereafter arising of whatever nature or
character, whether absolute or contingent, liquidated or
disputed, except for certain liabilities arising with respect to
the EPA Contracts and described on the Schedule of Assumed
Obligations annexed hereto as Schedule "3.C." (the "Assumed
Liabilities").
D. Seller shall indemnify and defend Purchaser against all claims
(each, a "Non-Assumed Liability Claim") for liabilities or
obligations that are not Assumed Liabilities, including, without
limitation, Workers' Claims, claims, set-offs or offsets by the
EPA under the EPA Contracts relating to work performed by Seller
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<PAGE> 6
prior to the Closing Date, or claims by third parties or
creditors of Seller relating to the conduct by Seller of their
business prior to Closing, in accordance with the following
procedures:
(i) In the event a Non-Assumed Liability Claim is asserted
against Purchaser, Purchaser shall notify Seller, in
writing, as soon as practicable after discovery of such
Non-Assumed Liability Claim, specifying in reasonable
detail the nature of the claim and the amount sought. The
Seller shall have the right to assume or direct, through
counsel of their own choosing, the defense, prosecution
or settlement of any Non-Assumed Liability Claim promptly
upon written notice to Purchaser, at their sole cost and
expense. If the seller elects to assume the defense of
any Non-Assumed Liability Claim, Seller shall keep
Purchaser informed as to the status of such litigation or
other action and shall not settle such Non-Assumed
Liability Claim in a manner which would impose any
material burden or obligation on Purchaser without the
consent of Purchaser, which consent shall not be
unreasonably withheld. The Purchaser may, at its own
expense, retain separate counsel to participate in such
defense. Purchaser shall provide Seller with such access
to its records and personnel relating to any such
Non-Assumed as is necessary to defend such Non-Assumed
Liability Claim during normal business hours and shall
otherwise cooperate with the Seller in the defense or
settlement thereof. Prior to resolution of the
Non-Assumed Liability Claim, Purchaser shall not pay, or
permit to be paid, or seek to offset, reserve for,
setoff, deduct or seek a credit against the Payment for
all or any part of the Non-Assumed Liability Claim,
unless the Seller consents in writing to such payment. If
the Seller fails to defend, or if after commencing or
undertaking any such defense, the Seller fails to
prosecute or withdraws from such defense, the Purchaser
shall have the right to defend such claim and to be
reimbursed its defense costs (including reasonable
counsel fees and expenses) related thereto by Seller,
provided that Purchaser shall use its best efforts to
settle such claim for the lowest amount possible, and
provided that Purchaser shall not be obligated to enter
into a settlement pursuant to which it will be required
to perform material nonmonetary obligations. Purchaser
shall (a) give the Seller prompt written notice (i) of a
proposed settlement offer made by the other party, prior
to acceptance of such offer or (ii) of an offer Purchaser
proposes to make, prior to making such offer, and (b)
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<PAGE> 7
request that the Seller consent thereto, which consent
shall not be unreasonably withheld. In the event the
Seller is unwilling to approve such proposed settlement,
the Seller shall have the right to assume or reassume
said defense. In the event that Seller neither approves
the proposed settlement or assumes or reassumes the
defense, Purchaser shall have the right to pay such
Non-Assumed Liability Claim at the settled amount and
recover the amount of such payment from Seller in
accordance with the terms of this Agreement. Any judgment
entered against the Purchaser on a Non-Assumed Liability
Claim after compliance with this subsection will be fully
reimbursed by Seller.
(ii) In the event that the EPA notifies Purchaser that an
audit reveals an overpayment to Seller for work performed
or expenses incurred prior to Closing and demands
repayment of such amounts or offsets such amounts against
payments owed to Purchaser pursuant to the EPA Contracts,
Purchaser shall notify Seller of such Non-Assumed
Liability Claim as soon as practicable after Purchaser
receives notice of such Non-Assumed Liability Claim. The
Seller shall have the right to negotiate with the EPA or
to participate in applicable dispute resolution
mechanisms, at their sole cost and expense. Purchaser
shall not pay the EPA for such Non-Assumed Liability
Claim without the consent of Seller, unless the failure
to pay such Non-Assumed Liability Claim will subject the
Purchaser to penalties or affect its ability to bid on or
obtain other government contracts or orders, in which
case the Purchaser may recover the amount paid by it with
respect to such Non-Assumed Liability Claim from Seller.
In the event that Seller cannot resolve such Non-Assumed
Liability Claim within thirty (30) days after the EPA has
withheld, offset or set funds with respect to such
Non-Assumed Liability Claim from funds payable to the
Purchaser, the Purchaser may recover such withheld,
offset or set-off amount from Seller in accordance with
this Agreement.
4. Purchase Price and Terms.
A. As consideration for the sale, assignment and delivery of the
Acquired Assets by Seller, Purchaser shall assume the Assumed
Liabilities and pay to Seller the following amount (collectively,
the "Purchase Price"):
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<PAGE> 8
(i) At Closing, One Million, Three Hundred Thousand Dollars
($1,300,000) in cash, paid by wire transfer, bank
transfer or bank or cashier's check (the "Payment");
5. Office Leases and Other EPA Contract Equipment.
A. Seller will obtain necessary written consent of the Landlord of
the Edmonds Washington lease and pay any charges of the Landlord
related to obtaining such consent to Purchaser's assumption of
that lease.
B. In the event the Purchaser and the Seller jointly determine,
after the date of this Agreement, that the Seller owns any
machinery, equipment, tools, uniforms, protective gear, office
furniture or equipment, that is not listed as EPA Contract
Equipment on Schedule 1.C. annexed hereto, but is used in
connection with or is necessary for the performance of the EPA
Contracts and is not otherwise required by the Seller in their
Business (the "Unscheduled EPA Contract Equipment"), Purchaser
shall have the right, but not the obligation, for a period of
thirty (30) days after the Closing (which period may be extended
upon the written consent of the Seller) to purchase, free and
clear of any and all Liens, for cash, or as otherwise mutually
agreed, any such Unscheduled EPA Contract Equipment at a mutually
agreeable price.
C. Purchaser shall be entitled to use, in connection with its
performance of the EPA contracts, Sellers' management information
system computer facilities located at Englewood, CO and any
related software, from and after the Closing, without charge, as
long thereafter as the system and computer are operated by the
Seller; provided, however, that such access shall be limited to
read only information and delivery order specific data directly
related to the EPA Contracts. Notwithstanding the preceding
sentence, Seller shall give Purchaser prompt notice upon learning
that such facility will become unavailable and shall cooperate
with Purchaser to ensure continued availability of all data on
such system.
6. Leased Equipment Used to Perform the EPA Contracts.
A. By notice to Seller up to 30 days after the Closing, Purchaser
shall have the option, but not the obligation, to the extent
assumable, to elect to assume any or all of Sellers' lease
obligations for leased equipment used to perform any jobs or work
orders under the EPA Contracts being performed at the time of the
Closing, all of which
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<PAGE> 9
leases, and the periodic rental obligations thereunder, are
described on Schedule "6.A." annexed hereto (the "EPA Leased
Equipment Leases"). Seller shall take all reasonably necessary
action to assume and assign the EPA Leased Equipment Leases, to
include satisfying any cure obligations.
7. Transfer Taxes.
A. All sales or transfer taxes, if any, including, but not limited
to, document recording fees, sales and excise taxes, arising out
of or in connection with the consummation of the transactions
contemplated hereby shall be paid by the Purchaser.
8. Allocation of Purchase Price.
A. The parties agree to allocate the aggregate consideration
received by Sellers with respect to the acquired assets in
accordance with Section 1060 of the Internal Revenue Service
Code, as mutually agreed. Subject to the requirements of any
applicable tax law or election, all such mutually agreed to
allocation shall be used by each party in preparing any filings
required pursuant to Section 1060 of the Code or any similar
provisions of state or local law and all relevant Income Tax
Returns.
9. Employees.
A. Seller and Purchaser agree to reasonably cooperate regarding
communications made to the employees of the Seller concerning the
transactions contemplated by this Agreement, understanding that
Purchaser may wish to contact those employees of the Seller that
Purchaser desires to hire or to whom it wishes to offer
employment. Notwithstanding the foregoing, Purchaser shall have
no obligation to hire or offer to hire any employee of the
Seller. With respect to any employee of the Seller, Purchaser
shall have no liability for any wages, severance benefits,
vacation benefits, COBRA, pension, Workers' Claim, or 401k
obligation, collective bargaining agreements or any other
benefits owed by the Seller to such employee.
10. Conditions Precedent.
A. All obligations of the Purchaser under this Agreement are subject
to the fulfillment of each of the following conditions prior to
or at the Closing, any of which conditions may be waived by the
Purchaser prior to or at the Closing:
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<PAGE> 10
(i) Representations and Warranties. All of the
representations, warranties and certifications of the
Seller contained in this Agreement shall be true, correct
and complete in all material respects on the Closing Date
as though all such representations, warranties and
certifications were made and given on and as of the
Closing Date.
(ii) Performance by the Seller. Seller shall have performed
and complied with all covenants, agreements and
conditions required to be performed or complied with by
them pursuant to this Agreement prior to or at the
Closing.
(iii) No Restraint on Transactions. There shall be no effective
injunction, judgment, decree, restraining order or order
of any nature issued against Seller or Purchaser by a
court or government agency of competent jurisdiction
which shall direct that this Agreement, or any of the
transactions contemplated by this Agreement not be
consummated as herein or therein provided, nor shall any
litigation or other proceeding seeking to enjoin the
Closing or any of the transactions contemplated by this
Agreement have been instituted or threatened by any
Federal, state or local governmental agency of
department. No request for voluntary postponement of the
Closing Date shall have been received by any party to
this Agreement from any Federal, state or local
governmental agency or department.
(iv) No Material Adverse Change. Since September 23, 1999
there shall not have been any material adverse change in
the condition of the Acquired Assets that is material in
the context of this transaction.
(v) Novation Approval. The effectiveness of the sale and
assignment of the acquired assets, the assumption by
Purchaser of the Assumed Liabilities, and all other
transactions contemplated by this Agreement shall be
subject to the condition that the EPA shall have
consented in writing to the assignment or novation from
Seller to Purchaser of the EPA Contract 68-W7-0016 by
November 30, 1999.
(vi) Other Consents. The Purchaser or Seller shall have
obtained such other consents, estoppels and
authorizations, in form and substance satisfactory to the
Purchaser, as shall
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<PAGE> 11
be reasonably necessary in order for the transactions
contemplated by this Agreement to be consummated,
including, without limitation, the consents of any
secured Parties or creditors.
B. All obligations of the Seller under this Agreement are subject to
the fulfillment of each of the following conditions prior to or
at the Closing, any of which conditions may be waived by the
Seller prior to or at the Closing:
(i) The representations, warranties and certifications of
Purchaser contained in this Agreement shall be true,
correct and complete in all material respects on the
Closing Date as though all such representations,
warranties and certifications were made and given on and
as of the Closing Date.
11. Representations of Sellers.
A. Seller hereby represents and warrants to the Purchaser as
follows:
(i) Organization. CET is a corporation duly organized,
validly existing and in good standing under the laws of
its respective state of incorporation and has all
requisite power and authority, corporate or otherwise, to
carry on and conduct its business as now being conducted
and to own or lease its properties and assets.
(ii) Authorization. Seller has the right, power and capacity
to execute, deliver and perform this Agreement and to
consummate the transactions contemplated hereby. The
execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby,
have been duly authorized by all necessary action on the
part of Seller's Board of Directors and this Agreement
and validly executed and delivered by Sellers and
constitute Seller's legal, valid and binding obligation,
enforceable in accordance with its terms.
(iii) Ownership of Acquired Assets.
(x) To the best of the knowledge, information and belief
of the officers of Seller, the Schedules referenced
in Schedules 1.A, 1.C. and 1.E hereof set forth a
complete and accurate list and description of
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<PAGE> 12
Acquired Assets that are being sold or assigned to
Purchaser;
(y) Seller has good and valid title to and owns all of
the Acquired Assets being sold to Purchaser
hereunder, including all rights under the EPA
Contracts and the Ancillary Assets.
(iv) No Brokerage. No finder or broker was consulted by Seller
or was involved in the sale and assignment transactions
contemplated by this Agreement or has any other basis
upon which to claim a fee or commission, except Seller
retained a broker, Sanders Morris & Mundy, and will be
solely responsible for paying all fees or commissions.
(v) Compliance with Law. Seller has not received any notice
of, and has no actual knowledge of, any claimed violation
with respect to any law, ordinance, regulation or court
order applicable to the Acquired Assets which remains
uncured, except as disclosed to in this Agreement and
applicable Schedules thereto.
(vi) Labor Matters. Seller is not a party to, or bound by, any
collective bargaining agreements, and no representation
question exists with respect to Seller's employees except
as set forth on Schedule 11.A.(vi). Seller is not
subject to any liabilities to its employees under the
Worker Adjustment and Retraining Notification Act (the
"WARN Act"), 29 U.S.C. Section 2101 et. seq.
(vii) Permits. Schedule 11.A.(vii) sets forth a true, correct
and complete list of all licenses and permits in
connection with the performance of the EPA Contracts (the
"Permits") including, without limitation, those issued or
required under Environmental Laws (as hereinafter
defined) and those relating to the occupancy or use of
the Edmonds Office issued to or held by Sellers, except
for those the absence of which would not have any
material adverse effect on the assets, business,
financial condition, results of operations or future
prospects of the Seller taken as a whole. Such listed
Permits are the only Permits that are required for the
Seller to perform the EPA Contracts, except for those the
absence of which would not have any material adverse
effect on the assets, business, financial condition,
results of operations or future prospects of Seller
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<PAGE> 13
in the performance of the EPA Contracts. Each such Permit
is in full force and effect and, to the knowledge of
Seller, no suspension or cancellation of such Permit is
threatened and there is no reasonable basis for believing
that any such Permit will not be renewable upon
expiration. Except as set forth in Schedule 11.A.(viii),
each such Permit is assignable by the Seller to the
Purchaser without the consent or approval of any party
and will continue in full force and effect following the
Closing except to the extent such Permit is not
assignable or assumable by law. To the extent a Permit is
assignable, Seller agrees to assist in the assignment of
such Permit by Purchaser.
(viii) Environmental Matters.
(a) Except as set forth in Schedule 11.A.(viii)(a),
Seller has complied in all material respects with
all applicable Environmental Laws (as defined below)
in performing the EPA Contracts. There is no pending
or, to the knowledge of Seller, threatened civil or
criminal litigation, written notice of violation,
formal administrative proceeding, or investigation,
inquiry or information request by any Governmental
Entity, relating to any Environmental Law involving
the EPA Contracts. For purposes of this Agreement,
"Environmental Law" means any federal, state or
local law, statute, rule or regulation or the common
law relating to the environment or occupational
health and safety, including, without limitation,
any statute, regulation or order pertaining to (i)
treatment, storage, disposal, generation and
transportation of industrial, toxic or hazardous
substances or solid or hazardous waste; (ii) air,
water and noise pollution; (iii) groundwater and
soil contamination; (iv) the release or threatened
release into the environment of industrial, toxic
or hazardous substances, or solid or hazardous
waste, including, without limitation, emissions,
discharges, injections, spills, escapes or dumping
of pollutants, contaminants or chemicals; (v) the
protection of wildlife, marine sanctuaries and
wetlands, including, without limitation, all
endangered and threatened species; (vi) storage
tanks, vessels and containers; (vii) underground and
other storage tanks or vessels, abandoned, disposed
or discarded barrels, containers and other closed
receptacles;
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(viii) health and safety of employees and other
persons; and (ix) manufacture, processing, use,
distribution, treatment, storage, disposal,
transportation or handling of pollutants,
contaminants, chemicals or industrial, toxic or
hazardous substances or oil or petroleum products or
solid or hazardous waste. As used herein, the terms
"release" and "environment" shall have the meaning
set forth in the federal Comprehensive Environmental
Compensation, Liability and Response Act of 1980
("CERCLA").
(b) Except as set forth in Schedule 11.A.(viii)(b),
there have been no releases of any Materials of
Environmental Concern (as defined below) into the
environmental at any parcel of real property or any
facility used in the performance of the EPA
Contracts formerly or currently owned, operated or
controlled by the Seller. With respect to any such
releases of Materials of Environmental Concern,
Seller has given all required notices to
Governmental Entities (true, correct and complete
copies of which have been previously provided to the
Purchaser). Seller is not aware of any releases of
Materials of Environmental Concern at parcels of
real property or facilities used in the performance
of the EPA Contracts owned, operated or controlled
by Seller. For purposes of this Agreement,
"Materials of Environmental Concern" means any
chemicals, pollutants or contaminants, hazardous
substances (as such term is defined under CERCLA),
solid wastes and hazardous wastes (as such terms
are defined under the Federal Resources Conservation
and Recovery Act), toxic materials, oil or petroleum
and petroleum products.
(c) Schedule 11.A.(viii)(c) sets forth a true, correct
and complete list of all environmental reports,
investigations and audits (whether conducted by or
on behalf of the Seller or a third party, and
whether done at the initiative of the Sellers or
directed by a Governmental Entity or other third
party) issued or conducted during the past five
years relating to the Edmonds Office. True, correct
and complete copies of each such report, or the
results of each such investigation or audit, which
are in the possession,
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or control of Seller, have previously been provided
to the Purchaser.
(d) Schedule 11.A.(viii)(d) sets forth a true, correct
and complete list of all of the solid and hazardous
waste transporters and treatment, storage and
disposal facilities used in the performance of the
EPA Contracts that have been owned or operated by
Seller since September 23, 1999. Seller is not aware
of any material environmental liability against
Seller with respect to any such transporter or
facility.
(ix) Government Contracts. Except as disclosed in Schedule
11.A.(ix), Sellers have not been suspended or debarred
from bidding on contracts or subcontracts with any
governmental entity; no such suspension or debarment has
been initiated or, to the knowledge of Sellers,
threatened; and the consummation of the transactions
contemplated by this Agreement will not result in any
such suspension or debarment of any Seller or the
Purchaser (assuming that no such suspension or debarment
will result solely from the identity of the Purchaser).
The Sellers have not been or are not now being audited or
investigated relative to the EPA Contracts by the United
States Government Accounting Office, the United States
Department of Defense or any of its agencies, the Defense
Contract Audit Agency, the United States Department of
Justice, the Inspector General of any United States
governmental entity, or any prime contractor with a
governmental entity; nor, to the knowledge of the
Sellers, has any such audit or investigation been
threatened except with respect to the Government Contract
Suspension referenced in Schedule 11.A.(ix). Except as
disclosed in Schedule 11.A.(ix), to the knowledge of the
Sellers, there is no valid basis for (a) the suspension
or debarment of the Sellers from bidding on contracts or
subcontracts with any Governmental Entity or (b) any
claim pursuant to an audit or investigation by any of the
entities named in the previous sentence with respect to
the EPA Contracts. Seller is not a party to any
agreement, contract or commitment, which requires such
any Seller to obtain or maintain a security clearance
with any Governmental Entity.
12. Price Adjustment for Acquired Assets. To the extent it is discovered
prior to transfer of title or ownership to Purchaser that any Acquired
Assets
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listed on the Schedules annexed hereto are not owned by
the Sellers as of the Closing or Sellers are otherwise
unable to transfer to Purchaser title to such Acquired
Assets, free and clear of Liens, Seller shall retain such
asset and Purchaser shall be entitled to a credit against
the payment on the value of such asset.
13. Representations of Purchaser.
A. Purchaser hereby represents and warrants to the Sellers as
follows:
(i) Organization. Purchaser is a corporation, duly organized,
validly existing and in good standing under the laws of
the state of California and has all requisite power and
authority, corporate or otherwise, to carry on and
conduct its business as now being conducted and to own or
lease its properties and assets.
(ii) Authorization. Purchaser has the right, power and
capacity to execute, deliver and perform this Agreement
and to consummate the transactions contemplated hereby.
The execution, delivery and performance of this
Agreement, and the consummation of the transactions
contemplated hereby, have been duly and validly executed
and delivered by Purchaser and constitute Purchaser's
legal, valid and binding obligation, enforceable in
accordance with its terms.
(iii) Qualification. As of the Closing, Purchaser (x) (1) has
performed services for the EPA within the past two (2)
years, and (2) has not had a contract with the EPA or a
contractor of the EPA be terminated for cause within the
past five (5) years, or (y) is unaware of any reason why
the EPA would not approve an assignment (or novation) of
the EPA Contracts to Purchaser.
(iv) No Brokerage. No broker was involved in the sale and
assignment transactions contemplated by the Agreement.
14. Warranties by Seller. Purchaser acknowledges that Seller is making no
express or implied warranty or representation as to condition,
merchantability or suitability as to any of the Acquired Assets and
that Purchaser takes the Acquired Assets of Sellers "as is" and "where
is"; provided, however, that Purchaser shall not be obligated to take
title to:
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(a) contaminated EPA Contract Equipment not located on an active EPA
Contract job site, unless Sellers agree to cause or pay for the
decontamination of same; or
(b) any EPA Contract Equipment which is incapable of being used for
the original purpose for which it was intended.
15. Cooperation.
A. Prior to Closing, Seller and Purchaser agree to cooperate in all
material respects with each other to afford access to their
respective personnel and representatives, and they shall provide
such information concerning the Business, the EPA Contracts and
any Acquired Assets that may be reasonably requested by the other
party.
B. Purchaser agrees to cooperate and assist, without charge, with
any reasonable request by Seller to provide at Seller's expense,
copies of records, documents or other information needed in
connection with an audit or examination by the EPA, other
government agency or third party and not otherwise, whether
formal or informal, of any jobs or work performed or invoices
rendered by the Sellers prior to closing.
C. Sellers and Purchaser shall cooperate and assist each other in
attempting to obtain the approval of the novation of the EPA
contracts from the EPA and all other consents or approvals
required hereunder.
16. Records Maintenance.
From and after the date of this Agreement, the parties shall preserve
all books, records, and other documents, materials, and information
relevant to the representations, warranties, and covenants set forth
in this Agreement for a period of six years following the date of this
Agreement or for such larger period as the rights of the parties
hereunder may exist.
17. Notices. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and transmitted by
facsimile or delivered in person, or mailed by registered or certified
mail, postage prepaid, addressed to the parties, at the following
address or to such changed address as such party may have fixed for
such notices. Any notice to change of address shall be effective only
upon receipt. All notices given by facsimile transmissions shall be
deemed given on the date of delivery; all notice given by registered
or certified mail shall be deemed given on the date placed in the
mail.
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If to Seller: CET Environmental Services Inc.
7032 S. Revere Parkway
Englewood, CO 80112
Attention: Steven H. Davis
Telephone: 720/875-9115
Facsimile: 720/875-9114
If to Purchaser: IT Corporation
2790 Mosside Boulevard
Monroeville, PA 15146-2792
Attention: Paul C. Smith, Esq.
Telephone: 412/372-7701
Facsimile: 412/858-3997
18. Noncompetition. Seller agrees that it will not seek, either directly
or indirectly, as a prime contractor or subcontractor, to obtain
contract or subcontract awards for the performance of emergency and
rapid response service with the U.S. Environmental Protection Agency
for a period of five (5) years from the date of this Agreement.
19. Entire Agreement. This Agreement, including the Schedules hereto, sets
forth the entire agreement and understanding between and among the
parties as to the subject matter hereof and merges and supersedes all
prior discussions, arrangements and understandings of every kind and
nature between them, and no party hereto shall be bound by any
condition, definition, warranty or representation other than as
expressly provided for in this Agreement or as may be on a date
subsequent to the date hereof duly set forth in writing signed by an
authorized officer of the party to be charged, and this Agreement may
not discharged except by performance in accordance with its terms or
by a writing signed by an authorized officer of the party to be
charged.
20. Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any jurisdiction, as to such jurisdiction, shall
be ineffective to the extent of such invalidity or unenforceability,
without rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in
any other jurisdiction.
21. Dispute Resolution and Arbitration. In the event that any dispute
arises between the parties pertaining to the subject matter of this
Agreement, and the parties, through the senior management of Seller
and Purchaser, are unable to resolve such dispute within a reasonable
time through
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negotiations and mediation efforts by senior executives of both parties,
such dispute shall be resolved as set forth in this Section 21.
(a) The procedures of this Section 21 may be initiated by a written notice
("Dispute Notice") given by one party ("Claimant") to the other, but
not before thirty (30) days have passed during which the parties have
been unable to reach a resolution as described above. The Dispute
Notice shall be accompanied by (i) a statement of the Claimant
describing the dispute in reasonable detail and (ii) documentation, if
any, supporting the Claimant's position on the dispute. Within twenty
(20) days after the other party's ("Respondent") receipt of the
Dispute Notice and accompanying materials, the parties shall submit
the dispute to binding arbitration in the Colorado area under the
commercial rules of the American Arbitration Association.
(b) Any award arising out of arbitration (i) shall be binding and
conclusive upon the parties; (ii) shall be limited to a holding for or
against a party, and affording such monetary remedy as is deemed
equitable, just and within the scope of this Agreement; (iii) may not
include special, incidental, consequential or punitive damages; (iv)
may in appropriate circumstances include injunctive relief; and (v)
may be entered in court in accordance with the United States
Arbitration Act.
(c) The arbitrator may not limit, expand or otherwise modify the terms of
this Agreement.
(d) The laws of the State of California shall apply to any mediation,
arbitration, or litigation arising under this Agreement.
(e) Each party shall bear its own expenses incurred in any mediation,
arbitration or litigation, but any expenses related to the
compensation and the costs of any mediator or arbitrator shall be
borne equally by the parties to the dispute.
(f) A request by a party to a court for interim measures necessary to
preserve a party's rights and remedies for resolution pursuant to this
Section 21 shall not be deemed a waiver of the agreement to arbitrate.
(g) The parties, their representatives, other participants and the
mediator or arbitrator shall hold the existence, content and result of
arbitration in confidence.
(h) Any claim by Purchaser for indemnity or reimbursement from Seller for
a "Non-Assumed Liability Claim" under Section 3.D need not be
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first submitted to arbitration under this Article 21, but
Purchaser may instead elect to proceed directly under Section 22.
22. Jurisdiction; Court Proceedings; Waiver of Jury Trial. Subject to the
provisions of Section 21, any suit, action or proceeding against any
party to this Agreement arising out of or relating to this Agreement
shall be brought in any Federal or state court located in the State of
California or Colorado and each of the parties hereby submits to the
exclusive jurisdiction of such courts for the purpose of any such
suit, action or proceeding. A final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law. To the extent that service of process by mail is permitted by
Applicable Law, each party irrevocably consents to the service of
process in any such suit, action or proceeding in such courts by the
mailing of such process by registered or certified mail, postage
prepaid, at its address for notices provided for herein. Each party
irrevocably agrees not to assert (a) any objection which it may ever
have to the laying of venue of any such suit, action or proceeding in
any Federal or state court located in the Commonwealth of Pennsylvania
and (b) any claim that any such suit, action or proceeding brought in
any such court has been brought in an inconvenient forum. Each party
waives any right to a trial by jury, to the extent lawful.
23. Non-Assignment of EPA Contracts. On and after the Closing, Purchaser
shall not assign, transfer or novate its interest in and to the EPA
Contracts without the prior written consent of the Seller; provided,
however, that the Purchaser may assign the EPA Contracts to an
affiliate or subsidiary or to a purchaser as part of a sale of the
Purchaser to a third party, subject to the terms and conditions
contained herein. This section shall survive the Closing.
24. Sections 3.C, 3.D, 5, 8, 9, 12, 14, 15, 16, 17, 18, 19, 20, 21, 22 and
23 shall survive the Closing.
25. Counterparts. This Agreement may be signed in two counterparts, each
of which shall be treated as an original, but which when taken
together, shall constitute one and the same instrument.
[This space is intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be executed in their respective names by their
respective duly authorized officers or representatives on the day and year first
above written.
CET Environmental Services, Inc.
By:
-------------------------------------
Name: Steven H. Davis
-----------------------------------
Title: President
----------------------------------
IT Corporation
By: /s/ BENJAMIN J. KOSEK
-------------------------------------
Name: Benjamin J. Kosek
-----------------------------------
Title: Vice President
----------------------------------
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be executed in their respective names by their
respective duly authorized officers or representatives on the day and year first
above written.
CET Environmental Services, Inc.
BY: /s/ STEVEN H. DAVIS
-------------------------------------
NAME: Steven H. Davis
-----------------------------------
TITLE: President
----------------------------------
IT Corporation
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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SCHEDULE 1.A
EPA CONTRACT
1. Contract 68-W-0016 (effective January 9, 1997), with the EPA related to the
provisions of Emergency and Rapid Response Services for Regions 6, 8 and 9
of the EPA, and the following delivery orders attached hereto.
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<PAGE> 24
HARBOR SQUARE
OFFICE
1. PARTIES: This Lease, dated for reference purposes only November 24, 1997, is
made by and between HARBOR SQUARE ASSOCIATES (hereinafter called "Landlord") and
CET ENVIRONMENTAL SERVICES, INC. a California Corporation (hereinafter called
"Tenant").
2. PREMISES: Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord that certain space (hereinafter called "Premises"), containing
approximately 6,920 square feet of floor area, being Suite 106 A AND 203 in
Building 5, located at 170 West Dayton, Edmonds, Snohomish County, Washington.
The approximate dimensions of said Premises are delineated in Exhibit "A" and
Exhibit "A-2" attached hereto and are located on property more particularly
described on Exhibit "A-1" attached hereto.
Said Lease is subject to the terms, covenants and conditions herein set forth
and the Tenant covenants as a material part of the consideration for this Lease
to keep and perform each and all of said terms, covenants and conditions by it
to be kept and performed.
3. USE: Tenant shall use the Premises for GENERAL OFFICE and shall not use or
permit the Premises to be used for any other purposes without the prior written
consent of Landlord.
4. TERM: Lease Term shall be THREE (3) FULL YEARS.
In the event the Premises are complete, the term of this Lease shall commence as
of APRIL 1, 1998. This Lease shall commence as of the date hereof and shall
continue thereafter during the Lease Term specified herein above, unless sooner
terminated as hereinafter provided in this Lease. Said Lease Term shall be
computed from the first day of January of the year following the date when the
obligation to pay any rental under this Lease first arises. The Lease shall
terminate on MARCH 31, 2001. * Unless extended as provided in Addendum 1
attached hereto.
In the event the Premises are not presently complete, Landlord agrees to deliver
to Tenant, and Tenant agrees to accept from Landlord possession of the Premises
forthwith upon substantial completion of the Premises as described in Exhibit
"B" attached hereto and incorporated herein by reference.
Landlord agrees that it will, at its sole cost and expense as soon as is
reasonably possible after the execution of this Lease commence and pursue to
completion the improvements to be erected by Landlord to the extent shown on the
attached Exhibit "B" labeled "Description of Landlord's Work and Tenant's Work".
The term "Substantial Completion of the Premises" is defined as the date on
which Landlord, its Agent or its Project Architect notifies Tenant in writing
that the Premises are substantially complete to the extent of Landlord's Work
specified in Exhibit "B" hereof, with the exception of such work as Landlord
cannot complete until Tenant performs necessary portions of its work. Tenant
shall commence the installation of fixtures, equipment and any of Tenant's work
as set forth in said Exhibit "B" promptly upon substantial completion of
Landlord's Work in the Premises and shall diligently prosecute such installation
to completion, and shall open the Premises for business not later than the date
specified for commencement of Monthly Base Rent in Article 5 hereof.
<PAGE> 25
5. MONTHLY BASE RENT: Tenant agrees to pay to Landlord as Rent, without notice
or demand, the monthly sum of EIGHT THOUSAND AND SEVENTY THREE AND 00/100's
($8,073.00) DOLLARS commencing APRIL 1,1998 and a like sum, in advance, on or
before the first day of each and every successive calendar month thereafter
during the term hereof, except that the first month's rent and deposit referred
to in Paragraph 6 herein, shall be paid upon the execution hereof. Rent for any
period during the term hereof which is for less than one (1) month shall be a
pro-rated portion of the monthly installment herein, based upon a thirty (30)
day month. Said rental shall be paid to Landlord without deduction or offset, in
lawful money of the United States of America, at such place as Landlord may from
time to time designate in writing.
5A. The Monthly Base Rent shall be subject to increase on each annual
anniversary of the commencement of the term of this Lease. The base for
computing the increase is the Consumer Price Index all Urban Consumers U.S. City
Average (1982-84) = 100), published by the United States Department of Labor,
Bureau of Labor Statistics ("Index"), which is in effect on the ninetieth (90th)
day preceding the date of the commencement of the term ("Beginning Index"). The
Index published and in effect on the ninetieth (90th) day preceding each
anniversary of the commencement of the term of this Lease ("Extension Index") is
to be used in determine the amount of the increase from one year to the next.
Beginning with the rent due on and after the first anniversary of the
commencement of the term of this Lease, and on and after each subsequent
anniversary, the Base Monthly Rent shall be increased to equal the product
achieved by multiplying the initial full base monthly rent due with respect to
the month immediately preceding such anniversary date by a fraction. On the
first anniversary of the Commencement Date, the numerator of the fraction will
be the Extension Index and the denominator will be the Beginning Index. On the
second and any subsequent anniversaries of the Commencement Date, the numerator
of the fraction will be the current Extension Index and the denominator will be
the Extension Index used to calculate the previous year's rental increase. If
there is a decline from one lease year to the next in the Extension Index, the
monthly rent due during the subsequent lease year shall equal the monthly rent
due during the then present lease year. Notwithstanding anything contained
herein to the contrary, in no event shall base rent increase more than 4% on
each adjustment date.
If the Index is changed so that the base year differs from that in effect
when the term commences, the Index shall be converted in accordance with the
conversion factor published by the United States Department of Labor, Bureau of
Labor Statistics. If the Index is discontinued or revised during the term, such
other government index or computation with which it is replaced shall be used in
order to obtain substantially the same result as would be obtained if the Index
had not been discontinued or revised.
6. SECURITY DEPOSIT: Tenant shall deposit with Landlord the sum of EIGHT
THOUSAND EIGHT HUNDRED AND SEVENTY FOUR AND 57/100'S ($8,874.57) DOLLARS. Said
sum shall be held by Landlord as security for the faithful performance by Tenant
of all the terms, covenants and conditions of this Lease to be kept and
performed by Tenant hereof. If Tenant defaults with respect to any provision of
this Lease including but not limited to the provisions relating to the payment
of rent, Landlord may (but shall not be required to) use, apply or retain all
or any part of this security deposit for the payment of any rent or any other
sum of default, or for the payment of any amount which Landlord may spend or
become obligated to spend by reason of Tenant's default, or to compensate
Landlord for any other loss or damage which Landlord may suffer by reason of
Tenant's default. If any portion of said deposit is so used or applied Tenant
shall, within five (5) days written demand therefore, deposit cash with Landlord
in an amount sufficient to restore the security deposit to its original amount
and Tenant's failure to do so shall be a default under this Lease. Landlord
shall not be required to keep this security deposit separate from its general
funds, and Tenant shall not be entitled to interest on such deposit. If Tenant
shall fully and faithfully perform every provision of this Lease to be performed
by it, the security deposit or any balance thereof shall be returned to Tenant
(or, at Landlord's option, to the last assignee of Tenant's interest hereunder)
within the ten (10) days following expiration of
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the Lease term. In the event of termination of Landlord's interest in this
Lease, Landlord shall transfer said deposit to Landlord's successor in interest.
7. ADDITIONAL CHARGES:
I. In addition to the Minimum Rent provided in Article 5 above, Tenant shall
pay to Landlord the following items, hereinafter called "Adjustments" Payment
for the Adjustments will commence MARCH 1, 1998. Base year 1997 cost per square
foot of $1.39 or $644.96 per month. The Adjustments are as follows:
(a) All real estate taxes and insurance premiums on the Premises, including
land, building and improvements thereon. Said real estate taxes shall include
all real estate taxes and assessments that are levied upon and/or assessed
against the Premises. Said insurance shall include all insurance premiums for
fire, extended coverage, liability, and any other insurance that Landlord deems
necessary on the Premises. Said taxes and insurance premiums for the purpose of
this provision shall be reasonably apportioned in accordance with the total
floor area of the Premises as it relates to the total rentable floor area of the
building or buildings of which the Premises are a part, (provided, however, that
if any tenants in said building or buildings pay taxes directly to any taxing
authority or carry their own insurance, as may be provided in their lease, their
square footage shall not be deemed a part of the floor area). Any additional
amount in insurance premium in excess of the norm for the building or buildings
due to the specific nature of Tenant's business, shall be borne by the Tenant.
(b) That percent of the total cost of the following items as Tenant's total
floor area bears to the total floor area of the building which is from time to
time completed as of the first day of each calendar quarter. Tenant's
proportionate share (23.65%) of the total cost of the following items:
(i) All real estate taxes including assessments, all insurance costs, and
all costs to maintain, repair or replace common areas, parking lots, sidewalks,
driveways, and other areas used in common by the tenants of the Building.
(ii) All costs to supervise and administer said common areas, parking
lots, sidewalks, driveways, and other areas used in common by the tenants or
occupants of the Building. Said costs shall include such fees as may be paid to
a third party in connection with same and shall in any event include a fee to
Landlord to supervise and administer same in an amount equal to ten (10%)
percent of the total costs of (I) above.
(iii) Any parking charges, utilities surcharges, or any other costs
levied, assessed, imposed by or at the direction of or resulting from statutes
or regulations or interpretations thereof, promulgated by any governmental
authority in connection with the use or occupancy of the Premises or the parking
facilities serving the Premises.
(iv) All rental taxes (other than Federal or State income taxes) levied
by any law, statute or ordinance presently in effect or enacted during the term
of this Lease.
II. Upon commencement of rental Landlord shall submit to Tenant a statement of
the anticipated monthly Adjustments for the period between such commencement and
the following January and Tenant shall pay same and all subsequent monthly
payments in advance on the first day of each month. Tenant shall continue to
make said monthly payments until notified by Landlord of a change thereof. By
March 1 of each year, Landlord shall endeavor to give Tenant a statement showing
the total actual Adjustments for the Building for the prior calendar year and
Tenant's allocable share thereof, prorated from the commencement of payment for
Adjustments. In the event the total of the monthly payments which Tenant has
made for the prior calendar year are less than the actual share of such
Adjustments, then Tenant shall pay the difference in a lump sum within ten (10)
days after receipt of such statement from Landlord and shall concurrently pay
the
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difference between the monthly payments made in the then-current calendar year
and the amount of monthly payments which are then calculated as monthly
Adjustments based on the prior year's experience. Any overpayment by Tenant
shall be credited towards the monthly Adjustments next coming due. The actual
Adjustments for the prior year shall be used for purposes of calculating the
anticipated monthly Adjustments for the then-current year with the actual
determination of such Adjustments after each calendar year as above provided;
excepting that in any year in which resurfacing is contemplated, Landlord shall
be permitted to include the anticipated cost of same as part of the estimated
monthly Adjustments. Even though the term has expired and Tenant has vacated the
premises, when the final determination is made of Tenant's share of said
Adjustments for the year in which this Lease terminates, Tenant shall
immediately pay any increase due over the estimated Adjustments previously paid
and, conversely, any overpayment made shall be immediately rebated by Landlord
to Tenant.
8. USES PROHIBITED: Tenant shall not do or permit anything to be done in or
about the Premises nor bring or keep anything therein which will in any way
increase the existing rate of or affect any fire or other insurance upon the
Building or any of its contents, or cause a cancellation of any insurance policy
covering said Building or any part thereof or any of its contents. Tenant shall
not do or permit anything to be done in or about the Premises which will in any
way obstruct or interfere with the rights of other tenants or occupants of the
Building or injure or annoy them or use or allow the Premises to be used for any
improper, immoral, unlawful or objectionable purpose, nor shall Tenant cause,
maintain or permit any nuisance in, on or about the Premises. Tenant shall not
commit or allow to be committed any waste in or upon the Premises.
9. COMPLIANCE WITH THE LAW: Tenant shall not use the Premises, or permit
anything to be done in or about the Premises, which will in any way conflict
with any law, statute, ordinance or governmental rule or regulation now in force
or which may hereafter be enacted or promulgated. Tenant shall, at its sole cost
and expense, promptly comply with all laws, statutes, ordinances and
governmental rules, regulations or requirements now in force or which may
hereafter be in force an with the requirements of any board of fire underwriters
or other similar bodies now or hereafter constituted relating to or affecting
the condition, use or occupancy of the Premises, excluding structural changes
not related to or affected by Tenant's Improvements or acts. The judgment of any
court of competent jurisdiction or the admission of Tenant in any action against
Tenant, whether Landlord be a party thereto or not, that Tenant has violated any
law, statute, ordinance or governmental rule, regulation or requirement, shall
be conclusive of that fact as between the Landlord and Tenant.
10. ALTERATIONS AND ADDITIONS: Tenant shall not make or allow to be made any
alterations, additions or improvements to or of the Premises or any part thereof
without the written consent of Landlord, and any alterations, additions or
improvements to or of said Premises, including, but not limited to, wall
covering, paneling and built-in cabinet work, but excepting movable furniture
and trade fixtures, shall at once become a part of the realty and belong to the
Landlord and shall be surrendered with the Premises. In the event Landlord
consents to the making of any alterations, additions or improvements to the
Premises by Tenant, the same shall be made by Tenant at Tenant's sole cost and
expense and any structural work shall be done by a contractor licensed and
bonded by the State of Washington. Upon the expiration or sooner termination of
the term hereof, Tenant shall, upon written demand by Landlord, given at least
thirty (30) days prior to the end of the term at Tenant's sole cost and expense,
forthwith and with all due diligence remove any alternations additions or
improvements made by Tenant, designated by Landlord to be removed, and Tenant
shall, forthwith and with all due diligence, at its sole cost and expense,
repair any damage to the premises caused by such removal.
11. REPAIRS: Notwithstanding the provisions of Article 10 hereinabove, Landlord
shall repair and maintain the structural portions of the Building including the
exterior walls and roof, unless such maintenance and repairs are caused in part
or in whole by the act, neglect, fault or omission of any duty by the Tenant,
its agents, servants, employees,
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invitees, or any damage caused by breaking and entering, in which case Tenant
shall pay to Landlord the reasonable cost of such maintenance and repairs.
Landlord shall not be liable for any failure to make any such repairs or to
perform any maintenance unless such failure shall persist for an unreasonable
time after written notice of the need of such repairs or maintenance is given to
Landlord by Tenant. Except as provided in Article 25 hereof, there shall be no
abatement of rent and no liability of Landlord by reason of any injury to or
interference with Tenant's business arising from the making of any repairs,
alterations or improvements in or to any portion of the Building or the Premises
or in or to fixtures, appurtenances and equipment therein, Tenant waives the
right to make repairs at Landlord's expense under any law, statute or ordinance
now or hereafter in effect.
By entry hereunder, Tenant accepts the Premises as being in good and sanitary
order, condition and repair. Tenant shall keep, maintain and preserve the
Premises in first class condition and repair, and shall, when and if needed, at
Tenant's sole cost and expense, make all repairs to the Premises and every part
thereof. Tenant shall upon the expiration or sooner termination of the term
hereof, surrender the Premises to Landlord in the same condition as when
received, usual and ordinary wear and tear excepted. Landlord shall have no
obligation to alter, remodel, improve, repair, decorate or paint the Premises or
any part thereof. The parties hereto affirm that Landlord has made no
representations to Tenant respecting the condition of the Premises, the
Building, the Project or the Common Area except as specifically herein set
forth.
12. LIENS: Tenant shall keep the Premises and the property in which the Premises
are situated from any liens arising out of any work performed, materials
furnished or obligations incurred by Tenant, Landlord may require, at Landlord's
sole option, that Tenant shall provide to Landlord, at Tenant's sole cost and
expense, a lien and completion bond in an amount equal to one and one-half (1
1/2) times the estimated cost of any improvements, additions, or alterations in
the Premises which the Tenant desires to make, to insure Landlord against any
liability for mechanics' and materialmen's liens and to insure completion of the
work.
13. ASSIGNMENT AND SUBLETTING: Tenant shall not either voluntarily, or by
operation of law, assign, transfer, mortgage, pledge hypothecate or encumber
this Lease or any interest therein, and shall not sublet the said Premises or
any part thereof, or any right or privilege appurtenant thereto, or allow any
other person (the employees agents, servants and invitees of Tenant excepted) to
occupy or use the said Premises, or any portion thereof, without the written
consent of Landlord first had and obtained. A consent to one assignment,
subletting, occupation or use by any other person shall not be deemed to be a
consent to any subsequent assignment, subletting, occupation or use by another
person. Consent to any such assignment or subletting shall in no way relieve
Tenant of any liability under this Lease.
Any such assignment or subletting without such consent shall be void, and
shall, at the option of the Landlord constitute a default under the terms of
this Lease.
In the event that Landlord shall consent to a sublease or assignment
hereunder, Tenant shall pay Landlord Five Hundred and no/l00s ($500.00) Dollars,
incurred in connection with the processing of documents necessary to giving of
such consent.
14. HOLD HARMLESS: Tenant shall indemnify and hold harmless Landlord against and
from any and all claims arising from Tenant's use of the Premises or from the
conduct of its business or from any activity, work, or other things done,
permitted or suffered by the Tenant or about the Premises, and shall further
indemnify and hold harmless Landlord against and from any and all claims arising
from any breach of default in the performance of any obligation on Tenant's part
to be performed under the terms of this Lease, or arising from any act or
negligence of the Tenant, or any officer, agent, employee, guest, or invitee of
Tenant, and from all costs, attorney's fees, and liabilities incurred in or
about the defense of any such claim or any action or preceding brought thereon
and in case any action or proceeding be brought against Landlord by reason of
such claim, Tenant upon notice from
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Landlord shall defend the same at Tenant's expense by counsel reasonably
satisfactory to Landlord, Tenant as a material part of the consideration to
Landlord hereby assumes all risk of damage to property or injury to persons in,
upon or about the Premises, from any cause other than Landlord's negligence, and
Tenant hereby waives all claims in respect thereof against Landlord.
Landlord or its agents shall not be liable for any loss or damage to persons
or property resulting from fire, explosion, falling plaster, steam, gas,
electricity, water or rain which may leak from any part of the Building or from
the pipes, appliances, or plumbing works therein or from the roof, street or
subsurface or from any other place resulting from dampness or any other cause
whatsoever, unless caused by or due to the negligence of Landlord, its agents,
servants or employees, Landlord or its agents shall not be liable for
interference with the light, air, or for any latent defect in the Premises.
Tenant shall give prompt notice to Landlord in case of casualty or accidents in
the Premises.
Neither Landlord nor any partner, director, officer, agent or employee of
Landlord shall be liable to Tenant or its partners, directors, officers,
contractors, agents, employees, invitees, sublessees or licensees, for any loss,
injury or damage to Tenant or to any other person, or to its or their property,
irrespective of the cause of such injury, damage or loss, unless solely caused
by or solely resulting from the gross negligence or willful misconduct of
Landlord or its employees in the operation or maintenance of the Premises, the
Building, or the Project without contributory negligence on the part of Tenant
or any of its sublessees or licensees or its or their employees, agents or
contractors, or any other lessees or occupants of the Building or Project.
Further, neither Landlord nor any partner, director, officer, agent or employee
of Landlord shall be liable (I) for any such damage caused by other lessees or
persons in or about the Building or Project, or caused by quasi-public work; or
(ii) for consequential damages arising out of any loss of the use of the
Premises of any equipment or facilities therein by Tenant or any person claiming
through or under Tenant.
15. SUBROGATION: As long as their respective insurers so permit, Landlord and
Tenant hereby mutually waive their respective rights of recovery against each
other for any loss insured by fire, extended coverage and other property
insurance policies existing for the benefit of the respective parties. Each
party shall apply to their insurers to obtain said waivers. Each party shall
obtain any special endorsements, if required by their insurer to evidence
compliance with the aforementioned waiver.
16. LIABILITY INSURANCE:
16A Tenant shall, during the term hereof and any other period of occupancy,
at its sole cost and expense, keep in full force and effect the following
insurance:
1. Standard form property insurance insuring against the perils of
fire, extended coverage, vandalism, malicious mischief, special extended
coverage ("All Risk") and sprinkler leakage. This insurance policy shall be upon
all property owned by Tenant, for which Tenant is legally liable or that was
installed at Tenant's expense, and which is located in the Project including,
without limitation, furniture, fittings, installations, fixtures (other than
Tenant Improvements installed by Landlord), and any other personal property, in
an amount not less than ninety percent (90%) of the full replacement cost
thereof. In the event that there shall be a dispute as to the amount which
comprises full replacement cost, the decision of Landlord or any mortgagees of
Landlord shall be conclusive. This insurance policy shall also be upon direct or
indirect loss of Tenant's earnings attributable to Tenant's inability to use
fully or obtain access to the Premises, Building or Project in an amount as will
property reimburse Tenant. Such policy shall name Landlord and any mortgagees of
Landlord as insured parties, as their respective interest may appear.
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2. Comprehensive General Liability Insurance insuring Tenant against
any liability arising out of the lease, use, occupancy or maintenance of the
Premises and all areas appurtenant thereto. Such insurance shall be in the
amount of $1,000,000 Combined Single Limit for injury to or death of one or more
persons in an occurrence, and for damage to tangible property (including loss of
use) in an occurrence, with such liability amount to be adjusted from year to
year to reflect increases in the Consumer Price Index. The policy shall insure
the hazards of the Premises and Tenant's Operations thereon, independent
contractors, contractual liability (covering the indemnity contained in
Paragraph 20 hereof and shall (a) name Landlord as an additional insured, (b)
contain a cross liability provision and (c) contain a provision that the
insurance provided the Landlord hereunder shall be primary and non-contributing
with any other insurance available to the Landlord.
3. Workers' Compensation and Employer's Liability insurance (as
required by state law).
4. Any other form or forms of insurance as Tenant or Landlord or any
mortgagees of Landlord may reasonably require from time to time in form, in
amounts and for insurance risks against which a prudent tenant would protect
itself.
16B All policies shall be written in a form satisfactory to Landlord and
shall be taken out with insurance companies holding a General Policyholders
Rating of "A" and a Financial Rating of "X" or better, as set forth in the most
current issue of Best's Insurance Reports. Within ten (10) days after the
execution of this Lease, Tenant shall deliver to Landlord copies of policies or
certificates evidencing the existence of the amounts and forms of coverage
satisfactory to Landlord. No such policy shall be cancelable or reducible in
coverage except after thirty (30) days' prior written notice to Landlord. Tenant
shall, within ten (10) days prior to the expiration of such policies, furnish
Landlord with renewals or "binders" thereof, or Landlord may order such
insurance and charge the cost thereof to Tenant as additional rent. If Landlord
obtains any insurance that is the responsibility of Tenant under this Paragraph,
Landlord shall deliver to Tenant a written statement setting forth the cost of
any such insurance and showing in reasonable detail the manner in which it has
been computed.
17. UTILITIES: Tenant shall pay for all water, gas, heat, light, power, sewer
charges, telephone service and all other services and utilities supplied to the
Premises, together with any taxes thereon. If any such services are not
separately metered to tenant, Tenant shall pay to Landlord a reasonable
proportion to be determined by Landlord of all charges jointly metered with
other premises.
18. PERSONAL PROPERTY TAXES: Tenant shall pay, or cause to be paid, before
delinquency any and all taxes levied or assessed and which become payable during
the term hereof upon all Tenant's leasehold improvements, equipment, furniture,
fixtures, and any other personal property located in the Premises. In the Event
any or all of the Tenant's leasehold improvements equipment, furniture, fixtures
and other personal property shall be assessed and taxed with the real property.
Tenant shall pay to Landlord its share of such taxes within ten (10) days after
delivery to Tenant by Landlord of a statement in writing setting forth the
amount of such taxes applicable to Tenant's property.
19. RULES AND REGULATIONS: Tenant shall faithfully observe and comply with the
rules and regulations that Landlord shall from time to time promulgate and/or
modify. The rules and regulations shall be binding upon the Tenant upon delivery
of a copy of them to Tenant. Landlord shall not be responsible to Tenant for the
nonperformance of any said rules and regulations by any other tenants or
occupants.
20. HOLDING OVER: If Tenant remains in possession of the Premises or any part
thereof with the express written consent of Landlord, such occupancy shall be a
tenancy from month to month at a rental in the amount of 150% the last Monthly
Minimum Rent,
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plus all other charges payable hereunder, and upon all the terms hereof
applicable to a month to month tenancy.
21. ENTRY BY LANDLORD: Landlord reserves, and shall at any and all times have
the right to enter the Premises to inspect the same, to submit said Premises to
prospective purchasers or tenants, to post notices of non-responsibility, to
repair the Premises and any portion of the Building of which the Premises are a
part that Landlord may deem necessary or desirable, without abatement of rent,
and may for that purpose erect scaffolding and other necessary structures where
reasonably required by the character of the work to be performed, always
providing that the entrance to the Premises shall not be blocked thereby, and
further providing that the business of the Tenant shall not be interfered with
unreasonably. Tenant hereby waives any claim for damages or for any injury or
inconvenience or interference with Tenant's business, any loss of occupancy or
quiet enjoyment of the Premises, and any other loss occasioned thereby, unless
caused by Landlord negligence. For each of the aforesaid purposes, Landlord
shall at all times have and retain a key with which to unlock all of the doors
in, upon and about the Premises, excluding Tenant's vaults, safes and files, and
Landlord shall have the right to use any and all means which Landlord may deem
proper to open said doors in an emergency in order to obtain entry to the
Premises without liability to Tenant except for any failure to exercise due care
for Tenant's property and any entry to the Premises obtained by Landlord by any
of said means, or otherwise, shall not under any circumstances be construed or
deemed to be a forcible or unlawful entry into, or a detainer of, the Premises,
or an eviction of Tenant from the Premises or any portion thereof.
22. TENANT'S DEFAULT: The occurrence of any one or more of the following events
shall constitute a default and breach of this Lease by Tenant.
22A. The vacating or abandonment of the Premises by Tenant.
22B. The failure by Tenant to make any payment of rent or any other payment
required to be made by Tenant hereunder, as and when due, where such
failure shall continue for a period of five 5) days after verbal or written
notice thereof by Landlord to Tenant.
22C. The failure by Tenant to observe or perform any of the covenants,
conditions, or provisions of this Lease to be observed or performed by the
Tenant, other than described in Article 22B above, where such failure shall
continue for a period of thirty (30) days after written notice hereof by
Landlord to Tenant; provided, however, that if the nature of Tenant's
default is such that more than thirty (30) days are reasonably required for
its cure, then Tenant shall not be deemed to be in default if Tenant
commences such cure within said thirty (30) days period and thereafter
diligently prosecutes such cure to completion.
22D. The making by Tenant of any general assignment or general arrangement
for the benefit of creditors; or the filing by or against Tenant of a
petition to have Tenant adjudged a bankrupt, or a petition or
reorganization or arrangement under any law relating to bankruptcy (unless,
in the case of a petition filed against Tenant, the same is dismissed
within sixty (60) days; or the appointment of a trustee or a receiver to
take possession of substantially all of Tenants assets located at the
Premises or of Tenants interest in this Lease, where possession is not
restored to Tenant within thirty (30) days; or the attachment, execution or
other judicial seizure of substantially all of Tenant's assets located at
the Premises or of Tenant's interest in this Lease, where such seizure is
not discharged in thirty (30) days.
23. REMEDIES IN DEFAULT: In the event of any such default or breach by Tenant,
Landlord may at any time thereafter, with or without notice or demand and
without
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limiting Landlord in the exercise of a right or remedy which Landlord may have
by reason of such default or breach;
23A. Terminate Tenant's right to possession of the Premises by any lawful
means, in which case this Lease shall terminate and Tenant shall
immediately surrender possession of the Premises to Landlord. In such event
Landlord shall be entitled to recover from Tenant all damages incurred by
Landlord by reason of Tenant's default including, but not limited to; the
cost of recovering possession of the Premises; expenses of reletting,
including necessary renovation and alteration of the Premises; reasonable
attorney's fees; the worth at the time of award by the court having
jurisdiction thereof of the amount by which the unpaid rent and other
charges and Adjustments called for herein for the balance of the term after
the time of such award exceeds the amount of such loss for the same period
that Tenant proves could be reasonably avoided; and that portion of any
leasing commission paid by Landlord and applicable to the unexpired term of
this Lease. Unpaid installments of rent or other sums shall bear interest
from the date due at the rate of twelve (12%) percent per annum; or,
23B. Maintain Tenant's right to possession in which case this Lease shall
continue in effect whether or not Tenant shall have abandoned the Premises.
In such event Landlord shall be entitled to enforce all of Landlord's
rights and remedies under this Lease, including the right to recover the
rent and any other charges and Adjustments as may become due hereunder; or
23C. Pursue any other remedy now or hereafter available to Landlord under
the laws or judicial decisions of the State in which the Premises are
located.
24. DEFAULT BY LANDLORD: Landlord shall not be in default unless Landlord fails
to perform obligations required of Landlord within a reasonable time, but in no
event later than thirty (30) days after the receipt of written notice of default
by Landlord and by the holder of any first mortgage or deed of trust covering
the Premises whose name and address shall have theretofore been furnished to
Tenant in writing, specifying wherein Landlord has failed to perform such
obligation, provided, however, that if the nature of Landlord's obligation is
such that more than thirty (30) days are required for performance then Landlord
shall not be in default if Landlord commences performance within such thirty
(30) days period and thereafter diligently prosecutes the same to completion. In
no event shall Tenant have the right to terminate this Lease as a result of
Landlord's default and Tenant's remedies shall be limited to damages and/or an
injunction.
25. RECONSTRUCTION: In the event the Premises are damaged by fire or other
perils covered by extended coverage insurance, Landlord agrees to forthwith
repair same, and this Lease shall remain in full force and effect, except that
Tenant shall be entitled to a proportionate reduction of the Minimum Rent from
the date of damage and while such repairs are being made, such proportionate
reduction to be based upon the extent to which the damage and making of such
repairs shall reasonably interfere with the business carried on by the Tenant in
the Premises. If the damage is due to the fault or neglect of Tenant or its
employees, there shall be no abatement of rent.
In the event the Premises are damaged as a result of any cause other than
the perils covered by fire and extended coverage insurance, then Landlord shall
forthwith repair the same, provided the extent of the destruction be less than
ten (10%) percent of the then full replacement cost of the premises. In the
event the destruction of the Premises is to an extent of ten (10%) percent or
more of the full replacement cost then Landlord shall have the option; (1) to
repair or restore such damage, this Lease continuing in full force and effect,
but the Monthly Base Rent to be proportionately reduced as hereinabove in this
Article provided; or (2) give notice to Tenant at any time within sixty (60)
days after such damage, terminating this Lease as of the date specified in such
notice, which date shall be no more than thirty (30) days after the giving of
such notice. In the event of giving such
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notice, this Lease shall expire and all interest of the Tenant in the
Premises shall terminate on the date so specified in such notice and the
Monthly Base Rent, reduced by as proportionate reduction, based upon the
extent, if any, to which such damage interfered with the business carried
on by the Tenant in the Premises, shall be paid up to date of said such
termination.
Notwithstanding anything to the contrary contained in this Article,
Landlord shall not have any obligation whatsoever to repair, reconstruct or
restore the Premises when the damage resulting from any casualty covered
under this Article occurs during the last twenty-four months of the term
of this Lease or any extension thereof.
Landlord shall not be required to repair any injury or damage by fire
or other cause, or to make any repairs or replacements of any leasehold
improvements, fixtures, or other personal property of Tenant.
26. EMINENT DOMAIN: If more than twenty-five (25%) percent of the Premises
shall be taken or appropriated by any public or quasi-public authority
under the power of eminent domain, either party hereto shall have the
right, at its option, within sixty (60) days after said taking, to
terminate this Lease upon thirty (30) days written notice. If either less
than or more than 25% of the Premises are taken (and neither party elects
to terminate as herein provided), the Monthly Base Rent thereafter to be
paid shall be equitably reduced. If any part of the Building other than the
Premise may be so taken or appropriated, Landlord shall within sixty (60)
days of said taking have the right at its option to terminate this Lease
upon written notice to Tenant. In the event of any taking or appropriation
whatsoever, Landlord shall be entitled to any and all awards and/or
settlements which may be given and Tenant shall have no claim against
Landlord for the value of any unexpired term of this Lease.
27. TENANT'S STATEMENT: Tenant shall at any time and from time to time upon
not less than five (5) days prior written notice from Landlord execute,
acknowledge and deliver to Landlord, and to any Lender of Landlord, a
statement in writing (a) certifying that this Lease is unmodified and in
full force and effect (or, if modified, stating the nature of such
modification and certifying that this Lease as so modified is in full force
and effect), and the date to which the rental and other charges are paid in
advance, if any, and (b) acknowledging that there are not, to Tenant's
knowledge, any incurred defaults on the part of the Landlord hereunder, or
specifying such defaults if any are claimed, and (c) setting forth the date
of commencement of rents and expiration of the term hereof. Any such
statement may be relied upon by any prospective purchaser or encumbrance of
all or any portion of the real property of which the Premises are a part.
28. PARKING AND COMMON AREAS: Landlord covenants that common and parking
areas shall be at all times available for the non-exclusive use of Tenant
during the full term of this Lease or any extension term hereof, provided
that the condemnation or other taking by any public authority, or sale in
lieu of condemnation, of any or all of such common and parking areas shall
not constitute a violation of this covenant. Landlord reserves the right to
change the entrances, exits, traffic lanes and the boundaries and locations
of such parking area or areas.
28A. Prior to the date of Tenant's opening for business in the
Premises, Landlord shall cause said common and parking area of areas
to be graded, surfaced, marked and landscaped at no expense to Tenant.
28B. The Landlord shall keep said automobile parking and common areas
in a neat, clean and orderly condition, and shall repair any damage to
the facilities thereof.
28C. Tenant, for the use and benefit of Tenant, its agents, employees,
customers, licensees and sub-tenants, shall have the non-exclusive
right in common with Landlord, and other present and future owners,
tenants and their agents, employees, customers, licensees and
sub-tenants, to use said common and parking areas during
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the entire term of this Lease, or any extension thereof, for ingress
and egress, and automobile parking.
28D. The Tenant, in the use of said common and parking areas, agrees
to comply with such reasonable rules, regulations and charges for
parking as the Landlord may adopt from time to time for the orderly
and proper operation of said common and parking area. Such rules may
include but shall not be limited to the following; (1) The restricting
of employee parking to a limited, designated area or areas; and (2)
The regulation of the removal, storage and disposal of Tenant's refuse
and other rubbish at the sole cost and cost and expense of Tenant.
29. AUTHORITY OF PARTIES:
29A. Corporate Authority. If Tenant is a corporation, each individual
executing this Lease on behalf of said corporation represents and
warrants that he is duly authorized to execute and deliver this Lease
on behalf of said corporation, in accordance with a duly adopted
resolution of the board of directors of said corporation, a copy of
which is attached hereto, in accordance with the bylaws of said
corporation, and that this Lease is binding upon said corporation in
accordance with its terms.
29B. Limited Partnerships. If the Landlord herein is a limited
partnership, it is understood and agreed that any claims by Tenant on
Landlord shall be limited to the assets of the limited partnership,
and furthermore, Tenant expressly waives any and all rights to proceed
against the individual partners, or the officers, directors or
shareholders of any corporate partner, except to the extent of their
interest in said limited partnership.
30. SIGNS: No sign, picture, advertisement or notice shall be displayed,
inscribed, painted or affixed to any of the glass or woodwork of the
premises hereby demised, except such as shall be approved by the Landlord
in writing, and shall be painted by a sign painter designated by the
Landlord, no signs or devices shall be hung on or placed against the
windows of said premises nor on the exterior wall of the building. (See
Sign Criteria attached.)
31. DISPLAYS: The Tenant may not display or sell merchandise or allow
grocery carts or other similar devices within the control of Tenant to be
stored or to remain outside the defined exterior walls and permanent
doorways of the Premises. Tenant further agrees not to install any exterior
lighting, amplifiers or similar devices or use in or about the Premises any
advertising medium which may be heard or seen outside the Premises, such as
flashing lights, searchlights, loudspeakers, phonographs or radio
broadcasts.
32. AUCTIONS: Tenant shall not conduct or permit to be conducted any sale
by auction in, upon or from the Premises, whether said auction be
voluntary, involuntary, pursuant to any assignment for the payment of
creditors or pursuant to any bankruptcy or other insolvency proceeding.
33. HOURS OF BUSINESS: Not applicable to this Lease.
34. LIMITATION ON LIABILITY: In consideration of the benefits accruing
hereunder, Tenant and all successors and assigns covenant and agree that,
in the event of any actual or alleged failure, breach or default
hereunder by Landlord:
34A The sole and exclusive remedy shall be against the Landlord's
interest in the Project;
34B No partner of Landlord shall be sued or named as a party in any
suite or action (except as may be necessary to secure jurisdiction of the
partnership);
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34C No service of process shall be made against any partner of
Landlord (except as may be necessary to secure jurisdiction of the
partnership);
34D No judgment will be taken against any partner of Landlord;
34E Any judgment taken against any partner of Landlord may be vacated
and set aside at any time nunc pro tunc;
34F No writ of execution will ever be levied against the assets of any
partner of Landlord;
34G The obligations of Landlord under this Lease do not constitute
personal obligations of the individual partners, directors, officers or
shareholders of Landlord, and Tenant shall not seek recourse against the
individual partners, directors, officers or shareholders of Landlord or any
of their personal assets for satisfaction of any liability in respect to
this Lease;
34H These covenants and agreements are enforceable both by Landlord
and also by any partner of Landlord.
35. MODIFICATION FOR LENDER: If in connection with obtaining construction,
interim or permanent financing for the Project the lender shall request
reasonable modifications in this Lease as a condition to such financing,
Tenant will not unreasonably withhold, delay or defer its consent thereto,
provided that such modifications do not increase the obligations of Tenant
hereunder or materially adversely affect the leasehold interest hereby
created or Tenant's rights hereunder.
36. HAZARDOUS SUBSTANCES:
36A Presence and Use of Hazardous Substances. Tenant shall not,
without Landlord's prior written consent, keep on or around the Premises,
Common Areas or Building, for use, disposal, treatment, generation, storage
or sale, any substances, wastes or materials, designated as, or containing
components designated as hazardous dangerous toxic or harmful and/or which
are subject to regulation by any federal, state or local law, regulation,
statute or ordinance (collectively referred to as "Hazardous Substances").
36B Cleanup Costs. Default and Indemnification.
1. Tenant shall be fully and completely liable to Landlord for any and
all cleanup costs, and any and all other charges, fees, penalties (civil
and criminal) imposed by any governmental authority with respect to
Tenant's use, disposal, transportation, generation and/or sale of Hazardous
Substances, in or about the Premises, Common Areas, or Building.
2. Tenant shall indemnify, defend and save Landlord harmless from any
and all of the costs, fees, penalties and charges assessed against or
imposed upon Landlord (as well as Landlord's attorneys' fees and costs) as
a result of Tenant's use, disposal, transportation, generation and/or sale
of Hazardous Substances.
3. Upon Tenant's default in addition to the rights and remedies set
forth elsewhere in this Lease, Landlord shall be entitled to the following
rights and remedies:
a. At Landlord's option, to terminate this Lease immediately;
and/or
b. To recover any and all damages associated with the default,
including, but not limited to cleanup costs and charges, civil and criminal
penalties and fees, loss of business and sales by Landlord and other
tenants of the Building, any and all damages and claims asserted by third
parties and Landlord's attorneys' fees and costs.
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37. GENERAL PROVISIONS:
(i) Plats and Riders. Clauses, plats, riders and addendum's, if any
affixed to this Lease are a part hereof.
(ii) Waiver. The waiver by Landlord of any term, covenant or condition
herein contained shall not be deemed to be a waiver of such term, covenant
or condition herein contained. The subsequent acceptance of rent hereunder
by Landlord shall not be deemed to be a waiver of any preceding default by
Tenant of any term, covenant or condition of this Lease, other than the
failure of the Tenant to pay the particular rental so accepted, regardless
of Landlord's knowledge of such preceding default at the time of the
acceptance of such rent.
(iii) Joint Obligation. If there be more than one Tenant the
obligations hereunder imposed shall be joint and several.
(iv) Marginal Headings. The marginal headings and article titles to
the articles of this Lease are not a part of the Lease and shall have no
effect upon the construction or interpretation of any part thereof.
(v) Time. Time is of the essence of this Lease and each and all of its
provisions in which performance is a factor.
(vi) Successors and Assigns. The covenants and conditions herein
contained, subject to the provisions as to assignment, apply to and bind
the heirs, successors, executors, administrators and assigns of the parties
hereto.
(vii) Recordation. Neither Landlord nor Tenant shall record this
Lease, but a short form memorandum hereof may be recorded at the request of
Landlord.
(viii) Quiet Possession. Upon Tenant paying the rent reserved
hereunder and observing and performing all of the covenants, conditions and
provisions on Tenant's part to be observed and performed hereunder, Tenant
shall have quiet possession of the Premises for the entire term hereof,
subject to all the provisions of this Lease. Tenant has satisfied himself
of and hereby accepts the building's method of construction for sound
deadening. Any additional requirements for sound deadening shall be borne
at the sole expense of the Tenant.
(ix) Late Charges. Tenant hereby acknowledges that late payment by
Tenant to Landlord of rent or other sums due hereunder will cause Landlord
to incur costs not contemplated by this Lease, the exact amount of which
will be extremely difficult to ascertain. Such costs include, but are not
limited to, processing and accounting charges, and late charges which may
be imposed upon Landlord by terms of any mortgage of trust deed covering
the Premises. Accordingly, if any installment of rent or any sum due from
Tenant shall not be received by Landlord or Landlord's designee within
ten (10) days after the amount is due, then Tenant shall pay to Landlord
a late charge equal to ten (10%) percent of such overdue amount, plus any
attorney's fees incurred by Landlord by reason of Tenant's failure to pay
rent and/or other charges when due hereunder. The parties hereby agree that
such late charges represent a fair and reasonable estimate of the cost that
Landlord will incur by reason of the late payment by Tenant. Acceptance of
such late charges by the Landlord shall in no event constitute a waiver of
tenant's default with respect to such overdue amount, nor prevent Landlord
from exercising any of the other rights and remedies granted hereunder.
(x) Prior Agreements. This Lease contains all of the agreement of the
parties hereto with respect to any matter covered or mentioned in this
Lease, and no prior agreements or understanding pertaining to any such
matters shall be effective for any purpose. No provision of this Lease may
be amended or added to except by an agreement in writing
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signed by the parties hereto or their respective successors in interest.
This Lease shall not be effective or binding on any party until fully
executed by both parties hereto.
(xi) Inability to Perform. This Lease and the obligations of the
Tenant hereunder shall not be affected or impaired because the Landlord is
unable to fulfill any of its obligations hereunder or is delayed in doing
so, if such inability or delay is caused by reason of strike, labor
troubles, acts of God, or any other cause beyond the reasonable control of
the Landlord.
(xii) Partial Invalidity. Any provision of this Lease which shall
prove to be invalid, void, or illegal shall in no way affect, impair or
invalidate any other provision hereof and such other provision shall remain
in full force and effect.
(xiii) Cumulative Remedies. No remedy or election hereunder shall be
deemed exclusive but shall, wherever possible, be cumulative with all other
remedies at law or in equity.
(xiv) Choice of Law. This Lease shall be governed by the laws of the
State in which the Premises are located.
(xv) Attorney's Fees. In the event of any action or proceeding brought
by either party against the other under this Lease the prevailing party
shall be entitled to recover for the fees of its attorney in such action or
proceeding, including costs of appeal, if any, in such amount as the court
may judge reasonable as attorney's fees. In addition, should it be
necessary for Landlord to employ legal counsel to enforce any of the
provisions herein contained, Tenant agrees to pay all attorney's fees and
court costs reasonably incurred.
(xvi) Sale of Premises by Landlord. In the event of any sale of the
Premises by Landlord, Landlord shall be and is hereby entirely freed and
relieved of all liability under any and all of its covenants and
obligations contained in or derived from this Lease arising out of any act,
occurrence or omission occurring after the consummation of such sale; and
the purchaser, at such sale or any subsequent sale of the Premises shall be
deemed, without any further agreement between the parties or their
successors in interest or between the parties and any such purchaser, to
have assumed and agreed to carry out any and all of the covenants and
obligations of the Landlord under this Lease.
(xvii) Subordination, Attornment. Upon request of the Landlord, Tenant
will, in writing, subordinate its rights hereunder to the lien of any
mortgage or deed of trust to any bank, insurance company or other lending
institution, now or hereafter in force against the Premises, and to all
advances made or hereafter to be made upon the security thereof.
In the event any proceedings are brought for foreclosure, or in the
event of the exercise of the power of sale under any mortgage or deed of
trust made by the Landlord covering the Premises, the Tenant shall attorn
to the purchaser upon any such foreclosure or sale and recognize such
purchaser as the Landlord under this Lease.
The provisions of this Article to the contrary notwithstanding and so
long as Tenant is not in default hereunder, this Lease shall remain in full
force and effect for the full term hereof.
(xviii) Notices. All notices and demands which may or are to be
required or permitted to be given by either party on the other hereunder
shall be in writing. All notices and demands by the Landlord to the Tenant
shall be sent by United States Mail, postage prepaid, addressed to the
Tenant at the Premises, and to the address herein below, or to such other
place as Tenant may from time to time designate in a notice to the
Landlord. All notices and demands by the Tenant to the Landlord shall be
sent by United States Mail postage prepaid, addressed to the Landlord at
the address set forth herein, and to such other person or place as the
Landlord may from time to time designate in a notice to the Tenant.
14
<PAGE> 38
To Landlord At: 120 W. DAYTON, SUITE B/6, EDMONDS, WASHINGTON 98020
To Tenant At: 170 W. DAYTON, SUITE 106 A, EDMONDS, WASHINGTON 98020
38. BROKERS. Tenant warrants that it has had no dealings with any real estate
broker or agents in connection with the negotiation of this Lease, excepting
only NONE and it knows of no other real estate broker or agent who is entitled
to a commission in connection with Lease.
39. This Lease is subject to final approval of the lending institution
financing this project.
If this Lease has been filled in, it has been prepared for submission to your
attorney for his approval. No representation or recommendation has been made by
the real estate broker or its agents or employees as to the legal sufficiency,
legal effect or tax consequences of this Lease or the transactions relating
thereto.
LANDLORD: HARBOR SQUARE ASSOCIATES
By: /s/ DICK BESELIN
---------------------------------------
Dick Beselin, Managing General Partner
TENANT:
By: /s/ JOHN G.L. HOPKINS
----------------------------------------
John G.L. Hopkins, Senior Vice President
CET Environmental Services, Inc.
<PAGE> 39
STATE OF WASHINGTON )
) ss.
COUNTY OF )
On this 10th day of December, 1997, before me, the undersigned, a Notary Public
in and for the State of Washington, duly commissioned and sworn, personally
appeared Dick Beselin, to me known to be the Managing General Partner, of the
company that executed the foregoing instrument, and acknowledged the said
instrument to be the free and voluntary act and deed of said corporation, for
the uses and purposes therein mentioned and on oath stated that he was
authorized to execute the said instrument and that the seal affixed is the seal
of said company.
Witness my hand and official seal hereto affixed the day and year first above
written.
[NOTARY PUBLIC SEAL] /s/ JANICE CONNER
----------------------------------
NOTARY PUBLIC in and for the State
of Washington, residing at
EDMONDS
----------------------------------
My commission expires: 11/9/99
---------
STATE OF WASHINGTON )
) ss.
COUNTY OF SNOHOMISH )
On this 2nd day of December, 199_, before me, a Notary Public in and for the
State of Washington, duly commissioned and sworn, personally appeared John G. L.
Hopkins, to me known to be the individual names in and who executed the
foregoing instrument, and acknowledged to me that he/she signed the same as
his/her free and voluntary act and deed for the uses and purposes therein
mentioned.
WITNESS MY HAND AND OFFICIAL SEAL the day and year first above written.
[NOTARY PUBLIC SEAL] /s/ SUSAN BESELIN
----------------------------------
NOTARY PUBLIC in and for the State
of Washington, residing at
EDMONDS
----------------------------------
My commission expires: 6/15/99
----------
16
<PAGE> 40
EXHIBIT "C"
HARBOR SQUARE BUSINESS PARK
RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the rules and
regulations that Landlord shall from time to time promulgate and/or modify. The
rules and regulations shall be binding upon the Tenant. Landlord shall not be
responsible to Tenant for the nonperformance of any said rules and regulations
by any other tenants or occupants.
The Tenant, in the use of said common and parking areas, agrees to
comply with such reasonable rules, regulations for the parking as the Landlord
may adopt from time to time for the orderly and proper operation of said common
and parking areas. Such rules may include but shall not be limited to the
restricting of employee parking to a limited, designated area or areas. The
following rules and regulations are now in effect:
1. Tenant parking is on a non-exclusive, first-come-first-serve basis within the
designated areas and is intended for vehicles used to commute to and from work.
Storage of vehicles or the display of vehicles, such as "for sale", is not
permitted. Company vans or cars used in the daily operation of tenant's business
may remain on the premises overnight. Any parking of vehicles other than what is
described above must have Landlord's approval. Vehicles not conforming with the
above will be towed at the owner's expense.
2. All loading and unloading of goods shall be done only at such times, in the
areas, and through the entrances designated for such purposes by Landlord.
3. All garbage and refuse shall be kept in the kind of container specified by
Landlord, and shall be placed outside of the Leases Premises prepared for
collection in the manner and at the times and places specified by Landlord. If
Landlord shall provide or designate a service for picking up refuse and garbage,
Tenant shall use same at Tenant's cost. Tenant shall pay the cost of removal of
any of Tenant's refuse or rubbish.
4. No aerial shall be erected on the roof or exterior walls of the Leased
Premises or on the grounds, without in each instance, the written consent of
Landlord. Any aerial so installed without such written consent shall be subject
to removal without notice at any time.
5. No loud speakers, televisions, phonographs, radios, or other devices shall be
used in a manner so as to be heard or seen outside of the Leased Premises
without the prior written consent of Landlord.
6. If the Leased Premises are equipped with heating facilities separate from
those in the remainder of the building, Tenant shall keep the Leased Premises at
a temperature sufficiently high to prevent freezing of water pipes and fixtures.
7. The exterior areas immediately adjoining the Leased Premises shall be kept
clean and free from snow, ice, dirt and rubbish by Tenant to the satisfaction of
Landlord, and Tenant shall not place or permit any obstruction or merchandise in
such areas.
8. The plumbing facilities shall not be used for any other purpose than that
for which they are constructed, and no foreign substance of any kind shall be
thrown therein, and the expense of any breakage, stoppage, or damage resulting
from a violation of this provision shall be borne by Tenant who shall, or whose
employees, agents or invitees shall have caused it.
9. Tenant shall use at Tenant's cost such pest extermination contractor as
Landlord may direct and at such intervals as Landlord may require.
17
<PAGE> 41
10. Tenant shall not burn any trash or garbage of any kind in or about the
Leased Premises.
11. Tenant shall not make noises, cause disturbances, or create odors which may
be offensive to other tenants of the building or their officers employees
agents, servants, customers or invitees.
12. Tenant shall not allow for the operation of a day care facility within the
Premises.
13. Tenant, employees or invitees shall not smoke in the premises.
18
<PAGE> 42
EXHIBIT "A"
HARBOR SQUARE BUSINESS PARK
[FIRST FLOOR PLAN]
<PAGE> 43
EXHIBIT "B"
HARBOR SQUARE BUSINESS PARK
Description of Landlord's Work and Tenant's Work
Tenant: CET ENVIRONMENTAL SERVICES, INC.
170 W. Dayton, 106 B-D
Edmonds, WA 98020
DESCRIPTION OF LANDLORD'S WORK
Premises: As is in the enclosed space, with the exception of:
1. Over Head door to be re-installed.
Exterior:
1. Landlord shall provide for a fenced area with one (1)
roller gate immediately adjacent to the warehouse as shown on
"Exhibit D - Yard".
<PAGE> 44
EXHIBIT "D-YARD"
HARBOR SQUARE BUSINESS PARK
[FLOOR PLAN]
<PAGE> 45
EXHIBIT "A-1"
HARBOR SQUARE BUSINESS PARK
Building 5
That portion of Government Lot 3, Section 23, Township 27 North, Range 3 East,
V.M., described as Parcel 5, in Snohomish County, Washington, together with
easements, covenants and restrictions of record.
22
<PAGE> 46
ADDENDUM 1
Tenant shall have three (3) successive options to extend the term of
this lease upon the same terms and conditions as contained in the Lease dated
November 24, 1997 for an additional period of one (1) year each commencing upon
the expiration of the preceeding term, provided that Tenant is not in material
default in the performance of any condition of the Lease at the time of the
exercise of the option or at the time of commencement of the option term. The
option may be exercised only by Tenant delivering written notice thereof to
Landlord not less than six (6) months prior to the expiration of the original
Lease term, the terms and conditions of the Lease shall remain the same except
for the amount of minimum rent, which amount shall be negotiated and agreed upon
by both parties at least four (4) months prior to commencement date of the
option term. In the event that minimum rent is not agreed upon by that time,
this option becomes null and void. Upon exercise of the option and upon
agreement of the amount of minimum rent per the above, the Lease shall be deemed
extended without execution of any further lease or other instrument. Together
with the payment of minimum rent due for the first month of the option term,
Tenant shall deposit with Landlord any additional amount necessary so that the
amount of security deposit held by Landlord equals the amount of the
then-current minimum rent.
23
<PAGE> 47
HARBOR SQUARE SIGN CRITERIA
BUILDING 5, 170 W. DAYTON
A. One copy of layout and shop drawings are to be submitted to the
Lessor for approval before fabrication and prior to submission to the
City.
B. An approved drawing will be required before installation of sign is
permitted. Signs built without approval or contrary to corrections on
approved drawing will be altered to conform with these standards at
the expense of the Lessee.
C. No flashing or animated signs will be permitted.
D. No exposed electrical tubing or "cross-over" will be permitted.
E. No projections above or below the sign panel designated area will be
permitted.
F. For the ground floor, the following types of signs are acceptable:
channel letters, foam letters.
Second floor signage is generally not permitted.
G. All lettering shall be restricted to the sign area. See subsequent
sheets for maximum letter heights and allowable locations.
H. Window signs shall be for tenant identification only and shall be fold
leaf or similar lettering (see Sheet 2).
I Symbols, spacing and colors are subject to the Lessor's written
approval.
J. After approval by Lessor, a sign must be submitted to and approved by
the Architectural Design Board of the City of Edmonds.
<PAGE> 48
TEMPORARY SIGNS:
All temporary signs, which have been pre-approved by Landlord and meet the City
of Edmonds sign code, require a refundable deposit of $100. Temporary signs
include, but are not limited to, banners and posters. All temporary signs shall
be removed after fourteen (14) days, unless Tenant has received prior approval
from Landlord for a longer placement. Any signs left up longer than what
Landlord has approved shall be removed by Landlord and Tenant shall forfeit the
entire deposit. Signs shall not be installed in such a manner that the building
shell is penetrated. In the event that this should occur, Tenant shall also pay
the cost the repair such penetrations in addition to the amount initially
deposited. Signs which have been placed without Landlord's prior written
approval shall be removed at the sole expense of Tenant including, but not
limited to, any repairs resulting from sign placement and removal.
Sandwich style signs are to be placed only on the grassy areas as outlined on
the attached site plan and must be to announce special events only (e.g.,
special displays, sales, etc.) and cannot be left out for more than fourteen
(14) days in a row and are to be removed each night. Only one sandwich sign at a
time can be placed on each of the grassy areas as outlined on the attached site
plan. These signs must also conform to the size, colors, etc. as allowed by the
current City of Edmonds codes.
<PAGE> 49
[HARBOR SQUARE LETTERHEAD]
HARBOR SQUARE
SIGN CRITERIA
A. INSTALLATION:
1. TENANTS SHALL PAY FOR THE INSTALLATION AND MAINTENANCE
OF ALL SIGNS. THE OWNER WILL PROVIDE PRIMARY ELECTRICAL
SERVICE TERMINATING AT THE POINT SHOWN ON THE CONSTRUCTION
DRAWINGS. THE TENANT SHALL PROVIDE ALL OTHER INSTALLATION,
INCLUDING FINAL CONNECTION, TRANSFORMERS AND ALL OTHER LABOR
AND MATERIALS FOR SIGN INSTALLATION.
B. EXCEPTIONS:
1. EXCEPTIONS TO THESE STANDARDS SHALL BE REVIEWED BY THE LESSOR,
AND ACCORDINGLY, THE DEVELOPER WILL RETAIN FULL RIGHTS OF APPROVAL ON
ANY SIGNS USED IN HARBOR SQUARE.
[DRAWING] C. STOREFRONT/WINDOWS:
1. THE TENANT IS ALLOWED TO USE UP TO 144 SQ. IN. OF GOLD
LEAF OR DECAL APPLICATION LETTERING, NOT TO EXCEED 2".
2. ALL NUMBERS AND DECAL LETTERS SHALL BE
"MICRO-STYLE BOLD". OTHER TYPE FACES ARE SUBJECT TO
APPROVAL BY LESSOR.
-2-
<PAGE> 50
[HARBOR SQUARE LETTERHEAD] HARBOR SQUARE
SIGN CRITERIA
A. ILLUMINATED SIGN CAN:
1. FROM SIDEWALL TO SIDEWALL OF TENANT SPACE, APPROVED
PLASTIC PANELS AND SIGNS SHALL BE LIMITED AS FOLLOWS:
a. They shall not exceed 20 percent of the wall area.
b. They shall be located a minimum distance of 18" from
adjacent tenants.
c. They shall not exceed a height of 18".
d. All edges and the back shall be fully encased in metal.
2. SIGN SHALL BE ATTACHED DIRECTLY TO WALL. THE BOTTOM OF
PROJECTING SIGN SHALL BE AT 8' - 0" MINIMUM.
3. SUGGESTED TYPE FACE IS "MICROSTYLE BOLD", OTHER FACES SUBJECT TO
PRIOR APPROVAL BY LESSOR.
[DRAWING] ANODIZED ALUMINUM SIGN [DRAWING]
CAN, TO MATCH STOREFRONT.
SEMI-OPAQUE BACKGROUND
COLOR SUBJECT TO LESSOR'S
APPROVAL.
TRANSLUCENT LETTERS,
COLOR SUBJECT TO LESSOR'S
APPROVAL. 430 WA. COOLWHITE
LAMPS, 7" O.C.
-3-
<PAGE> 51
[SITE PLAN]
[HARBOR SQUARE LOGO] HARBOR
SQUARE
ASSOCIATES
EDMONDS, WA
98020
<PAGE> 52
SCHEDULE 1.C.
EPA CONTRACT EQUIPMENT
SEE ATTACHED SCHEDULE AND INCLUDING SELLERS OFFICE FURNITURE AND MISCELLANEOUS
EQUIPMENT AND SUPPLIES LOCATED IN THE EDMUNDS, WA LEASED FACILITY.
23
<PAGE> 53
<TABLE>
<CAPTION>
ID SERIAL MAKE & MODEL AP VENDOR FAACCT BOOK_BASIS
- ---- ----------------- --------------------------------- ------------------------ -------- -----------
<S> <C> <C> <C> <C>
S100 1FTJX35G4RKB31487 94 F350 1 TON EXT CAB COURTESY 0172-002 $ 13,385.85
S101 1FTJX35GTEB64213 96 F350 1 TON EXT CAB ASSOCIATES LEASING 0172-002 $ 20,732.00
S102 2FDKF3852LCA91856 90 F350 1 TON FLATBED BILLPIE FORD 0171-002 $ 24,961.97
S103 [ILLEGIBLE] 95 CHEVY ASSOCIATES LEASING 0172-002 $ 22,743.53
S104 [ILLEGIBLE] 92 F250 1 TON BOX TRUCK ENTERPRISE 0172-002 $ 21,580.68
S105 1FTJW35SF9SEA71446 95 F350 1 TON CREW CAB ASSOCIATES LEASING 0172-002 $ 25,780.00
S106 [ILLEGIBLE] KOMATSU 5000LB INDUSTRIAL FORKLIFT HERTZ 0171-002 $ 13,000.03
S107 [ILLEGIBLE] 98 YAMAHA 386CC 4X4 ATV CANTON FARM EQUIPMENT 0171-002 $ 5,295.00
S108 3B7KC23C7SM172833 95 BR2500 RAM ASSOCIATES LEASING 0172-002 $ 27,315.00
S200 [ILLEGIBLE] 28' 1985 FRUEHAUF VAN FRUEHAUF 0170-002 $[ILLEGIBLE]
S202 16VAX1213N1A21011 92 BIG TEX UTILITY TRAILER HARRIS TRAILER SALES 0170-002 $ 777.56
S205 FRTO11702 32' SEMI TRAILER FRUEHAUF 0170-002 $ 3,843.00
S207 FRTO11708 32' SEMI TRAILER FRUEHAUF 0170-002 $ 3,843.00
S208 107101E 74 GINDY DRY VAN FRUEHAUF 0170-002 $ 6,774.12
S209 HAZDECON MODEL #R-MDF4LP HAZDECON 0170-002 $ 26,930.00
S210 983110 8'X20' DECON TRAILER HAZCO/CENTRAL INDUSTRIES 0170-002 $ 2,164.00
S300 GC02-2471827 2' TRASH PUMP HONDA 0170-002 $ 1,136.10
S301 234-76104-01 3' TRASH PUMP MULTIQUIP 0170-002 $ 1,555.13
S302 WAF1009366 3' TRASH PUMP HONDA 0170-002 $ 1,295.00
S304 [ILLEGIBLE] 2' SUBMERSIBLE PUMP TEEL SYSTEMS 0170-002 $ 1,487.58
S307 08-9527 PUMP ME/PAPB/TF/FTF/PTS WAGNER PROCESS/WILDEN 0170-002 $ 2,587.69
S308 PUMP WIMB/TO/TF/TF/AT ARGO/WILDEN 0170-002 $ 985.00
S309 PUMP WIM1STOTFTFAT ARGO/WILDEN 0170-002 $ 1,543.00
S310 PUMP WIMB/ST/FT/TF/ST ARGO/WILDEN 0170-002 $ 2,090.00
S311 PUMP WIMB/ST/FT/TF/ST ARGO/WILDEN 0170-002 $ 2,093.00
S313 PUMP M8-WIM ARGO/WILDEN 0170-002 $ 1,170.00
S314 PUMP M8-WIM ARGO/WILDEN 0170-002 $ 985.00
S317 15-5003 MIS-00-BN-BN-BN PHOENIX PUMPS/WILDEN 0170-002 $ 1,232,62
S318 [ILLEGIBLE] MASTERFLEX 12VDC COLE-PARMER/REDI-FLO 0170-002 $ 2,369.38
S319 110 VOLT FUEL PUMP REBEL OIL 0170-002 $ 466.94
S321 PUMP PCISP2GVPNC ARGO 0170-002 $ 946.25
S323 3'DD ALUMINUM PUMP HERTZ/WILDEN 0170-002 $ 1,357.38
S324 CA9105 CA9115 TELESCOPIC SHOWER SAFETY ENVIRONMENTAL 0170-002 $ 899.71
S329 LUTZ PUMP RYAN HERCO 0170-002 $ 1,325.87
S400 1119596 93 HONDA GENERATOR [ILLEGIBLE] HILLSBORO HONDA 0170-002 $ 2,150.00
S500A HIP AIR PACK CASCADE/MSA 0170-002 $ 1,748.89
S500B HIP AIR PACK CASCADE/MSA 0170-002 $ 1,748.89
S500C HIP AIR PACK CASCADE/MSA 0170-002 $ 1,748.89
S500D HIP AIR PACK CASCADE/MSA 0170-002 $ 1,748.89
S502A HIP AIR PACK HAZCO/MSA 0170-002 $ 1,582.73
S502B HIP AIR PACK HAZCO/MSA 0170-002 $ 1,582.73
S502C HIP AIR PACK HAZCO/MSA 0170-002 $ 1,582.73
S503A HIP AIR PACK HAZCO/CASCADE 0170-002 $ 1,359.04
S503B HIP AIR PACK HAZCO/CASCADE 0170-002 $ 1,359.04
S503C HIP AIR PACK HAZCO/CASCADE 0170-002 $ 1,359.04
S503D HIP AIR PACK HAZCO/CASCADE 0170-002 $ 1,359.04
S504A HIP AIR PACK CASCADE/MSA 0170-002 $ 1,487.58
S504B HIP AIR PACK CASCADE/MSA 0170-002 $ 1,487.58
S504C HIP AIR PACK CASCADE/MSA 0170-002 $ 1,487.58
S505A HIP AIR PACK CASCADE/MSA 0170-002 $ 1,437.50
</TABLE>
<TABLE>
<CAPTION>
ID SEP-99 DEP EXP-99 ACCUM 99 NBV
- ---- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
S100 (17.19) 897.51 13,368.61 17.19
S101 345.53 3,109.00 14,627.58 6,104.42
S102 0.00 0.00 24,961.97 0.00
S103 379.05 3,411.53 20,456.54 2,288.99
S104 359.88 3,237.10 20,693.47 [ILLEGIBLE]
S105 429.57 [ILLEGIBLE] [ILLEGIBLE] 4,640.91
S106 216.67 1,950.00 4,554.45 8,435.58
S107 58.25 794.25 [ILLEGIBLE] 3,674.14
S108 455.25 4,097.25 24,052.38 3,282.63
S200 104.45 940.02 3,874.96 2,391.82
S202 28.87 15.98 777.58 0.00
S205 (14.94) 79.00 3,843.01 0.00
S207 (14.94) 79.00 3,843.01 0.00
S208 112.90 1,016.12 4,22.53 2,551,59
S209 345.00 3,105.00 16,215.00 12,765.00
S210 0.00 0.00 [ILLEGIBLE] (0.00
S300 13.53 121.73 885.60 270.50
S301 0.00 82.69 1,565.13 (0.00
S302 0.00 23.74 1,295,00 (0.00
S304 0.00 0.00 1,487.58 0.00
S307 30.57 275.11 911.94 1,555.75
S308 0.00 0.00 917.47 67.53
S309 0.00 0.00 1,543.00 (0.00
S310 0.00 0.00 2,090.00 (0.00
S311 0.00 0.00 2,093.00 0.00
S313 13.93 125.36 998.21 171.79
S314 0.00 0.00 985.00 0.00
S317 14.67 132.07 555.17 577.45
S318 28.21 253.66 2,309.21 80.17
S319 5.80 52.17 373.90 113.04
S321 11.25 101.38 836.61 109.64
S323 16.16 145.43 324.28 1,033.12
S324 10.71 96.40 770.82 128.89
S329 22.10 154.68 154.68 1,171.19
S400 25.60 230.36 1,611.51 508.49
S500A 20.82 187.38 796.72 952.17
S500B 20.82 187.38 796.72 952.17
S500C 20.82 187.38 796.72 952.17
S500D 20.82 187.38 796.72 952.17
S502A 18.84 169.58 1,069.60 513.13
S502B 18.84 169.58 1,069.60 513.13
S502C 18.84 169.58 1,069.60 513.13
S503A 16.18 145.61 837.54 521.50
S503B 16.18 145.61 837.54 521.50
S503C 16.18 145.61 837.54 521.50
S503D 16.18 145.61 837.54 521.50
S504A 0.00 0.00 1,487.58 0.00
S504B 0.00 0.00 1,487.58 0.00
S504C 0.00 0.00 1,487.58 0.00
S505A 19.49 175.45 1,595.91 41.59
</TABLE>
Page 1 of 6
<PAGE> 54
<TABLE>
<CAPTION>
ID SERIAL MAKE & MODEL AP VENDOR FAACCT
-- ------ ------------ --------- ------
<S> <C> <C> <C> <C>
S505B HIP AIR PACK CASCADE/MSA 0170-002
S505C HIP AIR PACK CASCADE/MSA 0170-002
S505D HIP AIR PACK CASCADE/MSA 0170-002
S506 HIP AIR PACK MSA/SCBA 0170-002
S507 HIP AIR PACK MSA/SCBA 0170-002
S701 VAC-U-MAX 55 GAL OPEN TOP VACU-MAX 0170-002
S702 VAC-U-MAX CLN/U55 VACU-MAX 0170-002
S703 VAC-U-MAX CLN/U55 VACU-MAX 0170-002
S704 ASBESTOS VAC HACO 0170-002
S705 ASBESTOS VAC HACO 0170-002
S706 CA102ASB-12P PULLMAN HOLT 12 GAL VACUUM SAFETY ENVIRONMENTAL 0170-002
S707 CA102ASB-12P PULLMAN HOLT 12 GAL VACUUM SAFETY ENVIRONMENTAL 0170-002
S708 CA102ASB-12P PULLMAN HOLT 12 GAL VACUUM SAFETY ENVIRONMENTAL 0170-002
S709 CA102ASB-12P PULLMAN HOLT 12 GAL VACUUM SAFETY ENVIRONMENTAL 0170-002
S710 NILFISK WET/DRY MERCURY VAC HAZCO 0170-002
S711 NILFISK WET/DRY MERCURY VAC HAZCO 0170-002
S712 FA200DE NEGATIVE AIR SAFETY ENVIRONMENTAL 0170-002
S713 FA200DE NEGATIVE AIR SAFETY ENVIRONMENTAL 0170-002
S714 FA200DE NEGATIVE AIR SAFETY ENVIRONMENTAL 0170-002
S715 FA200DE NEGATIVE AIR SAFETY ENVIRONMENTAL 0170-002
S716 FA200DE NEGATIVE AIR SAFETY ENVIRONMENTAL 0170-002
S717 FA200DE NEGATIVE AIR SAFETY ENVIRONMENTAL 0170-002
S722 AIRSTRIPPER, SHALLOW TRAY AIR STRIP 0170-002
S724 CONCRETE VIBRATOR W/MOTOR LONE STAR NORTHWEST 0170-002
S725 FIRE SAFETY CABINET C&H DISTRIBUTORS 0170-002
S726 FIRE SAFETY CABINET C&H DISTRIBUTORS 0170-002
S734 1/2" PNEUMATIC DRILL GRAINGER 0170-002
S738 B190 PNEUMATIC DRUM DEHEADER GA W/3517 WIZARD DRUM TOOL 0170-002
S739 TC16116 BROOKS ($443,811) TARMAC 0170-002
S740 PD390-3953 3000 PSI GENERATOR PRESSURE WASHER LANDA 0170-002
S741 10074 SUPER PROLINE DRUM CRUSHER 10-20/70 DRUMBEATERS OF AMERICA 0170-002
S749 PH 3000 HYDRALIC SHEAR CODE 3 RES Q 0170-002
S752 DE4800/FR1210 105 GAL TANK W/FUEL PUMP ACE TANK & EQUIP 0170-002
S756 HAZCAT KIT W/SENS. PUMP & TUBES HAZTECH SYSTEMS 0170-002
S758 26083 BURIED PIPE & CABLE DETECTOR MCMASTER CARR SUPPLY 0170-002
S759 933113 LASER PRO SHOT L1AS OPTICO FIELD EQUIPMENT & S 0170-002
S761 K01B1 EXPLOSIMETER MODEL #1314SMPN GASTECH 0170-002
S763 580A-2521B-219 PHOTOIONIZATION DETECTOR MODEL #58 ENVIRONMENTAL INSTRUMEN 0170-002
S764 590A-24612-217 PHOTOIONIZATION DETECTOR MODEL #58 ENVIRONMENTAL INSTRUMEN 0170-002
S765 15326 100 FT WATER LEVEL INDICATOR SINCO/SLOPE INDICATOR COM 0170-002
S770 MARK 4 DUST FOGGER SYSTEM TORGERSON MACHINERY 0170-002
S771 SPACE RECOVERY UNIT ARAMSCO 0170-002
S773 063415 AUTO LEVEL W/TRIPOD CONTRACTORS WAREHOUSE 0170-002
S774 B0210 PCB SOIL TEST ANALYZER ENSYS 0170-002
S777 3.5 HP GAS BLOWER W/VINYL HOSE DUCT HAZCO 0170-002
S778 3.5 HP GAS BLOWER W/VINYL HOSE DUCT HAZCO 0170-002
S779 3.5 HP GAS BLOWER W/VINYL HOSE DUCT HAZCO 0170-002
S780 3.5 HP GAS BLOWER W/VINYL HOSE DUCT HAZCO 0170-002
S781 3.5 HP GAS BLOWER W/VINYL HOSE DUCT HAZCO 0170-002
S782 3.5 HP GAS BLOWER W/VINYL HOSE DUCT HAZCO 0170-002
</TABLE>
<TABLE>
<CAPTION>
ID BOOK_BASIS SEP-99 DEP EXP-99 ACCUM-99 NBV
-- ---------- ------ ---------- -------- ---
<S> <C> <C> <C> <C> <C>
S505B $ 1,637.50 19.49 175.45 1,593.31 44.18
S505C $ 1,637.50 19.49 175.45 1,593.31 44.19
S505D $ 1,637.50 19.49 175.45 1,593.31 44.19
S506 $ 2,694.50 0.00 192.48 2,694.75 0.00
S507 $ 2,694.50 0.00 0.00 2,694.75 0.00
S701 $ 1,345.85 18.02 144.20 254.22 1,091.63
S702 $ 954.55 0.00 0.00 954.56 (0.00)
S703 $ 954.55 0.00 0.00 954.56 (0.00)
S704 $ 1,300.00 15.48 139.29 513.29 785.71
S705 $ 1,300.00 15.48 139.29 513.29 785.71
S706 $ 624.06 7.43 66.87 522.79 101.29
S707 $ 624.06 7.43 66.87 534.68 89.40
S708 $ 624.06 7.43 66.87 534.68 89.40
S709 $ 624.06 7.43 66.87 534.68 89.40
S710 $ 4,072.38 48.48 436.33 1,016.48 3,055.90
S711 $ 4,072.38 48.48 436.33 1,165.77 2,905.61
S712 $ 808.13 9.62 86.59 692.36 115.77
S713 $ 808.13 9.62 86.59 692.36 115.77
S714 $ 808.13 9.62 86.59 692.36 115.77
S715 $ 808.13 9.62 86.59 692.36 115.77
S716 $ 808.13 9.62 86.59 692.36 115.77
S717 $ 808.13 9.62 86.59 692.36 115.77
S722 $ 13,096.00 155.93 1,403.36 5,145.64 7,952.36
S724 $ 948.00 11.29 101.57 714.39 233.61
S725 $ 794.68 9.48 85.14 530.73 263.95
S726 $ 795.00 9.46 85.18 659.86 135.34
S734 $ 651.72 7.76 69.83 606.01 43.71
S738 $ 3,005.60 0.00 146.70 3,005.60 (0.00)
S739 $443,611.00 5,283.46 47,551.18 65,239.69 358,571.11
S740 $ 10,641.03 0.00 0.00 10,641.03 (0.00)
S741 $ 45,774.30 544.93 4,904.38 25,339.34 20,434.96
S749 $ 6,330.43 75.36 576.26 3,197.87 3,132.58
S752 $ 689.55 8.21 73.66 307.29 382.26
S756 $ 3,007.30 35.80 322.21 1,661.18 1,345.12
S758 $ 674.04 8.02 72.22 430.37 243.67
S759 $ 3,315.60 39.47 355.24 1,518.33 1,797.27
S761 $ 2,324.15 0.00 0.00 2,324.15 0.00
S763 $ 4,885.00 56.15 523.39 1,093.31 3,791.68
S764 $ 4,925.00 58.63 527.68 1,102.28 3,822.74
S765 $ 680.00 8.10 72.66 152.19 527.81
S770 $ 2,291.36 27.28 245.51 1,382.10 909.28
S771 $ 2,675.88 31.86 286.70 2,056.62 619.06
S773 $ 864.86 0.00 51.48 664.68 0.00
S774 $ 1,261.50 15.26 137.30 1,000.79 280.71
S777 $ 1,118.89 13.32 119.88 388.06 730.83
S778 $ 1,118.89 13.32 119.88 388.06 730.83
S779 $ 1,118.89 13.32 119.88 388.06 730.83
S780 $ 1,118.89 13.32 119.88 388.06 730.83
S781 $ 1,118.89 13.32 119.88 388.06 730.83
S782 $ 1,118.89 13.32 119.88 388.06 730.83
</TABLE>
PAGE 2 OF 6
<PAGE> 55
<TABLE>
<CAPTION>
ID SERIAL MAKE & MODEL AP VENDOR FAACCT
-- ------ ------------ --------- ------
<S> <C> <C> <C> <C>
S783 3.5 HP GAS BLOWER W/VINYL HOSE DUCT HAZCO 0170-002
S784 DATA LOGGER TRANSDUCER 0170-002
S785 VAPOR EXT/GROUND WATER UNIT 0170-002
S786 WATER TREATMENT VESSELS CAMERON-YAKIMA 0170-002
S787 WATER TREATMENT VESSELS CAMERON-YAKIMA 0170-002
S788 WATER TREATMENT VESSELS CAMERON-YAKIMA 0170-002
S789 WAREHOUSE SECURITY GATE ECONOMY FENCE CENTER 0170-002
S790 BASIC SOIL AUGER KIT NORTHWEST PUMP & EQUIPM 0170-002
S791 000945 CONNEX BOX INSTANT SPACE 0170-002
S792 1000LB VAPOR PHASE CARBON VESSELS SUN-AG 0170-002
S794 202-2226 THERMO ANEMOMETER GRAINGER 0170-002
S795 59261 1000LB PORTABLE BALANCE SCALE CASCO 0170-002
S796 DCR-205-15 DRUM TIPPER 55 GAL/ 180 DEGREE CLARKLIFT OF SAN DIEGO 0170-002
S797 GREASE BARREL CHASSIS PUMP SPOKANE PUMP/LINCOLN 0170-002
S798 202-2226 THERMO ANEMOMETER GRAINGER 0170-002
S799 DESORBER UNIT REBUILD TARMAC 0170-002
S800 X7329576-1 445 CDX COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S801 X7328877-1 445 CDX COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S802 X7328876-1 445 CDX COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S803 X7311417 445 CDX COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S806 87142380 445 CDX COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S807 87141412 445 CDX COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S808 97278138 445 CDX COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S809 18504350 305 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S810 67041818 225 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S811 67041551 225 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S812 11651633 205 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S813 10628342 205 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S814 12895459 205 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S818 12895318 205 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S819 83443183 P100 DESK TOP COMPUTER INTEL/COMPUSAVE 0176-002
S820 83442978 P100 DESK TOP COMPUTER INTEL/COMPUSAVE 0176-002
S821 83443180 P100 DESK TOP COMPUTER INTEL/COMPUSAVE 0176-002
S822 6694685 105 CS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S824 6694770 105 CS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S825 12688656 205 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S826 200 MMX NOTEBOOK TOSHIBA/COMPUTER CITY 0176-002
S827 INTER-TEL AXXESS PHONE SYSTEM TERRA COMMUNICATIONS 0176-002
S828 77085756 225 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S829 95120264 TOSHIBA FAX MACHINE KELLY BUSINESS MACHINES 0176-002
S830 IBM-THINKPAD PACIFIC BUSINESS SYSTEMS 0176-002
S831 IBM-THINKPAD PACIFIC BUSINESS SYSTEMS 0176-002
S832 IBM-THINKPAD PACIFIC BUSINESS SYSTEMS 0176-002
S833 IBM-THINKPAD PACIFIC BUSINESS SYSTEMS 0176-002
S834 IBM-THINKPAD PACIFIC BUSINESS SYSTEMS 0176-002
S836 USKB123324 HEWLETT 4SI PRINTER HEWLETT PACKARD 0176-002
S837 USHC038184 HEWLETT 4SI PRINTER HEWLETT PACKARD 0176-002
S838 JPT001439 HP LASER 5SI HEWLETT PACKARD 0176-002
S839 JP6K048433 HP LASER 5SI HEWLETT PACKARD 0176-002
S841 601908 P-133 COMPUTER COMPUTER CITY 0176-002
<CAPTION>
ID BOOK_BASIS SEP-99 DEP EXP-99 ACCUM-99 NBV
-- ---------- ------ ---------- -------- ---
<S> <C> <C> <C> <C> <C>
S783 $ 1,118.89 13.32 19.88 388.06 730.83
S784 $ 3,023.65 36.00 323.96 2,813.67 209.98
S785 $ 48,210.30 585.84 572.53 41,857.61 7,342.49
S786 $ 2,841.66 33.83 304.46 2,238.12 805.54
S787 $ 2,841.66 33.83 304.46 2,238.12 805.54
S788 $ 2,841.66 33.83 304.46 2,238.12 805.54
S789 $ 1,081.35 12.87 115.88 821.72 159.83
S790 $ 779.00 9.27 83.46 884.00 115.00
S791 $ 2,950.00 18.73 283.29 2,850.00 0.00
S792 $ 8,120.00 98.87 870.00 7,250.00 870.00
S794 $ 592.50 6.70 60.27 107.81 454.68
S795 $ 575.00 2.26 52.48 575.00 0.00
S796 $ 883.44 10.28 92.51 792.17 71.27
S797 $ 759.46 9.04 81.37 850.65 108.80
S798 $ 582.50 6.70 90.27 107.81 454.89
S799 $ 334,952.00 3,987.64 35,868.79 35,88.79 299,073.21
S800 $ 2,563.31 42.72 364.50 900.01 1,663.30
S801 $ 2,563.31 42.72 364.50 900.01 1,663.30
S802 $ 2,563.31 42.72 364.50 900.01 1,663.30
S803 $ 2,434.90 40.58 365.24 848.90 1,588.10
S806 $ 2,610.00 43.50 391.50 1,025.16 1,584.85
S807 $ 2,610.02 43.50 391.50 1,025.16 1,584.85
S808 $ 2,455.62 40.93 368.34 839.98 1,515.88
S809 $ 1,988.28 32.80 295.24 825.48 1,342.80
S810 $ 2,980.47 43.17 388.57 1,070.73 1,519.74
S811 $ 2,782.42 48.37 417.36 1,255.18 1,527.24
S812 $ 2,824.73 43.75 393.71 971.15 1,853,58
S813 $ 2,227.09 37.12 564.08 1,374.61 852.48
S814 $ 1,878.71 31.31 281.81 994.67 884.04
S818 $ 2,034.88 33.91 305.23 1,048.48 958.38
S819 $ 856.85 14.28 128.53 255.83 601.23
S820 $ 856.85 14.28 128.53 255.83 601.23
S821 $ 856.85 14.28 128.53 255.83 601.22
S822 $ 2,126.55 35.44 318.98 1,349.18 777.37
S824 $ 3,143.42 52.39 471.51 2,107.84 1,035.58
S825 $ 2,217.89 38.96 332.68 1,175.48 1,042.41
S826 $ 1,976.96 32.95 296.54 571.12 1,405.64
S827 $ 32,736.89 389.71 3,507.42 8,808.05 24,655.84
S828 $ 2,889.62 48.33 434.94 1,254.89 1,644.73
S829 $ 2,850.00 44.17 397.50 1,938.92 711.08
S830 $ 2,604.00 43.40 390.60 585.85 2,038,35
S831 $ 2,604.23 43.40 390.63 585.70 2,038.53
S832 $ 1,372.70 22.88 205.91 298.18 1,074.52
S833 $ 1,372.00 22.87 205.80 298.03 1,073.97
S834 $ 1,372.00 22.87 205.80 298.03 1,073.97
S836 $ 1,406.52 0.00 0.00 1,406.52 (0.00)
S837 $ 1,433.83 23.88 215.01 959.74 474.89
S838 $ 1,498.67 0.00 0.00 4,496.67 (0.00)
S839 $ 1,447.84 24.13 217.18 1,321.56 126.28
S841 $ 1,778.81 29.65 266.82 935.85 842.98
</TABLE>
PAGE 3 OF 6
<PAGE> 56
<TABLE>
<CAPTION>
ID SERIAL MAKE & MODEL AP VENDOR FAACCT
- ------ ---------------- ------------------- ----------------------- ------------------
<S> <C> <C> <C> <C>
S842 500268 P-90 COMPUTER COMPUTER CITY 0176-002
S843 601907 P-133 COMPUTER COMPUTER CITY 0176-002
S844 M949502099 P-133 COMPUTER COMPUTER CITY 0176-002
S845 509131 P-100 COMPUTER COMPUTER CITY 0176-002
S646 P-133 COMPUTER COMPUTER CITY 0176-002
S647 M49502096 P-133 COMPUTER COMPUTER CITY 0176-002
S648 500267 P-90 COMPUTER COMPUTER CITY 0176-002
S849 P-133 COMPUTER COMPUTER CITY 0176-002
S850 601909 P-133 COMPUTER COMPUTER CITY 0176-002
S851 601909 P-133 COMPUTER COMPUTER CITY 0176-002
S852 62026088 ALDER S10 TYPEWRITER FIRSTLINE OFFICE 0175-002
S855 P-90 PCL ELSA FILE SERVER COMPUTER REPAIR, INC 0176-002
S858 CET COMPANY SIGN JIM MANNING & ASSOC. 0175-002
S862 MAGNA SHELL DESK PANEL CRAWFORD 0175-002
S863 42" HDN LATERAL FILE CABINET CRAWFORD 0175-002
S864 42" HDN LATERAL FILE CABINET CRAWFORD 0175-002
S865 1700CU OFFICE SAFE SOURCE 100 0175-002
S866 AUDIO VISUAL BOARD3076 CRAWFORD 0175-002
S867 Y8215376A NOTEBOOK COMPUTER TOSHIBA 0176-002
S868 Y8214843A NOTEBOOK COMPUTER TOSHIBA 0176-002
S869 Y8202213A NOTEBOOK COMPUTER TOSHIBA 0176-002
S892 500256 P-90 COMPUTER COMPUTER 0176-002
S902 174DVJ2978 GP300 RADIO MOTOROLA 0170-002
S907 174FVJ6950 GP300 RADIO MOTOROLA 0170-002
S909 174FVJ5926 GP300 RADIO MOTOROLA 0170-002
S910 174FVJ6928 GP300 RADIO MOTOROLA 0170-002
S911 174FVJ3215 GP300 RADIO MOTOROLA 0170-002
S914 174FWN1115 GP300 RADIO MOTOROLA 0170-002
S915 174FWND942 GP300 RADIO MOTOROLA 0170-002
S916 174FWLD223 GP300 RADIO MOTOROLA 0170-002
S918 174FWDL211 GP300 RADIO MOTOROLA 0170-002
S919 174FWN1146 GP300 RADIO MOTOROLA 0170-002
S921 174FWN1152 GP300 RADIO MOTOROLA 0170-002
S922 174FWN1145 GP300 RADIO MOTOROLA 0170-002
S935 174FLWD204 GP300 RADIO MOTOROLA 0170-002
S936 174FWN1118 GP300 RADIO MOTOROLA 0170-002
S937 174FWN1144 GP300 RADIO MOTOROLA 0170-002
P100 1FTDF1727VKB15641 97 F150 FORD 0172-002
P102 1FTJW36F3VEAS1658 97 F350 FORD 0172-002
P105 2FDLFH47MOMCADS 91 F450 FLAT BED FORD 0171-002
P111 WC619386 28'x8' RESPONSE TRAILER WELLS CARGO 0170-002
P200 15HP OUTBOARD MOTOR JOHNSON 0170-002
P201 15HP OUTBOARD MOTOR EVINRUDE 0170-002
P202 SYL492206896 SKIFF & TRAILER STEVENS MARINE/SYLVAN 0170-002
P203 SMK820288191 SKIFF & TRAILER SMOKER CRAFT 0170-002
P300 M-4 PUMP WILDEN 0170-002
P301 M-15 PUMP WILDEN 0170-002
P302 M-15 PUMP WILDEN 0170-002
P303 M-15 PUMP WILDEN 0170-002
P304 M-15 PUMP WILDEN 0170-002
<CAPTION>
<S> <C> <C> <C> <C> <C>
ID BOOK BASIS SEP-99 DEP EXP-99 ACCUM-99 NBV
- ------ ---------------- ------------- ----------------- ---------------- ----------
S842 4,028.30 67.14 604.25 3,403.91 624.39
S843 1,778.81 29.65 266.82 935.85 842.96
S864 1,991.96 33.20 298.79 1,660.27 131.69
S865 2,207.22 36.79 331.08 1,530.34 676.88
S646 1,372.71 22.68 205.91 624.58 748.13
S647 1,947.65 32.46 292.15 1,818.89 128.76
S648 2,948.14 49.14 442.22 2,491.16 456.95
S849 1,372.70 22.88 205.91 824.58 748.12
S850 1,566.74 26.11 235.01 824.28 742.46
S851 1,566.74 26.11 235.01 824.28 742.48
S852 700.70 0.00 0.00 700.70 (0.00)
S855 20,060.98 343.35 3,009.14 18,951.51 3,109.45
S858 3,080.65 36.68 330.09 2,013.56 1,067.29
S862 503.13 5.88 53.91 309.27 193.88
S863 615.95 7.33 65.93 380.57 235.35
S864 635.78 7.57 68.12 102.43 533.35
S865 773.63 9.21 82.89 597.11 178.52
S866 938.88 10.82 97.38 558.87 350.21
S867 1,303.17 21.72 173.78 173.76 1,129.41
S868 1,303.17 21.72 173.78 173.75 1,129.41
S869 1,303.18 21.72 173.76 173.75 1,129.41
S892 4,028.30 67.14 604.25 3,403.91 624.39
S902 1,074.58 12.79 115.13 650.72 423.86
S907 939.33 11.18 100.64 558.82 370.51
S909 939.33 11.16 100.64 161.77 777.56
S910 939.33 11.18 100.64 568.82 370.51
S911 939.33 11.18 100.64 568.82 370.51
S914 1,064.05 12.67 114.01 497.40 568.65
S915 1,064.05 12.67 114.01 497.40 568.65
S916 1,064.05 12.67 114.01 497.40 568.65
S918 888.60 10.55 94.99 414.45 472.15
S919 888.60 10.55 94.99 414.45 472.15
S921 888.60 10.55 94.99 414.45 472.15
S922 888.60 10.55 94.99 414.45 472.15
S935 1,064.05 12.67 114.01 497.40 568.65
S936 888.60 10.55 94.99 414.45 472.15
S937 1,064.05 12.67 114.01 497.40 568.65
P100 16,511.56 275.19 2,476.73 7,430.20 9,081.36
P102 27,599.40 459.99 4,139.91 17,510.29 10,089.11
P105 22,000.00 966.67 3,300.00 21,095.58 904.44
P111 10,526.00 175.43 1,578.90 6,549.51 3,978.49
P200 1,800.00 15.00 135.00 589.50 1,210.50
P201 1,799.00 14.99 134.83 546.20 1,250.80
P202 2,059.00 34.32 308.85 1,254.85 804.15
P203 2,500.00 41.67 375.00 1,209,72 1,290.26
P300 800.00 7.14 64.29 526.90 73.10
P301 1,500.00 17.86 160.71 1,027.38 472.62
P302 1,500.00 17.86 160.71 1,027.38 472.62
P303 1,500.00 17.86 160.71 1,027.38 472.62
P304 1,500.00 17.86 160.71 1,027.38 472.62
</TABLE>
Page 4 of 6
<PAGE> 57
<TABLE>
<CAPTION>
ID SERIAL MAKE & MODEL AP VENDOR FAACCT BOOK_BASIS SEP-99 DEP EXP-99
- ---- ------------ ---------------------------------- --------------------- -------- ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
P305 M-4 PUMP WILDEN 0170-002 $ 600.00 7.14 64.28
P306 9201 FLOTO PUMP WATERIOUS 0170-002 $ 1,500.00 17.95 150.71
P307 169322 VAC-U-MAX CLOSED TOP VACUMAX 0170-002 $ 900.00 10.71 96.43
P400 1457476 2.2 KW-GENERATOR DAYTON 0170-002 $ 500.00 5.95 53.57
P403 EA7-1134068 EM50005 GENERATOR HONDA 0170-002 $ 2,399.00 28.58 257.04
P404 12018 AIR COMPRESSOR SULLIVAN 0170-002 $ 15,000.00 178.57 1,607.14
P500 ALT285194358 IASA SCBA ULTRALITE 0170-002 $ 1,900.00 22.52 203.57
P501 ALT285155242 MSA SCBA ULTRALITE 0170-002 $ 1,900.00 22.62 203.57
P502 ALT295194296 MSA SCBA ULTRALITE 0170-002 $ 1,900.00 22.62 203.57
P508 HIP AIR PACK MSA 0170-002 $ 1,000.00 11.90 107.14
P509 HIP AIR PACK MSA 0170-002 $ 1,000.00 11.90 107.14
P510 ALT285224729 MSA SCBA ULTRALITE 0170-002 $ 1,900.00 22.62 203.57
P511 TP705-1727 BIO SYSTEM BIO SYSTEMS 0170-002 $ 1,000.00 23.51 214.29
P512 TP806-2229 BIO SYSTEM BIO SYSTEMS 0170-002 $ 2,000.00 23.81 214.29
P513 M003-2933 BIO SYSTEM BIO SYSTEMS 0170-002 $ 2,000.00 23.81 214.29
P600 400 OIL CONTAINMENT BOOM AMERICAN SEA CURTAIN 0170-002 $ 4,475.00 53.27 479.46
P708 9108143008 LEL METER INDUSTRIAL SCIENTIFIC 0170-002 $ 1,100.00 13.10 117.66
P714 2400 FAST TANK TENYERS 0170-002 $ 3,150.00 37.50 337.50
P720 COPPUS BLOWER COPPUS 0170-002 $ 1,500.00 17.56 180.71
P721 COPPUS BLOWER COPPUS 0170-002 $ 2,934.00 34.94 314.45
P722 WD796-6101 ALPHA 3100 OILWATER SEPARATOR LANDA 0170-002 $ 8,835.50 81.38 732.38
P723 VB564034 WELDING MACHINE MILLER 0170-002 $ 500.00 5.95 53.57
P724 07921174 CONFINED SPACE SYSTEM MODEL #K1550 0170-002 $ 3,100.00 36.90 332.14
P725 WRENCH SET/TOOLS CRAFTSMAN 0170-002 $ 510.24 6.07 54.67
P730 54699V FALL PROTECTION & RETRIEVE MILLER 0170-002 $ 2,200.00 25.19 235.71
P731 CC0243 LASER TRANSIT 0170-002 $ 895.00 10.65 95.89
P732 973500003 HEPA VAC EUROCLEAN 0170-002 $ 1,225.00 14.56 131.25
P733 9735000032 HEPA VAC EUROCLEAN 0170-002 $ 1,225.00 20.42 183.75
P734 973500006 HEPA VAC EUROCLEAN 0170-002 $ 1,225.00 14.58 131.25
P735 973500005 HEPA VAC EUROCLEAN 0170-002 $ 1,225.00 14.58 131.25
P737 903046013 LEL METER INDUSTRIAL SCIENTIFIC 0170-002 $ 500.00 5.95 53.57
P738 53625V FALL PROTECTION/BLOCK MILLER 0170-002 $ 1,474.85 17.56 158.02
P739 SOIL SAMPLER BORE KIT ARTS MANUFACTURING 0170-002 $ 1,000.00 11.90 107.14
P740 TK-02 VAC-U-MAX CLOSED TOP DRUM VAC-U-MAX 0170-002 $ 1,000.00 11.90 107.14
P741 55D-D61 VAC-U-MAX OPEN TOP DRUM VAC-U-MAX 0170-002 $ 1,000.00 11.90 107.14
P743 FILTER PRESS ELMCO 0170-002 $ 2,000.00 23.61 214.29
P744 EXPLOSION PROOF LIGHTS 0170-002 $ 900.00 10.71 96.43
P745 HAZCAT KIT HAZTECH 0170-002 $ 2,713.23 32.30 290.70
P746 38511847X7 CHAIN SAW STILH 0170-002 $ 446.90 5.32 47.88
P802 D75453111 LAPTOP TOSHIBA 0176-002 $ 2,009.57 33.50 301.48
P804 COMPUTER GATEWAY 0176-002 $ 2,590.00 0.00 56.79
P807 11BHNTZ TYPEWRITER IBM 0170-002 $ 575.00 9.58 89.25
P808 AUTOMATED PHONE SYSTEM SAMSUNG 0175-002 $ 13,774.32 153.96 1,475.82
P809 435 CDS LAPTOP TOSHIBA 0176-002 $ 1,585.95 26.43 237.89
P908 CELL PHONE MOTOROLA 0170-002 $ 500.00 0.00 0.00
P909 CELL PHONE MOTOROLA 0170-002 $ 500.00 0.00 0.00
P910 CELL PHONE MOTOROLA 0170-002 $ 500.00 0.00 211.11
P911 CELL PHONE MOTOROLA 0170-002 $ 500.00 0.00 211.11
P912 CELL PHONE MOTOROLA 0170-002 $ 500.00 0.00 211.11
OFFICE FILES DELATTE METALS 0174-002 $ 785.94 9.38 46.78
<CAPTION>
ID ACCUM-99 NBV
- ---- ---------- ---------
<S> <C> <C>
P305 410.95 189.05
P306 882.74 617.25
P307 616.43 283.57
P400 439.08 60.91
P403 1,041.47 1,357.53
P404 10,273.81 4,725.19
P500 1,164.88 735.12
P501 1,301.35 596.65
P502 1,301.35 596.65
P508 684.92 315.08
P509 684.92 315.08
P510 1,301.35 698.65
P511 1,369.84 630.16
P512 1,368.54 630.16
P513 1,389.54 630.16
P600 1,930.29 2,544.71
P708 753.41 346.59
P714 2,583.75 568.25
P720 1,027.38 472.52
P721 1,541.99 1,392.91
P722 2,948.49 3,887.01
P723 342.46 157.54
P724 2,123.25 876.75
P725 220.09 290.15
P730 516.83 1,665.17
P731 222.68 872.32
P732 312.57 912.43
P733 437.60 787.40
P734 312.57 912.43
P735 312.57 912.43
P737 342.48 157.54
P738 1,010.16 464.89
P739 684.92 315.08
P740 215.87 784.13
P741 215.87 784.13
P743 1,060.16 819.84
P744 618.43 283.57
P745 812.89 1,900.34
P746 194.01 252.89
P802 1,258.40 751.47
P804 2,690.00 (1.00)
P807 345.32 229.58
P808 3,312.40 10,481.92
P809 728.95 857.29
P908 500.00 0.00
P909 500.00 0.00
P910 500.00 0.00
P911 500.00 0.00
P912 500.00 0.00
48.78 739.18
</TABLE>
Page 5 of 6
<PAGE> 58
<TABLE>
<CAPTION>
ID SERIAL MAKE & MODEL AP VENDOR FAACCT
-- ------ ------------ --------- ------
<S> <C> <C> <C> <C>
TOSHIBA ANDREA LINDQUIST 0176-002
TOSHIBA LAURIE TEUN 0176-002
TOSHIBA BRYAN CHERNICK 0176-002
HP LASER JET 5SI COMPUTERS & APPLICATIONS 0176-002
15 HP 3 PHASE MOTOR DAVIS PUMP & ELECTRIC 0170-002
PH METER PROBE/RECEPTACLE TBI BAILEY 0170-002
101165 DIGITEC PRINT MOUNTAIN PACIFIC MACHINE 0170-002
TOSHIBA CAROL TIERNEY 0176-002
TOSHIBA LAURIE TEUN 0176-002
</TABLE>
<TABLE>
<CAPTION>
ID BOOK_BASIS SEP-99 DEP EXP-99 ACCUM-99 NBV
-- ---------- ------ ---------- -------- ---
<S> <C> <C> <C> <C> <C>
$ 800.00 13.33 105.67 105.67 693.33
$ 1,521.45 25.36 177.50 177.50 1,343.96
$ 790.20 13.17 52.68 52.68 737.52
$ 2,334.84 38.91 116.74 116.74 2,218.10
$ 694.02 11.57 23.13 23.13 670.89
$ 1,237.14 20.82 41.24 41.24 1,195.90
$ 2,197.25 36.62 73.24 73.24 2,124.01
$ 1,646.17 30.77 61.54 61.54 1,784.53
$ 1,751.75 29.20 58.39 58.39 1,593.36
$ 1,663,351.18 $ 20,257.41 $ 183,975.96 $ 697,014.67 $ 868,346.51
</TABLE>
FURNITURE AND EQUIPMENT
Page 6 of 6
<PAGE> 59
SCHEDULE 1.E.
ANCILLARY ASSETS
Ancillary Assets as defined in the Asset Purchase and Assignment
Agreement shall mean and include all documents, books and records, instruments,
databases, stationary, preprinted forms, programs, records, intangibles,
consultants' reports and memoranda, customer, vendor and supplier lists, trade
secrets and other proprietary or confidential information, work files and work
products necessary for closing out delivery orders, telephone numbers and other
assets of Seller, in each case which relate solely or primarily to the Acquired
Assets or are used solely or primarily with Acquired Assets or are used solely
or primarily in the performance of the EPA Contracts. Ancillary Assets shall
not include any EPA Contract Equipment or Excluded Assets.
24
<PAGE> 60
SCHEDULE 3.C
SCHEDULE OF ASSUMED LIABILITIES
The only liabilities of Sellers that Purchaser shall be obligated to assume are
as follows:
(1) The direct obligations of Sellers under the EPA Contracts relating to
performance after the Closing Date; and
(2) Obligations and liabilities of Sellers, whether to the EPA or third
parties that can be reasonably and foreseeably implied from the terms
of the EPA Contracts or the Federal Acquisition Regulations as
necessary or required in connection with the assumption, novation or
performance of the EPA Contracts, from and after the Closing Date.
Examples of the foregoing shall include, but are not limited to, any
obligations of Sellers under the EPA Contracts to use minority or small
business contractors or the requirement to lease or acquire particular
items of equipment necessary to complete performance under the EPA
Contracts. This does not include government or third party claims
arising out of Seller's performance of the EPA contract prior to the
Closing Date.
(3) Seller leases at the property located at 170 West Dayton, Edmonton, WA.
25
<PAGE> 61
SCHEDULE 1.D
EDMONDS FACILITY LEASE
SEE ATTACHED LEASE
26
<PAGE> 62
JOB STATUS SUMMARY
ERRS WEST
CONTRACT NO. 68-W7-0016
08/01/99 THROUGH 08/31/99
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
REGION 6
- -----------------------------------------------------------------------------------------------
D.O.
- -----------------------------------------------------------------------------------------------
D.O. Project Start Completion D.O.
- -----------------------------------------------------------------------------------------------
No. Name Date Date Ceiling
===============================================================================================
<S> <C> <C> <C> <C>
06-001 Shepherd Lead 02/27/97 06/05/97 300,000.00
- -----------------------------------------------------------------------------------------------
06-002 Mylar Fire 03/26/97 04/30/97 500,000.00
- -----------------------------------------------------------------------------------------------
06-003 Arkansas Methyl Parathion 03/31/97 08/31/98 600,000.00
- -----------------------------------------------------------------------------------------------
06-004 Louisiana Methyl Parathion 04/11/97 01/08/99 3,025,000.00
- -----------------------------------------------------------------------------------------------
06-005 BPS Inc., Fire 05/08/97 06/30/97 100,000.00
- -----------------------------------------------------------------------------------------------
06-006 Victory Metals 05/16/97 11/30/97 185,000.00
- -----------------------------------------------------------------------------------------------
06-007 Mammoth Mill 06/09/97 01/08/98 180,000.00
- -----------------------------------------------------------------------------------------------
06-008 Gray Ag-Air Site 06/24/97 10/31/97 350,000.00
- -----------------------------------------------------------------------------------------------
06-009 Garland Drum 06/24/97 07/31/97 25,000.00
- -----------------------------------------------------------------------------------------------
06-010 JFK High School 06/25/97 10/31/97 100,000.00
- -----------------------------------------------------------------------------------------------
06-011 Pontchatula Battery 07/18/97 10/15/97 120,000.00
- -----------------------------------------------------------------------------------------------
06-012 Preplanning Region 6 03/20/98 01/08/00 55,000.00
- -----------------------------------------------------------------------------------------------
06-013 Odessa Drum 07/18/97 01/08/98 1,000,000.00
- -----------------------------------------------------------------------------------------------
06-014 Southern Shipbuilding 08/21/97 10/30/97 150,000.00
- -----------------------------------------------------------------------------------------------
06-015 Mill Creek Drum 08/06/97 10/31/97 40,000.00
- -----------------------------------------------------------------------------------------------
06-016 Hot Springs Mercury 09/10/97 10/31/97 100,000.00
- -----------------------------------------------------------------------------------------------
06-017 Richland Oil Salvage, Inc. 09/23/97 01/08/98 400,000.00
- -----------------------------------------------------------------------------------------------
06-018 Stephenson-Bennett Mine Site 09/30/97 02/28/99 3,843,000.00
- -----------------------------------------------------------------------------------------------
06-019 Mesh Plastics 09/30/97 01/08/98 100,000.00
- -----------------------------------------------------------------------------------------------
06-020 Polycycle-Tecula 10/23/97 11/30/98 20,000.00
- -----------------------------------------------------------------------------------------------
06-021 Overholt Trucking 11/06/97 06/30/98 1,532,000.00
- -----------------------------------------------------------------------------------------------
06-022 Anti-freeze, Inc. 12/03/97 07/31/98 600,000.00
- -----------------------------------------------------------------------------------------------
06-023 Lake Maurapas Barge 12/02/97 06/30/98 200,000.00
- -----------------------------------------------------------------------------------------------
06-024 Texarkana Mercury and Neon 01/06/98 07/31/98 355,000.00
- -----------------------------------------------------------------------------------------------
06-025 Dallas Plating 01/08/98 07/31/98 263,000.00
- -----------------------------------------------------------------------------------------------
06-026 Everman Oil Spill 02/02/98 03/31/98 50,000.00
- -----------------------------------------------------------------------------------------------
06-027 Broussard Chemical 02/20/98 05/31/98 75,000.00
- -----------------------------------------------------------------------------------------------
06-028 Lake Palourde Aband. Barge 02/11/98 10/31/98 175,000.00
- -----------------------------------------------------------------------------------------------
06-029 Guthrie Oil 04/13/98 08/31/98 80,000.00
- -----------------------------------------------------------------------------------------------
06-630 Castex Systems 03/09/98 07/31/99 1,250,000.00
- -----------------------------------------------------------------------------------------------
06-631 Plano Mercury 03/05/98 05/30/98 50,000.00
- -----------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 63
JOB STATUS SUMMARY
ERRS WEST
CONTRACT NO. 68-W7-0016
08/01/99 THROUGH 08/31/99
<TABLE>
<S> <C> <C> <C> <C>
============================================================================================
06-632 11th Street Drums 04/01/98 07/31/98 110,000.00
- --------------------------------------------------------------------------------------------
06-633 Clearwater Fluids Recycling 04/06/98 01/07/99 690,000.00
- --------------------------------------------------------------------------------------------
06-634 Louisiana Oil Recycling, Inc. 04/10/98 01/07/99 500,000.00
- --------------------------------------------------------------------------------------------
06-635 FM 14 Drum Site 05/14/98 09/30/98 500,000.00
- --------------------------------------------------------------------------------------------
06-636 Penrod Drum 06/01/98 09/30/98 450,000.00
- --------------------------------------------------------------------------------------------
06-637 Westbank Asbestos 07/10/98 09/30/98 220,000.00
- --------------------------------------------------------------------------------------------
06-638 Mid-South Tire Fire 07/16/98 10/31/98 150,000.00
- --------------------------------------------------------------------------------------------
06-639 Concord Operating Co. 07/27/98 10/31/98 5,000.00
- --------------------------------------------------------------------------------------------
06-640 Bayou Sorrel Aband. Barge 07/30/98 01/08/99 300,000.00
- --------------------------------------------------------------------------------------------
06-641 Ojo Caliente Dip Vat Site 08/07/98 11/30/98 118,000.00
- --------------------------------------------------------------------------------------------
06-642 Hudson Oil Refinery 08/11/98 09/15/99 5,950,000.00
- --------------------------------------------------------------------------------------------
06-643 ERI Tire Fire 08/24/98 01/08/99 500,000.00
- --------------------------------------------------------------------------------------------
06-644 Delatte Metals 08/27/98 09/08/99 7,905,881.00
- --------------------------------------------------------------------------------------------
06-645 Talen's Landing Bulk Plant 09/08/98 09/08/99 1,350,000.00
- --------------------------------------------------------------------------------------------
06-646 Hastings Radiochemical Sites 09/28/98 06/30/99 1,500,000.00
- --------------------------------------------------------------------------------------------
06-647 MDI 09/28/98 09/30/99 600,000.00
- --------------------------------------------------------------------------------------------
06-648 Tex-Tin Site (off-site) 09/28/98 09/30/99 500,000.00
- --------------------------------------------------------------------------------------------
06-649 State Marine Site 09/29/98 09/30/99 40,000.00
- --------------------------------------------------------------------------------------------
06-650 Madisonville Tire/Drum Fire 10/04/98 10/04/99 65,000.00
- --------------------------------------------------------------------------------------------
06-651 Limestone Landfill Fire 10/07/98 09/30/99 200,000.00
- --------------------------------------------------------------------------------------------
06-652 Oilton Auto Pack Site 12/18/98 09/15/99 40,000.00
- --------------------------------------------------------------------------------------------
06-653 R&P Electroplating 01/06/99 09/30/99 900,000.00
- --------------------------------------------------------------------------------------------
06-654 Production Gauging Services, Inc. 01/07/99 04/30/99 250,000.00
- --------------------------------------------------------------------------------------------
06-655 Leachville Metal Plating Site 02/25/99 12/31/99 175,000.00
- --------------------------------------------------------------------------------------------
06-656 Hudson Oil Refinery II 03/26/99 01/08/00 900,000.00
- --------------------------------------------------------------------------------------------
06-657 Sulfur Molten Tank Fire 04/08/99 05/09/99 200,000.00
- --------------------------------------------------------------------------------------------
06-658 O'Neil Tank Battery 04/26/99 08/30/99 150,000.00
- --------------------------------------------------------------------------------------------
06-659 Tiger Pass 05/10/99 01/08/00 950,000.00
- --------------------------------------------------------------------------------------------
06-660 W. Duet No. 1 Well Gas Blowout 05/14/99 06/30/99 1,400,000.00
- --------------------------------------------------------------------------------------------
06-661 HHW, OK Tornadoes 05/18/99 09/30/99 50,000.00
- --------------------------------------------------------------------------------------------
06-662 The Chemical House 05/24/99 09/30/99 200,000.00
- --------------------------------------------------------------------------------------------
06-663 OK Tornado II 06/01/99 01/08/00 425,000.00
- --------------------------------------------------------------------------------------------
06-664 Rockwall Mercury 06/16/99 10/31/99 100,000.00
- --------------------------------------------------------------------------------------------
06-665 Ruston Foundary 06/28/99 08/31/99 40,000.00
- --------------------------------------------------------------------------------------------
06-666 Exxon Houston Ship Channel 06/28/99 07/31/99 8,000.00
============================================================================================
</TABLE>
<PAGE> 64
JOB STATUS SUMMARY
ERRS WEST
CONTRACT NO. 68-W7-0016
08/01/99 THROUGH 08/31/99
<TABLE>
===============================================================================================
<S> <C> <C> <C> <C>
06-667 Arabi Mercury Spill 07/09/99 10/31/99 50,000.00
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
08-001 Spring Creek Oil Spill 02/28/97 07/09/97 10,000.00
- -----------------------------------------------------------------------------------------------
08-002 Oklahoma City Bomb. / G7 Conf. 03/10/97 07/01/98 22,000.00
- -----------------------------------------------------------------------------------------------
08-003 Aspen Park Solvents 03/10/97 01/08/00 105,000.00
- -----------------------------------------------------------------------------------------------
08-004 Lovell Refining 03/10/97 09/30/99 298,720.00
- -----------------------------------------------------------------------------------------------
08-005 Industrial Chrome Plating 03/13/97 01/08/98 300,000.00
- -----------------------------------------------------------------------------------------------
08-006 York Street Drums 03/12/97 06/01/97 7,500.00
- -----------------------------------------------------------------------------------------------
08-007 Twins Inn Site 03/27/97 01/08/99 14,500.00
- -----------------------------------------------------------------------------------------------
08-008 Roxborough Mercury Site 04/01/97 07/01/97 5,000.00
- -----------------------------------------------------------------------------------------------
08-009 Red River of North Dakota 04/24/97 01/08/98 3,250,000.00
- -----------------------------------------------------------------------------------------------
08-010 Allison Street Drum Site 06/02/97 09/01/97 10,000.00
- -----------------------------------------------------------------------------------------------
08-011 Red Water Mine Site 06/13/97 10/31/98 245,000.00
- -----------------------------------------------------------------------------------------------
08-012 Ramp Industries 06/19/97 01/08/98 80,000.00
- -----------------------------------------------------------------------------------------------
08-013 Badger Mercury Site 06/25/97 11/30/97 18,500.00
- -----------------------------------------------------------------------------------------------
08-014 Flathead Lake Boat Site 07/04/97 07/31/97 5,000.00
- -----------------------------------------------------------------------------------------------
08-015 Reclaim Barrel Site 07/18/97 05/01/98 64,000.00
- -----------------------------------------------------------------------------------------------
08-016 Towaac Day Care Center 08/05/97 10/30/97 3,000.00
- -----------------------------------------------------------------------------------------------
08-017 Upper AR River / Leadville 09/22/97 01/08/00 500,000.00
- -----------------------------------------------------------------------------------------------
08-018 Manville Pesticide Site 09/25/97 09/30/98 390,000.00
- -----------------------------------------------------------------------------------------------
08-019 Ute Tribe Chemical Site 10/16/97 04/01/98 35,000.00
- -----------------------------------------------------------------------------------------------
08-020 Bull Oil Site 10/28/97 04/01/98 72,000.00
- -----------------------------------------------------------------------------------------------
08-021 Wounded Knee Sew. Lagoon 11/06/97 01/08/98 45,000.00
- -----------------------------------------------------------------------------------------------
08-022 Craig Diesel Spill-Yampa River 11/07/97 01/08/98 1,000.00
- -----------------------------------------------------------------------------------------------
08-023 32nd Street Asphalt Site 11/10/97 11/30/97 1,000.00
- -----------------------------------------------------------------------------------------------
08-024 38th and York PCB 02/06/98 09/01/98 81,000.00
- -----------------------------------------------------------------------------------------------
08-025 High-Tech Metals 02/19/98 08/30/98 190,000.00
- -----------------------------------------------------------------------------------------------
08-026 Craig Mercury Site 03/20/98 08/30/98 15,000.00
- -----------------------------------------------------------------------------------------------
08-027 Preplanning Region 8 03/30/98 01/08/00 55,000.00
- -----------------------------------------------------------------------------------------------
08-028 Sandy Smelter 04/01/98 03/31/99 1,850,000.00
- -----------------------------------------------------------------------------------------------
08-029 54th Street Drums 04/17/98 07/30/98 13,000.00
- -----------------------------------------------------------------------------------------------
08-830 Leadville Drums 05/19/98 10/31/98 23,000.00
- -----------------------------------------------------------------------------------------------
08-831 Hansen Container 05/28/98 12/31/98 22,000.00
- -----------------------------------------------------------------------------------------------
08-832 Sheridan PCM Drum 05/22/98 12/31/98 7,000.00
- -----------------------------------------------------------------------------------------------
08-833 Pine Ridge Pesticide Site 06/12/98 10/31/98 11,000.00
===============================================================================================
</TABLE>
<PAGE> 65
JOB STATUS SUMMARY
ERRS WEST
CONTRACT NO. 68-W7-0016
08/01/99 THROUGH 08/31/99
<TABLE>
<CAPTION>
=======================================================================================
<S> <C> <C> <C> <C>
08-834 58th and York 07/16/98 10/31/98 7,000.00
- ---------------------------------------------------------------------------------------
08-835 Summitville Drum 07/30/98 06/30/99 250,000.00
- ---------------------------------------------------------------------------------------
08-836 Upper Arkansas River Lagoon 07/30/98 10/31/98 24,500.00
- ---------------------------------------------------------------------------------------
08-837 Vasquez and I-70 09/22/98 06/30/99 785,000.00
- ---------------------------------------------------------------------------------------
08-838 Weld County Waste Disposal 09/25/98 10/01/99 2,195,000.00
- ---------------------------------------------------------------------------------------
08-839 Basin Tailings Site 10/08/98 06/30/99 355,000.00
- ---------------------------------------------------------------------------------------
08-840 R.J. Refinery Site 10/13/98 06/30/99 17,000.00
- ---------------------------------------------------------------------------------------
08-841 Davis Post & Pole 10/26/98 08/01/99 135,000.00
- ---------------------------------------------------------------------------------------
08-842 Santa Fe Tanker Site 12/05/98 11/01/99 20,000.00
- ---------------------------------------------------------------------------------------
08-843 Fenton Culvert 01/15/99 03/30/99 25,000.00
- ---------------------------------------------------------------------------------------
08-844 Rosebud Indian Reservation 02/05/99 04/30/99 5,000.00
- ---------------------------------------------------------------------------------------
08-845 Ute Mountain Indian Reservation 02/11/99 04/30/99 9,500.00
- ---------------------------------------------------------------------------------------
08-046 Thornton Mercury Site 03/11/99 not listed 6,500.00
- ---------------------------------------------------------------------------------------
08-847 Wade Field Services, Inc. 04/15/99 09/30/99 39,000.00
- ---------------------------------------------------------------------------------------
08-848 Pleasant View PCE Site 04/21/99 09/30/99 35,000.00
- ---------------------------------------------------------------------------------------
08-849 Manvel Pesticide Site 05/18/99 01/08/00 15,000.00
- ---------------------------------------------------------------------------------------
08-850 Monroe Chemical 05/26/99 01/08/00 100,000.00
- ---------------------------------------------------------------------------------------
08-851 Montezuma County Pesticide 06/02/99 01/08/00 13,000.00
- ---------------------------------------------------------------------------------------
08-852 Upper Ten Mile Creek 06/10/99 01/08/00 4,000,000.00
- ---------------------------------------------------------------------------------------
08-853 Kenco Refinery 06/11/99 01/08/00 24,000.00
- ---------------------------------------------------------------------------------------
08-854 Upper AR River Fluvial Tailings II 07/09/99 01/08/00 350,000.00
- ---------------------------------------------------------------------------------------
08-855 Lockwood Solvents 07/14/99 01/08/00 5,000.00
- ---------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------
09-001 Sutter County, California 01/15/97 06/30/99 200,000.00
- ---------------------------------------------------------------------------------------
09-002 San Joaquin County, California 01/15/97 06/30/97 100,000.00
- ---------------------------------------------------------------------------------------
09-003 McCormick & Baxter 03/03/97 10/31/97 455,000.00
- ---------------------------------------------------------------------------------------
09-004 Enviropur West 02/28/97 06/30/98 1,600,000.00
- ---------------------------------------------------------------------------------------
09-005 Fresno Drum 02/26/97 12/08/98 368,000.00
- ---------------------------------------------------------------------------------------
09-006 DC Metals 03/01/97 09/30/99 790,000.00
- ---------------------------------------------------------------------------------------
09-007 Del Norte 02/26/97 03/31/99 155,000.00
- ---------------------------------------------------------------------------------------
09-008 Frontier Fertilizer 02/26/97 06/30/97 35,000.00
- ---------------------------------------------------------------------------------------
09-009 Yuba County, California 02/26/97 06/30/97 75,000.00
- ---------------------------------------------------------------------------------------
09-010 Household Hazardous Waste 02/28/97 06/30/97 400,000.00
- ---------------------------------------------------------------------------------------
09-011 Moorpark Meth Lab 03/17/97 09/30/97 100,000.00
- ---------------------------------------------------------------------------------------
09-012 Proto Metals 04/07/97 07/31/97 139,000.00
=======================================================================================
</TABLE>
<PAGE> 66
JOB STATUS SUMMARY
ERRS WEST
CONTRACT NO. 68-W7-0016
08/01/99 THROUGH 08/31/99
<TABLE>
============================================================================================
<S> <C> <C> <C> <C>
09-013 Geo Operator Corp. / Unit 15 04/17/97 01/08/98 1,300,000.00
- --------------------------------------------------------------------------------------------
09-014 Republic of Palau 04/14/97 06/30/98 330,000.00
- --------------------------------------------------------------------------------------------
09-015 American Samoa 05/01/97 08/01/97 25,000.00
- --------------------------------------------------------------------------------------------
09-016 Freelove Meth Lab / Valleyhome 05/05/97 09/30/97 72,000.00
- --------------------------------------------------------------------------------------------
09-017 Ocean Park Lead 05/12/97 09/30/97 60,000.00
- --------------------------------------------------------------------------------------------
09-018 Lola and White Streets 06/20/97 07/31/97 5,000.00
- --------------------------------------------------------------------------------------------
09-019 PEMACO 08/01/97 01/08/00 1,100,000.00
- --------------------------------------------------------------------------------------------
09-020 South Idaho Floods 06/26/97 07/31/97 15,000.00
- --------------------------------------------------------------------------------------------
09-021 Gentry Subdivision PCB Site 07/08/97 09/30/97 52,000.00
- --------------------------------------------------------------------------------------------
09-022 Palermo Wells Site 07/11/97 09/30/97 50,000.00
- --------------------------------------------------------------------------------------------
09-023 Toro Creek 07/15/97 01/08/00 340,000.00
- --------------------------------------------------------------------------------------------
09-024 Iron Mountain Mine 08/01/97 03/31/98 600,000.00
- --------------------------------------------------------------------------------------------
09-025 Duck Valley 09/15/97 09/30/99 24,000.00
- --------------------------------------------------------------------------------------------
09-026 Leviathan Mine 09/24/97 09/25/98 600,000.00
- --------------------------------------------------------------------------------------------
09-027 Byers Bomb Site 09/22/97 09/30/99 1,050,000.00
- --------------------------------------------------------------------------------------------
09-028 Navajo Forest Products Ind. 09/24/97 09/30/98 80,000.00
- --------------------------------------------------------------------------------------------
09-029 Bakersfield Chrome & Bumper 09/24/97 06/30/98 130,000.00
- --------------------------------------------------------------------------------------------
09-030 Lava Cap Mine 10/15/97 12/31/98 525,000.00
- --------------------------------------------------------------------------------------------
09-031 K&L Plating / Pearmain 09/30/97 06/30/98 600,000.00
- --------------------------------------------------------------------------------------------
09-032 K&L Plating / 89th 10/03/97 06/30/98 500,000.00
- --------------------------------------------------------------------------------------------
09-033 Pala Drug Lab 09/25/97 01/08/98 10,000.00
- --------------------------------------------------------------------------------------------
09-034 Eagle 1 Mill 10/06/97 06/30/98 100,000.00
- --------------------------------------------------------------------------------------------
09-035 Tuolumne Indian Reservation 10/10/97 01/08/98 10,000.00
- --------------------------------------------------------------------------------------------
09-036 PRC Patterson 11/05/97 03/31/99 300,000.00
- --------------------------------------------------------------------------------------------
09-037 West Cap 03/05/98 03/31/99 518,500.00
- --------------------------------------------------------------------------------------------
09-938 The Syntrum Corporation 02/09/98 09/30/99 1,205,549.00
- --------------------------------------------------------------------------------------------
09-039 Preplanning Region 9 02/12/98 01/08/00 50,000.00
- --------------------------------------------------------------------------------------------
09-040 Bay Blvd. / Lagoon Drive 03/05/98 09/30/98 100,000.00
- --------------------------------------------------------------------------------------------
09-041 Indian Basin Boatyard 04/09/98 09/30/98 180,000.00
- --------------------------------------------------------------------------------------------
09-042 Gambonini Mercury Mine 04/10/98 09/30/99 2,750,000.00
- --------------------------------------------------------------------------------------------
09-943 Alcoa Pacific 04/21/98 09/30/98 35,000.00
- --------------------------------------------------------------------------------------------
09-944 Kingsbury Creek Mine 06/12/98 01/08/98 60,000.00
- --------------------------------------------------------------------------------------------
09-945 Cappell Road 07/22/98 01/08/99 200,000.00
- --------------------------------------------------------------------------------------------
09-946 Minerec Mining Chemical 09/01/98 03/31/99 150,000.00
- --------------------------------------------------------------------------------------------
09-947 Grey Eagle Mine 09/09/98 09/30/98 1,781,655.00
============================================================================================
</TABLE>
<PAGE> 67
JOB STATUS SUMMARY
ERRS WEST
CONTRACT NO. 68-W7-0016
08/01/99 THROUGH 08/31/99
<TABLE>
<S> <C> <C> <C>
===================================================================================
09-948 McFarland, CA 09/17/98 09/30/99 35,000.00
- -----------------------------------------------------------------------------------
09-949 Barona Res. Meth Drums 11/18/98 03/31/99 10,000.00
- -----------------------------------------------------------------------------------
09-950 Wilder Ranch 11/30/98 03/31/98 250,000.00
- -----------------------------------------------------------------------------------
09-951 Francis Plating Site 12/16/98 09/30/99 1,000,000.00
- -----------------------------------------------------------------------------------
09-952 CRIT Parker Pesticide Site 02/20/99 09/30/99 168,500.00
- -----------------------------------------------------------------------------------
09-953 38th Street Rad Site 03/04/99 09/30/99 50,000.00
- -----------------------------------------------------------------------------------
09-954 Hollywood Blvd, near I-5 03/10/99 06/30/99 50,000.00
- -----------------------------------------------------------------------------------
09-955 Hofer Property 05/04/99 01/08/00 680,000.00
- -----------------------------------------------------------------------------------
09-956 Pala Indian Reservation 04/29/99 06/30/99 5,000.00
- -----------------------------------------------------------------------------------
09-957 Gila River Indian Reservation 05/27/99 01/08/00 200,000.00
- -----------------------------------------------------------------------------------
09-958 SW Photochemical 06/18/99 01/08/00 600,000.00
- -----------------------------------------------------------------------------------
09-959 Buena Vista / Klau Mine 07/09/99 12/15/99 1,149,978.00
- -----------------------------------------------------------------------------------
09-960 Mongmong, Guam 07/21/99 12/15/99 200,000.00
===================================================================================
</TABLE>
<PAGE> 68
SCHEDULE 1.C.
EPA CONTRACT EQUIPMENT
SEE ATTACHED SCHEDULE AND INCLUDING SELLERS OFFICE FURNITURE AND MISCELLANEOUS
EQUIPMENT AND SUPPLIES LOCATED IN THE EDMUNDS, WA LEASED FACILITY.
23
<PAGE> 69
<TABLE>
<CAPTION>
ID SERIAL MAKE & MODEL AP VENDOR FAACCT BOOK_BASIS
- ---- ----------------- --------------------------------- ------------------------ -------- -----------
<S> <C> <C> <C> <C>
S100 1FTJX35G4RKB31487 94 F350 1 TON EXT CAB COURTESY 0172-002 $ 13,385.85
S101 1FTJX35GTEB64213 96 F350 1 TON EXT CAB ASSOCIATES LEASING 0172-002 $ 20,732.00
S102 2FDKF3852LCA91856 90 F350 1 TON FLATBED BILLPIE FORD 0171-002 $ 24,961.97
S103 [ILLEGIBLE] 95 CHEVY ASSOCIATES LEASING 0172-002 $ 22,743.53
S104 [ILLEGIBLE] 92 F250 1 TON BOX TRUCK ENTERPRISE 0172-002 $ 21,580.68
S105 1FTJW35SF9SEA71446 95 F350 1 TON CREW CAB ASSOCIATES LEASING 0172-002 $ 25,780.00
S106 [ILLEGIBLE] KOMATSU 5000LB INDUSTRIAL FORKLIFT HERTZ 0171-002 $ 13,000.03
S107 [ILLEGIBLE] 98 YAMAHA 386CC 4X4 ATV CANTON FARM EQUIPMENT 0171-002 $ 5,295.00
S108 3B7KC23C7SM172833 95 BR2500 RAM ASSOCIATES LEASING 0172-002 $ 27,315.00
S200 [ILLEGIBLE] 28' 1985 FREUHAUF VAN FRUEHAUF 0170-002 $[ILLEGIBLE]
S202 16VAX1213N1A21011 92 BIG TEX UTILITY TRAILER HARRIS TRAILER SALES 0170-002 $ 777.56
S205 FRTO11702 32' SEMI TRAILER FRUEHAUF 0170-002 $ 3,843.00
S207 FRTO11708 32' SEMI TRAILER FRUEHAUF 0170-002 $ 3,843.00
S208 107101E 74 GINDY DRY VAN FRUEHAUF 0170-002 $ 6,774.12
S209 HAZDECON MODEL #R-MDF4LP HAZDECON 0170-002 $ 26,930.00
S210 983110 8'X20' DECON TRAILER HAZCO/CENTRAL INDUSTRIES 0170-002 $ 2,164.00
S300 GC02-2471827 2' TRASH PUMP HONDA 0170-002 $ 1,136.10
S301 234-76104-01 3' TRASH PUMP MULTIQUIP 0170-002 $ 1,555.13
S302 WAF1009366 3' TRASH PUMP HONDA 0170-002 $ 1,295.00
S304 [ILLEGIBLE] 2' SUBMERSIBLE PUMP TEEL SYSTEMS 0170-002 $ 1,487.58
S307 08-9527 PUMP ME/PAPB/TF/FTF/PTS WAGNER PROCESS/WILDEN 0170-002 $ 2,587.69
S308 PUMP WIMB/TO/TF/TF/AT ARGO/WILDEN 0170-002 $ 985.00
S309 PUMP WIM1STOTFTFAT ARGO/WILDEN 0170-002 $ 1,543.00
S310 PUMP WIMB/ST/FT/TF/ST ARGO/WILDEN 0170-002 $ 2,090.00
S311 PUMP WIMB/ST/FT/TF/ST ARGO/WILDEN 0170-002 $ 2,093.00
S313 PUMP M8-WIM ARGO/WILDEN 0170-002 $ 1,170.00
S314 PUMP M8-WIM ARGO/WILDEN 0170-002 $ 985.00
S317 15-5003 MIS-00-BN-BN-BN PHOENIX PUMPS/WILDEN 0170-002 $ 1,232,62
S318 [ILLEGIBLE] MASTERFLEX 12VDC COLE-PARMER/REDI-FLO 0170-002 $ 2,369.38
S319 110 VOLT FUEL PUMP REBEL OIL 0170-002 $ 466.94
S321 PUMP PCISP2GVPNC ARGO 0170-002 $ 946.25
S323 3'DD ALUMINUM PUMP HERTZ/WILDEN 0170-002 $ 1,357.38
S324 CA9105 CA9115 TELESCOPIC SHOWER SAFETY ENVIRONMENTAL 0170-002 $ 899.71
S329 LUTZ PUMP RYAN HERCO 0170-002 $ 1,325.87
S400 1119596 93 HONDA GENERATOR [ILLEGIBLE] HILLSBORO HONDA 0170-002 $ 2,150.00
S500A HIP AIR PACK CASCADE/MSA 0170-002 $ 1,748.89
S500B HIP AIR PACK CASCADE/MSA 0170-002 $ 1,748.89
S500C HIP AIR PACK CASCADE/MSA 0170-002 $ 1,748.89
S500D HIP AIR PACK CASCADE/MSA 0170-002 $ 1,748.89
S502A HIP AIR PACK HAZCO/MSA 0170-002 $ 1,582.73
S502B HIP AIR PACK HAZCO/MSA 0170-002 $ 1,582.73
S502C HIP AIR PACK HAZCO/MSA 0170-002 $ 1,582.73
S503A HIP AIR PACK HAZCO/CASCADE 0170-002 $ 1,359.04
S503B HIP AIR PACK HAZCO/CASCADE 0170-002 $ 1,359.04
S503C HIP AIR PACK HAZCO/CASCADE 0170-002 $ 1,359.04
S503D HIP AIR PACK HAZCO/CASCADE 0170-002 $ 1,359.04
S504A HIP AIR PACK CASCADE/MSA 0170-002 $ 1,487.58
S504B HIP AIR PACK CASCADE/MSA 0170-002 $ 1,487.58
S504C HIP AIR PACK CASCADE/MSA 0170-002 $ 1,487.58
S505A HIP AIR PACK CASCADE/MSA 0170-002 $ 1,437.50
</TABLE>
<TABLE>
<CAPTION>
ID SEP-99 DEP EXP-99 ACCUM 99 NBV
- ---- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
S100 (17.19) 897.51 13,368.61 17.19
S101 345.53 3,109.00 14,627.58 6,104.42
S102 0.00 0.00 24,961.97 0.00
S103 379.05 3,411.53 20,456.54 2,288.99
S104 359.88 3,237.10 20,693.47 [ILLEGIBLE]
S105 429.57 [ILLEGIBLE] [ILLEGIBLE] 4,640.91
S106 216.67 1,950.00 4,554.45 8,435.58
S107 58.25 794.25 [ILLEGIBLE] 3,674.14
S108 455.25 4,097.25 24,052.38 3,282.63
S200 104.45 940.02 3,874.96 2,391.82
S202 28.87 15.98 777.58 0.00
S205 (14.94) 79.00 3,843.01 0.00
S207 (14.94) 79.00 3,843.01 0.00
S208 112.90 1,016.12 4,22.53 2,551,59
S209 345.00 3,105.00 16,215.00 12,765.00
S210 0.00 0.00 [ILLEGIBLE] (0.00
S300 13.53 121.73 885.60 270.50
S301 0.00 82.69 1,565.13 (0.00
S302 0.00 23.74 1,295,00 (0.00
S304 0.00 0.00 1,487.58 0.00
S307 30.57 275.11 911.94 1,555.75
S308 0.00 0.00 917.47 67.53
S309 0.00 0.00 1,543.00 (0.00
S310 0.00 0.00 2,090.00 (0.00
S311 0.00 0.00 2,093.00 0.00
S313 13.93 125.36 998.21 171.79
S314 0.00 0.00 985.00 0.00
S317 14.67 132.07 555.17 577.45
S318 28.21 253.66 2,309.21 80.17
S319 5.80 52.17 373.90 113.04
S321 11.25 101.38 836.61 109.64
S323 16.16 145.43 324.28 1,033.12
S324 10.71 96.40 770.82 128.89
S329 22.10 154.68 154.68 1,171.19
S400 25.60 230.36 1,611.51 508.49
S500A 20.82 187.38 796.72 952.17
S500B 20.82 187.38 796.72 952.17
S500C 20.82 187.38 796.72 952.17
S500D 20.82 187.38 796.72 952.17
S502A 18.84 169.58 1,069.60 513.13
S502B 18.84 169.58 1,069.60 513.13
S502C 18.84 169.58 1,069.60 513.13
S503A 16.18 145.61 837.54 521.50
S503B 16.18 145.61 837.54 521.50
S503C 16.18 145.61 837.54 521.50
S503D 16.18 145.61 837.54 521.50
S504A 0.00 0.00 1,487.58 0.00
S504B 0.00 0.00 1,487.58 0.00
S504C 0.00 0.00 1,487.58 0.00
S505A 19.49 175.45 1,595.91 41.59
</TABLE>
Page 1 of 6
<PAGE> 70
<TABLE>
<CAPTION>
ID SERIAL MAKE & MODEL AP VENDOR FAACCT
-- ------ ------------ --------- ------
<S> <C> <C> <C> <C>
S505B HIP AIR PACK CASCADE/MSA 0170-002
S505C HIP AIR PACK CASCADE/MSA 0170-002
S505D HIP AIR PACK CASCADE/MSA 0170-002
S506 HIP AIR PACK MSA/SCBA 0170-002
S507 HIP AIR PACK MSA/SCBA 0170-002
S701 VAC-U-MAX 55 GAL OPEN TOP VACU-MAX 0170-002
S702 VAC-U-MAX CLN/U55 VACU-MAX 0170-002
S703 VAC-U-MAX CLN/U55 VACU-MAX 0170-002
S704 ASBESTOS VAC HACO 0170-002
S705 ASBESTOS VAC HACO 0170-002
S706 CA102ASB-12P PULLMAN HOLT 12 GAL VACUUM SAFETY ENVIRONMENTAL 0170-002
S707 CA102ASB-12P PULLMAN HOLT 12 GAL VACUUM SAFETY ENVIRONMENTAL 0170-002
S708 CA102ASB-12P PULLMAN HOLT 12 GAL VACUUM SAFETY ENVIRONMENTAL 0170-002
S709 CA102ASB-12P PULLMAN HOLT 12 GAL VACUUM SAFETY ENVIRONMENTAL 0170-002
S710 NILFISK WET/DRY MERCURY VAC HAZCO 0170-002
S711 NILFISK WET/DRY MERCURY VAC HAZCO 0170-002
S712 FA200DE NEGATIVE AIR SAFETY ENVIRONMENTAL 0170-002
S713 FA200DE NEGATIVE AIR SAFETY ENVIRONMENTAL 0170-002
S714 FA200DE NEGATIVE AIR SAFETY ENVIRONMENTAL 0170-002
S715 FA200DE NEGATIVE AIR SAFETY ENVIRONMENTAL 0170-002
S716 FA200DE NEGATIVE AIR SAFETY ENVIRONMENTAL 0170-002
S717 FA200DE NEGATIVE AIR SAFETY ENVIRONMENTAL 0170-002
S722 AIRSTRIPPER, SHALLOW TRAY AIR STRIP 0170-002
S724 CONCRETE VIBRATOR W/MOTOR LONE STAR NORTHWEST 0170-002
S725 FIRE SAFETY CABINET C&H DISTRIBUTORS 0170-002
S726 FIRE SAFETY CABINET C&H DISTRIBUTORS 0170-002
S734 1/2" PNEUMATIC DRILL GRAINGER 0170-002
S738 B190 PNEUMATIC DRUM DEHEADER GA W/3517 WIZARD DRUM TOOL 0170-002
S739 TC16116 BROOKS ($443,811) TARMAC 0170-002
S740 PD390-3953 3000 PSI GENERATOR PRESSURE WASHER LANDA 0170-002
S741 10074 SUPER PROLINE DRUM CRUSHER 10-20/70 DRUMBEATERS OF AMERICA 0170-002
S749 PH 3000 HYDRALIC SHEAR CODE 3 RES Q 0170-002
S752 DE4800/FR1210 105 GAL TANK W/FUEL PUMP ACE TANK & EQUIP 0170-002
S756 HAZCAT KIT W/SENS. PUMP & TUBES HAZTECH SYSTEMS 0170-002
S758 26083 BURIED PIPE & CABLE DETECTOR MCMASTER CARR SUPPLY 0170-002
S759 933113 LASER PRO SHOT L1AS OPTICO FIELD EQUIPMENT & S 0170-002
S761 K01B1 EXPLOSIMETER MODEL #1314SMPN GASTECH 0170-002
S763 580A-2521B-219 PHOTOIONIZATION DETECTOR MODEL #58 ENVIRONMENTAL INSTRUMEN 0170-002
S764 590A-24612-217 PHOTOIONIZATION DETECTOR MODEL #58 ENVIRONMENTAL INSTRUMEN 0170-002
S765 15326 100 FT WATER LEVEL INDICATOR SINCO/SLOPE INDICATOR COM 0170-002
S770 MARK 4 DUST FOGGER SYSTEM TORGERSON MACHINERY 0170-002
S771 SPACE RECOVERY UNIT ARAMSCO 0170-002
S773 063415 AUTO LEVEL W/TRIPOD CONTRACTORS WAREHOUSE 0170-002
S774 B0210 PCB SOIL TEST ANALYZER ENSYS 0170-002
S777 3.5 HP GAS BLOWER W/VINYL HOSE DUCT HAZCO 0170-002
S778 3.5 HP GAS BLOWER W/VINYL HOSE DUCT HAZCO 0170-002
S779 3.5 HP GAS BLOWER W/VINYL HOSE DUCT HAZCO 0170-002
S780 3.5 HP GAS BLOWER W/VINYL HOSE DUCT HAZCO 0170-002
S781 3.5 HP GAS BLOWER W/VINYL HOSE DUCT HAZCO 0170-002
S782 3.5 HP GAS BLOWER W/VINYL HOSE DUCT HAZCO 0170-002
</TABLE>
<TABLE>
<CAPTION>
ID BOOK_BASIS SEP-99 DEP EXP-99 ACCUM-99 NBV
-- ---------- ------ ---------- -------- ---
<S> <C> <C> <C> <C> <C>
S505B $ 1,637.50 19.49 175.45 1,593.31 44.18
S505C $ 1,637.50 19.49 175.45 1,593.31 44.19
S505D $ 1,637.50 19.49 175.45 1,593.31 44.19
S506 $ 2,694.50 0.00 192.48 2,694.75 0.00
S507 $ 2,694.50 0.00 0.00 2,694.75 0.00
S701 $ 1,345.85 18.02 144.20 254.22 1,091.63
S702 $ 954.55 0.00 0.00 954.56 (0.00)
S703 $ 954.55 0.00 0.00 954.56 (0.00)
S704 $ 1,300.00 15.48 139.29 513.29 785.71
S705 $ 1,300.00 15.48 139.29 513.29 785.71
S706 $ 624.06 7.43 66.87 522.79 101.29
S707 $ 624.06 7.43 66.87 534.68 89.40
S708 $ 624.06 7.43 66.87 534.68 89.40
S709 $ 624.06 7.43 66.87 534.68 89.40
S710 $ 4,072.38 48.48 436.33 1,016.48 3,055.90
S711 $ 4,072.38 48.48 436.33 1,165.77 2,905.61
S712 $ 808.13 9.62 86.59 692.36 115.77
S713 $ 808.13 9.62 86.59 692.36 115.77
S714 $ 808.13 9.62 86.59 692.36 115.77
S715 $ 808.13 9.62 86.59 692.36 115.77
S716 $ 808.13 9.62 86.59 692.36 115.77
S717 $ 808.13 9.62 86.59 692.36 115.77
S722 $ 13,096.00 155.93 1,403.36 5,145.64 7,952.36
S724 $ 948.00 11.29 101.57 714.39 233.61
S725 $ 794.68 9.48 85.14 530.73 263.95
S726 $ 795.00 9.46 85.18 659.86 135.34
S734 $ 651.72 7.76 69.83 606.01 43.71
S738 $ 3,005.60 0.00 146.70 3,005.60 (0.00)
S739 $443,611.00 5,283.46 47,551.18 65,239.69 358,571.11
S740 $ 10,641.03 0.00 0.00 10,641.03 (0.00)
S741 $ 45,774.30 544.93 4,904.38 25,339.34 20,434.96
S749 $ 6,330.43 75.36 576.26 3,197.87 3,132.58
S752 $ 689.55 8.21 73.66 307.29 382.26
S756 $ 3,007.30 35.80 322.21 1,661.18 1,345.12
S758 $ 674.04 8.02 72.22 430.37 243.67
S759 $ 3,315.60 39.47 355.24 1,518.33 1,797.27
S761 $ 2,324.15 0.00 0.00 2,324.15 0.00
S763 $ 4,885.00 56.15 523.39 1,093.31 3,791.68
S764 $ 4,925.00 58.63 527.68 1,102.28 3,822.74
S765 $ 680.00 8.10 72.66 152.19 527.81
S770 $ 2,291.36 27.28 245.51 1,382.10 909.28
S771 $ 2,675.88 31.86 286.70 2,056.62 619.06
S773 $ 864.86 0.00 51.48 664.68 0.00
S774 $ 1,261.50 15.26 137.30 1,000.79 280.71
S777 $ 1,118.89 13.32 119.88 388.06 730.83
S778 $ 1,118.89 13.32 119.88 388.06 730.83
S779 $ 1,118.89 13.32 119.88 388.06 730.83
S780 $ 1,118.89 13.32 119.88 388.06 730.83
S781 $ 1,118.89 13.32 119.88 388.06 730.83
S782 $ 1,118.89 13.32 119.88 388.06 730.83
</TABLE>
PAGE 2 OF 6
<PAGE> 71
<TABLE>
<CAPTION>
ID SERIAL MAKE & MODEL AP VENDOR FAACCT
-- ------ ------------ --------- ------
<S> <C> <C> <C> <C>
S783 3.5 HP GAS BLOWER W/VINYL HOSE DUCT HAZCO 0170-002
S784 DATA LOGGER TRANSDUCER 0170-002
S785 VAPOR EXT/GROUND WATER UNIT 0170-002
S786 WATER TREATMENT VESSELS CAMERON-YAKIMA 0170-002
S787 WATER TREATMENT VESSELS CAMERON-YAKIMA 0170-002
S788 WATER TREATMENT VESSELS CAMERON-YAKIMA 0170-002
S789 WAREHOUSE SECURITY GATE ECONOMY FENCE CENTER 0170-002
S790 BASIC SOIL AUGER KIT NORTHWEST PUMP & EQUIPM 0170-002
S791 000945 CONNEX BOX INSTANT SPACE 0170-002
S792 1000LB VAPOR PHASE CARBON VESSELS SUN-AG 0170-002
S794 202-2226 THERMO ANEMOMETER GRAINGER 0170-002
S795 59261 1000LB PORTABLE BALANCE SCALE CASCO 0170-002
S796 DCR-205-15 DRUM TIPPER 55 GAL/ 180 DEGREE CLARKLIFT OF SAN DIEGO 0170-002
S797 GREASE BARREL CHASSIS PUMP SPOKANE PUMP/LINCOLN 0170-002
S798 202-2226 THERMO ANEMOMETER GRAINGER 0170-002
S799 DESORBER UNIT REBUILD TARMAC 0170-002
S800 X7329576-1 445 CDX COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S801 X7328877-1 445 CDX COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S802 X7328876-1 445 CDX COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S803 X7311417 445 CDX COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S806 87142380 445 CDX COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S807 87141412 445 CDX COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S808 97278138 445 CDX COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S809 18504350 305 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S810 67041818 225 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S811 67041551 225 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S812 11651633 205 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S813 10628342 205 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S814 12895459 205 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S818 12895318 205 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S819 83443183 P100 DESK TOP COMPUTER INTEL/COMPUSAVE 0176-002
S820 83442978 P100 DESK TOP COMPUTER INTEL/COMPUSAVE 0176-002
S821 83443180 P100 DESK TOP COMPUTER INTEL/COMPUSAVE 0176-002
S822 6694685 105 CS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S824 6694770 105 CS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S825 12688656 205 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S826 200 MMX NOTEBOOK TOSHIBA/COMPUTER CITY 0176-002
S827 INTER-TEL AXXESS PHONE SYSTEM TERRA COMMUNICATIONS 0176-002
S828 77085756 225 CDS COMPUTER TOSHIBA/COMPUTER CITY 0176-002
S829 95120264 TOSHIBA FAX MACHINE KELLY BUSINESS MACHINES 0176-002
S830 IBM-THINKPAD PACIFIC BUSINESS SYSTEMS 0176-002
S831 IBM-THINKPAD PACIFIC BUSINESS SYSTEMS 0176-002
S832 IBM-THINKPAD PACIFIC BUSINESS SYSTEMS 0176-002
S833 IBM-THINKPAD PACIFIC BUSINESS SYSTEMS 0176-002
S834 IBM-THINKPAD PACIFIC BUSINESS SYSTEMS 0176-002
S836 USKB123324 HEWLETT 4SI PRINTER HEWLETT PACKARD 0176-002
S837 USHC038184 HEWLETT 4SI PRINTER HEWLETT PACKARD 0176-002
S838 JPT001439 HP LASER 5SI HEWLETT PACKARD 0176-002
S839 JP6K048433 HP LASER 5SI HEWLETT PACKARD 0176-002
S841 601908 P-133 COMPUTER COMPUTER CITY 0176-002
<CAPTION>
ID BOOK_BASIS SEP-99 DEP EXP-99 ACCUM-99 NBV
-- ---------- ------ ---------- -------- ---
<S> <C> <C> <C> <C> <C>
S783 $ 1,118.89 13.32 19.88 388.06 730.83
S784 $ 3,023.65 36.00 323.96 2,813.67 209.98
S785 $ 48,210.30 585.84 572.53 41,857.61 7,342.49
S786 $ 2,841.66 33.83 304.46 2,238.12 805.54
S787 $ 2,841.66 33.83 304.46 2,238.12 805.54
S788 $ 2,841.66 33.83 304.46 2,238.12 805.54
S789 $ 1,081.35 12.87 115.88 821.72 159.83
S790 $ 779.00 9.27 83.46 884.00 115.00
S791 $ 2,950.00 18.73 283.29 2,850.00 0.00
S792 $ 8,120.00 98.87 870.00 7,250.00 870.00
S794 $ 592.50 6.70 60.27 107.81 454.68
S795 $ 575.00 2.26 52.48 575.00 0.00
S796 $ 883.44 10.28 92.51 792.17 71.27
S797 $ 759.46 9.04 81.37 850.65 108.80
S798 $ 582.50 6.70 90.27 107.81 454.89
S799 $ 334,952.00 3,987.64 35,868.79 35,88.79 299,073.21
S800 $ 2,563.31 42.72 364.50 900.01 1,663.30
S801 $ 2,563.31 42.72 364.50 900.01 1,663.30
S802 $ 2,563.31 42.72 364.50 900.01 1,663.30
S803 $ 2,434.90 40.58 365.24 848.90 1,588.10
S806 $ 2,610.00 43.50 391.50 1,025.16 1,584.85
S807 $ 2,610.02 43.50 391.50 1,025.16 1,584.85
S808 $ 2,455.62 40.93 368.34 839.98 1,515.88
S809 $ 1,988.28 32.80 295.24 825.48 1,342.80
S810 $ 2,980.47 43.17 388.57 1,070.73 1,519.74
S811 $ 2,782.42 48.37 417.36 1,255.18 1,527.24
S812 $ 2,824.73 43.75 393.71 971.15 1,853,58
S813 $ 2,227.09 37.12 564.08 1,374.61 852.48
S814 $ 1,878.71 31.31 281.81 994.67 884.04
S818 $ 2,034.88 33.91 305.23 1,048.48 958.38
S819 $ 856.85 14.28 128.53 255.83 601.23
S820 $ 856.85 14.28 128.53 255.83 601.23
S821 $ 856.85 14.28 128.53 255.83 601.22
S822 $ 2,126.55 35.44 318.98 1,349.18 777.37
S824 $ 3,143.42 52.39 471.51 2,107.84 1,035.58
S825 $ 2,217.89 38.96 332.68 1,175.48 1,042.41
S826 $ 1,976.96 32.95 296.54 571.12 1,405.64
S827 $ 32,736.89 389.71 3,507.42 8,808.05 24,655.84
S828 $ 2,889.62 48.33 434.94 1,254.89 1,644.73
S829 $ 2,850.00 44.17 397.50 1,938.92 711.08
S830 $ 2,604.00 43.40 390.60 585.85 2,038,35
S831 $ 2,604.23 43.40 390.63 585.70 2,038.53
S832 $ 1,372.70 22.88 205.91 298.18 1,074.52
S833 $ 1,372.00 22.87 205.80 298.03 1,073.97
S834 $ 1,372.00 22.87 205.80 298.03 1,073.97
S836 $ 1,406.52 0.00 0.00 1,406.52 (0.00)
S837 $ 1,433.83 23.88 215.01 959.74 474.89
S838 $ 1,498.67 0.00 0.00 4,496.67 (0.00)
S839 $ 1,447.84 24.13 217.18 1,321.56 126.28
S841 $ 1,778.81 29.65 266.82 935.85 842.98
</TABLE>
PAGE 3 OF 6
<PAGE> 72
<TABLE>
<CAPTION>
ID SERIAL MAKE & MODEL AP VENDOR FAACCT
- ------ ---------------- ------------------- ----------------------- ------------------
<S> <C> <C> <C> <C>
S842 500268 P-90 COMPUTER COMPUTER CITY 0176-002
S843 601907 P-133 COMPUTER COMPUTER CITY 0176-002
S844 M949502099 P-133 COMPUTER COMPUTER CITY 0176-002
S845 509131 P-100 COMPUTER COMPUTER CITY 0176-002
S646 P-133 COMPUTER COMPUTER CITY 0176-002
S647 M49502096 P-133 COMPUTER COMPUTER CITY 0176-002
S648 500267 P-90 COMPUTER COMPUTER CITY 0176-002
S849 P-133 COMPUTER COMPUTER CITY 0176-002
S850 601909 P-133 COMPUTER COMPUTER CITY 0176-002
S851 601909 P-133 COMPUTER COMPUTER CITY 0176-002
S852 62026088 ALDER S10 TYPEWRITER FIRSTLINE OFFICE 0175-002
S855 P-90 PCL ELSA FILE SERVER COMPUTER REPAIR, INC 0176-002
S858 CET COMPANY SIGN JIM MANNING & ASSOC. 0175-002
S862 MAGNA SHELL DESK PANEL CRAWFORD 0175-002
S863 42" HDN LATERAL FILE CABINET CRAWFORD 0175-002
S864 42" HDN LATERAL FILE CABINET CRAWFORD 0175-002
S865 1700CU OFFICE SAFE SOURCE 100 0175-002
S866 AUDIO VISUAL BOARD3076 CRAWFORD 0175-002
S867 Y8215376A NOTEBOOK COMPUTER TOSHIBA 0176-002
S868 Y8214843A NOTEBOOK COMPUTER TOSHIBA 0176-002
S869 Y8202213A NOTEBOOK COMPUTER TOSHIBA 0176-002
S892 500256 P-90 COMPUTER COMPUTER 0176-002
S902 174DVJ2978 GP300 RADIO MOTOROLA 0170-002
S907 174FVJ6950 GP300 RADIO MOTOROLA 0170-002
S909 174FVJ5926 GP300 RADIO MOTOROLA 0170-002
S910 174FVJ6928 GP300 RADIO MOTOROLA 0170-002
S911 174FVJ3215 GP300 RADIO MOTOROLA 0170-002
S914 174FWN1115 GP300 RADIO MOTOROLA 0170-002
S915 174FWND942 GP300 RADIO MOTOROLA 0170-002
S916 174FWLD223 GP300 RADIO MOTOROLA 0170-002
S918 174FWDL211 GP300 RADIO MOTOROLA 0170-002
S919 174FWN1146 GP300 RADIO MOTOROLA 0170-002
S921 174FWN1152 GP300 RADIO MOTOROLA 0170-002
S922 174FWN1145 GP300 RADIO MOTOROLA 0170-002
S935 174FLWD204 GP300 RADIO MOTOROLA 0170-002
S936 174FWN1118 GP300 RADIO MOTOROLA 0170-002
S937 174FWN1144 GP300 RADIO MOTOROLA 0170-002
P100 1FTDF1727VKB15641 97 F150 FORD 0172-002
P102 1FTJW36F3VEAS1658 97 F350 FORD 0172-002
P105 2FDLFH47MOMCADS 91 F450 FLAT BED FORD 0171-002
P111 WC619386 28'x8' RESPONSE TRAILER WELLS CARGO 0170-002
P200 15HP OUTBOARD MOTOR JOHNSON 0170-002
P201 15HP OUTBOARD MOTOR EVINRUDE 0170-002
P202 SYL492206896 SKIFF & TRAILER STEVENS MARINE/SYLVAN 0170-002
P203 SMK820288191 SKIFF & TRAILER SMOKER CRAFT 0170-002
P300 M-4 PUMP WILDEN 0170-002
P301 M-15 PUMP WILDEN 0170-002
P302 M-15 PUMP WILDEN 0170-002
P303 M-15 PUMP WILDEN 0170-002
P304 M-15 PUMP WILDEN 0170-002
<CAPTION>
<S> <C> <C> <C> <C> <C>
ID BOOK BASIS SEP-99 DEP EXP-99 ACCUM-99 NBV
- ------ ---------------- ------------- ----------------- ---------------- ----------
S842 4,028.30 67.14 604.25 3,403.91 624.39
S843 1,778.81 29.65 266.82 935.85 842.96
S864 1,991.96 33.20 298.79 1,660.27 131.69
S865 2,207.22 36.79 331.08 1,530.34 676.88
S646 1,372.71 22.68 205.91 624.58 748.13
S647 1,947.65 32.46 292.15 1,818.89 128.76
S648 2,948.14 49.14 442.22 2,491.16 456.95
S849 1,372.70 22.88 205.91 824.58 748.12
S850 1,566.74 26.11 235.01 824.28 742.46
S851 1,566.74 26.11 235.01 824.28 742.48
S852 700.70 0.00 0.00 700.70 (0.00)
S855 20,060.98 343.35 3,009.14 18,951.51 3,109.45
S858 3,080.65 36.68 330.09 2,013.56 1,067.29
S862 503.13 5.88 53.91 309.27 193.88
S863 615.95 7.33 65.93 380.57 235.35
S864 635.78 7.57 68.12 102.43 533.35
S865 773.63 9.21 82.89 597.11 178.52
S866 938.88 10.82 97.38 558.87 350.21
S867 1,303.17 21.72 173.78 173.76 1,129.41
S868 1,303.17 21.72 173.78 173.75 1,129.41
S869 1,303.18 21.72 173.76 173.75 1,129.41
S892 4,028.30 67.14 604.25 3,403.91 624.39
S902 1,074.58 12.79 115.13 650.72 423.86
S907 939.33 11.18 100.64 558.82 370.51
S909 939.33 11.16 100.64 161.77 777.56
S910 939.33 11.18 100.64 568.82 370.51
S911 939.33 11.18 100.64 568.82 370.51
S914 1,064.05 12.67 114.01 497.40 568.65
S915 1,064.05 12.67 114.01 497.40 568.65
S916 1,064.05 12.67 114.01 497.40 568.65
S918 888.60 10.55 94.99 414.45 472.15
S919 888.60 10.55 94.99 414.45 472.15
S921 888.60 10.55 94.99 414.45 472.15
S922 888.60 10.55 94.99 414.45 472.15
S935 1,064.05 12.67 114.01 497.40 568.65
S936 888.60 10.55 94.99 414.45 472.15
S937 1,064.05 12.67 114.01 497.40 568.65
P100 16,511.56 275.19 2,476.73 7,430.20 9,081.36
P102 27,599.40 459.99 4,139.91 17,510.29 10,089.11
P105 22,000.00 966.67 3,300.00 21,095.58 904.44
P111 10,526.00 175.43 1,578.90 6,549.51 3,978.49
P200 1,800.00 15.00 135.00 589.50 1,210.50
P201 1,799.00 14.99 134.83 546.20 1,250.80
P202 2,059.00 34.32 308.85 1,254.85 804.15
P203 2,500.00 41.67 375.00 1,209,72 1,290.26
P300 800.00 7.14 64.29 526.90 73.10
P301 1,500.00 17.86 160.71 1,027.38 472.62
P302 1,500.00 17.86 160.71 1,027.38 472.62
P303 1,500.00 17.86 160.71 1,027.38 472.62
P304 1,500.00 17.86 160.71 1,027.38 472.62
</TABLE>
Page 4 of 6
<PAGE> 73
<TABLE>
<CAPTION>
ID SERIAL MAKE & MODEL AP VENDOR FAACCT BOOK_BASIS SEP-99 DEP EXP-99
- ---- ------------ ---------------------------------- --------------------- -------- ----------- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
P305 M-4 PUMP WILDEN 0170-002 $ 600.00 7.14 64.28
P306 9201 FLOTO PUMP WATERIOUS 0170-002 $ 1,500.00 17.95 150.71
P307 169322 VAC-U-MAX CLOSED TOP VACUMAX 0170-002 $ 900.00 10.71 96.43
P400 1457476 2.2 KW-GENERATOR DAYTON 0170-002 $ 500.00 5.95 53.57
P403 EA7-1134068 EM50005 GENERATOR HONDA 0170-002 $ 2,399.00 28.58 257.04
P404 12018 AIR COMPRESSOR SULLIVAN 0170-002 $ 15,000.00 178.57 1,607.14
P500 ALT285194358 IASA SCBA ULTRALITE 0170-002 $ 1,900.00 22.52 203.57
P501 ALT285155242 MSA SCBA ULTRALITE 0170-002 $ 1,900.00 22.62 203.57
P502 ALT295194296 MSA SCBA ULTRALITE 0170-002 $ 1,900.00 22.62 203.57
P508 HIP AIR PACK MSA 0170-002 $ 1,000.00 11.90 107.14
P509 HIP AIR PACK MSA 0170-002 $ 1,000.00 11.90 107.14
P510 ALT285224729 MSA SCBA ULTRALITE 0170-002 $ 1,900.00 22.62 203.57
P511 TP705-1727 BIO SYSTEM BIO SYSTEMS 0170-002 $ 1,000.00 23.51 214.29
P512 TP806-2229 BIO SYSTEM BIO SYSTEMS 0170-002 $ 2,000.00 23.81 214.29
P513 M003-2933 BIO SYSTEM BIO SYSTEMS 0170-002 $ 2,000.00 23.81 214.29
P600 400 OIL CONTAINMENT BOOM AMERICAN SEA CURTAIN 0170-002 $ 4,475.00 53.27 479.46
P708 9108143008 LEL METER INDUSTRIAL SCIENTIFIC 0170-002 $ 1,100.00 13.10 117.66
P714 2400 FAST TANK TENYERS 0170-002 $ 3,150.00 37.50 337.50
P720 COPPUS BLOWER COPPUS 0170-002 $ 1,500.00 17.56 180.71
P721 COPPUS BLOWER COPPUS 0170-002 $ 2,934.00 34.94 314.45
P722 WD796-6101 ALPHA 3100 OILWATER SEPARATOR LANDA 0170-002 $ 8,835.50 81.38 732.38
P723 VB564034 WELDING MACHINE MILLER 0170-002 $ 500.00 5.95 53.57
P724 07921174 CONFINED SPACE SYSTEM MODEL #K1550 0170-002 $ 3,100.00 36.90 332.14
P725 WRENCH SET/TOOLS CRAFTSMAN 0170-002 $ 510.24 6.07 54.67
P730 54699V FALL PROTECTION & RETRIEVE MILLER 0170-002 $ 2,200.00 25.19 235.71
P731 CC0243 LASER TRANSIT 0170-002 $ 895.00 10.65 95.89
P732 973500003 HEPA VAC EUROCLEAN 0170-002 $ 1,225.00 14.56 131.25
P733 9735000032 HEPA VAC EUROCLEAN 0170-002 $ 1,225.00 20.42 183.75
P734 973500006 HEPA VAC EUROCLEAN 0170-002 $ 1,225.00 14.58 131.25
P735 973500005 HEPA VAC EUROCLEAN 0170-002 $ 1,225.00 14.58 131.25
P737 903046013 LEL METER INDUSTRIAL SCIENTIFIC 0170-002 $ 500.00 5.95 53.57
P738 53625V FALL PROTECTION/BLOCK MILLER 0170-002 $ 1,474.85 17.56 158.02
P739 SOIL SAMPLER BORE KIT ARTS MANUFACTURING 0170-002 $ 1,000.00 11.90 107.14
P740 TK-02 VAC-U-MAX CLOSED TOP DRUM VAC-U-MAX 0170-002 $ 1,000.00 11.90 107.14
P741 55D-D61 VAC-U-MAX OPEN TOP DRUM VAC-U-MAX 0170-002 $ 1,000.00 11.90 107.14
P743 FILTER PRESS ELMCO 0170-002 $ 2,000.00 23.61 214.29
P744 EXPLOSION PROOF LIGHTS 0170-002 $ 900.00 10.71 96.43
P745 HAZCAT KIT HAZTECH 0170-002 $ 2,713.23 32.30 290.70
P746 38511847X7 CHAIN SAW STILH 0170-002 $ 446.90 5.32 47.88
P802 D75453111 LAPTOP TOSHIBA 0176-002 $ 2,009.57 33.50 301.48
P804 COMPUTER GATEWAY 0176-002 $ 2,590.00 0.00 56.79
P807 11BHNTZ TYPEWRITER IBM 0170-002 $ 575.00 9.58 89.25
P808 AUTOMATED PHONE SYSTEM SAMSUNG 0175-002 $ 13,774.32 153.96 1,475.82
P809 435 CDS LAPTOP TOSHIBA 0176-002 $ 1,585.95 26.43 237.89
P908 CELL PHONE MOTOROLA 0170-002 $ 500.00 0.00 0.00
P909 CELL PHONE MOTOROLA 0170-002 $ 500.00 0.00 0.00
P910 CELL PHONE MOTOROLA 0170-002 $ 500.00 0.00 211.11
P911 CELL PHONE MOTOROLA 0170-002 $ 500.00 0.00 211.11
P912 CELL PHONE MOTOROLA 0170-002 $ 500.00 0.00 211.11
OFFICE FILES DELATTE METALS 0174-002 $ 785.94 9.38 46.78
<CAPTION>
ID ACCUM-99 NBV
- ---- ---------- ---------
<S> <C> <C>
P305 410.95 189.05
P306 882.74 617.25
P307 616.43 283.57
P400 439.08 60.91
P403 1,041.47 1,357.53
P404 10,273.81 4,725.19
P500 1,164.88 735.12
P501 1,301.35 596.65
P502 1,301.35 596.65
P508 684.92 315.08
P509 684.92 315.08
P510 1,301.35 698.65
P511 1,369.84 630.16
P512 1,368.54 630.16
P513 1,389.54 630.16
P600 1,930.29 2,544.71
P708 753.41 346.59
P714 2,583.75 568.25
P720 1,027.38 472.52
P721 1,541.99 1,392.91
P722 2,948.49 3,887.01
P723 342.46 157.54
P724 2,123.25 876.75
P725 220.09 290.15
P730 516.83 1,665.17
P731 222.68 872.32
P732 312.57 912.43
P733 437.60 787.40
P734 312.57 912.43
P735 312.57 912.43
P737 342.48 157.54
P738 1,010.16 464.89
P739 684.92 315.08
P740 215.87 784.13
P741 215.87 784.13
P743 1,060.16 819.84
P744 618.43 283.57
P745 812.89 1,900.34
P746 194.01 252.89
P802 1,258.40 751.47
P804 2,690.00 (1.00)
P807 345.32 229.58
P808 3,312.40 10,481.92
P809 728.95 857.29
P908 500.00 0.00
P909 500.00 0.00
P910 500.00 0.00
P911 500.00 0.00
P912 500.00 0.00
48.78 739.18
</TABLE>
Page 5 of 6
<PAGE> 74
<TABLE>
<CAPTION>
ID SERIAL MAKE & MODEL AP VENDOR FAACCT
-- ------ ------------ --------- ------
<S> <C> <C> <C> <C>
TOSHIBA ANDREA LINDQUIST 0176-002
TOSHIBA LAURIE TEUN 0176-002
TOSHIBA BRYAN CHERNICK 0176-002
HP LASER JET 5SI COMPUTERS & APPLICATIONS 0176-002
15 HP 3 PHASE MOTOR DAVIS PUMP & ELECTRIC 0170-002
PH METER PROBE/RECEPTACLE TBI BAILEY 0170-002
101165 DIGITEC PRINT MOUNTAIN PACIFIC MACHINE 0170-002
TOSHIBA CAROL TIERNEY 0176-002
TOSHIBA LAURIE TEUN 0176-002
</TABLE>
<TABLE>
<CAPTION>
ID BOOK_BASIS SEP-99 DEP EXP-99 ACCUM-99 NBV
-- ---------- ------ ---------- -------- ---
<S> <C> <C> <C> <C> <C>
$ 800.00 13.33 105.67 105.67 693.33
$ 1,521.45 25.36 177.50 177.50 1,343.96
$ 790.20 13.17 52.68 52.68 737.52
$ 2,334.84 38.91 116.74 116.74 2,218.10
$ 694.02 11.57 23.13 23.13 670.89
$ 1,237.14 20.82 41.24 41.24 1,195.90
$ 2,197.25 36.62 73.24 73.24 2,124.01
$ 1,646.17 30.77 61.54 61.54 1,784.53
$ 1,751.75 29.20 58.39 58.39 1,593.36
$ 1,663,351.18 $ 20,257.41 $ 183,975.96 $ 697,014.67 $ 868,346.51
</TABLE>
FURNITURE AND EQUIPMENT
Page 6 of 6
<PAGE> 75
SCHEDULE 1.E.
ANCILLARY ASSETS
Ancillary Assets as defined in the Asset Purchase and Assignment Agreement
shall mean and include all documents, books and records, instruments, databases,
stationery, preprinted forms, programs, records, intangibles, consultants'
reports and memoranda, customer, vendor and supplier lists, trade secrets and
other proprietary or confidential information, work files and work products
necessary for closing out delivery orders, telephone numbers and other assets of
Seller, in each case which relate solely or primarily to the Acquired Assets or
are used solely or primarily with Acquired Assets or are used solely or
primarily in the performance of the EPA Contracts. Ancillary Assets shall not
include any EPA Contract Equipment or Excluded Assets.
24
<PAGE> 76
SCHEDULE 3.C
SCHEDULE OF ASSUMED LIABILITIES
The only liabilities of Sellers that Purchaser shall be obligated to assume
are as follows:
(1) The direct obligations of Sellers under the EPA Contracts relating to
performance after the Closing Date; and
(2) Obligations and liabilities of Sellers, whether to the EPA or third
parties that can be reasonably and foreseeably implied from the terms
of the EPA Contracts or the Federal Acquisition Regulations as
necessary or required in connection with the assumption, novation or
performance of the EPA Contracts, from and after the Closing Date.
Examples of the foregoing shall include, but are not limited to, any
obligations of Sellers under the EPA Contracts to use minority or
small business contractors or the requirement to lease or acquire
particular items of equipment necessary to complete performance under
the EPA Contracts. This does not include government or third party
claims arising out of Seller's performance of the EPA contract prior
to the Closing Date.
(3) Seller leases at the property located at 170 West Dayton, Edmonton,
WA.
25
<PAGE> 77
SCHEDULE 1.D
EDMONDS FACILITY LEASE
SEE ATTACHED LEASE
26
<PAGE> 78
SCHEDULE 3.A.(j)
BILL OF SALE, ASSIGNMENT AND ASSUMPTION
CET Environmental Services, Inc., a California corporation having an
address at 7032 D. Revere Parkway, Englewood, CO 80112 ("CET") (hereinafter
Seller), as of the _________ day of ________________, 1999, in consideration of
the sum of ONE DOLLAR ($1.00) and other good and valuable consideration paid to
Sellers by IT CORPORATION, a corporation organized and existing under the laws
of the State of California, having its principal office at 2790 Mosside
Boulevard, Monroeville, Pennsylvania, 15146-2792 ("Purchaser"), the receipt and
sufficiency of which is hereby acknowledged, hereby sells, transfers, conveys,
sets over and assigns to Purchaser, it successors and assigns, the following:
All Acquired Assets (as more particularly listed in the referenced
Schedules to the Asset Purchase and Assignment Agreement (the "Purchase
Agreement") between the parties, incorporated by reference herein and made part
thereof), including:
A. the EPA Contracts, as listed in the Schedule 1 A. of the Purchase
Agreement;
B. the EPA Contract Equipment, as listed in Schedule 1.C of the Purchase
Agreement;
C the Insurance and Indemnity Rights and the Claim Rights, each as
described in Section 1.D of the Purchase Agreement; and
D. the Ancillary Assets, as listed in Schedule 1.D of the Purchase
Agreement.
In consideration of the above, the Purchase hereby assumes those
obligations, indebtedness and liabilities of the Seller described on Schedule
3.D to the Purchase Agreement (the "Assumed Liabilities").
Seller warrants that IT has good and marketable title to the Acquired
Assets and are conveying the Acquired Assets to Purchaser free and clear of all
liens, encumbrances, claims charges or other liabilities (except for the Assumed
Liabilities), and agrees to execute all documents necessary or advisable to
convey such title to Purchaser. Purchaser acknowledges that Sellers are making
no express or implied warranty or representation as to the condition,
merchantability or suitability as to any of the Acquired Assets and that
Purchaser takes the Acquired Assets of Sellers "as is" and "where is"; provided,
however that Purchaser shall not be obligated to take title to:
A. contaminated EPA Contract Equipment not located on an active EPA
Contract job site unless Seller agree to cause or pay for
decontamination of same; or
27
<PAGE> 79
B. any EPA Contract Equipment which is incapable of being used for the
original purpose for which it was intended.
The Seller covenants arid agrees to warrant and defend the sale, transfer
or assignment of the EPA Contracts from and against all persons.
The Purchaser covenants and agrees to warrant and defend the purchase,
transfer, and assumption of the Assumed Liabilities, from and against all
persons.
All capitalized terms not otherwise defined herein shall have the meaning
ascribed to such terms in the Purchase Agreement.
IN WITNESS WHEREOF, each of the undersigned has duly executed this Bill of
Sale, Assignment and Assumption on the day and year first above written.
CET Environmental Services, Inc.
By:
------------------------------------
Its:
-----------------------------------
IT Corporation
By:
------------------------------------
Its:
-----------------------------------
28
<PAGE> 80
SCHEDULE 6.A
EPA LEASED EQUIPMENT LEASES
TO BE PROVIDED PRIOR TO CLOSING.
29
<PAGE> 81
SCHEDULE 11.A (vi)
LABOR MATTERS
NONE
30
<PAGE> 82
Schedule 11.A (vii)
PERMITS
NONE
31
<PAGE> 83
SCHEDULE 11(viii)
ENVIRONMENTAL MATTERS
NONE
32
<PAGE> 84
SCHEDULE 11.A (ix)
GOVERNMENT CONTRACTS
Seller is currently suspended from government contract and grant programs
by the U.S. Environmental Protection Agency for the reasons set forth in the
Notice of Suspension, dated August 10, 1999, from Robert F. Meumier, Debarring
to the Notice of Suspension.
33
<PAGE> 1
================================================================================
ASSET PURCHASE AGREEMENT
between
CAPE ENVIRONMENTAL MANAGEMENT, INC.
("Buyer")
and
CET ENVIRONMENTAL SERVICES, INC.
("Seller")
Dated as of March 8, 2000
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS ...................................................................... 1
ARTICLE I DEFINITIONS ......................................................... 1
ARTICLE II PURCHASE AND SALE OF ASSETS ........................................ 4
2.1 Purchase and Sale of Assets ......................................... 4
2.2 Excluded Assets ..................................................... 4
2.3 Accounts Receivable ................................................. 5
ARTICLE III ASSUMPTION OF LIABILITIES ......................................... 5
3.1 Assumption of Liabilities ........................................... 5
ARTICLE IV CLOSING ............................................................ 6
4.1 Purchase Price and Payment .......................................... 6
4.2 Execution ........................................................... 7
4.3 Closing ............................................................. 8
4.4 Costs ............................................................... 8
4.5 Taxes and Fees ...................................................... 8
4.6 Prorations .......................................................... 8
4.7 Loss, Destruction, Condemnation, or Damage .......................... 8
4.8 Purchase Price Adjustment ........................................... 8
4.9 Economic Closing Date ............................................... 8
ARTICLE V SELLER'S REPRESENTATIONS AND WARRANTIES ............................. 9
5.1 Corporate Organization .............................................. 9
5.2 Qualification to do Business Corporate Authority .................... 9
5.3 Conflicting Agreements, Governmental Consents ....................... 9
5.4 Actions, Suits, Proceedings ......................................... 9
5.5 Title to Equipment .................................................. 9
5.6 Brokers and Finders ................................................. 9
5.7 No Overbillings ..................................................... 9
5.8 No Unpaid Vendors ................................................... 9
ARTICLE VI BUYER'S REPRESENTATIONS AND WARRANTIES ............................. 10
6.1 Corporate Organization .............................................. 10
6.2 Qualification to do Business, Corporate Authority ................... 10
6.3 Conflicting Agreements, Governmental Consents ....................... 10
6.4 Brokers and Finders ................................................. 10
6.5 Actions, Suits, Proceedings ......................................... 10
ARTICLE VII CONDITIONS OF BUYER TO CLOSE ...................................... 10
7.1 Applicable Approvals ................................................ 10
7.2 Contract Estoppel Certificate ....................................... 10
7.3 Lease Estoppe1 Certificate .......................................... 11
7.4 Novation of Specific Contracts ...................................... 11
7.5 Non-Competition Agreement ........................................... 11
7.6 Representations and Warranties ...................................... 11
7.7 No Adverse Change ................................................... 11
7.8 Observance and Performance .......................................... 11
7.9 Officer's Certificate ............................................... 11
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
7.10 Copies of Documents .................................................. 11
7.11 Deliveries on or prior to the Closing ................................ 11
ARTICLE VIII CONDITIONS OF SELLER TO CLOSE ..................................... 12
8.1 Representations and Warranties ........................................ 12
8.2 Observance and Performance ............................................ 12
8.3 Officer's Certificate ................................................. 12
8.4 Notices ............................................................... 12
8.5 Regulatory Approvals .................................................. 12
8.6 Qualification To Do Business .......................................... 12
8.7 No Legal Actions ...................................................... 12
8.8 Deliveries On or Prior to the Closing ................................. 12
ARTICLE IX OPERATION OF BUSINESS PRIOR TO CLOSING; COOPERATION ................. 13
9.1 Maintenance of Business and Assets .................................... 13
9.2 Revenue, Billing, Costs ............................................... 13
9.3 No Disposition of Assets or Additional Liens .......................... 13
9.4 Consent to Assignment ................................................. 13
9.5 Cooperation ........................................................... 13
9.6 Inspection Rights ..................................................... 13
9.7 Non-Solicitation ...................................................... 14
ARTICLE X POST-CLOSING TRANSITIONAL MATTERS .................................... 14
10.1 Post-Closing Inspection Rights ........................................ 14
10.2 Receivables ........................................................... 14
10.3 Transfer of Contracts ................................................. 14
10.4 Office Space and Temporary Employment ................................. 14
10.5 Transferred Employees ................................................. 14
10.6 Further Assurances; Attorney-in-Fact .................................. 15
ARTICLE XI TERMINATION OF AGREEMENT ............................................ 15
11.1 Mutual Consent ........................................................ 15
11.2 Breach of Agreement ................................................... 15
11.3 Government Action ..................................................... 15
11.4 Buyer's Determination ................................................. 15
ARTICLE XII INDEMNIFICATION .................................................... 15
12.1 Seller's Indemnification .............................................. 15
12.2 Buyer's Indemnification ............................................... 16
12.3 Survival of Indemnification ........................................... 16
ARTICLE XIII GENERAL PROVISIONS ................................................ 16
13.1 Entire Agreement ...................................................... 16
13.2 Assignments ........................................................... 16
13.3 Severance ............................................................. 17
13.4 Successors ............................................................ 17
13.5 Headings .............................................................. 17
13.6 Counterparts .......................................................... 17
13.7 Amendments and Waiver ................................................. 17
13.8 Covenant of Further Assurances ........................................ 17
13.9 Survival of Representations and Warranties ............................ 17
13.10 Public Announcement ................................................... 17
13.11 Governing Law ......................................................... 17
13.12 Resolution of Disputes ................................................ 17
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
13.13 Notices .............................................................. 18
13.14 Knowledge of the Parties ............................................. 18
EXHIBIT A (ASSET INVENTORY DETAIL) ................................................ 20
EXHIBIT B (ASSUMED CONTRACTS) ..................................................... 21
EXHIBIT C (ACCRUED VACATION) ...................................................... 22
EXHIBIT D (EMPLOYEES WITH CONTINUED EMPLOYMENT) ................................... 23
EXHIBIT E (NON-COMPETITION AGREEMENT) ............................................. 25
EXHIBIT F (BILL OF SALE) .......................................................... 26
</TABLE>
iii
<PAGE> 5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of this 8th
day of March, 2000, and is to become effective at 12:01 a.m. on Closing Date, by
and between Cape Environmental Management, Inc., a Georgia corporation
("Buyer"), and CET Environmental Services, Inc., a California corporation
("Seller").
RECITALS
WHEREAS, Seller is engaged in the business of hazardous, toxic, and
radiological waste remediation, both as a prime contractor and as a
subcontractor, pursuant to various contracts with governmental agencies and with
private sector companies (the "Business");
WHEREAS, Seller desires to transfer to Buyer and Buyer desires to acquire
from Seller, as permitted by and in accordance with applicable law, certain
federal and commercial environmental remediation contracts entered into by
Seller in the ordinary course of Seller's Business; and
WHEREAS, Seller desires to sell and Buyer desires to purchase all those
assets of Seller involved in the performance of such contracts, and to hire
those employees of Seller who are involved in the performance of such contracts,
on the terms and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual covenants and conditions contained in this Agreement, the parties hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.1 "Affiliate" shall mean any Person which controls, is controlled by, or
is under common control with a party to this Agreement whether through the
ownership of voting securities or by contract or otherwise.
1.2 "Assets" shall mean the Lease, the Equipment, the Contracts and the
Related Intangibles.
1.3 "Assumed Contract" shall mean a Contract actually assigned by Seller
to Buyer pursuant to this Agreement.
1.4 "Assumed Lease" shall mean the Lease, once it has been actually
assigned by Seller to Buyer pursuant to this Agreement.
1.5 "Assumed Liabilities" shall have the meaning assigned such term in
Section 3.1.
1.6 "Bids and Proposals" shall mean all bids and proposals prepared or
submitted by Seller with respect to work, projects or contracts which Seller
would be prohibited from competing for under the terms of the Non-Competition
Agreement.
1.7 "Books and Records" shall mean all books, records (including, but not
limited to all bills, billing records, ledgers and accounts), data, plans,
manuals, computer software, computer tapes, computer systems, computer disks,
computer programs, source codes and object codes containing any information,
pertaining directly
1
<PAGE> 6
or indirectly to the Assets and related licenses, and all rights of Seller to
retrieve data and other information pertaining directly or indirectly to the
Assets from third parties, whether now existing or hereafter arising.
1.8 "Business" shall have the meaning assigned to such term in the
background section.
1.9 "Buyer" shall have the meaning assigned such term in the background
section.
1.10 "Closing" shall have the meaning assigned such term in Section 4.3.
1.11 "Closing Date" shall mean the date of the Closing.
1.12 "Commercial Contracts" shall mean all contracts between Seller and
third parties for environmental and other services provided by Seller including,
but not limited to, the contracts listed on Exhibit "B" attached hereto and made
a part hereof by this reference, but not including the Government Contracts or
the Excluded Contracts.
1.13 "Contracts" shall mean the Government Contracts and the Commercial
Contracts.
1.14 "Covenant Payment" shall have the meaning assigned such term in
Section 4.1.
1.15 [Intentionally omitted].
1.16 "Employees" shall mean all the employees of Seller listed on Exhibit
"D" attached hereto and made a part hereof.
1.17 "Encumbrances" shall mean material defects of title, such as any
mortgage, pledge, lien, security interest, lease, charge, encumbrance,
encroachment, covenant, condition, restriction, objection or joint ownership.
1.18 "Environmental Law" shall mean any applicable federal, state or local
law, rule, order, regulation, statute or decree of any executive, legislative,
regulatory, administrative, judicial or other governmental authority regulating,
relating to or imposing liability or standards of conduct concerning the
protection of human health or the environment which is in effect and binding
upon any Company as of the Closing Date. For the sake of clarity, "Environmental
Law" includes the record keeping, disclosure, notification, and reporting
requirements contained in such Environmental Law respecting Hazardous
Substances.
1.19 "Environmental Liabilities and Costs" shall mean all claims, losses,
assessments, judgements, costs, expenses (including reasonable fees and expenses
of attorneys and experts including but not limited to, those incurred in
connection with the defense or prosecution of any indemnifiable claim and those
incurred in connection with the enforcement of this provision), obligations,
responsibilities, liabilities, debts and damages sustained by Buyer prior to any
reimbursement therefor as a result of or arising from a breach by Seller of any
Environmental Law.
1.20 "Equipment" shall mean all machinery, furniture, fixtures and
equipment in the Tustin, California, and San Antonio, Texas, office and such
equipment of Seller purchased or leased by Seller for use in the performance of
its obligations under the Contracts, including generally various vehicles,
environmental clean-up and technical equipment and supplies and thermal
oxidizers, whether located in the Tustin, California, or San Antonio, Texas,
offices, or elsewhere, including, but not limited to, all those items listed on
Exhibit "A" attached hereto and made a part hereof.
1.21 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
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<PAGE> 7
1.22 "Escrow Agent" shall mean the person or entity serving as escrow agent
under the Escrow Agreement.
1.23 "Escrow Agreement" shall mean the escrow agreement to be entered into
at Closing for deposit and subsequent disbursement of the Holdback.
1.24 "Excluded Assets" shall have the meaning assigned such term in Section
2.2.
1.25 "Excluded Contracts" shall mean all contracts or agreements between
Seller and the Federal Environmental Protection Agency or any state
environmental protection agency, all existing contracts relating to water and
wastewater treatment (other than groundwater remediation), the Bureau of
Reclamation contract (BOA No. 98-CO-40-00lB) and all of those contracts between
Seller and Remediation Financial, Inc. and its affiliates (collectively, "RFI")
for remediation services at a former explosives manufacturing site in Hercules,
California, and for infrastructure construction and remediation services at an
old ammunitions facility located in north Los Angeles County, California
contiguous to the Newhall Land & Farming developments.
1.26 "Government Contracts" shall mean all federal, state, municipal, local
and other governmental contracts for environmental and other services provided
by Seller including, but not limited to, the contracts listed on Exhibit "B"
attached hereto and made a part hereof by this reference, but not including the
Commercial Contracts or the Excluded Contracts.
1.27 "GAAP" shall mean generally accepted accounting principles.
1.28 "Goodwill" shall mean the goodwill of Seller associated with the
Assumed Contracts, including, but not limited to Seller's customer and project
lists (other than customer and project lists relating to Excluded Contracts or
to prospective customers or projects not covered by the Non-Competition
Agreement).
1.29 "Governmental Body" shall mean any domestic or foreign national,
state, multi-state or municipal or other local government, any subdivision,
agency, commission or authority thereof, or any quasi-governmental body
exercising any regulatory or taxing authority thereunder, including but not
limited to any branch of the armed forces of the United States.
1.30 "Hazardous Substances" shall mean (A) any "hazardous substance"
"pollutant" or "contaminant" as defined in Section 101(14) and (33) of the
Comprehensive Environmental Response, Compensation and Liability Act (CERCLA),
42 U.S.C. Section 9601(14) and (33) or 40 C.F.R. Part 302 (B) any pollutant,
hazardous waste or hazardous substance as those terms are defined in and within
the context used under any applicable state or local law and (C) oil as defined
under the Clean Water Act Section 31l(a)(l).
1.31 "Holdback" shall have the meaning set forth in Section 4.3.
1.32 "Independent Accounting Firm" shall mean a certified public accountant
or firm of certified public accountants which is sufficiently independent, under
applicable rules, to render an opinion on the financial statements of either
Seller or Buyer.
1.33 "Knowledge" shall have the meaning set forth in Section 13.14.
1.34 "Lease" shall mean the Commercial Office Lease between Seller, as
tenant, and Johnie B. Clouse, as landlord, for 18,490 square feet located in
Tustin, California, with a lease term running from April 15, 1999 to April 14,
2002.
1.35 "Material Adverse Effect" shall mean a material adverse effect on the
Seller.
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<PAGE> 8
1.36 "Person" shall mean any individual, corporation, limited liability
company, partnership, joint venture, trust, association, unincorporated
organization, other entity or Governmental Body.
1.37 "Pro Rata Share" shall mean that percentage or fraction of the
Holdback or the Covenant Payment, as the case may be, as equals the percentage
or fraction that the Purchase Price allocable at Closing to Assumed Contracts
bears to the total Purchase Price allocable to Contracts under this Agreement.
1.38 "Purchase Price" shall have the meaning set forth in Section 4.1.
1.39 "Relate Intangibles" shall mean Bids and Proposals, Books and Records
and Goodwill.
1.40 "Release" shall mean when used as a noun, any releases, spill,
emission, discharge, leaking, pumping, injection, deposit, disposal, dispersal,
leaching or migration into the environment (including, without limitation,
ambient air, surface water, groundwater, and surface or subsurface strata) or
into or out of any property, including the movement of Hazardous Substances
through or in the air, soil, surface water, groundwater or property, and when
used as a verb, the occurrence of any Release.
1.41 "Seller" shall have the meaning assigned such term in the background
section.
1.42 "Taxes" shall mean any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimate, or other tax
of any kind whatsoever, including any interest, penalty, or addition thereto.
1.43 "Tax Return" shall mean any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
1.44 "Transferred Employees" shall have the meaning set forth in Section
10.5.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Purchase and Sale of Assets. Subject to the terms and conditions of
this Agreement, Seller agrees to sell, transfer, and convey to Buyer, and Buyer
agrees to purchase from Seller, all or a portion of the Assets as more
particularly hereinafter described. Buyer's obligation to purchase, and Seller's
obligation to sell, the Assets is dependent, in part, on whether the approvals
of third parties can be obtained for the assignment of each of the Contracts. It
is Buyer's intention to purchase, and Seller's intention to sell, each Contract
that can be assigned with all requisite approvals, together with the related
Equipment. If a required approval cannot be obtained for any particular
Contract, then such Contract will not be purchased and the Purchase Price will
be adjusted appropriately, as described in Section 4.1. The Assets shall be
transferred together with all supporting documentation, including but not
limited to, backlog, including outstanding proposals, as of the Closing Date and
specifically designated on Exhibit "B," the "Assumed Contracts." The supporting
documentation shall include any and all accounting records and files and all
other records relating to the Assumed Contracts. The Assumed Contracts will be
assigned to Buyer. Seller will transfer to Buyer the Assets in accordance with
this Agreement free and clear of all liens, claims, security interests,
encroachments, and Encumbrances.
2.2 Excluded Assets. The following assets are excluded from the Asset
purchase:
(a) Cash and cash equivalents.
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<PAGE> 9
(b) Excluded Contracts. If, within one year after the Closing, Seller
should decide to sell or assign any of the Excluded Contracts, Buyer will
have the exclusive right, for a period of not less than two weeks after
receipt of written notice from Seller of its intention to sell or assign
such Excluded Contract together with all supporting written data relating
to such Excluded Contract, to negotiate with Seller for the purchase of
such Excluded Contract in whole or in part. If Seller and Buyer are unable
to agree upon a mutually satisfactory purchase arrangement for the Excluded
Contract within such two-week period, or should Buyer waive its exclusive
negotiating right in writing, Seller will have the right to negotiate with
others for the sale or assignment of the Excluded Contract. The foregoing
right of Buyer to receive notification and to negotiate with Seller for the
purchase of any Excluded Contract shall not apply to any contract with the
Federal Environmental Protection Agency. For purposes of this subsection
2.2(b) only, Excluded Contracts shall be deemed to include any Contract
that Seller did not assign to Buyer because the requisite third party
approval could not be obtained.
(c) All rights of Seller to any deposits, payment or performance bonds
or retainage (when released) with regard to the Assumed Contracts, with the
exception of rent deposits or prepaid rent on the Assumed Lease which shall
transfer to the Buyer upon closing.
(d) All properly booked accounts, notes, and other receivables arising
from the operation of the Business through and including the Closing.
(e) All corporate charters, qualifications to conduct business as a
foreign corporation, taxpayer, and other identification numbers, general
ledgers, tax returns, seals, minute books, stock transfer books, and
similar documents relating to the organization, maintenance, and existence
of Seller.
(f) All rights of Seller under this Agreement including, but not
limited to, the Purchase Price.
2.3 Accounts Receivable. Buyer acknowledges that no accounts, notes, or
other receivables existing at or prior to the Closing are being transferred
under this Agreement, but instead such receivables shall continue to be the
property of the Seller. Seller agrees to deliver to Buyer at the Closing a
complete and accurate listing of all such accounts, notes and other receivables.
Buyer agrees immediately to send to Seller, without set-off or contribution, any
collections on such receivables received by Buyer following the Closing, unless
the payer has been overbilled by Seller in which case Buyer may apply such
collection to outstanding receivables owed by such payer to Buyer. In the event
there is no designation by a payer making a payment to Buyer after the Closing
of the specific receivable to be paid, and there exists no other reason why such
payment would not be made to Seller (e.g. the payer has been over-billed by
Seller) such payment shall be applied first to any outstanding receivables owed
by such payer to Seller at or prior to the Closing. Otherwise, such payment
shall be applied to outstanding receivables owed by such payer to Buyer.
ARTICLE III
ASSUMPTION OF LIABILITIES
3.1 Assumption of Liabilities. Subject to the terms and conditions of this
Agreement, Buyer shall at the Closing, defined below in Section 4.3, assume and
pay, perform, and discharge in accordance with their terms only the following
obligations and liabilities of Seller (the "Assumed Liabilities"):
(a) liabilities under the Assumed Contracts and the Assumed Lease
arising after the Closing, and obligations of Seller under the Assumed
Contracts and the Assumed Lease to be performed after the Closing in
accordance with their respective terms or otherwise in the ordinary course
of business (other than in respect of breaches, violations or defaults
occurring prior to and including the Closing).
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<PAGE> 10
(b) all liabilities under the Assumed Contracts which are Government
Contracts arising at or before the Closing to the extent provided in any
novation agreement with the U.S. government relating to such Government
Contract, subject however, to Buyer's indemnification rights against
Seller for liabilities arising under such Government Contracts at or before
the Closing, notwithstanding this subsection.
(c) any accrued and unpaid vacation obligations (including the
associated payroll tax withholdings) through and including the Closing as
shown on Exhibit "C" for the Transferred Employees. These liabilities will
be subtracted from the Purchase Price described in section 4.1(a). The
actual amount to be deducted will be determined based on accrued vacation
pay information provided to Buyer by Seller at or before Closing
regarding the Transferred Employees and verified by Buyer as accurate.
To the extent the Assumed Liabilities include payment or performance bonds
or surety bonds posted by Seller with respect to any Assumed Contracts to be
acquired, or retainage payable to Seller which has yet to be paid under the
Assumed Contracts, Buyer will replace the bonds as of the Closing and Buyer will
pay the retainage to Seller, when, as and to the extent received by Buyer
(subject to Buyer's rights of setoff and reimbursement for any liabilities of
Seller under the Assumed Contracts to which such retainage relates that Buyer
actually pays, performs or incurs). If any portion of the retainage is not
released to Buyer because of Buyer's failure to perform in accordance with the
terms of the Assumed Contracts, then Buyer will pay to Seller from Buyer's own
funds the amount of such retainage so withheld. Buyer shall provide Seller with
reasonable evidence of Seller's failure to perform in accordance with the
Assumed Contracts before withholding any retainage from Seller. If Seller
furnishes Buyer at Closing with an estoppel certificate signed by the other
contract party under any Assumed Contract involving retainage which states that
Seller is not in default under such Assumed Contract and that such other
contract party has no then known claims or setoff rights against the retainage,
it shall be presumed that Seller is entitled to receive the retainage as and
when paid to Buyer, and Buyer shall have the burden of proof to overcome such
presumption in any dispute or proceeding between the parties relating to the
retainage.
ARTICLE IV
CLOSING
4.1 Purchase Price and Payment. In consideration of Seller's sale,
assignment, and transfer of the Assets and its performance of all the terms,
covenants, and provisions of this Agreement, Buyer shall pay to Seller at the
Closing up to, but not exceeding, Two Million Dollars ($2,000,000.00) (the
"Purchase Price"), subject to adjustment as hereinafter provided, payable by
wire transfer, cashier's check, or immediately available funds. In consideration
of Seller's execution and delivery of the non-competition agreement, Buyer shall
pay to Seller at the Closing the Pro Rata Share of One Hundred Thousand Dollars
($ 100,000.00) (the "Covenant Payment"), subject to adjustment as hereinafter
provided, payable by wire transfer, cashier's check or immediately available
funds. The foregoing payments shall be reduced by any liabilities Buyer assumes
for the vacation accrued by Seller's employees under Section 3.1(c) (including
associated payroll tax liabilities) and by any adjustments required to be made
pursuant to Section 4.8. The actual Purchase Price to be paid shall be the
aggregate of the amounts allocated to the Assets (as set forth below) that are
actually purchased by Buyer as follows:
(a) The payment amount listed in this section 4.1(a) for each of the
Assumed Contracts shall be due following its novation and assignment (or
following its assignment in the case of Commercial Contracts) at the
Closing is as follows:
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<TABLE>
<CAPTION>
Assumed Contract Payment Amount:
- ---------------- ------- ------
<S> <C>
Worldwide Full Service Environmental Four Hundred Thousand Dollars
Remedial Actions, F41624-97-D-8010 ($400,000.00)
Pre-Placed Remedial Action Contract, Four Hundred Thousand Dollars
(PRAC)DACA45-97-D-0022 ($400,000.00)
Seattle MARC Contract, DACW67-99-D-1008: One Hundred Fifty Thousand Dollars
($150,000.00)
METRIC Contract, F04699-97-D-0024 Zero Dollars ($0.00)
Lasmo Oil & Gas Contract Thirty Thousand Dollars
($30,000.00)
KDC-OC, LLC (Koll) Contract Thirty Thousand Dollars
($30,000.00)
GATX Contract Twenty Thousand Dollars
($20,000.00)
Paramount Petroleum Contract Twenty Thousand Dollars
($20,000.00)
All Other Commercial Contracts and Clients Zero Dollars ($0.00)
Montgomery Watson AFCEE Subcontract: Zero Dollars ($0.00)
Foster Wheeler South West Division RACII Zero Dollars ($0.00)
Subcontract:
Stone and Webster TERC Subcontract Zero Dollars ($0.00)
All other Government Contracts and Clients Zero Dollars ($0.00)
</TABLE>
(b) The payment amount listed in this section 4.1(b) for the other
Assets is as follows:
<TABLE>
<S> <C>
Equipment Nine Hundred Thousand Dollars
($900,000.00)
Related Intangibles Fifty Thousand Dollars ($50,000.00)
</TABLE>
The Purchase Price payment due at Closing will be reduced by the accrued
vacation liability as contemplated in section 3.1(c) (including the associated
payroll tax withholding). The Purchase Price payment due at Closing will also be
reduced by the Pro Rata Share of the Holdback as provided in Section 4.3. The
Purchase Price payment due at Closing will also be reduced by the amount
allocable to any Equipment not purchased by Buyer, as agreed to by Buyer and
Seller. No portion of the Purchase Price is being allocated to the Assumed
Lease.
4.2 Execution. Upon the finalization of this Agreement, Buyer and Seller
shall simultaneously execute two originals of this Agreement and transmit to the
other party via facsimile the "signature pages" of this Agreement. One original
signature page of this Agreement shall then be transferred to the other party
via overnight priority delivery.
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<PAGE> 12
4.3 Closing. Subject to the conditions to Closing and the rights to
terminate this Agreement, the Closing of the Asset purchase (the "Closing")
shall take place as soon as possible following the execution of this Agreement
at a mutually agreeable date and time between March 10, 2000, and March 24,
2000, subject to extension by mutual agreement of the parties. At the Closing,
Buyer shall deliver a cashier's check or other immediately available funds or
wire transfer funds for the Purchase Price payment to an account designated by
Seller, and Seller shall transfer to Buyer the Related Intangibles, the signed
Non-Competition Agreement, and the Assumed Contracts, which shall include, at a
minimum, either or both of the Pre-Placed Remedial Action Contract (PRAC),
DACA45-97-D-0022, and the Worldwide Full Service Environmental Remedial Actions,
F41624-97-D-8010, if successfully novated. The Pro Rata Share of the sum of
$250,000 (the "Holdback") shall be deducted by Buyer from the Purchase Price and
deposited with the Escrow Agent under the Escrow Agreement to be held for a
period of sixty (60) days after the Closing. Such amount shall be held and
disbursed in accordance with the terms and conditions of the Escrow Agreement.
The amount of the Holdback shall not be construed as a ceiling or limitation on
Buyer's right to adjust the Purchase Price as provided in Section 4.8 of this
Agreement, or as a limitation of Buyer's indemnification rights or other
remedies.
4.4 Costs. Each party shall pay all of the costs and expenses incurred by
it in negotiating and preparing this Agreement (and all other agreements,
certificates, and documents executed in connection with this Agreement), in
performing its obligations under this Agreement, and in otherwise consummating
the transactions contemplated by this Agreement, including without limitation
its attorneys' fees and accountants' fees.
4.5 Taxes and Fees. Seller shall be responsible for and shall pay all
transfer taxes or fees related to the Asset transfer.
4.6 Prorations. On the Closing, utility charges, real and personal property
taxes, and other similar obligations to third parties shall be prorated between
Seller and Buyer. Property taxes shall be pro-rated based on the year these
taxes are payable as determined in accordance with local law.
4.7 Loss, Destruction, Condemnation, or Damage. If, between the date of
this Agreement and the Closing, the premises subject to the Lease (the "Leased
Premises") or any Equipment is lost, destroyed, or condemned or suffers any
material damage, Seller shall bear the risk of loss associated therewith, and
Buyer shall have no further obligation to assume the Lease or purchase such
Equipment, as the case may be. Notwithstanding the foregoing, Buyer and Seller
may mutually agree to make an adjustment to the Purchase Price and close the
purchase and sale of the Lease or such Equipment, or Buyer, at its option, may
take an assignment from Seller of all insurance and/or condemnation, proceeds
payable to Seller on account of such loss, destruction, condemnation, or damage
and close the purchase and sale of the Lease or such Equipment in accordance
with the terms and conditions of this Agreement.
4.8 Purchase Price Adjustment. The Purchase Price will not include any
portions of the Purchase Price allocated to any Assets that are not transferred
to Buyer at the Closing, or if such allocation has not been made, the Purchase
Price shall be reduced by such amounts as the Buyer and Seller mutually agree
upon. The Purchase Price and Covenant Payment will also be reduced dollar for
dollar by the amount of any overpayments received by Seller under any of the
Assumed Contracts and by the amount of any payments owed to unpaid vendors of
Seller who have provided materials, goods or services to Seller in connection
with Assumed Contracts. For purposes of this Agreement, an overpayment shall
mean any amount received by Seller under an Assumed Contract that proves to be
in excess of the amount that should have been received based on Seller's actual
performance under the Assumed Contract through and including the date such
Assumed Contract is assigned to and assumed by Buyer. The foregoing reduction of
Purchase Price shall not be construed as a limitation of Buyer's rights to
exercise any other remedies of Buyer under this Agreement, or otherwise
available to Buyer at law or in equity.
4.9 Economic Closing Date. The date of Closing shall be the effective date
for terminating Seller's accruals of income and expense and commencing Buyer's
accruals of income and expense under each of the Assumed Contracts.
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<PAGE> 13
ARTICLE V
SELLER'S REPRESENTATIONS AND WARRANTIES
Seller hereby represents and warrants to Buyer that:
5.1 Corporate Organization. Seller is a corporation duly organized and
validly existing, is in good standing under the laws of its state of
incorporation, and has the corporate power and authority to own its properties
and carry on its business as now being conducted. True and correct copies of
the articles of incorporation and bylaws of Seller have been provided to Buyer.
5.2 Qualification to do Business, Corporate Authority. Seller is duly
qualified to do business and is in good standing under the laws of the State of
California and has the corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated by this Agreement. The
Seller's execution and delivery of this Agreement and the other documents
contemplated by this Agreement have been duly authorized by all necessary
corporate action by the board of directors and shareholders of Seller. This
Agreement and all other instruments required hereby to be executed and delivered
by Seller are legal, valid, and binding obligations of Seller, enforceable in
accordance with their respective terms.
5.3 Conflicting Agreements, Governmental Consents. The execution and
delivery of this Agreement and any other agreements to be executed and delivered
pursuant to this Agreement and the consummation of the transactions contemplated
by this Agreement do not and will not, with or without the giving of notice or
the passage of time, conflict with, result in, or constitute a breach, default,
right to accelerate, or loss of rights under, or result in the creation of any
lien, charge, or encumbrance pursuant to, the terms or conditions of any of
Seller's articles of incorporation or bylaws, any law, rule, regulation,
statute, order, judgment, or decree or any contract, agreement, lease, license,
or instrument to which Seller is a party or the Assets are bound or affected.
5.4. Actions, Suits, Proceedings. To the Seller's knowledge, there are no
actions, suits, or other legal or administrative proceedings pending or
threatened against Seller or any of its property in any court or before any
federal, state, municipal, or other governmental agency which, (a) if decided
adversely to Seller, would have a materially adverse effect upon the Business
or Assets, (b) seek to restrain or prohibit the transactions contemplated by
this Agreement or obtain any damages in connection therewith, or (c) in any way
question the validity of this Agreement.
5.5 Title to Equipment. Other than the representation and warranty
regarding ownership of and title to the Equipment, Buyer acknowledges that
Seller makes no representation or warranty regarding the Equipment or its
condition, and Buyer specifically agrees that it is purchasing the Equipment "AS
IS AND WHERE IS," and Seller expressly disclaims any implied warranty of
merchantability or fitness for a particular purpose.
5.6 Brokers and Finders. Seller has retained or engaged a broker in
connection with the transactions contemplated by this Agreement, Sanders Morris
Mundy, and Seller assumes full responsibility for the broker's fee. Seller has
retained or engaged no other brokers, finders or financial intermediaries in
connection with the transactions contemplated by this Agreement.
5.7 No Overbillings. To Seller's Knowledge, Seller has not billed or
collected any amounts under the Contracts in excess of the amounts that were due
and owing under such Contracts at the time of such billing or collection.
5.8 No Unpaid Vendors. To Seller's Knowledge, there are no Unpaid Vendors,
except for persons who will be paid in full at Closing for any amounts then owed
or who will be paid in the ordinary course of business by Seller within thirty
(30) days after receipt of their invoice.
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ARTICLE VI
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer hereby represents and warrants to Seller:
6.1 Corporate Organization. Buyer is a corporation duly organized and
validly existing, in good standing under the laws of Georgia, and has the
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated by this Agreement. True and correct
copies of the articles of incorporation and bylaws of Buyer have been provided
to Seller.
6.2 Qualification to do Business, Corporate Authority. Buyer is duly
qualified to do business and is in good standing under the laws of the State of
Georgia. Buyer has the corporate power to execute and deliver this Agreement and
to consummate the transactions contemplated by this Agreement. The Buyer's
execution and delivery of this Agreement and the other documents contemplated by
this Agreement have been duly authorized by all necessary corporate action by
the board of directors and shareholders of Buyer. This Agreement and all other
instruments required hereby to be executed and delivered by Buyer are legal,
valid, and binding obligations of Buyer, enforceable in accordance with their
respective terms.
6.3 Conflicting Agreements, Governmental Consents. The execution and
delivery of this Agreement and any other agreements to be executed and delivered
pursuant to this Agreement and the consummation of the transactions contemplated
by this Agreement do not and will not, with or without the giving of notice or
the passage of time, conflict with, result in, or constitute a breach, default,
right to accelerate, or loss of rights under, or result in the creation of any
lien, charge, or encumbrance pursuant to, the terms or conditions of any of
Buyer's articles of incorporation or bylaws, any law, rule, regulation, statute,
order, judgment, or decree or any contract, agreement, lease, license, or
instrument to which Buyer is a party or the Assets are bound or affected.
6.4 Brokers and Finders. Buyer has retained or engaged a mergers and
acquisitions consultant in connection with the transaction contemplated by this
Agreement, Earth Capital Corporation, LLC, and Buyer assumes full responsibility
for the consultant's fee. Buyer has not retained or engaged any broker, finder,
or other financial intermediary in connection with the transactions contemplated
by this Agreement.
6.5 Actions, Suits, Proceedings. There are no actions, suits, or other
legal or administrative proceedings pending or threatened against Buyer in any
court or before any federal, state, municipal, or other governmental agency
which, if decided adversely to Buyer, (a) may adversely prevent or in any way
impair the consummation of the transactions contemplated by this Agreement,
(b) seek to restrain or prohibit the transactions contemplated by this Agreement
or obtain any damages in connection therewith, or (c) in any way question the
validity of this Agreement.
ARTICLE VII
CONDITIONS OF BUYER TO CLOSE
The obligation of Buyer to effect the closing of the transactions
contemplated by this Agreement is subject to the satisfaction prior to or at the
Closing of the following conditions:
7.1 Applicable Approvals. Buyer shall have received all applicable
approvals of governmental or regulatory agencies and all other parties, if any,
necessary to consummate the Asset sale and to take an assignment of the Assumed
Contracts and Assumed Lease. In lieu of approval by the U.S. Environmental
Protection Agency ("EPA"), Seller shall have provided Buyer with a copy of a
letter dated January 11, 2000, addressed to Seller from referencing EPA Case No.
00-0077-00 and Seller, promptly after the execution of this Agreement by Buyer
and Seller, shall have notified the EPA that Seller and Buyer have executed this
Agreement.
7.2 Contract Estoppel Certificate. Buyer shall have received an estoppel
certificate regarding each Assumed Contract executed by an authorized officer or
agent of the third party or governmental agency for whom
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Seller has contracted to perform services for certifying that: (a) the Assumed
Contract remains the valid, binding, and enforceable obligation of the party in
accordance with its terms; (b) the party has not asserted, and there are (i) no
defaults of any nature under the terms and provisions of the Assumed Contract or
relating thereto, and (ii) no conditions or circumstances which would become a
default thereunder or under documents relating thereto solely by the passage of
time, or the service of notice, or both; and (c) all amounts owed to Seller
under the Assumed Contract for work performed have been paid in full, or if not
so paid, the amount then due and owing.
7.3 Lease Estoppel Certificate. Buyer shall have received an estoppel
certificate with respect to the Assumed Lease executed by an authorized officer
or agent of the landlord certifying that: (a) the Lease and accompanying lease
agreement remain the valid, binding, and enforceable obligation of the landlord
in accordance with the lease terms; (b) the landlord has not asserted, and there
are (i) no defaults of any nature under the terms and provisions of the Assumed
Lease or lease relating thereto, and (ii) no conditions or circumstances which
would become a default thereunder or under documents relating thereto solely by
the passage of time, or the service of notice, or both; and (c) all amounts owed
to the landlord under the lease have been paid in full or, if not so paid, the
amount then due and owing to the landlord.
7.4 Novation of Specific Contracts. Before the Closing, either the
Pre-Placed Remedial Action Contract (PRAC), DACA45-97-D-0022, or the Worldwide
Full Service Environmental Remedial Actions, F41624-97-D-8010, must be novated.
Otherwise, at Buyer's sole election, Buyer is not obligated to purchase the
Assets.
7.5 Non-Competition Agreement. Buyer shall have received an executed
non-competition agreement from Seller in the form attached as Exhibit E.
7.6 Representations and Warranties. The representations and warranties of
Seller contained in this Agreement shall be true and correct as of the Closing
as if made on the date of the Closing.
7.7 No Adverse Change. There shall have occurred no material adverse change
in the Assets as a whole or the Business or the financial condition or results
of operations of Seller since the date the financial statements were provided
to the Buyer up to and including the Closing. Seller covenants and agrees to
notify Buyer immediately of any such material adverse change.
7.8 Observance and Performance. Seller shall have observed and performed
all covenants and agreements required by this Agreement to be observed or
performed by Seller on or prior to the date of Closing.
7.9 Officer's Certificate. Seller shall have delivered to Buyer a
certificate of an authorized officer of Seller, dated the date of Closing, to
the effects set forth in Sections 5.1, 5.2, 5.3, 5.4, 5.7 and 5.8 above.
7.10 Copies of Documents. Buyer shall have received accurate and complete
copies of all documents and instruments listed in any of the exhibits to this
Agreement (and of any amendments, waivers, or similar related supplementary
materials).
7.11 Deliveries on or prior to the Closing. Seller shall have delivered or
caused to be delivered to Buyer the following at or prior to the Closing:
(a) Confirmation that all Assets defined in this Agreement and located
at said facilities are in free and clear condition with instruments of
titles where applicable.
(b) Certified copies of resolutions adopted by the board of directors
and shareholders, or governing boards of Seller, authorizing the execution
of this Agreement and the sale of the Assets in accordance with the terms
of this Agreement.
(c) Certificate of good standing of Seller issued by the Secretary of
State of incorporation within thirty days of the Closing.
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(d) the various certificates, instruments, and documents referred to
in this Article VII.
(e) A Bill of Sale duly executed by Seller, in the form attached as
Exhibit "F."
(f) An opinion from Seller's counsel confirming the accuracy and
validity of the representations contained in sections 5.1, 5.2, and 5.3,
and the enforceability of this Agreement.
ARTICLE VIII
CONDITIONS OF SELLER TO CLOSE
The obligation of Seller to effect the transactions contemplated by this
Agreement is subject to the satisfaction prior to or at the Closing of the
following conditions:
8.1 Representations and Warranties. The representations and warranties of
Buyer contained in this Agreement shall be true and correct as of the Closing as
if made on the date of the Closing.
8.2 Observance and Performance. Buyer shall have observed and performed all
covenants and agreements required by this Agreement to be observed or performed
by Buyer on or prior to or at the Closing.
8.3 Officer's Certificate. Buyer shall have delivered to Seller a
certificate of a responsible officer of Buyer dated the date of Closing to the
effects set forth in Sections 6.1, 6.2 and 6.3 above.
8.4 Notices. Buyer shall have made all filings and registrations with all
federal, state, and local governmental agencies or authorities required to be
made by Buyer in connection with the execution and delivery and consummation of
the transactions contemplated by this Agreement.
8.5 Regulatory Approvals. At Seller's expense, Buyer shall have received
all authorizations, consents, and approvals of governments and governmental
agencies required in connection with the purchase and sale contemplated by this
Agreement, subject to Section 7.4 above.
8.6 Qualification To Do Business. Buyer or its subsidiary shall be
qualified to do business as a foreign corporation in the states in which the
Assets are located.
8.7 No Legal Actions. No court or governmental authority of competent
jurisdiction shall have issued an order restraining, enjoining, or otherwise
prohibiting the consummation of the transactions contemplated by this Agreement,
and no person, entity, or governmental agency shall have instituted an action or
proceeding which shall not have been previously dismissed seeking to restrain,
enjoin, or prohibit the consummation of the transactions contemplated by this
Agreement.
8.8 Deliveries On or Prior to the Closing. Buyer shall have delivered or
caused to be delivered to Seller the following at or prior to Closing:
(a) Payment of the Purchase Price payment.
(b) Certified copies of resolutions adopted by the board of directors
and shareholders, or governing boards of Buyer, authorizing the execution
of this Agreement and the purchase of the Assets in accordance with the
terms of this Agreement.
(c) Certificate of good standing of Buyer issued by the Secretary of
State of incorporation within thirty days of the Closing.
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ARTICLE IX
OPERATION OF BUSINESS PRIOR TO CLOSING; COOPERATION
Seller agrees that, except with the prior written consent of Buyer, from the
date of this Agreement to and including the Closing:
9.1 Maintenance of Business and Assets. Seller will use reasonable efforts
to preserve the business organization of the Business, keep available the
services of key employees on terms no less favorable to Seller than those on
which such employees are presently employed, and use reasonable efforts to
preserve for Buyer the good will of suppliers, customers, and others having
business relationships with the Business. Seller will maintain its books and
records during such period in accordance with GAAP and in compliance with the
Federal Acquisition Regulations. Seller will maintain all tangible Assets in
good order and repair, ordinary wear and tear excepted.
9.2 Revenue, Billing, Costs. Seller will recognize revenue and produce
billings and incur all associated costs for each Assumed Contract and new
contracts up to and including the date such contract is assumed by Buyer.
Revenue and billing of a project will be based on the percentage of completion
accounting method which, in turn, is based on incurred costs recorded in
Seller's accounting system as a percentage of the true estimated cost at
completion of the project. Seller will be responsible for all direct, indirect,
payroll, sales and other operating expenses through and including the date such
contract is assumed by Buyer. These costs will include costs from expense
reports as well as any prorations of normal indirect expenses. These costs will
also include all transportation and disposal costs for removal and disposal of
hazardous and non-hazardous wastes generated in conjunction with performance of
the contracts and production of revenues through and including the date such
contract is assumed by Buyer. All costs, billing, and revenue for the Assumed
Contracts and new contracts occurring after the date such Contract is assumed by
Buyer will be the responsibility of the Buyer. Seller will be responsible for
all project costs relating to Contracts that are not Assumed Contracts.
9.3 No Disposition of Assets or Additional Liens. Seller will not sell,
transfer, dispose of or abandon any portion of the Assets, except in the
ordinary course of business and consistent with past practice. Seller will not
permit any of the Assets to become subject to any mortgage, lien, claim or
Encumbrance.
9.4 Consent to Assignment. Seller agrees to use all reasonable efforts (but
shall not be obligated to make any payment) to obtain the consents to assign
the Assumed Lease and Assumed Contracts to Buyer.
9.5 Cooperation. Seller will furnish to Buyer all information concerning
Seller, the Business and the Assets required for inclusion in any statement or
application made by Buyer to any governmental body in connection with the
transactions contemplated by this Agreement. Without limiting the foregoing
sentence, Seller will cooperate with Buyer in good faith to obtain all consents
and approvals required from governmental and regulatory authorities and private
third parties necessary to consummate the transactions contemplated hereby and
enable the Buyer thereafter to carry on the Business without material
disruption.
9.6 Inspection Rights. Seller will permit employees and agents of Buyer
during normal business hours and on reasonable notice to Seller to inspect the
Assets and to inspect all contracts, agreements, other documents and records
reflecting or reasonably relating to the Assets or the Business. Seller will
further permit Buyer the right to inspect Seller's offices and facilities to
assure that all wastes, both hazardous and non-hazardous, have been removed from
the facilities and disposed of at the Seller's cost. All waste discovered during
this inspection will be disposed of before the Closing. Buyer's inspections
will be conducted in a manner that will not interfere with Seller's normal
business operations. All information and records obtained by Buyer pursuant to
this Section shall be maintained as confidential and shall not be disclosed to
any third party without the consent of Seller. Buyer shall be obligated to
maintain as confidential any information obtained from Seller. The obligations
of confidentiality arising under this Section shall survive the termination or
abandonment of this Agreement. Seller also agrees to furnish to Buyer, as and
when available, all billing files and billing correspondence (including, but not
limited to, detailed ledger accounts) relating to the Contracts and all work
orders under the Contracts with respect to all monthly billing periods from
and after December, 1999 through and including the Closing. Seller also agrees
to
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furnish such information to Buyer, upon Buyer's request, with respect to past
billing periods for completed work or orders under the Contracts.
9.7 Non-Solicitation. Seller agrees that it will not enter into or conduct
any discussions with any other prospective purchaser of Seller's stock or Assets
through and including the date of the Closing, except with Buyer's express
written consent. Seller shall cause any agents, brokers, or finders that Seller
employed to refrain from soliciting prospective purchasers for Seller's stock or
Assets.
ARTICLE X
POST-CLOSING TRANSITIONAL MATTERS
10.1 Post Closing Inspection Rights. Buyer agrees that all books, records,
documents, and other materials delivered to Buyer by Seller pursuant to the
provisions of this Agreement shall be open for inspection by representatives of
Seller at any time during regular business hours on or prior to the first
anniversary of the Closing, and that Seller during such period at its expense
may make such excerpts therefrom as it may deem desirable. Seller agrees that
all documents, records, and other materials retained by Seller that are related
to the Assets or the Business shall be open for inspection by representatives of
Buyer at any time during regular business hours on or prior to the first
anniversary of the Closing, and that during this period Buyer may make such
excerpts therefrom at its expense as it may deem desirable. Thereafter, each
party shall offer to the other an opportunity to copy any such documents and
materials prior to the destruction of the documents and materials. If either
party has a reasonable and legitimate need to inspect or copy the books, records
or other documents of the other party after the first anniversary of the Closing
with respect to a matter arising under the Assumed Contracts, and makes a
request to do so, the parties agree to cooperate in good faith to permit such
inspection and copying at the expense of the requesting party.
10.2 Receivables. Buyer agrees to assist Seller in the collection of
outstanding accounts receivable. After the Closing, Buyer will provide Seller
with access to personnel having knowledge of projects and information contained
in project files including proposals, documentation, and all other information
required for Seller to collect outstanding accounts receivable for these
projects.
10.3 Transfer of Contracts. Seller agrees to assist Buyer in providing all
necessary documentation and assistance required to transfer all Seller's
contracts or documents related to this Agreement to Buyer's name as reasonably
deemed necessary by Buyer.
10.4 Office Space and Temporary Employment. At no charge to Buyer, Seller
will provide office space in Seller's Denver, Colorado office on a temporary
basis for up to ten employees whom Buyer will hire to enable Buyer to fulfill
its obligations under the Assumed Contracts. At no charge to Seller, Buyer will
make space available to Seller in the Tustin, California office, on a temporary
basis, for one employee whom Seller will retain to enable Seller to fulfill its
obligations under the Excluded Contracts. The obligations of both parties under
this provision shall terminate at the earlier of: (i) June 30, 2000, and (ii)
the date on which either party ceases to use the other's office.
10.5 Transferred Employees. Buyer shall offer employment to each of the
Employees listed on Exhibit "D". Each employee may then decide whether to accept
and continue employment with Buyer. All Employees who accept employment with
Buyer are defined as the "Transferred Employees." Seller will be responsible for
all its accrued payroll costs through and including the Closing. Buyer shall
become responsible for the payroll costs, which first accrue with respect to the
Transferred Employees after the Closing. Seller covenants and agrees not to
offer pay increases, benefits or other inducements to any of the Employees
listed on Exhibit "D" to encourage them to remain in Seller's employment, and
not to otherwise interfere with Buyer's efforts to hire such Employees.
Notwithstanding the foregoing, both Buyer and Seller shall have the right to
employ any Employee designated as "casual" from time to time as and when needed.
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10.6 Further Assurances: Attorney-in-Fact. The following provisions
relating to further assurances and attorney-in-fact are a part of this
Agreement.
(a) Further Assurances. At any time, and from time to time, upon
request of Buyer, Seller will make, execute and deliver, or will cause to
be made, executed or delivered, to Buyer or to Buyer's designee, and, when
requested by Buyer, cause to be filed, recorded, refiled, or rerecorded, as
the case may be, at such times and in such offices and places as Buyer may
deem appropriate, any and all such bills of sale, assignments,
acknowledgements, consents, instruments of transfer and further assurance,
certificates, and other documents as may, in the sole opinion of Buyer, be
necessary or desirable in order to effectuate, complete, perfect, continue
or preserve (a) the sale, assignment and transfer by Seller to Buyer of the
Assets under this Agreement, or (b) to meet the requirements of any third
party, including but not limited to any third party under the Assumed
Contracts who has requested Seller's execution or delivery of any such
document in connection with the novation, assignment or assumption of the
Assumed Contract.
(b) Attorney-in-Fact. If Seller fails to do any of the things referred
to in the preceding paragraph, Buyer may do so for and in the name of
Seller. For such purposes, Seller hereby irrevocably appoints Buyer as
Seller's attorney-in-fact for the purpose of making, executing, delivering,
filing, recording, and doing all other things as may be necessary or
desirable, in Buyer's sole opinion, to accomplish the matters referred to
in the preceding paragraph.
ARTICLE XI
TERMINATION OF AGREEMENT
This Agreement may be terminated at any time prior to and including the
Closing:
11.1 Mutual Consent. By mutual consent of Buyer and Seller.
11.2 Breach of Agreement. By Buyer giving written notice to Seller if
Seller is in breach, or by Seller giving written notice to Buyer if Buyer is in
breach, in any material respect of any representation, warranty, or covenant
contained in this Agreement.
11.3 Government Action. By Buyer or Seller if any court of competent
jurisdiction in the United States or other United States governmental body shall
have issued an order, decree, or ruling or taken any other action restraining,
enjoining, or otherwise prohibiting the consummation of the transactions
contemplated by this Agreement and such order, decree, ruling, or other action
shall have become final and non-appealable.
11.4 Buyer's Determination. By Buyer if, in its sole good faith discretion,
it determines that the acquisition of Seller's Assets is not commercially
feasible because Seller cannot obtain all the necessary consents or novations to
permit the assignment of the Lease or the Contracts to Buyer, or that
consummating the transaction would subject Buyer to material and adverse
liabilities that outweigh the benefits of the transaction to Buyer.
ARTICLE XII
INDEMNIFICATION
12.1 Seller's Indemnification. Seller agrees to indemnify and hold Buyer
and its officers, directors, stockholders, and assignees harmless from and
against any and all liabilities, damages, losses, costs, and expenses whatsoever
arising out of or resulting from:
(a) any breach of any warranty, agreement, covenant, or representation
made in this Agreement by Seller.
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(b) any lien, charge, claim, or Encumbrance of any nature whatsoever
against any of the Assets.
(c) ownership and operation of the Business and the Assets on or prior
to and including the Closing (including without limitation any actions,
suits, or claims of any nature arising from such ownership, operation, or
participation).
(d) any and all Taxes, interest, and penalties, of any kind arising at
any time from (1) ownership and operation of the Business and the Assets on
or prior to the Closing and (2) any transfer, payment or other transaction
described in this Agreement, including without limitation any and all
Taxes, interest, and penalties payable with respect to any proceeds, gain,
or income realized by Seller.
(e) any of Seller's liabilities or obligations other than the Assumed
Liabilities (excluding from the Assumed Liabilities, for this purpose,
Seller's liabilities and obligations under the Government Contracts).
(f) any Environmental Liabilities and Costs.
(g) any actions, suits, proceedings, demands, judgments, costs, legal
fees, and other expenses incident to any of the foregoing.
12.2 Buyer's Indemnification. Buyer agrees to indemnify and hold harmless
Seller from and against any and all liabilities, damages, losses, costs, and
expenses whatsoever arising out of or resulting from:
(a) any breach of any warranty, agreement, covenant, or representation
made in this Agreement by Buyer.
(b) ownership and operation of the Business and the Assets after the
Closing (including without limitation any actions, suits, or claims of any
nature arising from such ownership or operation).
(c) any Assumed Liabilities (other than Assumed Liabilities under the
Government Contracts).
(d) any actions, suits, proceedings, demands, judgments, costs, legal
fees, and other expenses incident to any of the foregoing.
12.3 Survival of Indemnification. Except as hereinafter expressly provided
to the contrary, the obligations of Seller and Buyer to indemnify and hold each
other harmless shall survive until the expiration of the applicable limitation
period imposed by law for the bringing of claims based on indemnification, and
thereafter all representations and warranties of Seller and Buyer under this
Agreement shall be extinguished and such indemnification obligation shall
expire. No claim for the recovery of damages based on the indemnification
obligation arising under this Agreement may be asserted after the expiration of
the foregoing survival period; provided, however, that claims first asserted in
writing within such period shall not be barred.
ARTICLE XIII
GENERAL PROVISIONS
13.1 Entire Agreement. This Agreement contains the entire understanding and
agreement between the parties and supersedes all prior negotiations,
understandings, and agreements between the parties.
13.2 Assignments. No party to the Agreement shall assign the Agreement
without written consent of the other parties.
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13.3 Severance. If any term of this Agreement shall be invalid or
unenforceable, the remainder of this Agreement and any other application of such
terms shall not be affected.
13.4 Successors. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties.
13.5 Headings. The headings of this Agreement are for purposes of reference
only and shall not limit or define the meaning.
13.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which is an original, but all of which shall constitute
one instrument.
13.7 Amendments and Waiver. This Agreement may be amended, waived, or
terminated only by an instrument in writing signed by all the parties.
13.8 Covenant of Further Assurances. From time to time after the Closing,
at the request of Buyer and without further consideration, Seller will execute
and deliver such other instruments of transfer and take such other actions as
Buyer may reasonably require to transfer the Assets to, and vest title of the
Assets in, Buyer, and to put Buyer in possession of the Assets.
13.9 Survival of Representations and Warranties. All representations and
warranties contained in this Agreement, and all other written representations
and warranties of Buyer and Seller contained in the instruments executed in
connection with the consummation of the transactions provided for in this
Agreement, shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated by this Agreement until the
expiration of the applicable limitation period imposed by law for the bringing
of claims based on such representations and warranties.
13.10 Public Announcement. Any and all public announcements of any kind or
nature whatsoever concerning the transactions contemplated by this Agreement
made by Buyer or Seller before, on, or after the Closing shall require the prior
written approval of the other party if the name Or identity of such party is
disclosed in such announcement.
13.11 Governing Law. This Agreement shall be construed and interpreted in
accordance with the laws of the State of Georgia, including for the purpose of
choice of law, as though all acts and omissions related to this Agreement
occurred in the State of Georgia.
13.12 Resolution of Disputes.
(a) Notice of Dispute: Negotiated Settlement. The parties recognize
that a bone fide dispute as to certain matters may from time to time arise
after the Closing that relates to a party's rights or obligations under
this Agreement. In such instance, any party may, by written notice to the
other party, have such dispute referred to their respective employees
designated below or their successors, for attempted resolution by good
faith negotiations within 30 days after such notice is received. Such
designated employees are as follows:
Seller: Steven H. Davis, President--CET Environmental Services,
Inc.
Buyer: Fernando J. Rios; President--Cape Environmental
Management, Inc.
Any settlement reached by the parties under this Section shall
not be binding until reduced to writing and signed by the above
specified employees of Buyer and Seller.
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When reduced to writing, such settlement agreement shall supersede all
other agreements, written or oral, to the extent such agreements
specifically pertain to the matters so settled. If the designated employees
are unable to resolve such dispute within such 30-day period, the dispute
may be settled by decision of a court of law in the State of Georgia.
(b) Dispute Resolution. Except as provided above in section 13.12(a),
any controversy or claim arising out of or relating to this Agreement
(except fraud or intentional misrepresentation), including disputes
relating to its formation, or the breach thereof, which are brought by
Seller, shall be settled by binding arbitration in Atlanta, Georgia, and
any disputes relating to its formation, or the breach thereof, which are
brought by Buyer shall be settled by binding arbitration in Denver,
Colorado, in each case at a time and location designated by the arbitrator,
but not exceeding 90 days after a demand for arbitration has been made.
Arbitration shall be conducted by the American Arbitration Association in
accordance with its Rules of Commercial Arbitration, and judgment upon the
award rendered by the arbitrator may be entered in any court having
jurisdiction. The arbitrator shall be a retired state or federal judge or
any attorney who has practiced business litigation for at least 10 years
and is familiar with the environmental remediation industry. Arbitration
will be conducted pursuant to the provisions of this Agreement and the
Commercial Arbitration Rules of the American Arbitration Association.
Limited civil discovery shall be permitted for the production of documents
and taking of depositions. Exemplary damages shall not be awarded in any
such arbitration proceeding. Unresolved discovery disputes may be brought
to the attention of, and may be decided by, the arbitrator. Each party
shall pay its own costs and expenses of the arbitration.
13.13 Notices. All notices given pursuant to this Agreement shall be
effective on receipt, shall be in writing, and shall be hand delivered,
delivered overnight, or sent by registered mail, postage prepaid, addressed as
follows (or to another address or person as a party may specify on notice to the
other):
(a) If to the Buyer: President
Cape Environmental Management, Inc.
2302 Parklake Drive, Suite 200
Atlanta, Georgia 30345-2907
with a copy to: Charles B. Roberts, Esq.
McGuire Woods Battle & Boothe LLP
Suite 2200, Marquis Two Tower
285 Peachtree Center Ave., NE
Atlanta, Georgia 30303-1234
(b) If to the Seller: President
GET Environmental Services, Inc.
7032 South Revere Parkway
Englewood, Colorado 80112
with a copy to: William J. Campbell, Esq.
Faegre & Benson LLP
2500 Republic Plaza
370 17th Street
Denver, Colorado 80202
13.14 Knowledge of the Parties. Where any representation or warranty
contained in this Agreement is expressly qualified by reference to the knowledge
of any of the parties, each of the parties acknowledges and confirms that, as
to the matters that are the subject of such representations and warranties, such
party has made all
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appropriate inquiries of officers and appropriate additional executives of such
party (and inquiries of such other individuals as, based on the results of the
inquiries and knowledge of such party's officers and other appropriate
executives, a reasonable person would deem prudent) and, when the results of
such inquiries indicated it to be prudent, each of the parties has reviewed all
appropriate books and records of such party. The terms "knowledge" shall not
mean, require, or imply that the representing party has made any further
investigation or inquiry.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers as of the date and year first
written above.
<TABLE>
<S> <C>
Signed, acknowledged and delivered BUYER:
as to Buyer in the presence of: -----
CAPE ENVIRONMENTAL MANAGEMENT, INC.
/s/ [ILLEGIBLE]
- -------------------------------------------
Notary Public Notary Public, Fulton County, Georgia.
[SEAL] My Commission Expires August 1, 2000. By: /s/ FERNANDO J. RIOS
---------------------------------
Print Name: FERNANDO J. RIOS
-------------------------
/s/ [ILLEGIBLE] Title: PRESIDENT
- ------------------------------------------- -----------------------------
Unofficial Witness
Signed, acknowledged and delivered SELLER:
as to Seller in the presence of: ------
CET ENVIRONMENTAL SERVICES, INC.
/s/ PATRICIA S. BEDINGFIELD
- -------------------------------------------
Notary Public Commission Expires
[SEAL] 10-16-02 By: /s/ STEVEN H. DAVIS
--------------------------------
Print Name: Steven H. Davis
------------------------
/s/ [ILLEGIBLE] Title: President
- ------------------------------------------- -----------------------------
Unofficial Witness
</TABLE>
-19-
<PAGE> 24
EXHIBIT A
(ASSET INVENTORY DETAIL)
See Attached.
-20-
<PAGE> 25
15 Pages EXHIBIT A
<TABLE>
<CAPTION>
===================================================================================================================================
GRP
PG # QTY. ITEM NO. CODE DESCRIPTION LOCATION COMMENTS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
7 11 MISC 1188LA 10 #3 MONTEREY SAND 100#
- -----------------------------------------------------------------------------------------------------------------------------------
33 11 4 10 1 1/2" CLOTH DISCHARGE HOSE
- -----------------------------------------------------------------------------------------------------------------------------------
6 38 MISC 1023LA 10 1 1/2" X 6" BRASS SLEEVES W/CAPS
- -----------------------------------------------------------------------------------------------------------------------------------
6 34 MISC 1020LA 10 1 LITER AMBER BOTTLES
- -----------------------------------------------------------------------------------------------------------------------------------
6 44 MISC 1120LA 10 1 LITER TEDLAR BAGS
- -----------------------------------------------------------------------------------------------------------------------------------
36 4 1 10 1/2" CHAIN 40 FT.
- -----------------------------------------------------------------------------------------------------------------------------------
7 24 MISC 1240LA 10 1/2" POLY TRUCK ROPE
- -----------------------------------------------------------------------------------------------------------------------------------
7 26 MISC 1242LA 10 1/4" POLY ROPE
- -----------------------------------------------------------------------------------------------------------------------------------
12 8 1 T723 10 1000 CFM UNIT - STEALTH FC-1000 #00396 Solutia
- -----------------------------------------------------------------------------------------------------------------------------------
1 6 1 10 12 VOLT PUMP
- -----------------------------------------------------------------------------------------------------------------------------------
33 10 4 10 2 1/2" CLOTH DISCHARGE HOSE
- -----------------------------------------------------------------------------------------------------------------------------------
32 5 3 10 2" SUBMERSIBLE PUMPS
- -----------------------------------------------------------------------------------------------------------------------------------
8 21 MISC 1207LA 10 2" WELL CAP THREADED
- -----------------------------------------------------------------------------------------------------------------------------------
6 40 MISC 1118LA 10 2" X 3" BRASS SLEEVES W/CAPS
- -----------------------------------------------------------------------------------------------------------------------------------
6 39 MISC 1024LA 10 2" X 6" BRASS SLEEVES W/CAPS
- -----------------------------------------------------------------------------------------------------------------------------------
8 17 MISC 1203LA 10 2"X10' WELL BLANK
- -----------------------------------------------------------------------------------------------------------------------------------
8 16 MISC 1202LA 10 2"X10' WELL SCREEN
- -----------------------------------------------------------------------------------------------------------------------------------
8 15 MISC 1201LA 10 2"X20' WELL BLANK
- -----------------------------------------------------------------------------------------------------------------------------------
8 14 MISC 1200LA 10 2"X20' WELL SCREEN
- -----------------------------------------------------------------------------------------------------------------------------------
8 19 MISC 1205LA 10 2"X5' WELL BLANK
- -----------------------------------------------------------------------------------------------------------------------------------
8 18 MISC 1204LA 10 2"X5' WELL SCREEN
- -----------------------------------------------------------------------------------------------------------------------------------
32 2 3 10 3 1/4" DIAPHRAGM PUMPS
- -----------------------------------------------------------------------------------------------------------------------------------
6 43 MISC 1119LA 10 3 OR 5 LITER TEDLAR BAGS
- -----------------------------------------------------------------------------------------------------------------------------------
32 13 1 10 3 PHASE CONVERTER
- -----------------------------------------------------------------------------------------------------------------------------------
36 2 1 10 3/4" POLY ROPE 200 FT.
- -----------------------------------------------------------------------------------------------------------------------------------
36 3 1 10 3/8" CHAIN 150 FT.
- -----------------------------------------------------------------------------------------------------------------------------------
7 25 MISC 1241LA 10 3/8" MANILLA ROPE
- -----------------------------------------------------------------------------------------------------------------------------------
12 3 1 10 300 CFM AIR EXCHANGE #5509-46L2EB5434
- -----------------------------------------------------------------------------------------------------------------------------------
8 20 MISC 1206LA 10 4" WELL CAP THREADED
- -----------------------------------------------------------------------------------------------------------------------------------
8 11 MISC 1197LA 10 4"X10" WELL BLANK
- -----------------------------------------------------------------------------------------------------------------------------------
8 10 MISC 1196LA 10 4"X10" WELL SCREEN
- -----------------------------------------------------------------------------------------------------------------------------------
8 9 MISC 1195LA 10 4"X20" WELL BLANK
- -----------------------------------------------------------------------------------------------------------------------------------
8 8 MISC 1194LA 10 4"X20" WELL SCREEN
- -----------------------------------------------------------------------------------------------------------------------------------
8 13 MISC 1199LA 10 4"X5' WELL BLANK
- -----------------------------------------------------------------------------------------------------------------------------------
8 12 MISC 1198LA 10 4"X5' WELL SCREEN
- -----------------------------------------------------------------------------------------------------------------------------------
6 35 MISC 1117LA 10 40 ML VOA'S
- -----------------------------------------------------------------------------------------------------------------------------------
4 33 22 1217LA 10 55 GAL POLY DRUM C/T
- -----------------------------------------------------------------------------------------------------------------------------------
35 19 1 10 580A OVM
- -----------------------------------------------------------------------------------------------------------------------------------
4 32 3 1216LA 10 85 GAL STEEL OVERPAK
- -----------------------------------------------------------------------------------------------------------------------------------
33 13 1 10 ACME MOTOR DIESEL E-1501 GENERATOR
- -----------------------------------------------------------------------------------------------------------------------------------
32 23 2 10 ACTIVATED CARBON CANISTERS LG
- -----------------------------------------------------------------------------------------------------------------------------------
32 21 2 10 ACTIVATED CARBON CANISTERS SM
- -----------------------------------------------------------------------------------------------------------------------------------
32 24 2 10 ACTIVATED CARBON CANISTERS XL
- -----------------------------------------------------------------------------------------------------------------------------------
35 29 1 10 AIR DRIVEN PRODUCT RECOVERY PUMPS
- -----------------------------------------------------------------------------------------------------------------------------------
12 7 1 10 AIR SPARE BLOWER - STEALTH
- -----------------------------------------------------------------------------------------------------------------------------------
32 32 1 10 AIRLINE PALLET
- -----------------------------------------------------------------------------------------------------------------------------------
2 21 1 T712 10 ALLADIN 1222 W/T104
- -----------------------------------------------------------------------------------------------------------------------------------
1 1 1 T300 10 ALPHA 1 - PERSONNEL MONITORING PUMP
- -----------------------------------------------------------------------------------------------------------------------------------
1 2 1 T301 10 ALPHA 1 - PERSONNEL MONITORING PUMP
- -----------------------------------------------------------------------------------------------------------------------------------
2 23 1 T715 10 Alpheus Co2 DEMO CASE W/NOZZLES
- -----------------------------------------------------------------------------------------------------------------------------------
2 22 1 T714 10 Alpheus Co2 MINI BLAST IN WOOD CRATE
- -----------------------------------------------------------------------------------------------------------------------------------
32 25 1 10 AMERICAN COMPRESSOR COMP BLOWER #930588BE (BIG)
- -----------------------------------------------------------------------------------------------------------------------------------
1 35 1 10 AMETEK MARK-3 AUDIO DOSIMETER
- -----------------------------------------------------------------------------------------------------------------------------------
37 6 1 10 ASBESTOS VAC NIKRO
- -----------------------------------------------------------------------------------------------------------------------------------
7 40 MISC 1303LA 10 ASPHALT PATCH
- -----------------------------------------------------------------------------------------------------------------------------------
32 22 2 10 BAG FILTERS
- -----------------------------------------------------------------------------------------------------------------------------------
3 7 17 T1006 10 BARRICADES W/FLASHER
- -----------------------------------------------------------------------------------------------------------------------------------
34 15 1 10 BATTERY CHARGER ENGINE STARTER PRO SERIES
- -----------------------------------------------------------------------------------------------------------------------------------
32 29 1 10 BLOWER (MEDIUM)
- -----------------------------------------------------------------------------------------------------------------------------------
35 18 MISC MISC 10 BLUE GAS SHELF & PH SUPPLIES
- -----------------------------------------------------------------------------------------------------------------------------------
2 17 1 10 BRIGGS & STRATTON ON A TRUCK
- -----------------------------------------------------------------------------------------------------------------------------------
35 20 2 10 CALIBRATION KITS
- -----------------------------------------------------------------------------------------------------------------------------------
12 6 1 10 CARBON FILTRATION UNIT
- -----------------------------------------------------------------------------------------------------------------------------------
CATALYTIC COMBUSTING UNIT - 2000 CFM CHLORONATED WESTERN FUEL OIL
12 1 1 10 HYDROCARBON UNIT W/SCRUBBER TOWER JOB SITE
- -----------------------------------------------------------------------------------------------------------------------------------
2 24 1 10 CIASONS 2hsp 23 gal
- -----------------------------------------------------------------------------------------------------------------------------------
2 26 1 10 COLEMAN 3.5hsp 20 gal
- -----------------------------------------------------------------------------------------------------------------------------------
7 41 2 BOX 1304LA 10 COLIWASAS
- -----------------------------------------------------------------------------------------------------------------------------------
32 11 1 10 COMPRESSOR ELECTRIC LARGE UPRIGHT CAST IRON SERIES
- -----------------------------------------------------------------------------------------------------------------------------------
7 47 MISC 350021 10 COMPRESSOR OIL
- -----------------------------------------------------------------------------------------------------------------------------------
35 27 20 10 CONCRETE TOOLS
- -----------------------------------------------------------------------------------------------------------------------------------
1 29 2 T704 10 CONDUCTIVITY METER - 1 GOOD, 1 BAD
- -----------------------------------------------------------------------------------------------------------------------------------
3 11 31 T1010 10 CONES
- -----------------------------------------------------------------------------------------------------------------------------------
32 9 1 10 CONTROL BOX & 1 1/2" SUBMERSIBLE PUMP
===================================================================================================================================
</TABLE>
1
<PAGE> 26
EXHIBIT A
---------
<TABLE>
<CAPTION>
GRP.
PG. # QTY. ITEM NO. CODE DESCRIPTION LOCATION COMMENTS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
6 42 23 1034LA 10 COOLERS
- ---------------------------------------------------------------------------------------------------------------------------
32 17 1 10 CREEPER
- ---------------------------------------------------------------------------------------------------------------------------
35 25 1 10 CROWN GAS MONITOR
- ---------------------------------------------------------------------------------------------------------------------------
3 16 MISC 10 DAVIT ARM WITH 100' WINCH 3 TRIPEDS, 2 WINCHES
- ---------------------------------------------------------------------------------------------------------------------------
32 31 1 10 DECON SHOWER
- ---------------------------------------------------------------------------------------------------------------------------
3 9 10 T1008 10 DELINEATORS W/STANDS
- ---------------------------------------------------------------------------------------------------------------------------
33 34 5 10 DIAPHRAM PUMPS 1"
- ---------------------------------------------------------------------------------------------------------------------------
1 5 1 10 DRAEGER PUMP (indicator tubes extra)
- ---------------------------------------------------------------------------------------------------------------------------
4 34 3 1268LA 10 DRUM DOLLY
- ---------------------------------------------------------------------------------------------------------------------------
4 35 5 1269LA 10 DRUM LIFTER - FORKLIFT APPLICATION
- ---------------------------------------------------------------------------------------------------------------------------
33 19 1 10 DRUM STAND
- ---------------------------------------------------------------------------------------------------------------------------
4 25 8 1079LA 10 DRUMS-17-E-55M STEEL C/T
- ---------------------------------------------------------------------------------------------------------------------------
4 26 6 1080LA 10 DRUMS-17-H-55M STEEL O/T
- ---------------------------------------------------------------------------------------------------------------------------
4 23 3 1067LA 10 DRUMS-85 GAL POLY OVERPACKED
- ---------------------------------------------------------------------------------------------------------------------------
5 2 1 P001 10 ELECTRIC HAND PUMP W/50FT. EXTENSION & HOLDING D
- ---------------------------------------------------------------------------------------------------------------------------
1 7 1 10 ELECTRIC VACUUM PUMP BROKE
- ---------------------------------------------------------------------------------------------------------------------------
32 6 1 10 ELECTRICAL MOTOR
- ---------------------------------------------------------------------------------------------------------------------------
7 1 MISC 1136LA 10 ELECTRICAL TAPE
- ---------------------------------------------------------------------------------------------------------------------------
1 36 1 10 ELECTRONIC DCL - 400 LOCATOR METAL DETECTOR
- ---------------------------------------------------------------------------------------------------------------------------
32 10 1 10 ETICATORS
- ---------------------------------------------------------------------------------------------------------------------------
1 8 1 T701 10 FID - OVA 108 FIELD
- ---------------------------------------------------------------------------------------------------------------------------
1 9 1 T705 10 FID/PID-TVA 1000 FIELD
- ---------------------------------------------------------------------------------------------------------------------------
36 21 1 10 FIRE EXTINGUISHER
- ---------------------------------------------------------------------------------------------------------------------------
34 17 24 10 FIRE EXTINGUISHERS
- ---------------------------------------------------------------------------------------------------------------------------
7 23 MISC 1238LA 10 FIRST AID KIT
- ---------------------------------------------------------------------------------------------------------------------------
33 27 MISC 10 FLAMMABLE CABINETS
- ---------------------------------------------------------------------------------------------------------------------------
34 5 5 10 GANG BOXES
- ---------------------------------------------------------------------------------------------------------------------------
33 28 12 10 GAS CANS
- ---------------------------------------------------------------------------------------------------------------------------
33 12 1 10 GENERATORS 8HP TUCUSCO
- ---------------------------------------------------------------------------------------------------------------------------
7 20 MISC 1211LA 10 GLASS SAMPLE JAR 4 oz
- ---------------------------------------------------------------------------------------------------------------------------
7 21 MISC 1212LA 10 GLASS SAMPLE JAR 8 oz
- ---------------------------------------------------------------------------------------------------------------------------
2 3 1 10 HAND AUGER AND 2" SOIL DRIVE SAMPLING KIT
- ---------------------------------------------------------------------------------------------------------------------------
37 3 4 10 HAZCAT KITS
- ---------------------------------------------------------------------------------------------------------------------------
34 4 1 10 HEPA VAC MODEL 86 #085361
- ---------------------------------------------------------------------------------------------------------------------------
1 32 1 T722 10 HF SCIENTIFIC TURBIDIMETER DRT-15CE FIELD
- ---------------------------------------------------------------------------------------------------------------------------
1 30 1 10 HYDAC PH/CONDUCTIVITY METER
- ---------------------------------------------------------------------------------------------------------------------------
1 31 1 10 HYDAC PH/CONDUCTIVITY METER FIELD
- ---------------------------------------------------------------------------------------------------------------------------
1 3 1 10 KURZ FLOWMETER
- ---------------------------------------------------------------------------------------------------------------------------
1 33 1 10 LAMOTTE TURBIDIMETER
- ---------------------------------------------------------------------------------------------------------------------------
7 46 MISC 350011 10 LAMSON GREASE 5.5 oz TUBE
- ---------------------------------------------------------------------------------------------------------------------------
1 20 1 10 LANDTECH GA90 FIELD
- ---------------------------------------------------------------------------------------------------------------------------
3 18 MISC 10 LANYARD 6' ON JOBS
- ---------------------------------------------------------------------------------------------------------------------------
6 45 MISC 1014LA 10 LARGE TREATABILITY BINS
- ---------------------------------------------------------------------------------------------------------------------------
1 19 1 10 LEL-MSA 261 COMBUSTABLE GAS FIELD
- ---------------------------------------------------------------------------------------------------------------------------
1 17 1 T70B 10 LEL-MSA 360 CARBON MONOXIDE HAZCO
- ---------------------------------------------------------------------------------------------------------------------------
1 18 1 10 LEL-MSA 361 HYDROGEN SULPHIDE BROKE
- ---------------------------------------------------------------------------------------------------------------------------
1 14 1 10 LEL-MSA PASSPORT PERSONAL ALARM
- ---------------------------------------------------------------------------------------------------------------------------
1 15 1 10 LEL-MSA PASSPORT PERSONAL ALARM HAZ
- ---------------------------------------------------------------------------------------------------------------------------
1 16 1 10 LEL-MSA PASSPORT PERSONAL ALARM BROKE
- ---------------------------------------------------------------------------------------------------------------------------
3 19 MISC 10 LIFELINE 25' ON JOBS
- ---------------------------------------------------------------------------------------------------------------------------
35 14 2 10 LOCK OUT/TAG OUT KITS
- ---------------------------------------------------------------------------------------------------------------------------
2 1 22 10 MAGNEHELIC GAUGES
- ---------------------------------------------------------------------------------------------------------------------------
3 13 2 T1012 10 MAGNETIC YELLOW CAUTION LIGHTS IN TOOL ROOM
- ---------------------------------------------------------------------------------------------------------------------------
7 44 MISC 351021 10 MARKING PAINT
- ---------------------------------------------------------------------------------------------------------------------------
6 49 MISC 1123LA 10 MASTER LOCKS
- ---------------------------------------------------------------------------------------------------------------------------
6 46 MISC 1015LA 10 MEDIUM TREATABILITY BINS
- ---------------------------------------------------------------------------------------------------------------------------
3 22 1 10 MIKASA JUMPING JACK FIELD
- ---------------------------------------------------------------------------------------------------------------------------
33 20 1 10 MILLERMATIC 250 WELDER MILLER
- ---------------------------------------------------------------------------------------------------------------------------
32 16 MISC 10 MISC STEEL PIPE 1" - 4"
- ---------------------------------------------------------------------------------------------------------------------------
32 30 MISC 10 MISC. 6" VALVES
- ---------------------------------------------------------------------------------------------------------------------------
35 26 MISC 10 MISC. BLACK PIPE
- ---------------------------------------------------------------------------------------------------------------------------
32 3 MISC 10 MISC. RETOX PARTS
- ---------------------------------------------------------------------------------------------------------------------------
35 23 6 10 MISC. TEST KITS
- ---------------------------------------------------------------------------------------------------------------------------
32 14 1 10 MOELLER CONTROL UNIT
- ---------------------------------------------------------------------------------------------------------------------------
33 21 1 10 NEBRASKA WELDER MILLER
- ---------------------------------------------------------------------------------------------------------------------------
35 11 8 10 NOMEX
- ---------------------------------------------------------------------------------------------------------------------------
2 4 1 10 NORTON PRESSURIZED BAILER SYSTEM
- ---------------------------------------------------------------------------------------------------------------------------
33 31 9 10 OIL WATER SEPARATOR
- ---------------------------------------------------------------------------------------------------------------------------
12 4 1 10 OIL WATER SEPARATOR UNIT - GOLDEN EAGLE
- ---------------------------------------------------------------------------------------------------------------------------
1 21 1 T707 10 OIL/WATER INTERFACE PROBE - ORS 100' HAZCO
- ---------------------------------------------------------------------------------------------------------------------------
1 22 1 T709 10 OIL/WATER INTERFACE PROBE - ORS 100'
- ---------------------------------------------------------------------------------------------------------------------------
1 23 1 T703 10 OIL/WATER INTERFACE PROBE - SOLINIST 100'
- ---------------------------------------------------------------------------------------------------------------------------
32 33 1 10 PALLET OF ELECTRICAL WIRING
- ---------------------------------------------------------------------------------------------------------------------------
32 34 2 10 PALLETS OF PUMP HOSE DISCHARGE HOSE
- ---------------------------------------------------------------------------------------------------------------------------
37 5 8 10 PCB TEST KITS
- ---------------------------------------------------------------------------------------------------------------------------
4 38 1 T726 10 PEGO CARBON UNIT 200 CFM CA543725
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 27
15 Pages EXHIBIT A
<TABLE>
<CAPTION>
Grp.
Pg # Qty Item No. Code Description Location Comments
- --- ---- ----- -------- --- ------------------------------------------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
1 28 2 10 PH METER JUNK
1 13 1 10 PID - MSA OVM GAS CORDER
1 11 1 10 PID - MSA PASSPORT IN FIELD
1 12 1 10 PID - MSA PASSPORT AT HAXCO
1 10 1 1702 10 PID - OVM 580B
3 30 1 10 PIPE CABLE LOCATOR AND TRACER
3 29 2 10 PIPE STAND
35 30 1 10 PIPE THREADER KIT
36 1 4 10 PLASTIC STORAGE BINS
34 22 MISC 10 PLUMB SAMPLES STAINLESS STEEL LIQUID
32 35 MISC 10 POLY CONTAMINATE SNAPS
7 18 MISC 1209LA 10 POLY SAMPLE JAR 16 oz
7 19 MISC 1210LA 10 POLY SAMPLE JAR 32 oz
7 17 MISC 1208LA 10 POLY SAMPLE JAR 8 oz
35 24 1 10 PORTABLE GAS MONITOR EXOLOX50
33 33 1 10 PUMP
33 32 9 10 PUMP METERS GASBOY
9 20 MISC MISC 10 PVC SUPPLIES, VARIOUS SIZES, LENGTHS, PIECES, ETC.
35 21 1 10 QUALITATIVE FIT TEST
32 18 2 10 RAMPS
35 17 10 10 REGULATORS FOR GAS METERS
34 14 MISC 10 RESPIRATORY CARTRIDGES FOR PAPR
8 3 MISC 1262LA 10 SAFETY FENCE
3 17 3 10 SCBA W/3 SPARE BOTTLES
6 48 MISC 1122LA 10 SHELL VIALS
34 16 2 10 SMALL FLAM CABINETS
2 20 1 1713 10 SOUIX 150-C
2 25 1 10 SPEEDAIRE 2hsp 20 gal
34 20 15 10 STAINLESS STEEL CAGES 2" X 2"
34 19 53 10 STAINLESS STEEL CAGES 2" X 4"
34 18 100 10 STAINLESS STELL CAGES 2" X 6"
5 3 3 P1007 10 SUBMERSIBLE PUMP (CENTRIFUGAL)
32 4 1 10 SUBMERSIBLE PUMPS 1 1/2"
35 22 1 10 SULFATE TEST KIT
37 4 1 10 TEAC SAMPLING PUMP
1 34 1 10 TLC METER - YSI 3000
33 26 4 10 TOW HITCHES
3 10 6 T1009 10 TRAFFIC SIGNS
36 32 5 10 TRAFFIC TRIANGLES
3 12 4 T1011 10 TRENCH PLATE 4" X4"
1 4 1 T701 10 TSI VELOCITY METER IN FIELD
7 5 MISC 11820LA 10 TSP
32 15 1 10 UPRIGHT PIPE RACK
7 14 6 1191LA 10 VISQUEEN 10 MIL 20x100
7 13 2 1190LA 10 VISQUEEN 6 MIL 20X100
7 10 MISC 1187LA 10 VOLCLAY TABLETS 50#
1 25 1 1721 10 WATER LEVEL INDICATOR - SLOPE 100' FIELD
1 26 1 10 WATER LEVEL INDICATOR - SLOPE 100'
1 24 1 10 WATER LEVEL INDICATOR - SOLONIST 150' (MAYBE 200') WHT VAN
32 1 5 10 WATER METERS
32 19 4 10 WELL SAMPLING REELS
12 2 1 10 WHITE HORSE 3000 CFM STRAIGHT HYDROCARBON
1998 CATOX-3000 #2190198
5 7 2 P1001 10 WILDEN DBL DIAPHRAGM PUMP 3"
8 4 MISC 1263LA 10 WIRE BRUSH
7 43 MISC 351011 10 WOOD LATHE
1 27 1 10 YSI DISSOLVED 02 METER
2 19 1 11 COLEMAN POWERMATE 7000 (ON DEVELOPMENT RIG)
2 18 1 T400 11 HONDA EB6500sx (SHOWS ON DEVELOPMENT RIG) W/T 104
11 1 1 11 PERMITTED EQUIPMENT - PEGO # 1 LIC #IEC9266 6/99
10 1 1 11 PERMITTED EQUIPMENT - RETOX #1 VIN #1M9FM1931K1261021
LIC# IBN5048
10 2 1 11 PERMITTED EQUIPMENT - RETOX #2 VIN #1M9FM1938L1261051
LIC# ICE7793
10 3 1 11 PERMITTED EQUIPMENT - RETOX #3 VIN #1M9FM1933L1261054
LIC# ICM6685
10 4 1 11 PERMITTED EQUIPMENT - RETOX #4 VIN #1M9FM1935L1261055
LIC# 1CM6721
10 5 1 11 PERMITTED EQUIPMENT - RETOX #6 VIN #1M9FM1931L1261053
LIC# ICM6748
10 6 1 11 PERMITTED EQUIPMENT - RETOX #7 VIN #1M9FM1935L1261085
LIC# ICU1853
10 7 1 11 PERMITTED EQUIPMENT - RETOX #8 VIN #1M9FM1932M1261130
LIC# ICY7788
10 8 1 11 PERMITTED EQUIPMENT - STEALTH BOBCAT VIN #CA723711
LIC# SE436284
</TABLE>
3
<PAGE> 28
15 Pages EXHIBIT A
<TABLE>
<CAPTION>
GRP
PG # QTY ITEM NO. CODE DESCRIPTION LOCATION COMMENTS
- --- ---- --- -------- ------ --------------------------------------------------------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
10 9 1 11 #9513900279
33 4 4 12 10' HIGH X 6' SHELVING
2 27 5 T900 12 2 WAY RADIO W/HEADSETS
34 13 1 12 5' LADDER
32 26 4 12 6' FOLDING TABLE
32 27 1 12 8' FOLDING TABLE
33 1 1 12 8 X 4' TABLE
3 23 1 12 BOSCH ELECTRIC JACK HAMMER
2 29 2 12 CAMCORDER
2 28 1 12 CAMERA POLAROID JOB PRO
35 9 2 12 CAMERAS
36 28 1 12 CHAIR
33 2 4 12 CHAIRS
3 28 2 12 CUT OFF SAW - PARTNER K650 MARK II 1 HERE, 1 IN FIELD
3 27 2 12 ELECTRIC CHOPSAW 1 HERE, 1 IN FIELD
32 28 6 12 FOLDING CHAIRS
36 27 1 12 LADDER
34 10 1 P710 12 LANDA PRESSURE WASHER TRAILER MOUNTED PGHW53500
1 P713 12 LANDA PRESSURE WASHER TRAILER MOUNTED PO9968804
35 15 1 12 LOT OF METAL SHELVING
3 24 1 12 MILWAUKEE ELECTRIC ROTARY HAMMER ON JOB
3 25 6 12 MILWAUKEE SAWSALL 4 HERE, 2 ON JOBS
3 1 17 T901 12 NEXTEL PHONES W/BATTERIES & CHARGERS
34 12 MISC 12 OXYCETELYNE GAUGES, HOSES, ALMOST TORCH
36 31 6 12 PAR RESPIRATORS
3 26 1 12 SKILSAW
35 4 2 12 SMALL STORAGE BINS
32 20 1 12 SPEEDAIRE COMPRESSORS
33 7 8 12 STANDS FOR LARGER BARRICADES
36 24 1 12 STORAGE LADDER
36 25 12 12 STORAGE SHELVES
3 31 5 12 SURVEYING EQUIPMENT (TRANSIT & ROD) 3 HERE, 2 ON JOBS
33 5 1 12 TABLE
34 9 1 12 THE S.A.V.E. SYSTEM (SOIL VAPOR EXTRACTION BURNING UNIT)
35 5 1 12 TOOL BOX & MISC TOOLS
3 14 3 12 WET/DRY VACUUM 2 HERE, 1 ON JOB
35 12 1 13 10' HIGH SHELVING
19 31 1 13 10X6 CUBE WORK STA ROOM 19
19 32 1 13 10X6 CUBE WORK STA ROOM 19
19 18 1 13 10X6 WORK STA ROOM 19
19 2 1 13 10X6 WORK STA CUBE ROOM 19
19 3 1 13 10X6 WORK STA CUBE ROOM 19
19 6 1 13 10X6 WORK STA CUBE ROOM 19
19 13 1 13 10X6 WORK STA CUBE ROOM 19
20 1 1 13 10X6 WORK STA CUBES ROOM 19
36 29 1 13 11 DRAWER MAP FILER
17 31 1 13 15" FAN ROOM 10
14 16 1 13 2 DRAWER FILE UPSTAIRS
19 14 1 13 2 DRAWER FILE CAB ROOM 19
19 15 1 13 2 DRAWER FILE CAB ROOM 19
18 11 1 13 2 DRAWER FILE CAB. ROOM 12
24 11 1 13 2 DRAWER FILE CABINET #11
30 20 1 13 2 DRAWER FILE CABINET #23
30 16 1 13 2 DRAWER FILE CABINET OAK #22
36 8 7 13 2 DRAWER FILE CABINETS
20 21 1 13 2 DRAWER FILE HORIZ ROOM 1
20 27 1 13 2 DRAWER HORIZ FILE ROOM 21
16 34 2 13 D DRAWER HORIZ FILES ROOM 7
27 24 1 13 2 DRAWER HORIZONTAL FILE CABINET #20
22 6 1 13 2 DRAWER HORIZONTAL FILING CABINET #3
25 28 1 13 2 DRAWER HORIZONTAL FILING CABINET #13
15 7 1 13 2 HOLE PUNCH ROOM 1
15 30 1 13 2 HOLE PUNCH ROOM 2
24 22 1 13 2 HOLE PUNCH #11
16 2 3 13 2 SHELF BOOK CASES ROOM 2
21 25 1 13 20" WALL MOUNTED MARKER BOARD CONF. ROOM
14 6 1 13 2X10 WORK STA CUBE 19
22 3 2 13 3 BOOKSHELVES 6' HIGH OAK #3
15 29 1 13 3 HOLE PUNCH ROOM 2
16 10 1 13 3 HOLE PUNCH ROOM 5
24 24 1 13 3 HOLE PUNCH #11
25 1 1 13 3 HOLE PUNCH #11
25 15 1 13 3 HOLE PUNCH #13
29 17 1 13 3 HOLE PUNCH #20
30 13 1 13 3 HOLE PUNCH #22
36 13 1 13 3 HOLE PUNCH
</TABLE>
4
<PAGE> 29
15 Pages EXHIBIT A
<TABLE>
<CAPTION>
Grp.
Pg # Qty Item No. Code Description Location Comments
- --- ---- ----- -------- --- ------------------------------------------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
15 5 1 13 3 HOLE PUNCH - MASTER PRODUCTS ROOM 1
20 29 1 13 3 HOLD PUNCH (ADJ) ROLODEX ROOM 21
20 28 1 13 3 SHELF BOOK CASE (WOOD) ROOM 21
24 28 1 13 3X5' BULLETIN BOARD #11
25 6 1 13 3X5' BULLETIN BOARD #11
25 29 1 13 3X5' BULLETIN BOARD #13
26 1 2 13 3X5' BULLETIN BOARD #14
28 23 1 13 3X5' BULLETIN BOARD #20
30 17 1 13 3X5' BULLETIN BOARD #22
31 10 1 13 3X5' BULLETIN BOARD #23
14 17 1 13 4 DRAWER FILE UPSTAIRS
16 35 1 13 4 DRAWER FILE ROOM 7
19 25 1 13 4 DRAWER FILE ROOM 19
23 11 1 13 4 DRAWER FILE CABINET #8
24 10 1 13 4 DRAWER FILE CABINET #11
24 32 1 13 4 DRAWER FILE CABINET #11
26 14 1 13 4 DRAWER FILE CABINET #18
27 34 1 13 4 DRAWER FILE CABINET #20
28 26 1 13 4 DRAWER FILE CABINET #20
34 26 1 13 4 DRAWER FILE CABINET
22 11 1 13 4 DRAWER FILE CABINET CENTURY #4
26 23 2 13 4 DRAWER FILE CABINETS #18
36 5 10 13 4 DRAWER FILE CABINETS
15 1 2 13 4 DRAWER FILE CABS ROOM 1
20 20 1 13 4 DRAWER FILE HORIZ ROOM 21
17 30 2 13 4 DRAWER FILES ROOM 10
20 26 2 13 4 DRAWER FILES ROOM 21
22 5 1 13 4 DRAWER FILING CABINET #3
28 10 1 13 4 DRAWER FILING CABINET #20
24 20 4 13 4 DRAWER FILING CABINETS PREMIER #11
36 6 14 13 4 DRAWER HORIZ FILE CABINETS
22 21 1 13 4 DRAWER HORIZONTAL FILE CABINET #6
24 8 1 13 4' HIGH BOOKCASE #9
23 19 4 13 4' LONG X 10' HIGH BOOKCASES HALLWAY
27 10 2 13 4' LONG X 6' HIGH BOOKCASES #18
15 4 1 13 4 SLOT HANGING LETTER FILE ROOM 1
22 20 1 13 4X3 BULLETIN BOARD #4
22 9 1 13 4X4 WALL MOUNTED MARKERBOARD #3
24 29 2 13 4X6'HIGH BOOKCASES #11
22 14 1 13 4X7 DESK #4
28 1 1 13 5' HIGH BY 4' LONG BOOKCASE #20
28 28 1 13 5' HIGH X 4' BOOKCASE #20
28 11 1 13 5' HIGH X 5' LONG BOOKCASE #20
23 6 1 13 5' HORIZONTAL FILE CABINET #8
17 13 1 13 5 SHELF BOOK CASE (METAL) ROOM 7
19 26 1 13 5 SHELF BOOK CASE (WOOD) ROOM 19
14 9 1 13 5 SHELF BOOK CASE METAL 23
16 6 2 13 5 SHELF BOOK CASES ROOM 5
17 29 2 13 5 SHELF BOOK CASES ROOM 10
17 1 2 13 5 SHELF BOOK CASES (WOOD) ROOM 7
15 13 2 13 5 SHELF BOOK SHELVES ROOM 1
15 2 1 13 5 SLOT LETTER FILE ROOM 1
24 30 1 13 5X5' HIGH BOOKCASE #11
16 20 1 13 5X6 FREESTANDING CUBE SECTION ROOM 7
21 33 1 13 6' CABINET CONF. ROOM
22 4 1 13 6' HIGH 5 BOOKSHELVES #3
23 10 1 13 6' HIGH BOOKSHELF #8
22 27 2 13 6' HIGH X 4' LONG BOOKSHELVES #6
25 8 2 13 6' HIGH X 5' BOOKCASES #13
15 24 1 13 6 SLOT LETTER FILE ROOM 1
21 12 1 13 6' TABLE RECEPTION
22 15 1 13 6' TABLE GOES WITH DESK HAS DRAWERS #4
21 26 1 13 6' WALL MOUNTED MARKER BOARD W/DOORS CONF. ROOM
30 3 1 13 6X4' L-SHAPED DESK #22
20 18 1 13 6X6 CUBE ROOM 21
14 3 1 13 6X6 WORK STA CUBE 21
20 10 1 13 6X6 WORK STA CUBE ROOM 21
20 33 1 13 6X6 WORK STA CUBE ROOM 21
29 31 8 13 6X8' CUBICLE WORKSTATIONS #20
31 9 5 13 6X8' CUBICLE WORKSTATIONS #23
20 24 1 13 6X8 WORK STA CUBE ROOM 21
14 10 8 13 6X8 WORK STA CUBES UPSTAIRS
15 3 1 13 7 SLOT LETTER FILE ROOM 1
22 24 1 13 7X7 L-SHAPED DESK #6
26 11 1 13 8X4' MAIL ORGANIZER STEEL #14
24 31 2 13 BASIC OFFICE DESK #11
</TABLE>
5
<PAGE> 30
EXHIBIT A
<TABLE>
<CAPTION>
Grp.
Pg # Qty Item No. Code Description Location Comments
- --- ---- ----- -------- --- ------------------------------------------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
21 28 1 13 BLUE CHAIR - OFFICE MASTER CONF. ROOM
29 15 1 13 BOOKCASE 5' HIGH X 3' #20
34 25 1 13 BOOKSHELF
22 18 1 13 BOOKSHELF 6'HIGH X 4' LONG #4
14 5 1 13 BULL BOARD 21
16 33 1 13 BULL BOARD ROOM 7
17 2 1 13 BULL BOARD ROOM 7
17 28 1 13 BULL BOARD ROOM 7
15 25 1 13 BULLETIN BOARD (GRAY) ROOM 1
23 23 1 13 BULLETIN BOARD 3X5 #17
35 13 2 13 CABINETS
29 11 1 13 CHAIR #29
21 2 4 13 CHAIRS RECEPTION
22 25 2 13 CHAIRS #6
23 5 3 13 CHAIRS #8
36 10 2 13 CHAIRS
22 1 2 13 CHAIRS - PURPLE & BLACK #3
22 12 2 13 CHAIRS - PURPLE & BLACK #4
28 31 1 13 CLIPBOARD #20
24 19 7 13 CLIPBOARDS #11
26 13 40 13 COFFEE CUPS #14
26 5 1 13 COFFEE MACHINE NEWCO #14
28 33 1 13 COFFEE WARMER SALTON #20
14 19 7 13 CONF. CHAIRS (CLOTH) UPSTAIRS
21 23 11 13 CONFERENCE CHAIRS CONF. ROOM
21 22 1 13 CONFERENCE TABLE 15'X6' CONF. ROOM
23 4 2 13 CUBICLE DESKS #8
26 15 4 13 CUBICLE DESKS #18
31 3 1 13 DATE STAMP #23
21 1 2 13 DATE STAMPS RECEPTOIN
36 11 1 13 DESK
15 22 1 13 DESK LAMP ROOM 1
17 11 1 13 DESK LAMP ROOM 7
18 2 1 13 DESK LAMP ROOM 10
28 2 1 13 DESK LAMP #20
28 12 1 13 DESK LAMP #20
24 14 1 13 DESK ORGANIZER #11
25 13 1 13 DESK ORGANIZER #13
26 27 1 13 DESK ORGANIZER #18
27 9 1 13 DESK ORGANIZER #18
27 33 1 13 DESK ORGANIZER #20
28 22 1 13 DESK ORGANIZER #20
29 1 1 13 DESK ORGANIZER #20
33 6 1 13 DESK ORGANIZER
25 11 1 13 DESK TABLE #13
17 15 1 13 DESK TOP LETTER FILE ROOM 7
19 19 9 13 DESK TOP LETTER FILES ROOM 19
16 19 4 13 DESK TOP LETTER FILES ROOM 5
17 12 2 13 DESK TOP LETTER FILES ROOM 7
29 7 1 13 DESKTOP ORGANIZER #20
30 4 1 13 DESKTOP ORGANIZER #22
30 23 1 13 DESKTOP ORGANIZER #23
31 2 1 13 DESKTOP ORGANIZER #23
26 4 1 13 DISHWASHER GE 530 #14
34 23 1 13 DRAFTING TABLE
16 17 1 13 ELEC. PENCIL SHARPENER ROOM 5
23 3 1 13 END TABLE #8
26 28 1 13 END TABLE #18
27 6 1 13 END TABLE #18
22 19 1 13 END TABLE WITH DOOR #4
14 21 2 13 ERASE BOARDS (DRY MARK) UPSTAIRS
16 23 2 13 EXEC. CHAIRS ROOM 7
21 31 1 13 EXPO DRY ERASE SYSTEM - SANFORD CONF. ROOM
23 2 1 13 FILE CABINET HDN #8
31 12 1 13 FIRE EXTINGUISHER AMEREX #24
23 20 1 13 FIRE EXTINGUISHER AMEREX A500 #MZ-038580 HALLWAY
26 6 1 13 FIRE EXTINGUISHER AMEREX A500 MC-302992 #14
26 9 1 13 FIRST AID KIT #14
29 6 1 13 FLASHLIGHT #20
30 14 1 13 FLAT HOLE #22
26 12 1 13 FLOWER POT #14
24 12 1 13 FOLDING CHAIR #11
24 13 1 13 FOLDING COMPUTER TABLE #11
24 7 1 13 FOLDING TABLE #17
24 18 1 13 FOLDING TABLE #11
36 26 1 13 FOLDING TABLE
</TABLE>
6
<PAGE> 31
EXHIBIT A
<TABLE>
<CAPTION>
GRP.
PG # QTY ITEM NO. CODE DESCRIPTION LOCATION COMMENTS
- --- ---- ----- -------- --- ------------------------------------------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
36 9 3 13 FOLDING TABLES
32 12 1 13 FOOD ONLY REFRIGERATOR
31 24 1 13 FOOT STEP #24
34 29 1 13 GREY DESK
34 24 1 13 GREY SHELF
14 12 1 13 GUEST CHAIR UPSTAIRS
15 33 2 13 GUEST CHAIRS ROOM 2
17 34 2 13 GUEST CHAIRS ROOM 10
16 7 2 13 GUEST CHAIRS (LEATHER) ROOM 5
36 18 1 13 HEAVY DUTY HOLE PUNCH
23 30 1 13 HEAVY DUTY UTILITY SCALE PELOUZE 100 LB P1085 #17
23 27 1 13 HOLE PUNCH - GBC #MHD1600 #17
14 14 4 13 HORIZ 2 DRAWER FILES UPSTAIRS
15 10 1 13 HORIZ FILE 2-DRAWER ROOM 1
15 11 1 13 HORIZ FILE 2-DRAWER ROOM 1
15 12 1 13 HORIZ FILE 2-DRAWER ROOM 1
21 10 1 13 HORIZ FILE CABINET 2 DRAWER 3 1/2' RECEPTION
15 31 1 13 HORIZONTAL FILE 2-DRAWER ROOM 2
16 5 2 13 HORIZONTAL FILE CABS 4-DRAWER ROOM 5
21 20 3 13 IN/OUT BOARD RECEPTION
33 23 2 13 LAB REFRIGERATORS
21 14 1 13 LABEL IT EZ LABEL PRINTER CASIO KL-8100 RECEPTION
33 22 1 13 LABORATORY MICROWAVE
16 21 4 13 LARGE WOOD SEC DESKS ROOM 7
23 7 1 13 LEATHER CHAIR #8
15 16 5 13 LETTER TRAYS ROOM 1
18 33 1 13 LIGHTED VIEWING TABLE ROOM 12
21 6 1 13 L-SHAPED RECEPTION DESK 6X6 RECEPTION
23 26 1 13 MAIL ORGANIZER 4X6' STEEL #17
16 32 1 13 METAL 8 COMPARTMENT LETTER FILE ROOM 7
36 7 4 13 METAL CABINETS
36 23 1 13 METAL CART
36 12 1 13 MICROWAVE
26 7 1 13 MICROWAVE PANASONIC #14
15 8 1 13 OFFICE CHAIR ROOM 1
21 11 1 13 OFFICE CHAIR RECEPTION
22 2 1 13 OFFICE CHAIR #3
22 13 1 13 OFFICE CHAIR #4
25 10 1 13 OFFICE DESK #13
22 7 1 13 OFFICE DESK L-SHAPED 8X8 #3
35 6 1 13 PAPER CUTTER
36 20 1 13 PAPER CUTTER
18 32 1 13 PAPER CUTTER (SMALL) ROOM 12
24 4 1 13 PENCIL SHARPENER - ROYAL #17
30 9 1 13 PENCIL SHARPENER - ROYAL POWERPOINT #22
22 8 1 13 PLANT #3
22 22 1 13 PLANT #6
23 9 1 13 PLANT #8
28 27 1 13 PLANT #20
30 2 1 13 PLANT #22
21 5 3 13 PLANTS RECEPTION
28 9 1 13 PLASTIC CRATE #20
24 33 4 13 PLASTIC CRATES #11
24 23 1 13 PLASTIC DESK ORGANIZER #11
25 4 2 13 PLASTIC DESK ORGANIZERS #11
29 20 1 13 PLASTIC STORAGE CONTAINER #20
23 32 1 13 POSTAGE METER PITNEY BOWES A900 #8118608 #17
29 25 1 13 PRINTER STAND #20
24 1 1 13 PRINTER TAPE FED EX POWERSHIP #17
21 4 1 13 RECEPTION TABLE RECEPTION
26 3 1 13 REFRIGERATOR WHIRLPOOL #14
19 1 1 13 ROLLING FILE ROOM 19
17 10 1 13 ROLODEX ROOM 7
19 22 1 13 ROLODEX ROOM 19
30 7 1 13 ROLODEX #22
31 8 1 13 ROLODEX #23
14 2 1 13 SEC CHAIR 21
14 4 1 13 SEC CHAIR 21
15 9 1 13 SEC CHAIR ROOM 1
19 7 1 13 SEC CHAIR ROOM 19
19 16 1 13 SEC CHAIR ROOM 19
19 24 1 13 SEC CHAIR ROOM 19
19 34 1 13 SEC CHAIR ROOM 19
20 7 1 13 SEC CHAIR ROOM 21
20 16 1 13 SEC CHAIR ROOM 21
20 25 1 13 SEC CHAIR ROOM 21
</TABLE>
7
<PAGE> 32
EXHIBIT A
<TABLE>
<CAPTION>
GRP.
PG # QTY ITEM NO. CODE DESCRIPTION LOCATION COMMENTS
- --- ---- ----- -------- ---- ------------------------------------------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
20 30 1 13 SEC CHAIR ROOM 21
15 32 1 13 SEC CHAIR W/ROLLERS ROOM 2
14 11 8 13 SEC CHAIRS UPSTAIRS
16 22 2 13 SEC CHAIRS ROOM 7
15 14 1 13 SEC DESKS ROOM 1
15 34 1 13 SEC DESK (WOOD) ROOM 2
17 33 1 13 SEC CHAIR ROOM 10
18 13 2 13 SEC CHAIRS ROOM 12
19 4 2 13 SEC CHAIRS ROOM 19
16 18 1 13 SEC. EXEC. CHAIR LEATHER ROOM 5
28 29 1 13 SENSAPHONE PHONETICS 839-BA-00886 #20
20 22 1 13 SHARP CALCULATOR EL21926 ROOM 21
23 24 1 13 SHREDDER SHREDEX CROCODILE C-1000 #822952 #17
29 26 1 13 SMALL DESK #20
21 19 1 13 SPACE HEATER 1500 WTS LAKEWOOD 711 RECEPTION
36 30 1 13 SPACE HEATER RIVAL TITAN
29 8 1 13 SPACEMAKER PORTABLE FILES ROGERS #20
16 1 1 13 STAPLER ROOM 2
16 15 1 13 STAPLER ROOM 5
17 9 1 13 STAPLER ROOM 7
25 2 1 13 STAPLER #11
25 14 1 13 STAPLER #13
27 8 1 13 STAPLER #18
28 19 1 13 STAPLER #20
28 35 1 13 STAPLER #20
29 13 1 13 STAPLER #20
29 21 1 13 STAPLER #20
30 5 1 13 STAPLER #22
30 31 1 13 STAPLER #23
15 6 1 13 STAPLER - GBC BATES ROOM 1
21 21 1 13 STAPLER & TAPE DISPENSER RECEPTION
23 1 1 13 STAPLER & TAPE DISPENSER #8
15 17 1 13 STAPLER HD - ROSETEC RT 250 ROOM 1
24 25 1 13 STAPLER SWINGLINE #11
26 25 1 13 STAPLER SWINGLINE #18
28 3 1 13 STAPLER SWINGLINE #20
17 27 2 13 STAPLERS ROOM 7
24 5 3 13 STAPLERS #17
26 16 4 13 STAPLERS #18
29 27 3 13 STAPLERS #20
36 19 11 13 STAPLERS
25 5 1 13 STEP STOOL #11
22 23 1 13 SWIVEL CHAIR #6
23 8 1 13 SWIVEL CHAIR #8
26 22 1 13 SWIVEL CHAIR #18
27 23 1 13 SWIVEL CHAIR #20
28 5 1 13 SWIVEL CHAIR #20
28 13 1 13 SWIVEL CHAIR #20
28 30 1 13 SWIVEL CHAIR #20
29 22 1 13 SWIVEL CHAIR #20
30 24 1 13 SWIVEL CHAIR #23
31 5 1 13 SWIVEL CHAIR #23
31 11 1 13 SWIVEL CHAIR #24
35 1 1 13 SWIVEL CHAIR SUPPLY HUT
36 22 1 13 SWIVEL CHAIR
23 29 2 13 SWIVEL CHAIRS #17
24 21 2 13 SWIVEL CHAIRS #11
27 1 2 13 SWIVEL CHAIRS #18
27 31 2 13 SWIVEL CHAIRS #20
30 28 2 13 SWIVEL CHAIRS #23
25 9 1 13 SWIVEL OFFICE CHAIR #13
30 15 1 13 SWIVEL OFFICE CHAIR #22
22 26 1 13 TABLE (SIZE OF CARDBOARD TABLE) #6
31 25 2 13 TABLES #24
36 14 1 13 TABLETOP FOLDERS PITNEY BOWES 1820 0412293 #0412293
14 13 1 13 TALL BOOKCASE UPSTAIRS
16 16 1 13 TAPE DISPENSER ROOM 5
16 28 1 13 TAPE DISPENSER ROOM 7
17 14 1 13 TAPE DISPENSER ROOM 7
17 26 2 13 TAPE DISPENSER ROOM 7
24 26 1 13 TAPE DISPENSER #11
25 17 1 13 TAPE DISPENSER #13
26 26 1 13 TAPE DISPENSER #18
27 5 1 13 TAPE DISPENSER #18
27 29 1 13 TAPE DISPENSER #20
28 4 1 13 TAPE DISPENSER #20
</TABLE>
8
<PAGE> 33
EXHIBIT A
<TABLE>
<CAPTION>
GRP.
PG # QTY ITEM NO. CODE DESCRIPTION LOCATION COMMENTS
- --- ---- ----- -------- ---- ------------------------------------------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
28 18 1 13 TAPE DISPENSER #20
28 32 1 13 TAPE DISPENSER #20
30 6 1 13 TAPE DISPENSER #22
30 33 1 13 TAPE DISPENSER #23
36 17 18 13 TAPE DISPENSER
24 6 3 13 TAPE DISPENSERS #17
29 28 2 13 TAPE DISPENSERS #20
24 3 3 13 TAPE GUNS #17
26 8 1 13 TOASTER OVEN BLACK & DECKER SPACEMAKER #14
28 21 1 13 TOSHIBA PHONE EKT6520-SD #20
26 10 2 13 TRASH CANS #14
14 20 1 13 TRIPOD DISPLAY BOARD UPSTAIRS
21 34 1 13 TV STAND CONF. ROOM
30 21 1 13 TYPEWRITER STAND #23
VELOBIND PRESENTATION SYSTEMS - GENERAL BINDING CORP
23 25 1 13 470KN #GB06497 #17
35 2 1 13 VISITING CHAIR
25 7 2 13 VISITING CHAIRS #13
30 1 2 13 VISITING CHAIRS #22
21 27 1 13 WALL CLOCK EMPIRE 102183 CONF. ROOM
23 21 1 13 WATER COOLER HALLWAY
26 2 1 13 WATER COOLER #97117121 #14
23 31 1 13 WEIGHT CLASSIFIER PITNEY BOWES #17
14 18 1 13 WOOD CONF. TABLE UPSTAIRS
14 7 1 13 WOOD DESK 23
16 8 1 13 WOOD DESK (REGULAR) ROOM 5
16 9 1 13 WOOD DESK (SMALL) ROOM 5
17 32 2 13 WOOD SEC. DESKS ROOM 10
32 8 4 14 1 1/2" BLOWERS
37 2 1 14 1" IMPACT WRENCH AIR
36 34 1 14 AIR CHISEL
36 35 1 14 ATLAS NIBLER AIR DRIVEN
32 7 2 14 BLOWERS 2"
35 33 3 14 DROP CORDS
33 9 2 14 DRUM VACS
37 1 1 14 EMPTY TOOLBOX
35 32 1 14 EXPLOSION LIGHTS DROP CORD
35 28 5 14 FENCE POST POUNDERS
35 8 2 14 FLASHLIGHTS
33 15 1 14 HYDRAULIC AUGER LITTLE BEAVER
33 24 MISC 14 HYDRAULIC JACKS MISC.
33 17 8 14 JACKSTANDS
4 2 1 14 LADDER - 10' STEP
4 1 1 14 LADDER - 12' STEP
4 4 5 14 LADDER - 16' EXTENSION
4 3 1 14 LADDER - 20' EXTENSION
3 32 4 14 LADDER - 8' STEP
35 3 1 14 MATIKA DRILL
33 8 1 14 MANUAL HAND PUMP 55 GAL DRUM
36 33 MISC 14 MISC. HAND TOOLS
30 18 1 14 PICK AXE #22
4 18 MISC 14 ASSORTED
4 6 MISC 14 SHOVELS, RAKES, BROOMS - ASSORTED
35 16 1 14 SKIL 6" BENCH GRINDER
35 7 1 14 SKIL CORDLESS DRILL
4 14 MISC 14 ASSORTED
35 31 1 14 TRIPOD VICE
33 30 1 14 VACUUM PUMP BECKER PUMP
4 5 4 14 WHEEL BARROW
33 25 4 14 WRENCHES
5 15 MISC MISC 15 BOOTIES - ALL TYPES
6 14 MISC MISC 15 CARTRIDGES - ALL TYPES
5 18 MISC MISC 15 COVERALLS - ALL TYPES
6 1 MISC MISC 15 GLOVES - ALL TYPES
5 10 MISC MISC 15 LEVEL A & B PROTECTIVE GEAR
LEVEL C PROTECTIVE GEAR (INCLUDES TYVEK, BOOTS, HARD
HATS, GOGGLES (OR EQUIVALENT), NITRILE GLOVES,
DISPOSABLE GLOVE LINERS, AIR PURIFYING RESPIRATORS
5 11 MISC MISC 15 (APR) W/CARTRIDGES AND EAR PLUGS)
LEVEL D PROTECTIVE GEAR (INCLUDES ALL OF THE ABOVE
5 12 MISC MISC 15 EXCEPT APR'S)
5 17 5 1239LA 15 PVC STEEL TOES BOOTS
5 34 MISC MISC 15 RAINGEAR - ASSORTED
6 23 2 1111LA 15 RESPIRATOR - 1/2 FACE
6 25 9 1112LA 15 RESPIRATOR - FULL FACE
6 20 7 1109LA 15 RESPIRATOR LENS COVER
</TABLE>
9
<PAGE> 34
15 Pages EXHIBIT A
<TABLE>
<CAPTION>
GRP
PG # QTY. ITEM NO. CODE DESCRIPTION LOCATION COMMENTS
- --- ---- ----- -------- --- ------------------------------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
5 30 MISC MISC 15 TYVEK -ALL SIZES
5 39 MISC 1151LA 15 WORK VEST
15 19 1 16 12 DIGIT CALC W/TAPE SHARP EL21976II ROOM 1
31 1 1 16 12" X 12" SPEAKER #23
40 11 1 16 14" SVGA MONITOR #TBD STORAGE
40 12 1 16 14" SVGA MONITOR #TBD STORAGE
40 13 1 16 14" SVGA MONITOR #TBD STORAGE
40 14 1 16 14" SVGA MONITOR #TBD STORAGE
40 15 1 16 14" SVGA MONITOR #TBD STORAGE
40 16 1 16 14" SVGA MONITOR #TBD STORAGE
40 17 1 16 14" SVGA MONITOR #TBD STORAGE
40 4 1 16 19" MONITOR HP ULTRA VGA 1600 #JP54317593 GIS/CADD
16 25 1 16 40X MAX COMPUTER ROOM 7
27 22 1 16 586-100/16/1000 #504008 #20
27 20 1 16 586-100/16/833 PROSYSTEMS 08521 #20
27 21 1 16 586-150/16/1585 #AZ01 #20
17 17 1 16 ACER MONITOR ROOM 7
22 28 1 16 A-MATIC MOUSE 921678011 #6
31 20 1 16 BACKUP TAPE HP SURE STORE TAPE 5000 #24
20 34 1 16 CALCULATOR ROOM 21
21 13 1 16 CALCULATOR CASIO DL-220 #1232539 RECEPTION
14 1 1 16 CALCULATOR SHARP EL1197GII 21
20 32 1 16 CANNON P120DH CALCULATOR ROOM 21
34 30 1 16 CASIO CALCULATOR
20 9 1 16 CASIO CALCULATOR HD DL22OR ROOM 21
31 26 1 16 CD PLAYER TEAC PD-D860 #24
40 2 1 16 CD-ROM WRITER MICRONET MCDPRO/ADD #K507209 GIS/CADD
17 3 1 16 CMAX COMPUTER W/ZIP ROOM 7
15 21 1 16 COMP.MOITOR - SCEPTRE ROOM 1
17 16 1 16 COMPUTER ROOM 7
17 23 1 16 COMPUTER ROOM 7
19 27 1 16 COMPUTER ROOM 19
38 1 1 16 COMPUTER COOPER, MONICA INT 56K; 44XCDROM; INT
100MB ZIP
38 3 1 16 COMPUTER GLAZER, DEAN NIC
38 4 1 16 COMPUTER IKEMOTO, RICK 32X CD-R0M
14.4 INT MODEM; 8X
CD-ROM;
38 5 1 16 COMPUTER OPEN SLOW ON NETWORK
38 6 1 16 COMPUTER SMITH, MARY PAT 8X CD-ROM, INT 28.8 MODEM
38 7 1 16 COMPUTER FILE SERVER EXT HP 5000 TAPE BACKUP
& CD ROM
38 8 1 16 COMPUTER NUSENOW, MATT ROM
38 9 1 16 COMPUTER NUSENOW, MATT 14.4 INT. MODEM
38 10 1 16 COMPUTER PO STATION PANASONIC KX P2135 DOT
MATRIX PRINTER
38 11 1 16 COMPUTER MASSOUD, RAY
38 12 1 16 COMPUTER EDMUND, BILL 14.4 INT. MODEM
38 13 1 16 COMPUTER OPEN 14.4 INT. MODEM
38 14 1 16 COMPUTER ISLAS, MICHELLE 56K INT. MODEM
38 15 1 16 COMPUTER OPEN FORMER FOSTER
38 16 1 16 COMPUTER SALCEDO, VICTOR 461 MB IN BAD SECTORS
38 17 1 16 COMPUTER OPEN FORMER NAFARRETE
38 18 1 16 COMPUTER RECEPTIONIST 56K INT MODEM
38 19 1 16 COMPUTER INTERNET 33.6 EXTERNAL MODEM
LOST CONNECTION; MISSING
38 20 1 16 COMPUTER GIS LINK TO DATABASE
38 21 1 16 COMPUTER SCANNER SCANNER, WRITEABLE CD-ROM
38 22 1 16 COMPUTER BEDOY, DARRYL 28.8 INT. MODEM,
CD-ROM4X4
38 23 1 16 COMPUTER OPEN FORMER JOHSON STATION
38 24 1 16 COMPUTER COTTON, MAUREEN 28.8 INT MODEM
38 25 1 16 COMPUTER MUNOZ, LAURA 28.8 INT MODEM
38 26 1 16 COMPUTER OPEN FORMER MARKET
38 27 1 16 COMPUTER MARKETING EXT. HP SCANJETT II; 40X
CDROM
38 28 1 16 COMPUTER GILBERT, KEITH 33.6 EXT. MODEM, CD-ROM
38 29 1 16 COMPUTER OPEN 14.4 INT. MODEM, CD-ROM
38 30 1 16 COMPUTER SONES,PAUL 28.8 INT. MODEM, CD-ROM
38 31 1 16 COMPUTER DADPOUR, BRUCE 14.4 EXT. MODEM, CD-ROM
38 32 1 16 COMPUTER ENGINEERING 14.4 INT. MODEM
W/DIRECTSOFT
38 33 1 16 COMPUTER MANNING, BRIAN PORTABLE09-WINBOOK,
DOCKING STATION
PORTABLE 11 - WINBOOK,
HAS BOOT PROBLEMS; UNABLE
38 34 1 16 COMPUTER PORTABLE11 TO READ A: DRIVE; DS2
38 35 1 16 COMPUTER ALBERTSON, MIKE PORTABLE08-WINBOOK,
DOCKING STATION
38 36 1 16 COMPUTER PORTABLE05 PORTABLE05 - WINBOOK;
PLC5; DS1
38 37 1 16 COMPUTER BEDOY, DAYRRL PORTABLE02 - TOSHIBA
38 38 1 16 COMPUTER MANNING, BRIAN PORTABLE04 - WINBOOK;
TIMBERLINE; DS1
38 39 1 16 COMPUTER STAND BY UPSTAIRS
38 40 1 16 COMPUTER FORMER SERVER FORMER FILE SERVER
38 41 1 16 COMPUTER PCANYWHERE 33.6 EXT. MODEM
38 42 1 16 COMPUTER STAND BY UPSTAIRS, 14.4 INT. MODEM
DOS 6.22
</TABLE>
10
<PAGE> 35
15 Pages EXHIBIT A
<TABLE>
<CAPTION>
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
GRP
PG # QTY. ITEM NO. CODE DESCRIPTION LOCATION COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
38 43 1 16 COMPUTER STAND BY FORMER MILLER STATION
- ------------------------------------------------------------------------------------------------------------------------------------
38 44 1 16 COMPUTER STAND BY UPSTAIRS, DOS 5.0
- ------------------------------------------------------------------------------------------------------------------------------------
38 45 1 16 COMPUTER STAND BY UPSTAIRS, EISA, SCSI, DOS 5.0
- ------------------------------------------------------------------------------------------------------------------------------------
38 46 1 16 COMPUTER SURPLUS
- ------------------------------------------------------------------------------------------------------------------------------------
UPSTAIRS, MAY NEED NEW
38 47 1 16 COMPUTER STAND BY HARD DRIVE
- ------------------------------------------------------------------------------------------------------------------------------------
PORTABLE07 - WINBOOK, ENG
38 48 1 16 COMPUTER PORTABLE07 SYSTEM PROGRAMS; DS2
- ------------------------------------------------------------------------------------------------------------------------------------
PORTABLE03 - WINBOOK,
MONOCHROME, POWER FAILURE -
38 49 1 16 COMPUTER PORTABLE03 DO NOT USE
- ------------------------------------------------------------------------------------------------------------------------------------
38 50 1 16 COMPUTER SURPLUS
- ------------------------------------------------------------------------------------------------------------------------------------
38 51 1 16 COMPUTER SURPLUS
- ------------------------------------------------------------------------------------------------------------------------------------
38 52 1 16 COMPUTER SURPLUS
- ------------------------------------------------------------------------------------------------------------------------------------
38 53 1 16 COMPUTER SURPLUS
- ------------------------------------------------------------------------------------------------------------------------------------
38 54 1 16 COMPUTER SURPLUS
- ------------------------------------------------------------------------------------------------------------------------------------
38 55 1 16 COMPUTER SMITH, KEVIN
- ------------------------------------------------------------------------------------------------------------------------------------
38 56 1 16 COMPUTER SURPLUS
- ------------------------------------------------------------------------------------------------------------------------------------
38 57 1 16 COMPUTER LAB CHROMATOGRAM
- ------------------------------------------------------------------------------------------------------------------------------------
18 21 1 16 COMPUTER - PENTIUM ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
18 28 1 16 COMPUTER - PENTIUM ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
18 9 1 16 COMPUTER (SERVER) FIERY 2X6 ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
28 17 1 16 COMPUTER SPEAKERS HI-TEX CP-18 #20
- ------------------------------------------------------------------------------------------------------------------------------------
40 5 1 16 CONCENTRATOR HUB SYNOPTICS LATTIS HUB 280 # TBD FILE SERVER
- ------------------------------------------------------------------------------------------------------------------------------------
40 6 1 16 CONCENTRATOR HUB SYNOPTICS LATTIS HUB 280 # TBD FILE SERVER
- ------------------------------------------------------------------------------------------------------------------------------------
40 7 1 16 CONCENTRATOR HUB SYNOPTICS LATTIS HUB 280 # TBD FILE SERVER
- ------------------------------------------------------------------------------------------------------------------------------------
40 8 1 16 CONCENTRATOR HUB SYNOPTICS LATTIS HUB 280 # TBD FILE SERVER
- ------------------------------------------------------------------------------------------------------------------------------------
40 9 1 16 CONCENTRATOR HUB SYNOPTICS LATTIS HUB 280 # TBD FILE SERVER
- ------------------------------------------------------------------------------------------------------------------------------------
29 30 1 16 COPIER XEROX 230ST #20
- ------------------------------------------------------------------------------------------------------------------------------------
23 22 1 16 COPIER XEROX 5895 #17
- ------------------------------------------------------------------------------------------------------------------------------------
18 35 1 16 COPY MACHINE HP DESK JET 1200C/PS ROOM 19
- ------------------------------------------------------------------------------------------------------------------------------------
14 8 1 16 COPY MACHINE SHARP SF-7750 23
- ------------------------------------------------------------------------------------------------------------------------------------
18 34 3 16 COPY MACHINES HP LASER JET 4 PLUS ROOM 19
- ------------------------------------------------------------------------------------------------------------------------------------
23 35 1 16 CPU UNIT #17
- ------------------------------------------------------------------------------------------------------------------------------------
22 31 1 16 CPU UNIT #0101432X5 #6
- ------------------------------------------------------------------------------------------------------------------------------------
21 18 1 16 CPU UNIT 08606 PROSYSTEMS RECEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
26 19 1 16 CPU UNIT 1994 #0901286X4 #18
- ------------------------------------------------------------------------------------------------------------------------------------
27 17 1 16 CPU UNIT 33/4/209 #0101051X4 #20
- ------------------------------------------------------------------------------------------------------------------------------------
27 18 1 16 CPU UNIT 33/4/333 #0501183X4 #20
- ------------------------------------------------------------------------------------------------------------------------------------
27 16 1 16 CPU UNIT 33/8/333 #0501188X4 #20
- ------------------------------------------------------------------------------------------------------------------------------------
25 24 1 16 CPU UNIT 486 #13
- ------------------------------------------------------------------------------------------------------------------------------------
27 13 1 16 CPU UNIT 486-33/4/209 #0101052X4 #20
- ------------------------------------------------------------------------------------------------------------------------------------
27 15 1 16 CPU UNIT 486-33/4/532 #0101053X4 #20
- ------------------------------------------------------------------------------------------------------------------------------------
27 12 1 16 CPU UNIT 486-33/8/209 #1479 #20
- ------------------------------------------------------------------------------------------------------------------------------------
27 11 1 16 CPU UNIT 486-66 #20
- ------------------------------------------------------------------------------------------------------------------------------------
27 14 1 16 CPU UNIT 486-66/43/C:831 #0301167X4 #20
- ------------------------------------------------------------------------------------------------------------------------------------
29 16 1 16 CPU UNIT 586 PROSYSTEMS #20
- ------------------------------------------------------------------------------------------------------------------------------------
29 5 1 16 CPU UNIT 586/100 PROSYSTEMS #20
- ------------------------------------------------------------------------------------------------------------------------------------
26 34 1 16 CPU UNIT 586-100/9/640 MACRO TECHNOLOGIES #18
- ------------------------------------------------------------------------------------------------------------------------------------
31 7 1 16 CPU UNIT 586-90/16/1800 #23
- ------------------------------------------------------------------------------------------------------------------------------------
31 19 1 16 CPU UNIT ALPHA MICROSYSTEMS #24
- ------------------------------------------------------------------------------------------------------------------------------------
23 17 1 16 CPU UNIT AMERICAN SYSTEC PENTIUM ASC078 #016925 #8
- ------------------------------------------------------------------------------------------------------------------------------------
28 25 1 16 CPU UNIT MAGITRONIC #20
- ------------------------------------------------------------------------------------------------------------------------------------
29 19 1 16 CPU UNIT PENTIUM #20
- ------------------------------------------------------------------------------------------------------------------------------------
31 18 1 16 CPU UNIT STRATEGY VOICE PROCESSING #24
- ------------------------------------------------------------------------------------------------------------------------------------
24 2 1 16 DOT MATRIZ PRINTER #17
- ------------------------------------------------------------------------------------------------------------------------------------
18 31 1 16 ELEC. DRAWING BOARD ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
21 32 1 16 ELECTAGRAPHIC III PLUS PROJECTOR - KODAK #A-615015 CONF. ROOM
- ------------------------------------------------------------------------------------------------------------------------------------
18 19 1 16 ELECTRONIC DRAWING TABLET HURTA XGT ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
26 29 1 16 ELETRONIC TYPEWRITER IBM WHEELWRITER 3 #18
- ------------------------------------------------------------------------------------------------------------------------------------
21 9 1 16 ELETRONIC TYPEWRITER IBM WHEELWRITER SERIES II #102126 RECEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
30 22 1 16 ELECTRONIC TYPEWRITER SILVER REED EZ50 #23
- ------------------------------------------------------------------------------------------------------------------------------------
16 29 1 16 EVERVIEW MONITOR ROOM 7
- ------------------------------------------------------------------------------------------------------------------------------------
18 26 1 16 EXTERNAL CD DRIVE MICRONET MASTER CD 4X ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
18 18 1 16 EXTERNAL POWER CONVERTER ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
20 15 1 16 FAX MODEM - US ROBOTICS 33.6 ROOM 21
- ------------------------------------------------------------------------------------------------------------------------------------
31 21 1 16 FILE SERVER AIR PROVESIA #24
- ------------------------------------------------------------------------------------------------------------------------------------
31 22 1 16 FILE SERVER AIR PROVESIA #24
- ------------------------------------------------------------------------------------------------------------------------------------
27 19 1 16 FILE SERVER COLORADO 350 #20
- ------------------------------------------------------------------------------------------------------------------------------------
18 25 1 16 FLAT TOP SCANNER - MICROTEK SCANMAKER III ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
18 14 1 16 HP COMPUTER VECTA XU ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
17 19 1 16 HP COPIER LASERJET 4 PLUS ROOM 7
- ------------------------------------------------------------------------------------------------------------------------------------
18 10 1 16 HP DESIGN JET 650C COPY MACHINE ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
16 4 1 16 KEYBOARD ROOM 2
- ------------------------------------------------------------------------------------------------------------------------------------
17 4 1 16 KEYBOARD ROOM 7
- ------------------------------------------------------------------------------------------------------------------------------------
17 6 1 16 KEYBOARD ROOM 7
- ------------------------------------------------------------------------------------------------------------------------------------
18 4 1 16 KEYBOARD ROOM 10
- ------------------------------------------------------------------------------------------------------------------------------------
18 15 1 16 KEYBOARD ROOM 12
====================================================================================================================================
</TABLE>
11
<PAGE> 36
15 Pages EXHIBIT A
<TABLE>
<CAPTION>
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
GRP
Pg # QTY. ITEM NO. CODE DESCRIPTION LOCATION COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
18 22 1 16 KEYBOARD ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
18 29 1 16 KEYBOARD ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
19 10 1 16 KEYBOARD ROOM 19
- ------------------------------------------------------------------------------------------------------------------------------------
19 29 1 16 KEYBOARD ROOM 19
- ------------------------------------------------------------------------------------------------------------------------------------
20 4 1 16 KEYBOARD ROOM 21
- ------------------------------------------------------------------------------------------------------------------------------------
20 13 1 16 KEYBOARD ROOM 21
- ------------------------------------------------------------------------------------------------------------------------------------
25 19 1 16 KEYBOARD #13
- ------------------------------------------------------------------------------------------------------------------------------------
27 28 1 16 KEYBOARD #20
- ------------------------------------------------------------------------------------------------------------------------------------
23 33 1 16 KEYBOARD - FEDEX POWERSHIP #17
- ------------------------------------------------------------------------------------------------------------------------------------
25 25 1 16 KEYBOARD #00078804 #13
- ------------------------------------------------------------------------------------------------------------------------------------
31 16 1 16 KEYBOARD #C950538907 #24
- ------------------------------------------------------------------------------------------------------------------------------------
31 15 1 16 KEYBOARD #J964115316 #24
- ------------------------------------------------------------------------------------------------------------------------------------
30 10 1 16 KEYBOARD #J964134511 #22
- ------------------------------------------------------------------------------------------------------------------------------------
23 18 1 16 KEYBOARD #K743807292 #8
- ------------------------------------------------------------------------------------------------------------------------------------
29 3 1 16 KEYBOARD #T202050941 #20
- ------------------------------------------------------------------------------------------------------------------------------------
31 23 1 16 KEYBOARD AIR PROVEISIA #24
- ------------------------------------------------------------------------------------------------------------------------------------
22 29 1 16 KEYBOARD CE C66134117 #6
- ------------------------------------------------------------------------------------------------------------------------------------
28 14 1 16 KEYBOARD FKB4600 #H2108149 #20
- ------------------------------------------------------------------------------------------------------------------------------------
24 16 1 16 KEYBOARD LITE ON SK300RN #C941219519 #11
- ------------------------------------------------------------------------------------------------------------------------------------
29 10 1 16 KEYBOARD NEC 855501162M #20
- ------------------------------------------------------------------------------------------------------------------------------------
21 17 1 16 KEYBOARD NMB TECHNOLOGIES MODEL RT8255CWT #B2150582 RECEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
26 33 1 16 KEYBOARD RT82555 #B2151202 #18
- ------------------------------------------------------------------------------------------------------------------------------------
26 21 1 16 KEYBOARD RT8255C+ #A1652381 #18
- ------------------------------------------------------------------------------------------------------------------------------------
31 6 1 16 KEYBOARD RT8255CWT #B2151253 #23
- ------------------------------------------------------------------------------------------------------------------------------------
28 8 1 16 KEYBOARD SK-3000RN #C941219565 #20
- ------------------------------------------------------------------------------------------------------------------------------------
15 23 1 16 KEYBOARD W/MOUSE ROOM 1
- ------------------------------------------------------------------------------------------------------------------------------------
16 12 1 16 KEYBOARD W/MOUSE ROOM 5
- ------------------------------------------------------------------------------------------------------------------------------------
17 18 1 16 KEYBOARD W/MOUSE ROOM 7
- ------------------------------------------------------------------------------------------------------------------------------------
17 24 1 16 KEYBOARD W/MOUSE ROOM 7
- ------------------------------------------------------------------------------------------------------------------------------------
19 35 1 16 KEYBOARDS ROOM 19
- ------------------------------------------------------------------------------------------------------------------------------------
20 35 1 16 LAPTOP W/DISK DRIVE (WINBOOK XP) ROOM 21
- ------------------------------------------------------------------------------------------------------------------------------------
25 12 1 16 LAPTOP COMPUTER WINBOOK XP ANL-4 #10AUA00693 #13
- ------------------------------------------------------------------------------------------------------------------------------------
25 22 1 16 LAPTOP HOLDER ASE TECHNOLOGIES D2 #13
- ------------------------------------------------------------------------------------------------------------------------------------
27 27 1 16 LAPTOP HOLDER ASE TECHNOLOGIES D3I #1195410110 #20
- ------------------------------------------------------------------------------------------------------------------------------------
30 12 1 16 LAPTOP HOLDER ASE TECHNOLOGY #22
- ------------------------------------------------------------------------------------------------------------------------------------
25 21 1 16 LAPTOP WINBOOK XP5 ANL-4 #13
- ------------------------------------------------------------------------------------------------------------------------------------
18 12 1 16 LARGE WORK STATION - 3 WALLS ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
21 16 1 16 LOGITECH MOUSE LZA50414146 RECEPTION
- ------------------------------------------------------------------------------------------------------------------------------------
18 3 1 16 MAGITRONIC COMPUTER ROOM 10
- ------------------------------------------------------------------------------------------------------------------------------------
16 30 1 16 MICROSOFT KEYBOARD ROOM 7
- ------------------------------------------------------------------------------------------------------------------------------------
23 15 1 16 MICROSOFT MOUSE #05936610 #8
- ------------------------------------------------------------------------------------------------------------------------------------
28 24 1 16 MODEM US ROBOTICS SPORTSTER 33.6 #20
- ------------------------------------------------------------------------------------------------------------------------------------
MODEM US ROBOTICS SPORTSTER 33.6 FAX MODEM
25 23 1 16 #0008390262024123 #13
- ------------------------------------------------------------------------------------------------------------------------------------
17 25 1 16 MONITOR ROOM 7
- ------------------------------------------------------------------------------------------------------------------------------------
18 6 1 16 MONITOR ROOM 10
- ------------------------------------------------------------------------------------------------------------------------------------
18 24 1 16 MONITOR ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
23 34 1 16 MONITOR #17
- ------------------------------------------------------------------------------------------------------------------------------------
19 12 1 16 MONITOR - ORCHESTRA TRUMPET 14" ROOM 19
- ------------------------------------------------------------------------------------------------------------------------------------
16 13 1 16 MONITOR - SOCOS ROOM 5
- ------------------------------------------------------------------------------------------------------------------------------------
29 2 1 16 MONITOR 14" 1987 ARCUS DCM-1589 #20
- ------------------------------------------------------------------------------------------------------------------------------------
27 3 1 16 MONITOR 14" 1991 AAMAZING CM8428SX # 10704066 #18
- ------------------------------------------------------------------------------------------------------------------------------------
27 30 1 16 MONITOR 14" 1995 MIKRO ELECTRONICS #20
- ------------------------------------------------------------------------------------------------------------------------------------
29 12 1 16 MONITOR 14" EVERVIEW #20
- ------------------------------------------------------------------------------------------------------------------------------------
31 13 1 16 MONITOR 14" LOADING TECHNOLOGY #24
- ------------------------------------------------------------------------------------------------------------------------------------
25 26 1 16 MONITOR 14" ORCHESTRA 1994 TRUMPET #KL44347 #13
- ------------------------------------------------------------------------------------------------------------------------------------
30 11 1 16 MONITOR 14" PACKARD BELL #92465466 #22
- ------------------------------------------------------------------------------------------------------------------------------------
23 14 1 16 MONITOR 14" SPECTRE 1995 #8
- ------------------------------------------------------------------------------------------------------------------------------------
26 18 1 16 MONITOR 14" SPECTRE 1996 #18
- ------------------------------------------------------------------------------------------------------------------------------------
31 14 1 16 MONITOR 14" TRUMPET 14 #24
- ------------------------------------------------------------------------------------------------------------------------------------
31 4 1 16 MONITOR 15" 1995 GM #CX-2158D6 #23
- ------------------------------------------------------------------------------------------------------------------------------------
26 32 1 16 MONITOR 15" GOLDSTAR 1505 #257B5B01847A #18
- ------------------------------------------------------------------------------------------------------------------------------------
25 20 1 16 MONITOR 15" GOLDSTAR 1995 1505 #257B8B01898A #13
- ------------------------------------------------------------------------------------------------------------------------------------
24 15 1 16 MONITOR GOLDSTAR 1995 1505 #257353011712A #11
- ------------------------------------------------------------------------------------------------------------------------------------
28 7 1 16 MONITOR MAGNAVOX CM2015D1 #54791402 #20
- ------------------------------------------------------------------------------------------------------------------------------------
22 30 1 16 MONITOR NEC MULTISYNC 4D #6
- ------------------------------------------------------------------------------------------------------------------------------------
19 28 1 16 MONITOR ORCHESTRA TRUMP 14" ROOM 19
- ------------------------------------------------------------------------------------------------------------------------------------
20 3 1 16 MONITOR SCEPTRE 14" ROOM 21
- ------------------------------------------------------------------------------------------------------------------------------------
18 17 1 16 MONITOR VIEW SCENIC 17GS ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
17 7 1 16 MOUSE ROOM 7
- ------------------------------------------------------------------------------------------------------------------------------------
18 5 1 16 MOUSE ROOM 10
- ------------------------------------------------------------------------------------------------------------------------------------
18 16 1 16 MOUSE ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
18 23 1 16 MOUSE ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
18 30 1 16 MOUSE ROOM 12
- ------------------------------------------------------------------------------------------------------------------------------------
19 11 1 16 MOUSE ROOM 19
- ------------------------------------------------------------------------------------------------------------------------------------
19 30 1 16 MOUSE ROOM 19
====================================================================================================================================
</TABLE>
12
<PAGE> 37
EXHIBIT A
<TABLE>
<CAPTION>
===================================================================================================================================
Grp
Pg # Qty. Item No. Code Description Location Comments
- --- ---- ----- -------- ---- ------------------------------------------------------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
20 5 1 16 MOUSE ROOM 21
- -----------------------------------------------------------------------------------------------------------------------------------
20 14 1 16 MOUSE ROOM 21
- -----------------------------------------------------------------------------------------------------------------------------------
25 18 1 16 MOUSE #13
- -----------------------------------------------------------------------------------------------------------------------------------
16 31 1 16 MOUSE DEXXA ROOM 7
- -----------------------------------------------------------------------------------------------------------------------------------
26 20 1 16 MOUSE DEXXA #LC2942006943 #18
- -----------------------------------------------------------------------------------------------------------------------------------
29 4 1 16 MOUSE DEXXA #LC4543012511 #20
- -----------------------------------------------------------------------------------------------------------------------------------
27 25 1 16 MOUSE DEXXA 1995 #20
- -----------------------------------------------------------------------------------------------------------------------------------
29 9 1 16 MOUSE DEXXA LC2541010112 #20
- -----------------------------------------------------------------------------------------------------------------------------------
26 31 1 16 MOUSE LOGITECH #LU269004814 #18
- -----------------------------------------------------------------------------------------------------------------------------------
28 20 1 16 MOUSE MICROSOFT 2.0A #20
- -----------------------------------------------------------------------------------------------------------------------------------
25 27 2 16 MOUSE MICROSOFT 2.0A #06314477 #13
- -----------------------------------------------------------------------------------------------------------------------------------
16 3 1 16 NETWORK HOOKUP FOR LAPTOP ROOM 2
- -----------------------------------------------------------------------------------------------------------------------------------
21 30 1 16 OVERHEAD PROJECTOR 3M IMAGE SYSTEMS 2000 AG CONF. ROOM
- -----------------------------------------------------------------------------------------------------------------------------------
19 9 1 16 PENTIUM COMPUTER ROOM 19
- -----------------------------------------------------------------------------------------------------------------------------------
23 36 1 16 POWER PROTECTOR #17
- -----------------------------------------------------------------------------------------------------------------------------------
20 17 1 16 PRINTER - HP LASER JET SERIES II ROOM 21
- -----------------------------------------------------------------------------------------------------------------------------------
20 8 1 16 PRINTER - PANASONIC KXP2135 COLOR ROOM 21
- -----------------------------------------------------------------------------------------------------------------------------------
39 1 1 16 PRINTER HP 1200C/PS #USA3B12015 BULLPEN
- -----------------------------------------------------------------------------------------------------------------------------------
39 2 1 16 PRINTER HP 1200C/PS #USA3C05700 STORAGE
- -----------------------------------------------------------------------------------------------------------------------------------
27 7 1 16 PRINTER HP LASERJET 4 PLUS #JPGX263825 #18
- -----------------------------------------------------------------------------------------------------------------------------------
23 13 1 16 PRINTER HP LASERJET 4 PLUS C2037A #JPGX227829 #8
- -----------------------------------------------------------------------------------------------------------------------------------
29 24 1 16 PRINTER HP LASERJET 4SI #20
- -----------------------------------------------------------------------------------------------------------------------------------
39 6 1 16 PRINTER HP4PLUS #JPGH024370 MARKETING
- -----------------------------------------------------------------------------------------------------------------------------------
39 3 1 16 PRINTER HP4PLUS #JPGJ011235 BULLPEN
- -----------------------------------------------------------------------------------------------------------------------------------
39 4 1 16 PRINTER HP4PLUS #JPGK077740 BULLPEN
- -----------------------------------------------------------------------------------------------------------------------------------
39 5 1 16 PRINTER HP4PLUS #JPGK092652 BULLPEN
- -----------------------------------------------------------------------------------------------------------------------------------
39 9 1 16 PRINTER HP4PLUS #JPGK227829 WORD PROCESSING
- -----------------------------------------------------------------------------------------------------------------------------------
39 7 1 16 PRINTER HP4PLUS #JPGK263825 ESTIMATOR
- -----------------------------------------------------------------------------------------------------------------------------------
39 8 1 16 PRINTER HP4PLUS #TBD STORAGE
- -----------------------------------------------------------------------------------------------------------------------------------
39 10 1 16 PRINTER HP4PSi #USDB346096 BULLPEN
- -----------------------------------------------------------------------------------------------------------------------------------
39 11 1 16 PRINTER HP560C #US4C61C08T STORAGE
- -----------------------------------------------------------------------------------------------------------------------------------
39 14 1 16 PRINTER HP650C #TBD STORAGE
- -----------------------------------------------------------------------------------------------------------------------------------
39 13 1 16 PRINTER HP650C #USA4201952 CADD/GIS
- -----------------------------------------------------------------------------------------------------------------------------------
39 12 1 16 PRINTER HPLASERJET 6P #TBD STORAGE
- -----------------------------------------------------------------------------------------------------------------------------------
39 15 1 16 PRINTER HPLASERJET II #TBD WAREHOUSE
- -----------------------------------------------------------------------------------------------------------------------------------
39 16 1 16 PRINTER HPLASERJET II #TBD STORAGE
- -----------------------------------------------------------------------------------------------------------------------------------
39 17 1 16 PRINTER HPLASERJET II #TBD STORAGE
- -----------------------------------------------------------------------------------------------------------------------------------
39 18 1 16 PRINTER HPLASERJET II #TBD STORAGE
- -----------------------------------------------------------------------------------------------------------------------------------
39 19 1 16 PRINTER HPLASERJET II #TBD ZIA
- -----------------------------------------------------------------------------------------------------------------------------------
39 20 1 16 PRINTER PANASONIC KX P2135 PO STATION
- -----------------------------------------------------------------------------------------------------------------------------------
27 4 1 16 PRINTING CALCULATOR CASIO FR - 12155 #4235516 #18
- -----------------------------------------------------------------------------------------------------------------------------------
36 16 1 16 PRINTING CALCULATORS CANON P20-DX
- -----------------------------------------------------------------------------------------------------------------------------------
15 18 1 16 PRO SYSTEMS COMPUTER ROOM 1
- -----------------------------------------------------------------------------------------------------------------------------------
16 11 1 16 PRO SYSTEMS COMPUTER ROOM 5
- -----------------------------------------------------------------------------------------------------------------------------------
20 11 1 16 PRO SYSTEMS COMPUTER ROOM 21
- -----------------------------------------------------------------------------------------------------------------------------------
20 2 1 16 PRO SYSTEMS PC ROOM 21
- -----------------------------------------------------------------------------------------------------------------------------------
31 27 1 16 RADIO PLAYER LABORATORY STANDARD #24
- -----------------------------------------------------------------------------------------------------------------------------------
20 12 1 16 SAMSUNG MONITOR ROOM 21
- -----------------------------------------------------------------------------------------------------------------------------------
16 24 1 16 SCANNER (FLAT TOP) HP SCANJET IICX ROOM 7
- -----------------------------------------------------------------------------------------------------------------------------------
40 3 1 16 SCANNER HP SCANJET II CX #3414A78321 MARKETING
- -----------------------------------------------------------------------------------------------------------------------------------
40 1 1 16 SCANNER SCANMAKER II #S59760110A GIS/CADD
- -----------------------------------------------------------------------------------------------------------------------------------
15 15 1 16 SMALL COPY MACHINE - XEROX 7042 #E139751T ROOM 1
- -----------------------------------------------------------------------------------------------------------------------------------
23 12 1 16 SMITH CORONA ELECTRIC TYPEWRITER #713541 #8
- -----------------------------------------------------------------------------------------------------------------------------------
21 15 1 16 SPECTRE MONITOR RECEPTION
- -----------------------------------------------------------------------------------------------------------------------------------
28 16 1 16 SPECTRE MONITOR 15" #20
- -----------------------------------------------------------------------------------------------------------------------------------
30 26 1 16 SURGE PROTECTOR #23
- -----------------------------------------------------------------------------------------------------------------------------------
40 10 1 16 TAPE BACKUP HP SURESTORE TAPE 5000 #TBD FILE SERVER
- -----------------------------------------------------------------------------------------------------------------------------------
22 17 1 16 TEXAS INSTRUMENTS CALCULATOR TI-5032 #4
- -----------------------------------------------------------------------------------------------------------------------------------
27 26 1 16 TOSHIBA PHONE EXT 6520-H #20
- -----------------------------------------------------------------------------------------------------------------------------------
21 29 1 16 TV W/VCR BUILT IN 15" PANANSONIC W/REMOTE CONF. ROOM
- -----------------------------------------------------------------------------------------------------------------------------------
30 27 1 16 TYPEWRITER IBM CORRECTING SELECTRIC III #23
- -----------------------------------------------------------------------------------------------------------------------------------
31 17 1 16 UNION SURGE PROTECTOR #24
- -----------------------------------------------------------------------------------------------------------------------------------
UNIT YOU PLUG LAPTOP INTO SO YOU CAN SEE MONITORE - ASE
24 17 1 16 TECHNOLOGIES D2 #C5525 #11
- -----------------------------------------------------------------------------------------------------------------------------------
17 5 1 16 VIEWSONIC MONITOR W/EXT SPEAKER ROOM 7
- -----------------------------------------------------------------------------------------------------------------------------------
18 8 1 T 800 16 XEROX 5150 COPY MACHINE ROOM 12 52K312912
- -----------------------------------------------------------------------------------------------------------------------------------
17 21 1 16 XEROX FAX MACHINE 7042 ROOM 7
- -----------------------------------------------------------------------------------------------------------------------------------
16 26 1 16 ZIP DRIVE - IOMEGA ZIP 100 ROOM 7
- -----------------------------------------------------------------------------------------------------------------------------------
17 8 1 17 9 BUTTON PHONE TOSHIBA ROOM 7
- -----------------------------------------------------------------------------------------------------------------------------------
16 14 1 17 9 BUTTON PHONE W/DISPLAY TOSHIBA ROOM 5
- -----------------------------------------------------------------------------------------------------------------------------------
20 6 1 17 9 BUTTON PHONE W/DISP ROOM 21
- -----------------------------------------------------------------------------------------------------------------------------------
19 8 1 17 9 BUTTON PHONE W/DISP ROOM 19
- -----------------------------------------------------------------------------------------------------------------------------------
19 23 1 17 9 BUTTON PHONE W/DISPLAY ROOM 19
- -----------------------------------------------------------------------------------------------------------------------------------
15 20 1 17 9 BUTTON PHONE W/DISPLAY TOSHIBA ROOM 1
- -----------------------------------------------------------------------------------------------------------------------------------
16 27 1 17 9 BUTTON PHONE W/DISPLAY TOSHIBA ROOM 7
- -----------------------------------------------------------------------------------------------------------------------------------
14 15 2 17 9 BUTTON PHONES TOSHIBA UPSTAIRS
===================================================================================================================================
</TABLE>
13
<PAGE> 38
15 Pages
EXHIBIT A
<TABLE>
<CAPTION>
GRP
PG # QTY ITEM NO. CODE DESCRIPTION LOCATION COMMENTS
-- -- --- -------- ---- --------------------------------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
19 17 1 17 9 BUTTON TOSHIBA PHONE ROOM 19
19 33 1 17 9 BUTTON TOSHIBA PHONE ROOM 19
20 19 1 17 9 BUTTON TOSHIBA PHONE ROOM 21
18 27 1 17 9 BUTTON TOSHIBA PHONE (WHITE) ROOM 12
20 23 1 17 9 BUTTON TOSHIBA PHONE W/DISP ROOM 21
20 31 1 17 9 BUTTON TOSHIBA PHONE W/DISP ROOM 21
17 20 1 17 9 BUTTON TOSHIBA PHONE W/DISP. ROOM 7
19 5 1 17 9 BUTTON TOSHIBA PHONE W/DISP. ROOM 19
15 35 1 17 9 BUTTON TOSHIBA PHONE W/DISPLAY ROOM 2
18 20 1 17 9 BUTTON TOSHIBA PHONE W/DISPLAY ROOM 12
28 15 1 17 CELL PHONE MOTOROLA #20
19 21 1 17 NEXTEL BATTERY ROOM 19
18 7 1 17 NEXTEL CHARGER ROOM 10
19 20 1 17 NEXTEL CHARGER ROOM 19
15 26 4 17 NEXTEL CHARGERS ROOM 1
15 27 1 17 NEXTEL MOTOROLA CELL PHONE ROOM 1
15 28 1 17 NEXTEL PHONE BATERY ROOM 1
17 22 1 17 PHONE 9 BUTTON TOSHIBA W/DISP. ROOM 7
18 1 1 17 TOSHIBA 9 BUTTON PHONE ROOM 10
34 28 1 17 TOSHIBA PHONE
36 15 1 17 TOSHIBA PHONE
21 3 1 17 TOSHIBA PHONE EKT6020-H RECEPTION
26 24 1 17 TOSHIBA PHONE EKT6020-H #18
23 28 1 17 TOSHIBA PHONE EKT6025-H #17
29 14 1 17 TOSHIBA PHONE EKT6025-H #20
29 23 1 17 TOSHIBA PHONE EKT6025-H #20
29 29 1 17 TOSHIBA PHONE EKT6025-H #20
30 19 1 17 TOSHIBA PHONE EKT6025-H #23
30 25 1 17 TOSHIBA PHONE EKT6025-H #23
30 30 1 17 TOSHIBA PHONE EKT6025-H #23
27 2 1 17 TOSHIBA PHONE EKT6025-SD #18
28 6 1 17 TOSHIBA PHONE EKT6025-SD #20
27 32 1 17 TOSHIBA PHONE EKT6020-H #20
30 29 1 17 TOSHIBA PHONE EKT6020-H #23
30 32 1 17 TOSHIBA PHONE EKT6020-H #23
21 7 1 17 TOSHIBA PHONE EKT6520-SD RECEPTION
21 24 1 17 TOSHIBA PHONE EKT6520-SD CONF. ROOM
22 10 1 17 TOSHIBA PHONE EKT6520-SD #3
22 16 1 17 TOSHIBA PHONE EKT6520-SD #4
22 32 1 17 TOSHIBA PHONE EKT6520-SD #6
23 16 1 17 TOSHIBA PHONE EKT6520-SD #8
24 27 1 17 TOSHIBA PHONE EKT6520-SD #11
25 3 1 17 TOSHIBA PHONE EKT6520-SD #11
25 16 1 17 TOSHIBA PHONE EKT6520-SD #13
26 17 1 17 TOSHIBA PHONE EKT6520-SD #18
26 30 1 17 TOSHIBA PHONE EKT6520-SD #18
28 34 1 17 TOSHIBA PHONE EKT6520-SD #20
29 18 1 17 TOSHIBA PHONE EKT6520-SD #20
30 8 1 17 TOSHIBA PHONE EKT6520-SD #22
21 8 1 17 TOSHIBA TRANSFER SET HDSS6560 RECEPTION
2 7 1 T103 99 CARGO VAN - 1995 FORD E350;
VIN 1FTHE24H4SHC16664
2 9 1 T105 99 CARGO VAN - 1996 FORD AEROSTAR;
VIN 1FTDA14UXTZA48252
2 12 1 T108 99 CLARK FORKLIFT (WAREHOUSE USE);
SERIAL #5978
2 99 FLATBED TRAILERS
2 13 1 T109 99 MIGHTY MOVER FLAT TRAILER W/1100
GALLON TANK
2 5 1 T100 99 SERVICE TRUCK - 1987 NISSAN
FLATBED WITH LIFTGATE;
VIN JN6HD15H3HW000852
1 T113 99 SERVICE TRUCK - 1995 CHEVY C25 HD;
VIN 1GCGC29F3SE236592
1 T112 99 SERVICE TRUCK - 1995 CHEVY C25 HD;
VIN 1GCGC29K3SE235102
2 11 1 T107 99 SERVICE TRUCK -1995 F350 STAKEBED;
VIN 1FDLF47FXSEA72211
2 10 1 T106 99 SERVICE TRUCK - 1996 CHEVY PICK-UP;
VIN 2GCEC19W5T1117639
1 P104 99 SERVICE TRUCK - 1996 FORD STAKEBED;
VIN 1FDLF47F5TEB58821
1 P101 99 SERVICE TRUCK - 1997 FORD F250 HD;
VIN 1FTHX25F6VEA39080
1 T111 99 SERVICE TRUCK - F250;
VIN 1FTHF26H1PLA75728
2 8 1 T104 99 WELL DEVELOPMENT RIG - 1995 FORD
F350 W/TOOLS; VIN 1FDJF37FXSEA00992
4 1 115 VAC GRUNDFOS POWER CONVERTER DENVER DENVER OFFICE
2 1 150 FT GRUNDFOS REDIFLOW SAMPLING
PUMP W/PORTABLE REEL & ACCESSORIES DENVER DENVER OFFICE
3 1 200 FT GRUNDFOS REDIFLOW SAMPLING
PUMP W/PORTABLE REEL & ASSECCORIES DENVER DENVER OFFICE
5 1 200 FT WATER-LEVEL TAPE HOE CREEK HOE CREEK SITE
5 1 230 VAC GRUNDFOS POWER CONVERTER DENVER DENVER OFFICE
4 1 3 METER CONNECTION CABLE FOR
REDOX PROBE DENVER DENVER - SITE 67 (FUDS)
4 1 81" X 12" UTILITY TRAILER HOE CREEK HOE CREEK SITE
1 T734 AIREX VAPOR EXTRACTION
SYSTEM RETOX #8 1M9FM1932M1261099
</TABLE>
14
<PAGE> 39
15 Pages EXHIBIT A
<TABLE>
<CAPTION>
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C>
GRP
Pg # QTY ITEM NO. CODE DESCRIPTION LOCATION COMMENTS
- ------------------------------------------------------------------------------------------------------------------------------------
3 1 ANSWERING MACHINE HOE CREEK HOE CREEK SITE
- ------------------------------------------------------------------------------------------------------------------------------------
CATALYTIC COMBUSTION 3000 SCFM CATALYTIC OXIDIZER W/
1 T719 SCRUBBER SYSTEM
- ------------------------------------------------------------------------------------------------------------------------------------
5 1 CONDUCTIVITY METER W/KIT DENVER DENVER - SITE 67 (FUDS)
- ------------------------------------------------------------------------------------------------------------------------------------
1 T500 COYNE 60" 300 CU AIR BOTTLE A-1786301Y
- ------------------------------------------------------------------------------------------------------------------------------------
6 1 DISSOLVED OXYGEN METER W/KIT DENVER DENVER - SITE 67 (FUDS)
- ------------------------------------------------------------------------------------------------------------------------------------
8 1 EZLOAD II-L/S PUMPHEAD DENVER DENVER - SITE 67 (FUDS)
- ------------------------------------------------------------------------------------------------------------------------------------
1 1 FAX HOE CREEK HOE CREEK SITE
- ------------------------------------------------------------------------------------------------------------------------------------
1 T700 FOXBORO OIL IN WATER ANALYZER IFF-A-B
- ------------------------------------------------------------------------------------------------------------------------------------
1 T701 FOXBORO ORGANIC VAPOR ANALYZER A22259
- ------------------------------------------------------------------------------------------------------------------------------------
1 1 HATCH TURBIDITY 2100P METER DENVER DENVER OFFICE
- ------------------------------------------------------------------------------------------------------------------------------------
1 P707 INDUST SCI 9107064014
- ------------------------------------------------------------------------------------------------------------------------------------
1 1 IN-LINE FLOW CELL W/CASE & ACCESSORIES DENVER DENVER SITE -67 (FUDS)
- ------------------------------------------------------------------------------------------------------------------------------------
1 P401 KATOLITE ACME 9111
- ------------------------------------------------------------------------------------------------------------------------------------
6 2 MICROWAVE OVENS HOE CREEK HOE CREEK SITE
- ------------------------------------------------------------------------------------------------------------------------------------
9 1 MODULAR BATTERY & CHARGER DENVER DENVER - SITE 67 (FUDS)
- ------------------------------------------------------------------------------------------------------------------------------------
1 T706 MSA LEL METER 360 288011
- ------------------------------------------------------------------------------------------------------------------------------------
1 T708 MSA LEL METER 360
- ------------------------------------------------------------------------------------------------------------------------------------
1 T704 ORION CONDUCTIVITY METER 31304070
- ------------------------------------------------------------------------------------------------------------------------------------
1 T707 ORS OIL/WATER INTERFACE PROBE 9515141
- ------------------------------------------------------------------------------------------------------------------------------------
2 2 PH/REDOX METERS W/KIT DENVER DENVER - SITE 67 (FUDS)
- ------------------------------------------------------------------------------------------------------------------------------------
2 1 PHONE HOE CREEK HOE CREEK SITE
- ------------------------------------------------------------------------------------------------------------------------------------
1 T802 QUEBEC COLONY COUNTER 12847
- ------------------------------------------------------------------------------------------------------------------------------------
3 1 REDOX PROBE W/PLUG HEAD DENVER DENVER - SITE 67 (FUDS)
- ------------------------------------------------------------------------------------------------------------------------------------
1 T110 RSI IC ENGINE VAPOR EXTRACTION 2966
- ------------------------------------------------------------------------------------------------------------------------------------
7 1 SERIES II AC-DC GEOPUMP W/KIT DENVER DENVER - SITE 67 (FUDS)
- ------------------------------------------------------------------------------------------------------------------------------------
1 T703 SOLINST INTERFACE PROBE 17124
- ------------------------------------------------------------------------------------------------------------------------------------
1 T711 SRI GAS CHROMATOGRAPH AUTO SAMPLER
- ------------------------------------------------------------------------------------------------------------------------------------
1 T718 STEALTH FIRECAT 250 SCFM THERMAL/CATALYTIC OXIDIZER 00394
- ------------------------------------------------------------------------------------------------------------------------------------
1 T724 STEALTH FIRECAT 500 ELECTRIC THERMAL OXIDIZER 00275
- ------------------------------------------------------------------------------------------------------------------------------------
1 T717 STEALTH FIRECAT 500 SCFM THERMAL OXIDIZER 00364
- ------------------------------------------------------------------------------------------------------------------------------------
1 T720 STEALTH INDUSTRIES 70 GPM WATER TREATMENT TRAILER 00291/1T9FM183S1441
- ------------------------------------------------------------------------------------------------------------------------------------
1 T702 THERMO ENVIRONMENTAL ORGANIC VAPOR MONITOR 580B-33156-245
- ------------------------------------------------------------------------------------------------------------------------------------
1 T710 TSI VELOCITY METER 410015
- ------------------------------------------------------------------------------------------------------------------------------------
1 T727 WHITE HORSE TECHNOLOGIES 5000 SCFM CATALYTIC OXIDIZER
====================================================================================================================================
</TABLE>
15
<PAGE> 40
EXHIBIT B
(ASSUMED CONTRACTS)
<TABLE>
<S> <C>
Pre-Placed Remedial Action Contract (PRAC) DACA45-97-D-0022
Worldwide Full Service Environmental Remedial Actions F41624-97-D-8010
Seattle MARC Contract DACW67-99-D-1008
METRIC Contract F04699-97-D-0024
Stone and Webster TERC Subcontract
Foster Wheeler South West Division RACII Subcontract
Montgomery Watson AFCEE Subcontract
Lasmo Oil & Gas Contract
KDC-OC, LLC (Koll) Contract
GATX Contract
Paramount Petroleum Contract
Coastal Corp./Pacific Refinery Co./Gaffey
Street Venture, LLC
Georgia Pacific
City of Coachella
Solutia Inc.
Landbank
Overton, Moore & Assoc.
Mar General
BNSF Railway
Ameripride Services, Inc.
Fletcher
Golden West Refining Co.
Cole
CH2M Hill
Mar General Contracting
Golden West Refining Co.
Other Government Contracts and clients, if any--as mutually agreed prior to closing
</TABLE>
-21-
<PAGE> 41
EXHIBIT C
(ACCRUED VACATION)
See Attached
-22-
<PAGE> 42
EXHIBIT C
ACCRUED VACATION*
VACATION BALANCE AS OF PAYROLL DATE 3/3/2000 (W/E 2/27/2000)
<TABLE>
<CAPTION>
HOURLY VAC BALANCE LIABILITY VACATION ACCRL
NAME RATE (HOUR) AMOUNT PER PAYROLL
- ---- ------ ----------- --------- ----------------
<S> <C> <C> <C> <C>
BEDOY, DARRYL 23.39 49.56 $1,159.21 3.08
COOPER, MONICA 34.14 178.04 6,078.29 4.62
COTTON, MAUREEN 42.50 136.42 5,797.85 4.62
DADPOUR, BEHROUZ 32.21 29.76 958.57 3.08
EDMUND, WILLIAM 29.77 15.90 473.34 4.62
FINK, ED 18.36 3.40 62.42 TERMINATED
GILBERT, KEITH 28.12 124.13 3,490.54 4.62
GLAZER, GEORGE 47.04 148.60 6,990.14 4.62
IKEMOTO, WILLIAM 21.59 1.84 39.73 3.08
ISLAS, MICHELLE 19.81 90.46 1,792.01 3.08
MANNING, BRIAN 35.63 65.68 2,340.18 3.08
MASSOUD, GHOLAMREZA 23.88 280.99 6,710.04 6.15
MAYEKAWA, GLEN 38.42 245.96 9,449.78 4.62
MCMULLEN, PAT 40.87 41.32 1,688.75 3.08
MEYER, ROBERT 27.00 21.72 586.44 3.08
MITCHELL, STEVEN 20.00 67.72 1,354.40 4.62
NUSENOW, MATTHEW 35.00 99.52 3,483.20 3.08
OGG, RANDY 30.70 25.52 783.48 3.08
SALCEDO, VICTOR 24.04 343.21 8,250.77 6.15
SCHMIDT, MICHAEL 28.85 30.24 872.42 3.08
SMITH, KEVIN 15.20 9.16 139.23 3.08
SMITH, MARY PAT 24.81 103.06 2,556.92 4.62
SONES, PAUL 37.50 42.10 1,578.75 4.62
STRADER, TOM 24.44 25.66 627.13 3.08
TODD, LINDA 13.00 83.28 1,082.64 3.08
--------- ----------
TOTAL 2,263.25 $68,346.22
</TABLE>
* Data will be upated as of the day of closing.
<PAGE> 43
EXHIBIT D
(EMPLOYEES WITH CONTINUED EMPLOYMENT)
<TABLE>
<S> <C>
Bedoy, Darryl R. Proposal Coordinator
Bishop, Everett Casual, O&M Operator
Bishop, Judy Casual, O&M Operator
Bohn, Ed, R.G. Casual
Cawood, Felix Casual - Laborer
Cooper, Monica A. Manager of Marketing
Cotton, Maureen K. Director, Marketing
Dadpour, Behrouz Engineer
Edmund, William C. Staff Geologist
Fink, Ed Site Superintendent/Operator
Franklin, Waleed T. Casual - Laborer
Fula, Luis Casual Laborer
Gilbert, Keith Staff Geologist
Glazer, George D. Regional Manager
Green, Andre A. Casual - Environmental Technician
Ikemoto, William R. Cadd Operator/Draftsman
Islas, Michelle L. Office Manager
Johnson, James E. Casual - Technician
Manning, Brian A. Estimator
Mason, Robert A. Casual - Laborer
Massoud, Gholamreza Staff Engineer
Mayekawa, Glen S. Manager of Safety
McMullen, Pat Marketing, Manager
Meyer, Robert Superintendent
Mitchell, Steven Construction Foreman
Munoz, Laura Contract - Word Processing
Nusenow, Matthew J. Engineering Manager
Ogg, Randy T. Project Manager
Porter, Jeffrey S. Casual - Environmental Technician
Roberts, Eli Casual, Equipment Operator
Salcedo, Victor Senior Geologist
Schmidt, Michael Project Manager
</TABLE>
-23-
<PAGE> 44
<TABLE>
<S> <C>
Smith, Kevin N. Facilities Manager
Smith, Mary Pat Technical Editor
Sones, Paul R. Senior Project Manager
Strader, Tom Superintendent
Todd, Linda Field Secretary
Wilson, Lawrence T. Casual - Laborer
Wing, Chris J. Casual - Equipment Operator
</TABLE>
In addition to the above named employees, CAPE requests access to Tim Cooper,
Site Superintendent and Charles Cullina, Site Superintendent and possibly other
CET staff needed to complete short term projects on a subcontract basis. CAPE
will also attempt to provide subcontract employee support to CET on an as
needed--as available basis.
-24-
<PAGE> 45
EXHIBIT E
(NON-COMPETITION AGREEMENT)
See attached
-25-
<PAGE> 46
NON-COMPETITION AGREEMENT
BETWEEN
CET ENVIRONMENTAL SERVICES, INC.
AND
CAPE ENVIRONMENTAL MANAGEMENT, INC.
DATED AS OF _________ ____, 2000
<PAGE> 47
NON-COMPETITION AGREEMENT
This Non-Competition Agreement (this "Agreement") is effective as of
this ____ day of _________, 2000, by and between Cape Environmental Management,
Inc., a Georgia corporation ("Buyer"), and CET Environmental Services, Inc., a
California corporation ("Seller").
RECITALS
WHEREAS, Seller is engaged in the business of environmental
remediation (the "Business");
WHEREAS, Seller has agreed to transfer to Buyer and Buyer has agreed to
acquire from Seller, as permitted by and in accordance with applicable law,
certain public and private Environmental remediation contracts entered into by
Seller in the ordinary course of Seller's Business; and
WHEREAS, pursuant to the Asset Purchase Agreement between Buyer and
Seller dated March _____, 2000 (the "Asset Purchase Agreement"), Seller has
agreed to sell and Buyer has agreed to purchase all those assets of Seller
involved in the performance of such contracts, and to hire those employees of
Seller who are involved in the performance of such contracts, on the terms and
subject to the conditions of the Asset Purchase Agreement; and
WHEREAS, Buyer requires assurances that Seller will not re-enter the
market and compete with Buyer for the Business Seller sold to Buyer;
NOW, THEREFORE, in consideration of the mutual agreements and covenants
in this Agreement, the sufficiency of which the Seller and Buyer hereby
acknowledge, Buyer and Seller agree as follows:
TERMS AND CONDITIONS
1. Definition of Terms. Each capitalized term used in this Agreement
shall, unless otherwise defined, have the meaning provided in the Asset Purchase
Agreement. In addition, the capitalized terms set forth below shall have the
meanings assigned such terms as follows:
(a) "Department of Defense" shall mean the United States Department
of Defense, its successors and assigns.
(b) "Scheduled Customers" shall mean the customers listed on Schedule
1 attached hereto and made a part hereof.
(c) "Southern California" shall mean that portion of the State of
California that is situated south of the latitude that passes
through the northernmost point on the north boundary of the city
of San Luis Obispo.
-2-
<PAGE> 48
(d) "Subordinate Unit" shall mean any subdivision, department,
district, agency or other component organization within or under
the regulatory authority of the Department of Defense, their
successors and assigns.
(e) "Unscheduled Customers" shall mean all customers that are not
Scheduled Customers, the Department of Defense or any Subordinate
Unit.
2. Term. Unless otherwise specified in this Agreement, this Agreement
shall commence at the Closing (as defined in the Asset Purchase Agreement)
and continue through a term of four (4) years (the "Term");
3. Agreement Not to Compete. Seller will not, directly or indirectly,
engage or invest in, own, manage, operate, finance, control, or participate in
the ownership, management, operation, financing, or control of, be associated
with, or in any manner connected with, lend Seller's name or any similar name
to, lend Seller's credit to, or render services or advice to, any business whose
environmental remediation services, products or activities are similar to those
provided by Buyer on the date of Closing:
(a) anywhere in the United States in the case of any such business
that competes for contracts or work from the Department of
Defense or any Subordinate Unit, except pursuant to an
unsolicited contract with a third party that is under contract
with the Department of Defense or any Subordinate Unit, provided
that before entering into any such contract Seller shall first
advise Buyer of the proposed contract and shall obtain Buyer's
prior written consent to enter into such contract. Buyer agrees
not to unreasonably withhold such consent unless Buyer has
decided to pursue the work covered by such contract or to pursue
other work with the Department of Defense or Subordinate Unit
that is party to such contract;
(b) anywhere in the State of California in the case of any business
that competes for contracts or work from the Scheduled Customers;
and
(c) anywhere in Southern California (but only for a period of twelve
months after the Closing) in the case of any business that
competes for contracts or work from Unscheduled Customers;
provided, however, that Seller may purchase or otherwise acquire up to (but not
more than) one percent of any class of securities of any enterprise (but without
otherwise participating in the activities of such enterprise) if such securities
are listed on any national or regional securities exchange or have been
registered under Section 12(g) of the Securities Exchange Act of 1934. For
purposes of the foregoing, Seller and Buyer agree that any business will be
deemed competitive with Buyer's business if its services, products or activities
are the same as, or similar to, those services, products or activities as were
furnished by Seller pursuant to the Assumed Contracts (as defined in the Asset
Purchase Agreement). Notwithstanding the foregoing, Seller may continue to
perform its obligations under the following Contracts:
-3-
<PAGE> 49
(i) Contracts with the U.S. Environmental Protection Agency;
(ii) Contracts with Remediation Financial, Inc.;
(iii) Contracts with Signal Hill Petroleum; and
(iv) Other Contracts in existence as of the Closing Date which
are not Assumed Contracts
In addition, Seller may enter into renewals or extensions of the
Contracts listed in subsections (i), (ii), and (iii) above, or enter into new
agreements to provide any services to the persons listed in subsections (i),
(ii), and (iii) above, without being in violation of this covenant. Seller
agrees that this covenant is reasonable with respect to its duration,
geographical area, and scope.
4. Mutual Nonsolicitation. For one (1) year following the Closing,
without the other party's prior written approval, each party shall not: (i)
employ or attempt to employ any person who is currently employed by the other
party or any of its affiliates or otherwise, directly or indirectly, interfere
with or disrupt any employment relationship (contractual or other) of the other
party or any of its affiliates, (ii) request, advise, or induce any present or
potential customer, supplier, or other person having a business relationship
with the other party or any of its affiliates to cancel, curtail, or otherwise
change such business relationship, or (iii) criticize or disparage in any manner
or by any means (whether written or oral, express or implied) the business of
the other party, or any of its affiliates, or any aspect of the management,
policies, operations, practices, decisions, personnel, products, or business of
any of them.
5. Remedies. The parties acknowledge that the provisions in Sections 3
and 4 are a substantial inducement to the parties in entering into the Asset
Purchase Agreement and consummating the transactions contemplated in this
Agreement. The parties also acknowledge and agree that this Section 5 is
reasonable and necessary to ensure that the parties receive the expected
benefits of acquiring the Business, and that violation of Sections 3 and 4 will
irreparably and immediately harm the parties to such an extent that monetary
damages alone would be an inadequate remedy. Accordingly, the parties agree that
each party shall, in addition to and not in lieu of its other rights and
remedies, be entitled to: (a) injunctive relief to prevent a breach and compel
specific performance of this Agreement, and (b) an extension of the Term of this
Agreement for the period of time equal to the length of the breach. If any
provision or application of this Section 5 is held unlawful or unenforceable in
any respect, this Section 5 shall be construed in a manner that renders it
lawful and enforceable to the fullest extent possible.
6. Representations and Additional Agreements. The parties hereby
represent and agree as follows:
(a) Each party is an entity in good standing in its jurisdiction of
formation and has full power and authority to enter into this
Agreement and is able to perform its obligations under this
Agreement;
-4-
<PAGE> 50
(b) Each party has fully executed and delivered this Agreement, and
the provisions of this Agreement are valid and binding
obligations and agreements, enforceable against them in
accordance with their terms;
(c) Each party has sought and received independent advice from
counsel of its own selection in connection with this Agreement
and have not relied to any extent on any member, manager,
officer, director, or shareholder of, or counsel to the other
party in deciding to enter into this Agreement; and
(d) Each party is relying on the other party's execution and delivery
of this Agreement as a basis for entering into the Asset Purchase
Agreement.
7. Indemnification. Each party ("Indemnifying Party") agrees to
indemnify the other party ("Indemnified Party") and hold the Indemnified Party's
members, managers, officers, directors, shareholders, and assignees harmless
from and against any and all liabilities, damages, losses, costs, and expenses
(including, but not limited to, reasonable fees of attorneys and other
professionals actually incurred) arising out of or resulting from any breach or
non-performance by the Indemnifying Party of any representation, agreement, or
covenant made in this Agreement.
8. Entire Agreement. This Agreement and the Asset Purchase Agreement
contain the entire understanding and agreement between the parties and supersede
all prior negotiations, understandings, and agreements between the parties.
9. Assignments. No party to the Agreement shall assign the Agreement
without the written consent of the other party; provided, however, that Buyer
may, without obtaining Seller's consent, assign this Agreement and all Buyer's
rights hereunder to any purchaser of all or substantially all of Buyer's assets
or to any successor of Buyer by merger, consolidation or other acquisitive
reorganization.
10. Severance. If any term of this Agreement shall be invalid or
unenforceable, the remainder of this Agreement and any other application of such
terms shall not be affected.
11. Successors. This Agreement shall be binding upon and inure to the
benefit of and be enforceable by the respective successors and assigns of the
parties.
12. Headings. The headings of this Agreement are for purposes of
reference only and shall not limit or define the meaning.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which is an original, but all of which shall constitute
one instrument.
14. Amendments and Waivers. This Agreement may be amended, waived, or
terminated only by an instrument in writing signed by all the parties.
15. Governing Law. This Agreement shall be interpreted and enforced
pursuant to the laws of the State of Georgia.
-5-
<PAGE> 51
16. Notices. All notices and other communications provided for in this
Agreement shall be in writing and delivered personally, by overnight delivery,
by facsimile, or sent by registered or certified mail, postage prepaid, as
follows:
(a) To the Seller: President
CET Environmental Services, Inc.
7032 South Revere Parkway
Englewood, Colorado 80112
with a copy to: William J. Campbell, Esq.
Faegre & Benson LLP
2500 Republic Plaza
370 17th Street
Denver, Colorado 80202
(b) To the Buyer: President
Cape Environmental Management, Inc.
2302 Parklake Drive NE, Suite 200
Atlanta, Georgia 30345-2907
With a copy to: Charles E. Roberts, Esq.
McGuire Woods Battle & Boothe LLP
Suite 2200, Marquis Two Tower
285 Peachtree Center Avenue, NE
Atlanta, Georgia 30303-1234
17. Jurisdiction: Service of Process. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of Georgia, County of DeKalb, or, if it has or can acquire jurisdiction, in the
United States District Court for the Northern District of Georgia, and each of
the parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first above written.
BUYER:
CAPE ENVIRONMENTAL MANAGEMENT, INC.
By:
-------------------------------
Print Name:
-----------------------
Title:
----------------------------
-6-
<PAGE> 52
SELLER:
CET ENVIRONMENTAL SERVICES, INC.
By:
-------------------------------
Print Name:
-----------------------
Title:
----------------------------
-7-
<PAGE> 53
SCHEDULE 1
SCHEDULED CUSTOMERS
<TABLE>
<S> <C>
1. Coastal Corp./Pacific Refinery Co./Gaffey
Street Venture, LLC
2. Georgia Pacific
3. City of Coachella
4. Solutia Inc.
5. Landbank
6. Overton, Moore & Assoc.
7. Mar General
8. BNSF Railway
9. Ameripride Services, Inc.
10. Fletcher
11. Golden West Refining Co.
12. Cole
13. CH2M Hill
14. Mar General Contracting
15. Golden West Refining Co.
16. Lasmo Oil & Gas
17. KDI-OC, LLC (Koll)
18. GATX
19. Paramount Petroleum
</TABLE>
-8-
<PAGE> 54
EXHIBIT F
(BILL OF SALE)
See attached
-26-
<PAGE> 55
BILL OF SALE
This BILL OF SALE is entered into as of March __, 2000, by and between
Cape Environmental Management, Inc., a Georgia corporation (the "Buyer") and
CET Environmental Services, Inc., a California Corporation ("Seller").
1. DEFINED TERMS. All capitalized terms used in this Bill of Sale
shall have the same meanings given to the terms in the Asset Purchase Agreement,
dated March ____, 2000 (the "Agreement"), by and between Buyer and Seller unless
otherwise expressly defined in this Bill of Sale.
2. ASSET PURCHASE AGREEMENT. This Bill of Sale is made pursuant to the
Agreement and is subject to every agreement, representation, warranty,
indemnification, covenant, and provision contained in the Agreement.
3. TRANSFER OF ASSETS AND WARRANTY OF TITLE. For good and valuable
consideration in hand paid to Seller as set forth in the Agreement, the receipt
and sufficiency of which are hereby acknowledged, Seller hereby sells, conveys,
transfers, and assigns to Buyer all of Seller's right, title, and interest in
the Assets. Seller hereby warrants and confirms to Buyer that: (a) the Equipment
is physically located at [LOCATION OF EQUIPMENT] on the date hereof; (b) Seller
has the right, power and authority to convey all of the Assets; and (c) that the
Assets conveyed herein are free and clear of all liens, claims, security
interests and Encumbrances. Seller covenants and binds its successors and
assigns to warrant and defend the title to the Assets to Buyer, its successors
and assigns, forever, against the lawful claims of all persons.
4. SELLER'S DISCLAIMER. Seller sells, conveys, transfers and assigns
the Equipment to Buyer "AS IS, WHERE IS, AND WITH ALL FAULTS." Seller
specifically disclaims and excludes any promises or warranties, express or
implied, regarding the condition, quality, or operating characteristics of the
Equipment, or as to any prior use of the Equipment, including any implied
warranty of merchantability or fitness for a particular purpose. Notwithstanding
Seller's disclaimer of warranties, Seller does hereby sell, convey, transfer and
assign to Buyer any and all manufacturer's warranties and other express
warranties relating to the Equipment.
Buyer acknowledges that Seller is not a dealer in goods such as the
Equipment, that Seller does not have, or hold itself out as having, any
knowledge or skill peculiar to the Equipment involved in this transaction, and
that the Buyer has determined to purchase the Equipment upon the basis of the
Buyer's own judgment, relying upon such inspection of the Equipment as the Buyer
may have seen fit fo make prior to the issuance of this Bill of Sale. Buyer
assumes all risks as to the condition, quality and operating characteristics of
the Equipment and hereby waives, to the fullest extent permitted under
applicable law, any and all rights, claims, and causes of action that Buyer may
have against the Seller relating to condition, quality or operating
characteristics of the Equipment under or based upon any federal, state, local,
or foreign law, ordinance, rule, or regulation or any principle of equity.
<PAGE> 56
5. FURTHER ASSURANCES. The parties agree to cooperate by performing any
further action the other party may reasonably request to complete the sale,
conveyance, transfer, and assignment of the Assets to Buyer.
6. NO AMENDMENT; CONFLICT WITH PURCHASE AGREEMENT. This Bill of Sale is
intended to implement the provisions of the Agreement and shall not be construed
to enhance, extend or limit the rights or obligations of the parties thereunder.
To the extent any provision of this Bill of Sale is inconsistent with the
Agreement, the provisions of the Agreement shall control.
7. SUCCESSORS AND ASSIGNS. This Bill of Sale shall inure to the
benefit of and be binding upon the parties and their respective successors and
assigns.
8. GOVERNING LAW. This Bill of Sale shall be governed by and construed
in accordance with the laws of the State of Georgia applicable to agreements
made and to be performed entirely within such state, without regard to the
conflicts of law principles of the state.
9. AUTHORIZATION TO EXECUTE BILL OF SALE. The person executing this
Bill of Sale on behalf of Seller warrants and represents that he is duly
authorized to do so on behalf of Seller. The person executing this Bill of Sale
on behalf of Buyer warrants and represents that he is duly authorized to do so
on behalf of Buyer.
10. COUNTERPARTS. This Bill of Sale may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed and delivered this Bill
of Sale effective as of the above date.
<TABLE>
<CAPTION>
SELLER: BUYER:
<S> <C>
CET ENVIRONMENTAL SERVICES, INC. CAPE ENVIRONMENTAL MANAGEMENT, INC.
By: By:
---------------------------- ------------------------------
Print Name: Print Name:
-------------------- ----------------------
Title: Title:
------------------------ ---------------------------
</TABLE>
<PAGE> 1
COVER SHEET
FOR
LEASE AGREEMENT
OWNER:
SKY HARBOR ASSOCIATES LIMITED PARTNERSHIP
TENANT:
CET ENVIRONMENTAL SERVICES, INC.
<PAGE> 2
TABLE OF CONTENTS
BASIC LEASE PROVISIONS
GENERAL LEASE PROVISIONS:
1. Incorporation of Attachments; Definitions
2. Lease Grant
3. Term
4. Payment of Rent
5. Base Rent and Percentage Rent
6. Additional Rent; Escalation
7. Late Charge and Interest on Overdue Rent
8. Security Deposit
9. Use of Premises; Merchant's Association; Covenant's
10. Use of Common Areas; Parking
11. Rules and Regulations
12. Building Services and Utilities
13. Owner's Construction of Premises
14. Tenant's Alterations
15. Repairs and Maintenance
16. Signs and Advertising
17. Mechanics' Liens
18. Indemnification and Exculpation
19. Tenant's Liability insurance; Subrogation Rights
20. Subordination
21. Estoppel Certificates
22. Assignment and Subletting by Tenant
23. Holding Over
24. Acceptance of Surrender of Premises
25. Condemnation
26. Fire and Other Casualty
27. Events of Default
28. Owner's Remedies
29. Owner's Lien
30. Certain Rights Reserved by Owner
31. Intentionally Omitted
32. Brokers
33. Quiet Enjoyment
34. Notices
35. Force Majeure
36. Entire Agreement; Amendments; Waivers; Binding Effect
37. Severability
38. Joint and Several Liability of Tenant
39. Owner's Liability Limitation
40. Arbitration
41. Waiver of Trial by Jury
42. Applicable Law
43. Miscellaneous
44. Special Provisions
45. Acts to be Performed by Tenant Prior to Tenant's Construction
46. Personal Property Taxes
47. Transfer of Interest
48. Special Provisions
RIDERS
I Additional Rent; Escalation
II Building Services and Utilities
ADDENDUM NO. 1 TO LEASE AGREEMENT
1
<PAGE> 3
TABLE OF CONTENTS
EXHIBITS
A-1 Description of Land
A-2 Description of Building
A-3 Proposed Floor Plan
B Rules and Regulations
C Work Letter
D Lease Commencement Date Memorandum
2
<PAGE> 4
BASIC LEASE PROVISIONS
LEASE DATE: March 1, 1999
TENANT: Name: CET Environmental Services, Inc.
Legal Form: Corporation
Legal Situs: (State of Residence, Incorporation or Formation):
California
Address: 7032 S. Revere Pkwy., Ste. 300
Authorized Representative: Stephen H. Davis
Telephone: 303-708-1360 x215
OWNER: Name: Sky Harbor Associates Limited Partnership
Legal Form: Limited Partnership
Legal Situs: Michigan
Address: 74 E. Long Lake Road, Bloomfield Hills, MI 48304-2379
Authorized Representative: Cytryn/Tischler Properties, Inc.
Telephone: (303) 777-2500
LAND: The tract of land located in Arapahoe County and described in
Exhibit A-1.
BUILDING: The building commonly know as 7032 S. Revere Parkway
Englewood, Colorado situated on the Land and described in or
depicted on Exhibit A-1.
PREMISES: Suite 300, being the Building shown on the Floor Plan,
Exhibit A-3
STATE: Colorado
TERM: 5 years 0 months (subject to adjustment pursuant to Paragraph 3).
ENDING DATE OF TERM (pursuant to paragraph 3): April 30, 2004
Initials: Owner
---------
Tenant
---------
ESTIMATED COMMENCEMENT DATE: May 1, 1999
ACTUAL COMMENCEMENT DATE: (pursuant to paragraph 3):
---------------
Initials: Owner
---------
Tenant
---------
BASE RENT: $ See Addendum No. 1 per year, payable in monthly installments of $
See Addendum No. 1 per month
OVERDUE INTEREST RATE: Ten (10)% per annum (but never to exceed the maximum rate
of interest permitted by applicable law to be charged Tenant for the use,
forbearance or detention of money).
LATE CHARGE: Five Percent (5%)
SECURITY DEPOSIT: $8,268.56
FIRST OPERATING COST YEAR: Means the twelve (12) month period commencing on the
first day of January, 1999.
INITIAL MONTHLY ESTIMATED ADDITIONAL RENT: $3.75 per square foot per year =
$3,758.44 per month for the Premises.
TENANT'S PROJECT PROPORTIONATE SHARE: The percentage which expresses the ratio
between the number of square feet leased and the rentable square feet within the
project (initially approximately 108,021) which for the purpose of the Lease
shall initially be conclusively deemed to be 11.13%. This percentage shall be
the initial Tenant's Project Proportionate Share. If and at such times as
1
<PAGE> 5
the Project is expanded or diminished, Owner shall equitably adjust Tenant's
Project Proportionate Share to reflect the increased or decreased rentable
square feet within the Project using the formula set forth above.
RENTABLE AREA: Project 108,021 square feet
Premises 12,027 square feet
The rentable area and the usable area of the Premises may be different, but
have been stipulated and agreed to by the parties, and the Rent and
Tenant's Allocated Share shall not be changed even if it is determined that
the Premises contains either a larger or a smaller area than indicated.
PERMITTED USE: General office & storage of files and materials/equipment
BROKER: Frederick Ross Company & Re/max Commercial Services, Inc.
2
<PAGE> 6
GENERAL LEASE PROVISIONS
This LEASE AGREEMENT ("Lease") is entered into as of the Lease Date
between Owner and Tenant. In consideration of the mutual covenants herein set
forth, and intending to be legally bound hereby, Owner and Tenant agree as
follows:
1. Incorporation of Attachments: Definitions. This Lease consists of
the Cover Sheet, Table of Contents, Basic Lease Provisions, General Lease
Provisions, Riders, Addendums and Exhibits all of which are attached and
incorporated by reference for all purposes. The terms defined in the Basic Lease
Provisions, General Lease Provisions, Riders, Addendum and Exhibits shall be
deemed to have the meanings ascribed, wherever used herein. The Cover Sheet,
Table of Contents and headings of paragraphs, Riders, Addendum and Exhibits are
for convenience only and shall not be deemed to enlarge or diminish the meanings
of the provisions of this Lease.
2. Lease Grant. Owner leases to Tenant and Tenant leases from Owner the
Premises for the Term and upon the provisions and subject to the conditions set
forth herein.
3. Term.
(a) The Commencement Date of the Term shall be the earlier of (i)
the date on which Tenant, with Owner's approval, takes possession of the
Premises for the Permitted Use, or (ii) on the thirtieth (30th) day following
the date on which Owner notifies Tenant that the Premises will be available for
occupancy, provided that Owner's work on the Premises is substantially completed
as specified in paragraph 13 by such date, and if not then substantially
completed, (iii) five (5) days following the date of substantial completion of
such work. Upon notification as provided in (ii) above, Owner and Tenant shall
schedule a preoccupancy inspection of the Premises at which time all mechanical
systems will be demonstrated to Tenant, a punchlist of outstanding items, if
any, shall be completed by Owner for conformance to construction plans, and a
letter of acceptance of the Premises shall be executed by Tenant, on Owner's
usual form. If the Commencement Date is other than the first day of a calendar
month, the Term shall be deemed extended by the period from (including) the
Commencement Date to the end of such month.
(b) Notwithstanding said commencement date, if for any reason Owner
cannot deliver possession of the Premises to Tenant on said date, Owner shall
not be subject to any liability therefor, nor shall such failure affect the
validity of this Lease or the obligations of Tenant hereunder. However, in such
case Tenant shall not be obligated to pay rent until possession of the Premises
is tendered to Tenant. Upon Owner's request, the parties agree to execute in
writing an Addendum to certify the Commencement Date and expiration date hereof,
but this Lease shall not be affected in any manner if either party fails or
refuses to execute such Addendum.
4. Payment of Rent. The term "Rent" means Base Rent, Additional Rent
and any charges, fees and other amounts due from Tenant to Owner hereunder,
Tenant agrees to pay all Rent to Owner, in lawful currency of the United States
of America, at Owner's Address or at such other location as Owner may specify by
notice to Tenant, without notice or demand (except as may be expressly provided
for herein with regard to a particular portion of Rent) and without setoff or
deduction. Tenant's obligation to pay any and all Rent owing by Tenant to Owner
under this Lease shall survive any expiration or termination of this Lease.
5. Base Rent. Base Rent is payable in monthly installments in advance
on the first day of each calendar month during the Term, except that the monthly
installment of Base Rent due for the first full calendar month of the Term shall
be paid on the Lease Date. If the Commencement Date is other than the first day
of a calendar month, Tenant shall pay on the Commencement Date a pro rata
portion of the monthly installment of Base Rent for the month during which the
Commencement Date falls, such pro rata portion being equal to one-thirtieth of
the monthly installment times the number of days from (including) the
commencement Date to the end of such month.
6. Additional Rent; Escalation. Additional Rent shall be calculated
and is payable as provided in Rider I.
7. Late Charge and Interest on Overdue Rent. If any installment of Base
Rent or Additional Rent is not received within ten (10) days after the due date
thereof (without in any way implying Owner's consent to such late payment),
Tenant agrees to pay Owner the Late Charge, to the extent permitted by law, in
addition to said installment of Base Rent or Additional Rent, it being
understood that the Late Charge shall constitute liquidated damages and such
liquidated damages shall be solely for the purpose of reimbursing Owner for the
additional costs and expenses which Owner presently expects to incur in
connection with the handling and processing of late payments of Base Rent and/or
Additional Rent. Owner and Tenant agree that in the event of any such late
payment by Tenant, the damages resulting to Owner will be difficult to ascertain
1
<PAGE> 7
precisely, and that the Late Charges constitutes a reasonable and good faith
estimate by the parties of the extent of such damages. In addition to the Late
Charge, Tenant agrees to pay Owner interest, at the Overdue Interest Rate, on
any installment of Base Rent or Additional Rent not paid within thirty (30) days
after the due date thereof, which interest shall accrue from the due date to the
date of payment. Notwithstanding the foregoing, the Late Charge shall not apply
to any sum which may have been advanced by Owner to or for the benefit of Tenant
pursuant to any provision of this Lease, it being understood that such sum shall
bear interest, which Tenant agrees to pay Owner, at the Interest Rate specified
in such provision.
8. Security Deposit. The Security Deposit and the first month's rent
shall be delivered by Tenant to Owner on the Lease Execution Date, and shall be
held by Owner, without liability for interest, as security for the performance
by Tenant of Tenant's covenants and obligations under this Lease, it being
expressly understood that the Security Deposit shall not be considered an
advance payment of Rent or a measure of Owner's damages in case of default by
Tenant. Upon the occurrence of any Event of Default, Owner, from time to time
and without prejudice to any other remedy, may use the Security Deposit to the
extent necessary to make good any arrearages of Rent and any other damage,
injury, expense or liability caused to Owner by such Event of Default. Following
any such application of the Security Deposit, Tenant shall pay Owner on demand
the amount so applied in order to restore the Security Deposit to its original
amount. If Tenant is not then in default hereunder, any remaining balance of the
Security Deposit shall be returned by Owner to Tenant within a reasonable period
of time after the termination of this Lease, and in any event within the time
period prescribed by State law, if any. If Owner transfers its interest in the
Premises during the Term, Owner may assign the Security Deposit (or so much
thereof as has not been used and not restored by Tenant) to the transferee and
thereafter Owner shall have no further liability to Tenant for the return of the
Security Deposit.
9. Use of Premises. Tenant shall use the Premises only for the
Permitted Use. Tenant will not occupy or use the Premises, or permit any portion
of the Premises to be occupied or used, for any business or purpose other than
the Permitted Use or for any use or purpose which is unlawful in part or in
whole or deemed to be disreputable in any manner or extra hazardous on account
of fire or other casualty, nor permit anything to be done which will in any way
increase the rate of insurance on the Building or contents; and in the event
that, by reason of acts of Tenant or Tenant's servants, employees, agents,
contractors, licensees or invitees ("Tenant Parties"), there shall be any
increase in rate of insurance on the Building or contents, then such acts shall
be deemed to be an Event of Default hereunder and Tenant hereby agrees to pay to
Owner the amount of such increase on demand. Tenant will conduct its business
and control Tenant Parties in such a manner as not to create any nuisance, nor
interfere with, annoy or disturb other tenants or Owner in the ownership or
management of the Land or Building. Tenant will maintain the Premises in a
clean, healthful and safe condition and will comply with all laws, ordinances,
orders, rules and regulations (of federal, state, municipal and other agencies
or bodies having any jurisdiction thereof), and any restrictive covenants and
condominium association by-laws, rules and regulations of which Tenant has been
advised, with reference to the use, condition or occupancy of the Premises.
10. Use of Common Areas: Parking.
(a) Tenant shall have the right, nonexclusive and in common with
others, to use (i) any common hallways, entrances, lobbies, elevators,
stairways, common restroom facilities and similar common areas of the Building
for the purposes for which the same were designed and (ii) to use the exterior
paved driveways and walkways of the Land for vehicular and pedestrian access to
the Building. Tenant shall also have the right, non-exclusive and in common
with other tenants of the Building and Owner, to use the designated free
parking areas of the Land, if any, for the parking of automobiles and other
vehicles of Tenant and its employees and business visitors; incident to Tenant's
Permitted Use of the Premises; provided that Owner shall have the right to
restrict or limit Tenant's utilization of such parking areas in the event the
same become overburdened and in such case to allocate on a proportionate basis
or assign parking spaces among Tenant and the other tenants of the Building.
Owner shall have the right to establish other reasonable regulations,
applicable to all tenants, governing the use of or access to any interior or
exterior common areas, and such regulations; when communicated by written
notification from Owner to Tenant, shall be deemed incorporated by reference
into Exhibit B hereof.
(b) Tenant covenants and agrees that all loading and unloading of
freight, merchandise, supplies, construction materials, trade fixtures and other
goods delivered to or from the Premises shall be done only in the loading dock
area of the Premises or the Building, as applicable. Under no circumstances
shall Tenant allow freight, merchandise, supplies, construction materials, trade
fixtures or other goods delivered to or from the Premises to be stored on,
accumulate on, or obstruct the entrances of the Building or the loading dock
area, roads, trash bay, sidewalks, driveways or parking areas within the
Project. A violation or violations of this sub-paragraph shall constitute a
material breach of this lease.
(c) Tenant shall not perform or permit work to be done on the
loading dock, roads, sidewalks, driveways, parking areas, landscaped areas or
any other exterior areas within the Project. This
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includes, but is not limited to, assembly, construction, mechanical work,
painting, drying, layout, cleaning or repair of goods or materials.
11. Rules and Regulations. Tenant will comply fully with all requirements
of the Rules and Regulations set forth in Exhibit B. Owner shall at all times
have the right to change the Rules and Regulations or to promulgate other Rules
and Regulations in such manner as Owner may deem advisable for safety, care, or
cleanliness of the Building, Land and Premises, and for preservation of good
order therein, all of which additional Rules and Regulations, changes and
amendments will be forwarded to Tenant in writing and shall be carried out and
observed by Tenant. Tenant shall further be responsible for compliance with
such Rules and Regulations by Tenant Parties. Nothing in this Lease shall be
construed to impose upon Owner any duty or obligation to enforce the rules and
Regulations or terms, covenants or conditions in any other lease, against any
other tenant, and Owner shall not be liable to Tenant for violation of the same
by any other tenant, its tenant parties, or other visitors.
12. Building Services and Utilities. Building services and utilities shall
be provided by Owner as provided in Rider II.
13. Owner's Construction of Premises.
(a) Before the Commencement Date, Owner will substantially complete
the construction of the Building (if not substantially completed as of the Lease
Date) to the stage that the Building is operable for Tenant's purposes, which
shall be defined as occurring when the public entrances of the Building,
including ground floor lobbies and the public hallways of the floor(s)
containing the Premises (or portions of said lobbies and hallways necessary to
provide reasonable and safe access to the Premises) are substantially completed
and elevators necessary (if any) to provide service to the Premises, the heating
and air conditioning system (as required for the season and then prevailing
climate) and all other mechanical systems required for service to the Premises
are in regular operation.
(b) The Premises shall be deemed to be substantially completed when
all work specified to be done in Exhibit C ("Tenant Finish") has been
substantially completed, except for (i) minor items of finishing and
construction of a nature which are not necessary to make the Premises reasonably
tenantable for the Permitted Use, and (ii) items not then completed because of
delay by Tenant in furnishing any drawings, plans or approvals (collectively,
"Plans") required by Exhibit C or because of approved requests made by Tenant
subsequent to delivery of Plans, for changes or additions therein.
(c) Intentionally Omitted
(d) Owner shall have the Premises substantially completed by the
Estimated Commencement Date, except for delays due to Force Majeure or Tenant's
failure to timely furnish the Plans, any of which shall extend the Estimated
Commencement Date for a period equal to the total of the duration of each such
delay. If the Premises is not substantially completed within three (3) months
following the Estimated Commencement Date, as the same may be extended in
accordance herewith, Tenant, as Tenant's sole right thereby arising, may
terminate this Lease by notice to Owner given thereafter, provided that the Term
shall not have commenced within thirty (30) days after the giving of such notice
by Tenant. This Lease shall terminate in such case upon expiration of thirty
(30) days after Owner's receipt of such notice without substantial completion
having occurred, whereupon Owner shall return all rent and the Security Deposit
paid by Tenant to Owner in advance, and all further obligations of the parties
hereunder shall end. It is understood that in the event of such termination by
Tenant, Owner shall have no responsibility to reimburse Tenant for any cost or
expense which Tenant may have directly or indirectly incurred with respect to
this Lease or the projected occupancy of the Premises, whether arranging for, or
termination of arrangements for, other space, or any Alterations to the
Premises or otherwise.
14. Tenant's Alterations.
(a) Tenant will not make or allow to be made any alterations,
additions or improvements ("Alterations") in or to the Premises without the
prior written consent of Owner. Alterations to the Premises shall be done by
Owner or by contractors approved in writing by Owner), at Tenant's sole cost and
expense. If Owner approves Tenant's proposed Alterations and agrees to permit
Tenant's contractor to do the work, Tenant's contractor must first furnish to
Owner insurance coverage against such risks and in such amounts as Owner may
require, including but not limited to Workman's Compensation Insurance (as
required under the Workman's Compensation Act of Colorado), issued by such
companies as Owner may approve. All Alterations permitted by Owner must
conform to all rules and regulations established from time to time by the
Underwriters' Association (or comparable organization) of the local area in
which the Land and Building are located, and conform to all requirements of all
governmental entities having jurisdiction. Tenant's contractor shall also
furnish all applicable building and occupancy permits required by law. Owner
shall have the right to have Tenant's contractor's work inspected by architects
and engineers, the cost of which shall be paid by
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Tenant to Owner on demand, with interest thereon at the Reimbursement Interest
Rate from the due date until paid. At any time Tenant either desires to, or is
required to make repairs or Alterations in accordance with this Lease, Owner
may, in addition to its other options, require Tenant at Tenant's sole cost and
expense, to obtain and provide to Owner a lien and completion bond (or such
other applicable bond as reasonably determined by Owner) in an amount equal to
one and one-half (1.5) times the estimated cost of such improvements to insure
Owner against risk and liability, including but not limited to liability for
mechanics and materialman's lien, and to insure the completion of the work.
(b) All Alterations (whether temporary or permanent in character and
whether made with or without Owner's consent) made in or upon the Premises,
either by Owner or Tenant, shall be Owner's property upon installation and shall
remain on the Premises without compensation to Tenant unless Owner shall, by
written notice, elect to have the alterations so made be removed upon expiration
of the Term or termination of this Lease. Owner may give this notice of election
to Tenant at any time during the Term of the Lease, and for a period of three
(3) days after the expiration of the Term or the termination of this Lease. If
Owner shall make such election that Alterations so made shall be removed, then
Tenant agrees to cause same to be removed and to restore the Premises to their
former condition at Tenant's sole cost and expense, and should Tenant fail to
remove the same and restore the Premises, then Owner may cause same to be
removed and the Premises restored at Tenant's expense, and Tenant agrees to
reimburse Owner on demand for the cost of such removal and restoration, together
with any and all damages which Owner may suffer and sustain by reason of the
failure of Tenant to remove the same with interest thereon at the Reimbursement
Interest Rate from the due date until paid.
(c) At the Ending Date of Term or other termination of this Lease, all
furniture, movable trade fixtures and personal property of Tenant may be removed
by Tenant if Tenant so elects and no Event of Default then exists, and shall be
so removed if required by Owner, or if not so removed shall, at the option of
Owner, become the property of Owner.
(d) All Alterations, installations, removals and restoration shall be
accomplished in a good and workmanlike manner so as not to damage the Premises
or the Building, and in such manner as not to disturb other tenants in their use
and occupancy of the Building.
15. Repairs and Maintenance.
(a) Owner shall be responsible for repair and maintenance of the
foundation, floors (beneath the carpet or other floor covering), roof, the
exterior walls (excluding all glass windows, window frames and doors), and the
electrical service to the wall box (before any Tenant finish), the plumbing to
the wall stubs and common areas. Owner shall also be responsible for the
preventative maintenance contract for the roof mounted air conditioning and
heating apparatus. Tenant shall pay for these items as provided for in Rider I.
(b) Tenant shall use, operate and maintain the Premises and its
systems, including all fixtures and equipment installed by Tenant, in such
manner as to keep the same in good order and condition, making all repairs and
replacements necessary to maintain such good order and condition all at Tenant's
expense, including but not limited to, plumbing from the wall stubs, electrical
service from the wall box, sewer, water and heating pipes from the exterior
wall, and all glass. Tenant shall be responsible for the maintenance (other than
preventative maintenance) and repair and/or replacement of any heating,
ventilating, air conditioning, plumbing, electrical or other systems and
fixtures installed solely to service the Premises, whether installed or paid for
by Owner or Tenant. The performance by Tenant of its obligations to maintain the
Premises shall be conducted only by contractors approved in writing by Owner, it
being understood that Tenant shall procure and maintain and shall cause
contractors engaged by or on behalf of Tenant to procure and maintain insurance
coverage against such risks and in such amounts as Owner may require, including
but not limited to Workmen's Compensation Insurance (as required under the
Workmen's Compensation Act of Colorado), issued by such companies as Owner may
approve, in connection with such maintenance. If Tenant fails to make any repair
within fifteen (15) days after the occurrence of the damage necessitating same,
or fails to cause other maintenance to be performed within fifteen (15) days
after notice from Owner of the need therefor, Owner at its option may make such
repair, or cause such other maintenance to be performed, and Tenant, shall on
demand therefor, pay Owner for the cost thereof, with interest thereon at the
Reimbursement Interest Rate from the due date until paid. At the Ending Date of
Term or other termination of this Lease, Tenant shall deliver up the Premises
including all Alterations (except as otherwise herein provided), in good repair
and condition, reasonable wear and tear excepted, and shall deliver to Owner all
keys to the Premises.
(c) Tenant shall give Owner prompt written notice of any damage to or
defects in, the Premises and in the plumbing, electrical, heating, air
conditioning and other systems and apparatus located in the Premises. The
obligation to repair such damages or defects shall be as stated in this
paragraph 15. In no event shall Owner be obligated to repair any damage to the
Premises or the Building caused by any act,
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omission or negligence of Tenant or Tenant Parties. Tenant shall reimburse Owner
for all costs and expenses of repairing and replacing all damage to the Premises
and Building and to fixtures and equipment caused by Tenant or Tenant Parties
or as the result of all or any of them moving in or out of Building or by
installation or removal of furniture, fixtures or other property. Such costs and
expenses shall be paid by Tenant to Owner on demand, with interest thereon at
the Reimbursement Interest Rate from the due date until paid.
(d) Owner shall not be liable by reason of any injury to or
interference with Tenant's business arising from the making of any repairs or
alterations in or to the Premises or the Building or to any appurtenances or
equipment therein. There shall be no abatement of Rent because of such repairs
or alterations, or because of any delay by Owner in making the same.
16. Signs and Advertising. No sign, advertisement or notice shall be
inscribed, painted, affixed or otherwise displayed on any part of the outside or
the inside of the Building except on the directories and doors of offices, and
then only in such place, number, size, color and style as is approved by Owner
and provided by Owner at Tenant's cost and expense, if any such sign,
advertisement or notice is nevertheless exhibited by Tenant, Owner shall have
the right to remove same and Tenant shall be liable for any and all expenses
incurred by Owner in said removal, which shall be payable by Tenant to Owner on
demand, with interest thereon at the Reimbursement Interest Rate from the due
date until paid. Owner shall have the right to prohibit (by injunction or
otherwise) any advertisement of Tenant which in Owner's opinion tends to impair
the reputation of the Building or its desirability. Upon written notice from
Owner, Tenant shall immediately refrain from and discontinue any such
advertisement.
17. Mechanic's Liens.
(a) Tenant will not suffer or permit any mechanic's, laborer's or
materialman's lien to be filed against the Land, Building, or Premises, or any
part thereof, by reason of work, labor services or materials supplied or claimed
to have been supplied to Tenant; and if any such lien shall at any time be
filed, Tenant, within ten (10) days after notice of the filing thereof, shall
cause it to be discharged of record by payment, deposit, bond, order of a court
of competent jurisdiction or as otherwise provided by law. If Tenant shall fail
to cause such lien to be discharged within the period aforesaid, then in
addition to any other right or remedy, Owner may, but shall not be obligated to,
discharge it either by paying the amount claimed to be due or by procuring the
discharge of such lien by deposit or by bonding or other proceedings. Owner may
at its option and without waiving any of its rights set forth in the immediately
preceding sentence, permit Tenant to contest validity of any such lien or claim,
provided that in such circumstances the Tenant shall at its expense defend
itself and Owner against the same and shall pay and satisfy any such adverse
judgment that may be rendered thereon before the enforcement thereof against the
Owner, the Premises or the building, provided further that Owner may at any time
require the Tenant to post a bond with an entity satisfactory to Owner in an
amount on and one-half (1.5) times the amount of the lien or to deposit with the
Court exercising jurisdiction over such claim such amount as either the Court or
statute may determine to be sufficient as a release and discharge of the lien.
If Tenant shall not immediately make such payment upon the request of Owner,
Owner may make said payment in the amount so paid together with interest thereon
from the date of payment and all legal costs and charges, including attorney
fees incurred by Owner in connection with said payment shall be deemed
Additional Rent and shall be payable on the next date on which a base rental
installment is due. Any amount so paid by Owner, plus all of Owner's costs and
expenses associated therewith, shall be paid by Tenant to Owner on demand, with
interest thereon at the Reimbursement Interest Rate from the due date until
paid.
(b) Nothing in this Lease, nor any approval by Owner of any of
Tenant's Alterations or contractors, shall be deemed or construed in any way
as constituting consent by Owner for the making of any alterations or additions
by Tenant within the meaning of any State law, or constituting a request by
Owner, expressed or implied, to any contractor, subcontractor, laborer or
materialman for the performance of any labor or the furnishing of any materials
for the use or benefit of Owner.
18. Indemnification and Exculpation.
(a) Tenant indemnifies and agrees to hold harmless Owner against and
from any and all claims arising from Tenant's use of the Premises, or from the
conduct of Tenant's business or from any activity, work or things done,
permitted or suffered by Tenant in or about the Premises, Land, Building or
elsewhere, and Tenant further indemnifies and agrees to hold harmless Owner
against and from any and all claims arising from any breach or default in the
performance of any obligation on Tenant's part to be performed under the terms
of this Lease, or arising from any negligence of Tenant or Tenant Parties, and
from and against all costs, attorney's fees, expenses and liabilities incurred
in the defense of any such claims or any action or proceeding brought thereon,
and if any action or proceeding is brought against Owner by reason of any such
claim, Tenant upon notice from Owner shall defend the same at Tenant's expense
by counsel satisfactory to Owner.
(b) Owner shall not be liable or responsible for any loss or damage to
any property or death or injury to any person occasioned by theft, fire, act of
God or public enemy, criminal conduct of third
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parties, injunction, riot, strike, insurrection, war, court order, requisition
or other act of governmental body or authority, acts of other tenants of the
Building, or any other matter beyond the control of Owner, or for any injury or
damage or inconvenience which may arise through repair or alteration of any part
of the Building, failure to make repairs, or from any cause whatever except
Owner's gross negligence or willful wrong.
19. Tenant's Liability Insurance; Subrogation Rights.
(a) Tenant shall obtain and keep in effect throughout the Term, an
insurance policy or policies, issued by insurance carriers reasonably
satisfactory to Owner, providing general public liability insurance against
claims for personal injury (including death), property damage, or otherwise,
arising out of or in any way connected with the Premises or this Lease, in
amounts of not less than a combined single limit of $1,000,000.00 or such
higher amounts as Owner shall reasonably require from time to time. Such
insurance shall not be subject to cancellation, reduction of coverage or
other modification without at least thirty (30) days prior notice to all
insureds, and such insurance shall name Owner, first mortgagee and Tenant as
insured and if requested by Owner shall also name as additional insureds any
lessor and any other mortgagee.
(b) Prior to the commencement of the Term, Tenant shall provide
Owner with original certificates or duplicate originals of the policy or
policies of insurance referred to in subparagraph (a) with evidence that
premiums have been paid in full for the respective policy periods. Tenant also
shall furnish to Owner throughout the Term, replacement certificates or renewal
policies, together with evidence of like premium payment at least ten (10) days
prior to the respective expiration dates of the then current policy or policies.
(c) Each party hereto hereby waives any cause of action it might have
against the other party on account of any loss or damage that is insured against
under any insurance policy (to the extent that such loss or damage is
recoverable under such insurance policy and only to the extent of and with
respect to any loss or damage occurring during such time as the policy or
policies of insurance covering said loss shall contain a clause or endorsement
to the effect that this waiver shall not adversely affect or impair said
insurance or prejudice the right of the insured to recover thereunder) that
covers the Building, the Land, the Premises, Owner's or Tenant's fixtures,
personal property, leasehold improvements or business and which names Owner or
Tenant, as the case may be, as a party insured. Each party hereto agrees that it
will request its insurance carrier to endorse all applicable policies waiving
the carrier's rights of recovery under subrogation or otherwise against the
other party.
(d) Tenant shall obtain and keep in effect throughout the Term of the
Lease an insurance policy or policies with coverage known as business
interruption or business continuation insurance. This policy shall name Owner
as an additional insured. Such insurance shall not be subject to cancellation,
reduction of coverage or other modification without at least thirty (30) days
prior written notice to Owner.
(e) Any insurance required by Tenant hereunder shall be in companies
rated A+, AAA or better in "Best's Insurance Guide". If in the reasonable
opinion of Owner, the amount of liability insurance required hereunder or the
coverage under such policy is not adequate, then not more frequently than twice
during this Lease and any extension or renewal term of this Lease, if any,
Tenant shall reasonably increase said insurance coverage, either in an amount or
breadth of insurance as required by Owner provided however that in no event
shall the amount of the liability insurance increase by more than fifty per cent
(50%) of the amount of the insurance during the preceding term of this Lease.
20. Subordination.
(a) This Lease and all rights of Tenant hereunder are subject and
subordinate to any first deed of trust, first mortgage or other first instrument
of security (a "Mortgage"), and at Owner's option, this Lease and all rights of
Tenant hereunder are subject and subordinate to any junior deed of trust, junior
mortgage or other junior instrument of security, as well as to any ground Lease
or primary Lease (an "Underlying Lease") that now or hereafter covers all or any
part of the Building, the Land, or any interest of Owner therein, and to any and
all advances made on the security thereof, and to any and all increases,
renewals, modifications, consolidations, replacements and extensions of any
Mortgage or Underlying Lease. This provision is self-operative and no further
instrument shall be required to effect such subordination of this Lease. Tenant
shall, however, upon demand at any time or times execute, acknowledge and
deliver to Owner or to the holder ("Holder") of any Mortgage, or lessor
("Lessor") in any Underlying Lease, any and all instruments and certificates
that in the judgment of Owner, Holder or Lessor may be necessary or desirable to
confirm or evidence such subordination. Not in limitation of the generality of
the foregoing, Tenant agrees that any Holder shall have the right at any time to
subordinate any Mortgage to this Lease on such terms and subject to such
conditions as such Holder may deem appropriate in its discretion. Tenant further
covenants and agrees upon demand by Holder or Lessor at any time, before or
after the institution of any proceedings for foreclosure or sale pursuant to any
Mortgage, or termination of any Underlying Lease, to attorn to the purchaser
upon such foreclosure or sale or to Lessor upon such termination, and to
recognize such purchaser
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or Lessor as Owner under this Lease. The agreement of Tenant to attorn contained
in the immediately preceding sentence shall survive any such foreclosure, sale
or termination. Tenant, upon demand at any time or times, before or after any
such foreclosure, sale or termination, shall execute, acknowledge and deliver to
Holder or Lessor any and all instruments that in the judgment of Holder or
Lessor may be necessary or desirable to confirm or evidence such attornment and
Tenant hereby irrevocably authorizes Holder or Lessor to execute, acknowledge
and deliver any such instruments on Tenant's behalf.
(b) If Owner shall be or is alleged to be in default of any of its
obligations owing to Tenant under this Lease, Tenant agrees to give to Holder
and Lessor a copy of any written notice (by registered or certified mail or by
delivery service) of any such default which Tenant shall have served upon Owner,
provided that prior thereto Tenant has been notified in writing (by way of
notice of assignment of rents and/or leases, or otherwise) of the name and
addresses of any such Holder and Lessor. Tenant shall not be entitled to
exercise any right or remedy as may exist because of any default by Owner
without having given such notice to Holder and Lessor; and Tenant further agrees
that if Owner shall fail to cure such default; (i) Holder or Lessor shall have
an additional thirty (30) days (measured from the later of the date on which the
default should have been cured by Owner, or the date of Holder's or Lessor's
receipt of such notice from Tenant), provided that if such default could not be
cured within such thirty (30) day period and Holder or Lessor is diligently
pursuing the remedies necessary to effectuate the cure (including but not
limited to foreclosure or termination proceedings, if appropriate) such
longer period as may be necessary, within which to cure such default; and (ii)
Tenant shall not exercise any right or remedy as may exist or arise because of
Owner's default, as may be expressly provided for herein or available to
Tenant as a matter of law, if the Holder or Lessor either has cured the default
within such thirty (30) day period, or as the case may be, has initiated the
cure of same within such thirty (30) day period and is diligently pursuing the
cure of same as aforesaid.
(c) If any Holder or Lessor, or a successor of either, succeeds to the
interest of Owner in the Land or Building, or acquires the right to possession
of the Land or Building, such person shall not be (i) liable for any act or
omission of Owner under this Lease; (ii) liable for the performance of Owner's
covenants hereunder which arise and accrue prior to such person's succeeding to
the interest of Owner hereunder or acquiring such right to possession; (iii)
subject to any offsets or defenses which Tenant may have at any time against
Owner; (iv) bound by any rent which Tenant may have prepaid for more than one
month; (v) in the event the unexpired term of this Lease exceeds three years at
the time of such succession or acquisition of the right to possession, bound by
any amendment or modification hereof relating to the reduction of rent,
shortening of term, or effecting a cancellation or surrender hereof and made
without the consent of such person; or (vi) liable for the performance of any
covenant of Owner under this Lease which is capable of performance only by the
original Owner.
21. Estoppel Certificates. Tenant agrees, from time to time as may be
requested by Owner, Holder or Lessor, within five (5) days after such request,
to execute, acknowledge and deliver to such person(s) as may be specified in the
request, a certificate confirming and containing such factual certifications
and representations with respect to Tenant and this Lease, as may be deemed
appropriate by Owner, Holder or Lessor. Not in limitation of the foregoing, such
certificate shall confirm that this Lease is in full force end effect and has
not been amended, modified or superseded, that Owner has satisfactorily
completed all construction work required by this Lease (subject to completion of
punchlist items), that Tenant has accepted the Premises and is then in
possession thereof, that Tenant has no defense, offsets or counterclaims
hereunder or otherwise against Owner with respect to this Lease or the Premises,
that Owner is not in default hereunder, that Tenant has no knowledge of any
pledge or assignment of this Lease or rentals hereunder (other than to Holder),
and that Rent is accruing under this Lease but has not been paid more than one
month in advance (and specifying the date to which Rent has been paid). If any
of the foregoing shall not be the case, Tenant shall specify in reasonable
detail the extent and nature of the deviation therefrom.
22. Assignment and Subletting by Tenant.
(a) Without the prior written consent of Owner, Tenant shall not (i)
assign or in any manner transfer this Lease or any estate or interest therein,
or (ii) permit any assignment of this Lease or any estate or interest therein by
operation of law, or (iii) sublet the Premises or any part thereof, or (iv)
grant any license, concession or other right of occupancy of any portion of the
Premises, or (v) permit the use of the Premises by any parties other than
Tenant, its agents and employees, and any such acts without Owner's prior
written consent shall be void and of no effect. Consent by Owner to one or more
assignments or sublettings shall not operate as a consent to, or a waiver of
Owner's rights with respect to, any subsequent assignments and sublettings.
Notwithstanding any assignment or subletting, Tenant and any guarantor of
Tenant's obligations under this Lease shall at all times remain fully
responsible and liable for the payment of the Rent and for compliance with
all of Tenant's other obligations under this Lease. If an Event of Default
should occur while the Premises or any part thereof is then assigned or sublet,
Owner, in addition to any other remedies herein provided or provided by law, may
at its option collect directly from such assignee or sublessee all payments
becoming due to Tenant under such assignment or sublease and apply such
payments against any sums due to Owner by Tenant hereunder, and Tenant hereby
authorizes and directs any such assignee or
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sublessee to make such payments directly to Owner upon receipt of notice from
Owner. No direct collection by Owner from any such assignee or sublessee
(regardless of whether or not such assignee or sublessee shall be deemed to be
void and of no effect as stated in the first sentence of this (a)) shall be
construed to constitute a novation or a release of Tenant or any guarantor of
Tenant from the further performance of its obligations hereunder. Receipt by
Owner of payments from any assignee, sublessee or occupant of the Premises shall
not be deemed a waiver of the covenants in this Lease against assignment and
subletting, or a release of Tenant under this Lease. The receipt by Owner from
any such assignee or sublessee obligated to make payments shall be a full and
complete release, discharge, and acquittance to such assignee or sublessee to
the extent of any such amount so paid to Owner. Owner is authorized and
empowered on behalf of Tenant to endorse the name of Tenant upon any check,
draft, or other instrument payable to Tenant evidencing payment under an
assignment or sublease to Tenant, and to receive and apply the proceeds thereof
in accordance with the terms hereof.
(b) Tenant shall not mortgage, pledge or otherwise encumber this Lease or
any estate or interest therein or in the Premises.
(c) If Tenant requests Owner's consent to an assignment of the Lease or
subletting of all or a part of the Premises, it shall submit to Owner, in
writing, the name of the proposed assignee or subtenant and the nature and
character of the business of the proposed assignee or subtenant, the term, use,
rental rate and other particulars of the proposed subletting or assignment,
including without limitation, evidence satisfactory to Owner that the proposed
subtenant or assignee is financially responsible and will immediately occupy and
thereafter use the Premises (or any sublet portion thereof) for the remainder of
the Term (or for the entire term of the sublease, if shorter). In addition,
Tenant shall submit to Owner $300.00 which shall be deemed to be Owner's expense
in reviewing the materials referred to in the immediately preceding sentence.
Owner shall be under no obligation to review any of the materials until such
time as Owner receives said $300.00. This review is made solely for the purpose
of determining suitability from Owner's point of view of the proposed subtenant
and subtenancy or proposed assignee and assignment. Owner shall have the option
(to be exercised within thirty (30) days from receipt of Tenant's written
request) to cancel this Lease (or to cancel this Lease with respect to the
applicable portion of the Premises, as to a partial subletting) as of the
commencement date provided for in the subletting or assignment. If Owner elects
to cancel this Lease as dated, then the Term, and the tenancy and occupancy of
the Premises by Tenant under this Lease, shall terminate with respect to that
portion of the Premises proposed to be so assigned or sublet, as if the
cancellation date were the Ending Date of Term, and Tenant shall pay to Owner
all costs or charges which are the responsibility of Tenant hereunder with
respect to that portion of the Premises, and Tenant shall, at its own cost and
expense, discharge in full any outstanding commission obligation of Owner with
respect to this Lease, or any part hereof so cancelled, and/or reimburse Owner
for the portion of any such commission paid by Owner relating to the portion of
the Term which is cancelled. Thereafter Owner may lease the Premises to any
person, including the prospective subtenant or assignee, without liability to
Tenant. If Owner does not thus cancel this Lease, the terms and provisions of
subparagraph (a) hereof will apply.
(d) If Owner consents to any subletting or assignment by Tenant as above
provided, and subsequently any payments received by Tenant under any such
sublease are in excess of the Rent payable by Tenant under this Lease, or any
additional consideration is paid to Tenant by the assignee under any such
assignment, then Owner may, at its option, either (i) declare such excess
payments under such sublease or such additional consideration for such
assignment to be due and payable by Tenant to Owner as Additional Rent
hereunder, or (ii) elect to cancel this Lease as provided in subparagraph (c)
hereof.
(e) All of the foregoing notwithstanding, Tenant shall not enter into any
lease, sublease, license, concession or other agreement for the use, occupancy
or utilization of the Premises or any portion thereof, which provides for a
rental or other payment for such use, occupancy or utilization based in whole or
in part on the income or profits derived by any persons from the property
leased, occupied or utilized (other than an amount based on a fixed percentage
or percentages of receipts or sales). Any such purported lease, sublease,
license, concession or other agreement shall be absolutely void and ineffective
as a conveyance of any right or interest in the possession, use or occupancy of
any part of the Premises.
23. Holding Over. Tenant shall, at the expiration or earlier termination of
the Term, promptly quit and surrender the Premises in good order and condition
and in conformity with the applicable provisions of this Lease, excepting only
reasonable wear and tear and damage by fire or other insured casualty. Tenant
shall have no right to hold over beyond the expiration or earlier termination of
the Term and in the event Tenant shall fail to deliver possession of the
Premises as herein provided, such occupancy shall not be construed to effect or
constitute other than a tenancy at sufferance, at a daily rental equal to (a)
the greater of (i) twice the Rent (calculated on a per diem basis) in effect for
the last day of the Term, or (ii) the then current market rental (calculated on
a per diem basis) for the Premises, plus (b) all damages, costs and expenses
sustained by Owner by reason of Tenant's holding over. Without limiting any
rights and remedies of Owner as a result of the holding over by Tenant, and
without creating any right in Tenant to continue in possession of the Premises,
all of Tenant's obligations provided for in this Lease with respect to the use,
occupancy and
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maintenance of the Premises shall continue during such hold over period. The
inclusion of this paragraph shall not be construed as Owner's consent for Tenant
to hold over.
24. Acceptance of Surrender of Premises. During the Term, tenant
shall continuously occupy the Premises and shall not permit the Premises to
become vacant or abandoned. No act or thing done by Owner or its agents during
the Term shall be deemed an acceptance of a surrender of the Premises, and no
agreement to accept a surrender of the Premises shall be valid unless the same
is made in writing and signed by Owner.
25. Condemnation.
(a) If any taking by condemnation, or sale in lieu thereof,
pursuant to an exercise of a power of eminent domain ("Condemnation") occurs
with respect to the Building or Land or any portion of either, which would
leave the remainder of the Building or Land unsuitable for use comparable
(economically or otherwise) to its use prior to the Condemnation, in Owner's
reasonable judgment, then Owner may terminate this Lease.
(b) If any Condemnation occurs with respect to the entire
Premises, or more than 25% thereof (by floor area), or such portion of the
Premises as renders the remainder thereof unsuitable for use comparable
(economically or otherwise) to its use prior to the Condemnation, in Owner's
reasonable judgment, then Owner or Tenant may terminate this Lease.
(c) If Owner determines that the compensation awarded for
Condemnation, available for restoration of the Land, Building or Premises will
not be sufficient to pay the cost of restoration, or if such award is required
to be applied on account of any Mortgage or Underlying Lease, or if Owner
determines that the length of the Term remaining after restoration would make
restoration impractical (whether for economic or other reasons), Owner may
terminate this Lease.
(d) Any termination of this Lease pursuant to this paragraph
shall be effective upon the earlier of the date title to or possession of the
condemned real estate vests in the condemnor. All Rent shall be apportioned
equitably and paid in full by Tenant to Owner to that date. In the event of a
Condemnation which does not effect a termination of this Lease but does deprive
Tenant of the use of a portion of the Premises, there shall be an equitable
reduction of the Rent, taking into account the period for which and the extent
to which such portion of the Premises is not reasonably usable for the
Permitted Use.
(e) All compensation awarded for any Condemnation of the
Building or Land or any portion of either shall be the property of Owner, and
Tenant shall have no claim thereto, the same being expressly waived by Tenant.
Tenant assigns to Owner all rights to compensation for damages, if any,
sustained by Tenant on any Condemnation, except for loss of business, or for
Condemnation of equipment, fixtures and/or improvements which Tenant, on
expiration of the Term, is entitled to remove, if and to the extent a separate
award is made by the condemner to Tenant for such items.
(f) If this Lease is not terminated as provided above, Owner
shall make such repairs, if any, as are reasonably necessary to restore the
part of the Premises not condemned to tenantable condition. Owner, in so doing,
shall not be required to expend more than the net amount Owner reasonably
expects to be available for restoration of the Premises, unless Tenant agrees
to pay the amount of the excess expenditure and, before commencement of the
restoration, provides Owner with reasonable security for such payment by
Tenant. Restoration, if any, shall begin promptly after Tenant vacates the part
of the Premises condemned and shall be completed with reasonable diligence,
subject, however, to delays incident to Force Majeure.
26. Fire and Other Casualty.
(a) Except as provided below, in case of damage to the
Premises or other portions of the Building by fire or other insured casualty,
Owner shall repair the damage. Such repair work shall be commenced promptly
following notice of the damage and completed with reasonable diligence, taking
into account the time required for Owner to effect a settlement with and procure
insurance proceeds from the insurer, except for delays due to Force Majeure.
(b) If the damage is of a nature or extent that, in Owner's
reasonable judgment, the repair and restoration work would require more than
180 days to complete after commencement of work, assuming normal work crews
not engaged in overtime, Owner shall so notify Tenant within a reasonable time
after such determination, and either party, for a period of fifteen (15) days
after such notice, shall have the right to terminate this Lease by notice to
the other, as of the date, not later than thirty (30) days thereafter,
specified in such termination notice. Further, if Owner reasonably determines
that the Building is damaged to such extent as to make repair thereof
unfeasible or that the length of the Term remaining after restoration would
make restoration impractical (in either case, whether for economic or other
reasons), within a reasonable time after such determination Owner shall have
the right to terminate this Lease by notice to Tenant, as of the date,
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<PAGE> 15
not later than thirty (30) days thereafter, specified in such termination
notice.
(c) If the insurance proceeds received or to be received by
Owner (excluding any rental interruption insurance proceeds) would not be
sufficient to pay for repairing the damage or are required to be applied on
account of any Mortgage or Underlying Lease, or if the nature of loss is not
covered by Owner's hazard insurance coverage, Owner may elect either to (i)
repair the damage as above provided notwithstanding such fact, or (ii)
terminate this Lease, by giving Tenant within thirty (30) days after Owner's
knowledge of the damage and determination of availability or sufficiency of
insurance proceeds, notice of Owner's election; and if the election is to
terminate, specifying the termination date, which termination date shall be not
earlier than fifteen (15) days nor later than thirty (30) days thereafter.
(d) All injury or damage to the Premises or the Building
caused by Tenant or Tenant Parties shall be repaired at Tenant's sole cost and
expense. Owner shall have the right to make such repairs, and any cost or
expense so incurred by Owner shall be paid by Tenant to Owner on demand, with
interest thereon at the Reimbursement Interest Rate from the due date until
paid.
(e) Owner shall not be obligated to repair any Alterations
which Tenant may have installed (whether or not Tenant has the right or the
obligation to remove the same or is required to leave the same on the Premises
as of the Ending Date of Term or earlier termination of this Lease) unless
Tenant, in a manner satisfactory to Owner, assures payment in full of all
costs which may be incurred by Owner in connection therewith. Owner shall not be
required to insure any Alterations to the Premises in excess of Building
standard tenant improvements, or any fixtures, equipment or other property of
Tenant. Tenant shall have the right, at its sole expense, to insure the value
of its leasehold improvements, fixtures, equipment or other property located in
the Premises, for the purpose of providing funds to Owner to repair the
Premises. Except as otherwise provided in this Lease, any insurance which may
be carried by Owner or Tenant against loss or damage to the Building or to the
Premises shall be for the sole benefit of the party carrying such insurance and
under its sole control.
(f) If this Lease is terminated pursuant to this paragraph,
all Rent shall be apportioned equitably and paid in full by Tenant to Owner to
the date of termination. This provision shall not relieve Tenant of liability to
Owner for damages (including damages arising due to early termination of this
Lease) arising out of the negligence or other tortious conduct of Tenant or
Tenant Parties.
(g) In the event of a fire or other casualty damage not
arising out of the negligence or other tortious conduct of Tenant or Tenant
Parties, which does not result in termination of this Lease pursuant to this
paragraph but does deprive Tenant of the use of a portion of the Premises,
there shall be an equitable reduction of the Rent, taking into account the
period for which and the extent to which such portion of the Premises is not
reasonably usable for the Permitted Use.
27. Events of Default. In addition to any Event of Default
specified elsewhere in this Lease, each of the following events shall be deemed
to be an "Event of Default" by Tenant under this Lease:
(a) Failure by Tenant to pay when due any installment of Rent
payable by Tenant hereunder or any rental or other sum under any other lease
now or hereafter executed by Tenant in connection with space in the Building).
(b) Failure by Tenant to comply with or observe any other
provision of this Lease (or any other Lease now or hereafter executed by Tenant
in connection with space in the Building) after ten (10) days notice of such
failure.
(c) Vacation or abandonment by Tenant or any portion of the
Premises.
(d) (i) Appointment of a receiver to take possession of,
or making of an attachment or execution against, Tenant's assets or any
substantial portion thereof, or Tenant's interest in this Lease; or
(ii) Making by Tenant of a general assignment for
the benefit or creditors; or
(iii) Admission by Tenant in writing of its
inability to meet its obligations as they mature; or
(iv) Commission by Tenant of any other act of
bankruptcy or filing by Tenant of a petition or institution of a proceeding on
its behalf under any section or chapter of the Bankruptcy Code of the United
States, as amended, or under any similar law or statute of the United States
or any state thereof ("Bankruptcy Laws"); or
(v) Filing by any third party of a petition or
institution by any third party of a
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proceeding against Tenant under any Bankruptcy Law, and such petition or
proceeding is not dismissed within thirty (30) days; or
(vi) Adjudication of Tenants as a bankrupt; or
(vii) Occurrence of any of the foregoing actions
in this subparagraph (d) with respect to any guarantor of Tenant's obligations
under this Lease, or default by such guarantor in performance of any
provision under its guaranty.
28. Owner's Remedies. If an Event of Default shall occur, the
following provisions shall apply and Owner shall have the rights and remedies,
cumulatively if possible, set forth herein, which rights and remedies may be
exercised, separately or cumulatively, notwithstanding any election of
remedies, upon or at any time following the occurrence of an Event of Default
unless, prior to such exercise, Owner shall agree in writing with Tenant that
the Event of Default has been cured by Tenant in all respects:
(a) Acceleration of Rent.
(i) By notice to Tenant, Owner shall have the right
to accelerate all Base Rent and all Additional Rent due hereunder and
otherwise payable in installments over the remainder of the Term, and,
at Owner's option, any other Additional Rent and other Rent to the extent that
such Additional Rent and other Rent can be determined and calculated (which may
be reasonably estimated by Owner) to a fixed sum; and the amount of all of such
accelerated Rent, without further notice or demand for payment, shall be due
and payable by Tenant within five (5) days after Owner has so notified Tenant.
Additional Rent and other Rent which has not been included in accelerated Rent,
shall be due and payable by Tenant during the remainder of the Term, in the
amounts and at the times otherwise provided for in this Lease.
(ii) Notwithstanding the foregoing or the
application of any rule of law based on election of remedies or otherwise, if
Tenant fails to pay the accelerated Rent in full when due, Owner thereafter
shall have the right by notice to Tenant. (A) to terminate Tenant's further
right to possession of the Premises and (B) to terminate this Lease under
subparagraph (c) below; and if Tenant shall have paid part but not all of the
accelerated Rent, the portion thereof attributable to the period equivalent to
the part of the Term remaining after Owner's termination of possession or
termination of this Lease shall be applied by Owner against Tenant's
obligations owing to Owner as determined by the applicable provisions of
subparagraphs (d) and (f) below.
(b) Taking of Possession - Curing Tenant's Defaults.
(i) With or without notice, Owner shall have the
right to enter upon and take possession of the Premises and expel or remove
Tenant and any other person who may be occupying the Premises or any part
thereof, by force if necessary, without being liable for prosecution or any
claim for damages therefor. No re-entry or taking possession of the Premises
by Owner shall be construed as an election on its part to terminate this Lease,
unless a written notice of termination is given to Tenant.
(ii) With or without re-entering and taking
possession of the Premises, and with or without notice to Tenant, Owner may
make any payment which Tenant was obligated but failed to make under this
Lease, and perform or attempt to perform any other obligation of Tenant under
this Lease which Tenant has failed to perform.
(c) Termination of Lease.
(i) By notice to Tenant, Owner shall have the right
to terminate this Lease as of a date specified in the notice. Tenant's rights
to the possession and use of the Premises shall end absolutely as of the
specified termination date, and this Lease shall terminate in all respects
except for the provisions hereof regarding Owner's damages and Tenant's
liabilities arising prior to, out of and following the Event of Default and
the ensuing termination, and the provisions hereof which by their terms survive
termination. Therefore after termination of the Lease, Tenant shall remain
liable to Owner for damages as calculated pursuant to 28.(f)
(ii) Following such termination (as well as upon any
other termination of this Lease by expiration of the Term or otherwise) Owner
immediately shall have the right to recover possession of the Premises; and to
that end, Owner may enter the Premises and take possession, without the
necessity of giving Tenant any notice to quit or any other notice, with or
without legal process or proceedings, and in so doing Owner may remove Tenant's
property (including any improvements or additions to the Premises which Tenant
made, unless made with Owner's consent which expressly permitted Tenant to not
remove the same upon expiration of the Term), as well as the property of others
as may be in the Premises, and make disposition thereof in such manner as Owner
may deem to be commercially reasonable under the circumstances.
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(d) Tenant's Continuing Obligations - Owner's Re-letting
Rights.
(i) Unless and until Owner shall have in writing
terminated this Lease under subparagraph (c) above, Tenant shall remain fully
liable and responsible to perform all of the covenants and to observe all the
conditions of this Lease throughout the remainder of the Term; and, in addition,
whether or not Owner shall have terminated this Lease, Tenant shall pay to
Owner, on demand and with interest thereon at the Reimbursement Interest Rate
from the due date until paid, the total sum of all costs, losses and expenses,
including reasonable counsel fees, as Owner incurs, directly or indirectly,
because of any Event of Default having occurred.
(ii) If Owner either terminates Tenant's right to
possession without terminating this Lease or terminates this Lease and Tenant's
leasehold estate as above provided, Owner shall have the unrestricted right to
re-let the Premises or any part thereof to such tenants, on such provisions, and
for such periods as Owner may deem appropriate. It is understood that Owner
shall have no obligation to have the Premises available for re-letting or
otherwise endeavor to re-let so long as Owner (or any affiliated entity) has
other comparable or competing vacant space or property available for leasing to
others in the Building or in other buildings in the general market area of which
the Building is a Part; and that notwithstanding nonavailability of other space
or property, Owner's obligation to mitigate damages shall be limited to such
efforts as Owner, in its reasonable judgement, deems appropriate.
(e) Bankruptcy Assurances.
Owner and Tenant understand that, notwithstanding
certain provisions to the contrary contained herein, a trustee or debtor in
possession under the Bankruptcy Code of the United States (or other Bankruptcy
Laws) may have certain rights to assume or assign this Lease. Owner and Tenant
further understand that in any event Owner is entitled under the Bankruptcy Code
(or other Bankruptcy Laws) to adequate assurances of future performance of the
terms and provisions of this Lease. For purposes of any such assumption or
assignment, the parties hereto agree that the term "adequate assurance" shall
include at least the following:
(i) In order to assure Owner that the proposed
assignee will have the resources with which to pay the Rent, any proposed
assignee must have demonstrated to Owner's satisfaction a net worth (as defined
in accordance with generally accepted accounting principles consistently
applied) at least as great as the net worth of Tenant on the commencement Date,
increased by ten percent (10%) for each year from the Commencement Date through
the date of the proposed assignment. The financial condition and resources of
Tenant were a material inducement to Owner in entering into this Lease.
(ii) Any proposed assignee must have been engaged in
the business conducted by Tenant in the Premises, allowable pursuant to the
Permitted Use, for at least five (5) years prior to any such proposed
assignment.
(iii) Any proposed assignee must agree to use the
Premises only for the Permitted Use. In entering into this Lease, Owner
considered extensively the Permitted Use and determined that such Permitted Use
would add substantially to Owner's tenant balance and that were it not for
Tenant's agreement to use the Premises only for the Permitted Use, Owner would
not have entered into this Lease. Owner's overall operation will be
substantially impaired if the trustee in bankruptcy or any assignee of this
Lease makes any use of the Premises other than the Permitted Use.
(f) Owner's Damages.
(i) Whether the Lease is terminated or not the
damages which Owner shall be entitled to recover from Tenant shall be the sum
of:
(a) All Rent accrued and unpaid as of the
termination date or the date Owner retakes possession of the premises
(whichever occurs later); and
(b) (1) all costs and expenses incurred by
Owner in recovering possession of the Premises, including removal and storage
of Tenant's property, improvements and Alterations therefrom, (2) the costs
and expenses of curing or attempting to cure any default by Tenant, (3) the
costs and expenses of restoring the Premises to the condition in which the same
were to have been surrendered by Tenant as of the Ending Date of Term, or, in
lieu thereof, the costs and expenses of remodeling or altering the Premises or
any part for re-letting the same, (4) the costs of re-letting (exclusive of
those covered by the foregoing) including brokerage fees and reasonable counsel
fees, and (5) any special overhead expenses related to the vacancy of the
Premises not in excess of ten percent (10%) of the monthly Base Rent otherwise
to be paid by Tenant over the remainder of the Term, for each month or part
between the date of termination and the re-
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letting of the entire Premises; and
(c) All Base Rent and Additional Rent and
other Rent (to the extent that the amount of Additional Rent and other Rent
has been then determined or estimated as provided above) otherwise payable by
Tenant over the remainder of the Term; and
(d) All reasonable attorney fees, court
costs, arbitration costs, witness fees and similar costs of enforcing
this Lease;
(e) Less [deducting from the total
determined under subparagraphs (a), (b), (c) and (d)] all Rent and Additional
Rent which Owner receives from other tenants by reason of the leasing of the
Premises or part thereof during or attributable to any period falling within
what would otherwise have been the remainder of the Term. If the premises
covered by a new lease by other tenants include other premises not part of the
Premises of this Lease, a fair apportionment of the rent received from such new
lease and expenses incurred in connection therewith as provided aforesaid will
be made in determining the net proceeds from such new lease. If the existing
term of a new lease by other tenants is different from the Term of this Lease
any rent concessions will be equally apportioned over the term of the new
lease.
(ii) The damages payable by Tenant under the preceding
provisions of this subparagraph (f) shall be payable on demand from time to time
as the amounts are determined; and if from Owner's subsequent receipt of rent
as aforesaid from re-letting, there shall be any excess payment(s) by Tenant by
reason of the crediting of such rent thereafter received, the excess payment(s)
shall be refunded by Owner to Tenant, without interest.
(iii) If this Lease is terminated, then Owner shall have the
additional options to determine the damages as follows:
(a) Tenant shall be liable for amounts
determined pursuant to 28, Owner's Remedies, (a)(i). Owner may have damages
determined under this section A. even if Owner did not previously accelerate
the rent pursuant to 28 (a)(i).
(b) Owner shall be entitled to recover
forthwith against Tenant as damages for loss of the bargain, and not as a
penalty, an aggregate sum which, at the time of such termination of this lease,
represents the aggregate of the rent and all other sums payable by Tenant
hereunder that would have accrued for the balance of the term discounted
present worth at the rate of 4% per annum.
(g) Interest on Damages Amounts. Any sums payable by
Tenant hereunder which are not paid after the same shall be due shall bear
interest, from the due date until paid, at the Overdue Interest Rate.
(h) Owner's Statutory Rights. Owner shall have all
rights and remedies now or hereafter existing at law or in equity with respect
to the enforcement of Tenant's obligations hereunder and the recovery of the
Premises. No right or remedy herein conferred upon or reserved to Owner shall
be exclusive of any other right or remedy, but shall be cumulative and in
addition to all other rights and remedies given hereunder or now or hereafter
existing at law or in equity. Owner shall be entitled to injunctive relief in
case of the violation, or attempted or threatened violation, by Tenant of any
covenant, agreement, condition or provision of this Lease, or to a decree
compelling performance of any covenant, agreement, condition or provision of
this Lease. If Tenant is in default, Tenant may not remove property subject to
the security interest referred to in paragraph 29. Owner's Lien. Owner shall be
entitled to injunctive relief in case Tenant attempts to remove property
subject to the security interest referred to in paragraph 29. Owner's Lien.
This injunctive relief includes, but is not limited to a temporary or permanent
restraining order. Tenant hereby agrees to the issuance of such restraining
order ex parte. Tenant acknowledges that Owner's remedy at law in such a case
would be inadequate and that the equitable relief may be brought without the
necessity of proof of actual damage or inadequacy or any legal remedy.
Notwithstanding any statute to the contrary, Owner shall have the right to
such restraining order without the necessity of a bond.
(i) Remedies Not Limited. Nothing herein contained shall
limit or prejudice the right of Owner to exercise any or all rights and
remedies available to Owner by reason of default or to prove and obtain in
proceedings under any Bankruptcy Laws, an amount equal to the maximum
allowance permitted by any law in effect at the time when, and governing the
proceedings in which, the damages are to be proved, whether or not the amount
is greater, equal to, or less than the amount of the loss or damages referred
to above.
(j) No termination Except by Owner in writing. No action
by Owner, including without limitation legal proceedings for eviction, unlawful
detainer or similar actions that may be available under the laws of the State,
shall be deemed a termination of this Lease or of Tenant's obligations
hereunder unless Owner specifies in writing that the Lease is terminated and
that Tenant has no further liability hereunder.
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(k) No Waiver by Owner. No delay or forbearance by Owner
in exercising any right or remedy hereunder, or Owner's undertaking or
performing any act or matter which is not expressly required to be undertaken by
Owner shall be construed, respectively, to be a waiver of Owner's rights or to
represent any agreement by Owner to undertake or perform such act or matter
thereafter. Waiver by Owner of any breach by Tenant of any covenant or condition
herein contained (which waiver shall be effective only if so expressed in
writing by Owner) or failure by Owner to exercise any right or remedy in respect
of any such breach shall not constitute a waiver or relinquishment for the
future of Owner's right to have any such covenant or condition duly performed or
observed by Tenant, or of Owner's rights arising because of any subsequent
breach of any such covenant or condition, nor bar any right or remedy of Owner
in respect of such breach or any subsequent breach. Owner's receipt and
acceptance of any payment from Tenant which is tendered not in conformity with
the provisions of this Lease or following an Event of Default (regardless of any
endorsement or notation on any check or any statement in any correspondence
accompanying any payment) shall not operate as an accord and satisfaction or a
waiver of the right of Owner to recover any payments then owing by Tenant which
are not paid in full, or act as a bar to the termination of this Lease and the
recovery of the Premises because of Tenant's previous default.
29. Owner's Lien. In addition to any applicable statutory Owner's
lien, which is not waived but is supplemented hereby, Owner shall have, at all
times, and Tenant hereby grants to Owner, a valid security interest to secure
payment of all Rent and other sums of money becoming due hereunder from Tenant,
and to secure payment of any damages or loss which Owner may suffer by reason of
any Event of Default, upon all goods, wares, equipment, fixtures, furniture,
improvements and other personal property of Tenant presently or which may
hereafter be situated in the Premises or the Building or on the Land
("Property"), and all proceeds thereof, and the Property shall not be removed
therefrom without the consent of Owner until all arrearages in Rent as well as
any and all other sums of money then due to Owner hereunder shall first have
been paid and discharged and all the covenants, agreements and conditions hereof
have been fully complied with and performed by Tenant. Upon the occurrence of an
Event of Default in addition to any other remedies provided herein, Owner may
enter upon the Premises and take possession of any and all Property, without
liability for trespass or conversion, and sell the same at public or private
sale, with or without having the Property at the sale, after giving Tenant
reasonable notice of the time and place of any public sale or of the time after
which any private sale is to be made, at which sale Owner or its assigns may
purchase unless prohibited by law. Unless otherwise provided by law, and without
intending to exclude any other manner of giving Tenant reasonable notice, the
requirement of reasonable notice shall be met if such notice is given, in the
manner prescribed in this Lease, at least five (5) days before the time of sale.
The proceeds from any such disposition, less any and all expenses connected with
the taking of possession, holding and selling of the Property (including
reasonable attorneys' fees and other expenses), shall be applied as a credit
against the payments secured by the security interest granted in this paragraph.
Any surplus shall be paid to Tenant or as otherwise required by law, and Tenant
shall pay any deficiencies forthwith. Upon request by Owner, from time to time,
Tenant agrees to execute and deliver to Owner a financing statement or
statements in form sufficient to perfect the security interest of Owner in the
Property and proceeds thereof under the provisions of the Uniform Commercial
Code in force in the State. In addition, Tenant hereby agrees to grant Owner a
power of attorney to act as Tenant's agent to execute any financing agreement or
financing statement in order to perfect the security interest referred to in
this paragraph 29.
30. Certain Rights Reserved by Owner. Owner (acting itself or
through persons authorized by it) shall have the following rights, exercisable
from time to time without notice and without liability to Tenant for damage or
injury to property, persons or business and without effecting an eviction,
constructive or actual, or disturbance of Tenant's use or possession of the
Premises or giving rise to any claim for set off or abatement of Rent or
otherwise affecting Tenant's obligations hereunder:
(a) To decorate and to make repairs, alterations, additions,
changes or improvements whether structural or otherwise, in and about the
Building, or any part thereof, and for such purposes to enter upon the Premises,
and during the continuance of any such work, to temporarily close doors,
entryways, common areas, public space and corridors in the Building, to
interrupt or temporarily suspend Building Services and facilities and to change
the arrangement and location of entrances or passageways, doors and doorways,
corridors, elevators, stairs, toilets, or other public parts of the Building, so
long as the Premises are reasonably accessible and Tenant is not unreasonably
disturbed in use or possession thereof.
(b) To have and retain paramount title to the Premises free
and clear of any act of Tenant purporting to burden or encumber the Premises.
(c) To grant to anyone the exclusive right to conduct any
business in or render any service to the Building, provided such exclusive right
shall not operate to exclude Tenant from the Permitted Use.
(d) To prohibit the placing of vending or dispensing machines
of any kind in or about the Premises without the prior written permission of
Owner.
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(e) To have access for Owner and other tenants of the
Building to any mail chutes located on the Premises according to the rules of
the United States Postal Service.
(f) To take all such reasonable measures as Owner may deem
advisable for the security of the Building and its occupants, including without
limitation, the search of persons entering or leaving the Building, the
evacuation of the Building for cause, suspected cause, or for drill purposes,
the temporary denial of access to the Building, and the closing of the Building
after normal business hours and on Saturdays, Sundays and holidays, subject,
however to Tenant's right to admittance when the Building is closed after
normal business hours under such reasonable regulations as Owner may prescribe
from time to time which may include by way of example but not of limitation,
that persons entering or leaving the Building, whether or not during normal
business hours, identify themselves to a security officer by registration or
otherwise and that such persons establish their right to enter or leave the
Building.
(g) To enter the Premises to perform Owner's covenants under
this Lease, to exercise Owner's remedies under this Lease, to ascertain if
Tenant is in compliance with its covenants under this Lease, to inspect the
Premises, and to exhibit the Premises to Mortgagees and Lessors and to
prospective lenders, purchasers and tenants.
(h) To change the name by which the Building is designated.
(i) To transfer, assign and convey, in whole or in part, the
Building and any and all of its rights under this Lease, and in the event Owner
assigns its rights under this Lease, Owner shall thereby be released from any
further obligations hereunder, and Tenant agrees to attorn to and look solely to
such successor in interest of the Owner for performance of such obligations.
31. Intentionally Omitted
32. Brokers. Each party warrants to the other that it has had no
dealings with any broker or agent in connection with the negotiation or
execution of this Lease except as may be named in the Basic Lease Provisions,
and each party agrees to indemnify the other against all costs, expenses,
attorney's fees or other liability for commissions or other compensation or
charges claimed by any broker or agent claiming the same by through or under
said indemnifying party.
33. Quiet Enjoyment. Provided Tenant has performed all of the
terms and conditions of this Lease, including the payment of Rent, to be
performed by Tenant, Tenant shall peaceably and quietly hold and enjoy the
Premises for the Term, without hindrance from Owner, subject to the terms and
conditions of this Lease.
34. Notices. Each provision of this Lease, or of any applicable
governmental law, ordinance or regulation, or other requirement, with reference
to the sending, mailing or delivery of any notice or document, or with reference
to the making of any payment by Tenant to Owner, shall be deemed to be complied
with when and if the following steps are taken:
(a) All Rent and other payments required to be made by Tenant
to Owner hereunder shall be payable to Owner at Owner's Address set forth in the
Basic Lease Provisions or at such other address as Owner may specify from time
to time by notice to Tenant, and shall be deemed delivered only upon actual
receipt (and if other than in cash, subject to collection).
(b) Any notice or document required to be delivered hereunder
shall be deemed to be delivered if actually received and whether or not received
when deposited in the United States mail, postage prepaid, certified or
registered mail (with return receipt requested), addressed to the party to
receive same at its address set forth in the basic Lease Provisions or at such
other address as said party has theretofore specified to the other by notice.
35. Force Majeure. Whenever a period of time is herein prescribed
for action to be taken by Owner, Owner shall not be liable or responsible for,
and there shall be excluded from the computation of any such period of time, any
delays due to strikes, riots, acts of God, shortages of labor or materials, war,
governmental laws, regulations or restrictions or any other causes of any kind
whatsoever which are beyond the control of Owner ("Force Majeure").
36. Entire Agreement; Addendums; Waivers; Binding Effect. This
Lease contains and embodies the entire agreement of the parties hereto with
respect to the subject matter hereof, and no representations, inducements or
agreements, oral or otherwise, between the parties not contained in this Lease
shall be of any force or effect. This Lease may not be supplemented or amended,
except by instrument in writing signed by both parties hereto. No provision of
this Lease shall be deemed to have been waived by Owner unless such
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waiver is in writing signed by Owner and addressed to Tenant, nor shall any
custom or practice which may evolve between the parties in the administration of
the terms thereof be construed to waive or lessen the right of Owner to insist
upon performance by Tenant in strict accordance with the terms hereof. The terms
and conditions contained in this Lease shall apply to, inure to the benefit of,
and be binding upon the parties hereto, and upon their respective successors in
interest and legal representatives, except as otherwise herein expressly
provided.
37. Severability. If any clause or provision of this Lease is
illegal, invalid, or unenforceable under present or future laws effective
during the Term, the remainder of this Lease shall not be affected thereby and
in lieu of such clause or provision, there shall be deemed added as a part of
this Lease a clause or provision as similar in terms thereto as may be possible
and be legal valid and enforceable.
38. Joint and Several Liability of Tenant. If there is more than
one person comprising Tenant, the obligations imposed upon Tenant hereunder
shall be joint and several. If there is a guarantor or there are guarantors of
Tenant's obligations hereunder, the obligations imposed upon Tenant shall be
the joint and several obligations of Tenant and each such guarantor and Owner
need not first proceed against Tenant before proceeding against any such
guarantor, nor shall any such guarantor be released from its guaranty for any
reasons whatsoever, including without limitation, any amendment hereto, waiver
of any provision hereof or failure to give such guarantor any notice
hereunder.
39. Owner's Liability Limitation. The liability of Owner to
Tenant for fulfillment of any obligation of Owner or for any default by Owner
under the terms of this Lease shall be limited to the interest of Owner in the
Building and the Land; Tenant shall look solely to such interest for
satisfaction thereof; and Owner shall not be personally liable for any
deficiency.
40. Arbitration.
(a) At Owner's option, all claims, disputes and other
matters in question or calling for mutual agreement, between Owner and Tenant
arising out of, or relating to this Lease or the breach hereof, shall be decided
by arbitration in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then obtaining. At Owner's option, any
arbitration arising out of or relating to this Lease or any breach hereof shall
include, by consolidation, joinder or joint filing any other person not a party
to this Lease to the extent necessary for the final resolution of the matter in
controversy. This agreement by Tenant to arbitrate shall be specifically
enforceable by Owner under the prevailing arbitration law. The award rendered
by the arbitrators shall be final, and judgment may be entered upon it in
accordance with applicable law in any court having jurisdiction thereof.
(b) Notice of the demand for arbitration shall be filed by
Owner in writing with Tenant and with the American Arbitration Association. The
demand for arbitration shall be made within a reasonable time after the claim,
dispute or other matter has arisen, and in no event shall it be made after the
date when institution of legal or equitable proceedings based on such claim,
dispute or other matter would be barred by the applicable statute of
limitations.
(c) Unless otherwise agreed in writing by Owner, Owner and
Tenant shall continue to perform their obligations under this Lease in
accordance with Owner's interpretation of the claim, dispute or other matter
during any arbitration proceedings, until final resolution thereof.
(d) At Owner's option, the venue for arbitration or
litigation with respect to all claims, controversies and disputes arising out
of or relating to this Lease or any breach hereof, shall be the county in
which the Land and Building are located.
41. Waiver of Trial by Jury. To the extent such waiver is
permitted by applicable law, Owner and Tenant waive trial by jury in any action
or proceeding brought in connection with this Lease or the Premises.
42. Applicable Law. This Lease and the rights and obligations of
Owner and Tenant hereunder shall be construed in accordance with and governed by
the laws of the State of Colorado.
43. Miscellaneous.
(a) Any approval by Owner or Owner's architects and/or
engineers of any of Tenant's Plans shall not in any way be construed or
operate to bind Owner or to constitute a representation or warranty of Owner
as to the adequacy or sufficiency of such Plans or the Alterations to which
they relate, for any use, purpose, or condition, but such approval shall merely
be the consent of Owner as may be required hereunder.
(b) Nothing contained in this Lease shall be deemed or
construed to create a partnership or joint venture of or between Owner and
Tenant, or to create any other relationship between the parties hereto other
than that of Owner and Tenant.
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(c) Words of any gender used in this Lease shall be held and
construed to include any other gender, and words in the singular number shall
be held to include the plural, unless the context otherwise requires. The word
"person" as used in this Lease means any natural person, legal entity, or body
politic.
(d) The submission of this Lease to Tenant shall not be
construed as an offer, nor shall Tenant have any rights with respect thereto
unless and until Owner shall have executed a copy of this Lease and delivered
the same to Tenant.
(e) If Tenant is a corporation, each of the persons executing
this Lease on behalf of Tenant hereby warrants that Tenant is a duly formed and
existing corporation, qualified to do business in the State, that the Tenant
has the full right and authority to enter into the Lease, and that each of the
persons signing on behalf of Tenant are authorized to do so.
(f) The covenants and obligations of Owner and Tenant
hereunder are independent, such that the obligations of Tenant to pay rent
hereunder are not contingent upon any act or failure to act by Owner.
(g) If Owner consults with an attorney to enforce any
provision of this Lease then all costs, including reasonable attorney fees
from the date any such matter is turned over to an attorney shall be
recoverable by Owner from Tenant.
44. Recording. Tenant hereby covenants and agrees not to place
the Lease of record. If so requested by Owner, Tenant shall execute a short
form memorandum of lease which memorandum may, at Owner's option, be placed of
record. Any recording of the Lease or of any notice or memorandum thereof by
Tenant without Owner's prior written consent shall be a default under the Lease
and Owner shall have all of the rights and remedies set forth therein for a
default. In addition, if requested by Owner, Tenant shall execute a memorandum
of lease to be filed with the Colorado Department of Revenue on such form as may
be prescribed by said department within ten (10) days after execution of the
Lease, or any other such memorandum so that Owner may avail itself of such
statutes as Section 39-22-604 (7)(c) of the Colorado Revised Statutes(1973).
45. Acts to be performed by Tenant Prior to Tenant's Construction.
(a) In the event that Tenant receives Owner's prior written
approval to commence any alterations, additions, improvements or construction
of whatever kind or nature to be done by Tenant in or about the Premises (the
"Alterations"), which approval or disapproval shall be in Owner's sole and
subjective discretion, then, as a condition precedent to Tenant's commencing
such Alterations, Tenant shall submit to Owner the following items:
(i) All architectural, engineering, construction
and/or design drawings, plans, specifications, studies, reports, bids and other
material of every kind relating to the Alterations (the "Plans and
Specifications");
(ii) An originally signed copy of the contract
between Tenant and any and all contractors, subcontractors, materialmen or
suppliers together with copies of any and all subcontracts and supply contracts
relating to the Alterations;
(iii) A standard indemnification in a form approved
by Owner.
(iv) Originally signed lien waivers from all
subcontractors and materialmen or suppliers for all work done and/or material
supplied in connection with the Alterations in a form approved by Owner; and
(v) An originally signed general release of liens
from Tenant's general contractor in a form approved by Owner; and
(vi) A standard form of notice to be posted at the
Property in a form approved by Owner.
(b) Upon completion of the Alterations, Tenant shall
submit to Owner:
(i) A certification from Tenant's general contractor
and, if requested by Owner, from Tenant's architect, certifying that each has
inspected the Premises not more than five (5) days prior to the date of the
certification and that the Alterations have been constructed in good and
workmanlike manner and in substantial accordance with the Plans and
Specifications and with the requirements of the governmental
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authorities having jurisdiction or control over same, and that all materials
for which payment has been made by Tenant have been delivered to and have been
incorporated into the Premises; and
(ii) Final unconditional certificate(s) of
occupancy, or the equivalent issued by the applicable governmental authority.
46. Personal Property Taxes. Tenant shall pay, prior to
delinquency, all taxes, assessments, license fees and public charges levied,
assessed or imposed upon or measured by the value of its personal property and
business operations, including but not limited to, the furniture, fixtures,
leasehold improvements, equipment and other property of Tenant at any time
situated upon or installed in the Premises by Tenant. Tenant shall cause all
such personal property to be assessed and billed separately from the real
property of Owner.
47. Transfer of Interest. If Tenant is a partnership or
corporation, the transfer, sale, conveyance and disposition of a controlling
interest in Tenant to any third party, including without limitation, to an
affiliate of Tenant shall be deemed as assignment or transfer of Tenant's
interest under the Lease for purposes of Section 22 of the Lease. As used
herein, the term "affiliate" shall mean any subsidiary or parent company of
Tenant and any subsidiary of a parent company of Tenant, or any entity related
to Tenant or held in common control with Tenant.
48. Special Provisions. Special Provisions, if any, are provided
in Addendum I.
IN WITNESS WHEREOF, Owner and Tenant have executed this Lease as of the Lease
date.
OWNER: TENANT:
SKY HARBOR ASSOCIATES LIMITED CET ENVIRONMENTAL SERVICES, INC.
PARTNERSHIP
By: Pomeroy Investment Corporation By: /s/ STEPHEN H. DAVIS
Corporation, General Partner -----------------------------
Stephan H. Davis
Its: President
By: /s/ HOWARD LESHMAN
---------------------------------
Howard Leshman
Its: Vice President
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RIDER I
This Rider to Lease is attached to and forms a part of that certain lease
between Sky Harbor Associates Limited Partnership ("Owner") and CET
Environmental Services, Inc. ("Tenant") dated as of the 1st day of March 1999
(the "Lease"), and sets forth additional terms and provisions to be incorporated
into the Lease.
ADDITIONAL RENT. It is expressly agreed that Tenant will pay in addition to
the Base Rent, Additional Rent, herein defined as those items enumerated in this
Rider.
A. Tenant shall pay to Owner as Additional Rental commencing
with the First Operating Cost Year (as said term is hereinafter defined), and
for each Subsequent Operating Cost Year thereafter an amount equal to Tenant's
Project Proportionate Share (as said term in hereinbefore defined) of the total
aggregate of Operating Costs (as said term is hereinafter defined) of said
Operating Cost Year.
B. The term "Operating Costs" means the total amounts paid or
payable, whether by Owner or otherwise on behalf of Owner, in connection with
the ownership, management, maintenance, repair and operation of the Building,
including by way of illustration and not a limitation, and without limiting the
generality of the foregoing, the aggregate of the amounts paid or payable for;
(i) all electricity furnished to the Building except those amounts paid
directly by Tenant or tenants; (ii) the amount paid or payable for all water
furnished to the Building other than those amounts paid directly by Tenant or
tenants; (iii) labor and or wages and other payments made by Owner in the
operation, maintenance and repair of the Building, including, without
limitation, the cost to Owner of workman's compensation and disability
insurance, payroll taxes, and contributions to any social security,
unemployment insurance, welfare, pension or similar fund and payments for other
fringe benefits made to or on behalf of all employees of Owner performing
services rendered in connection with the operation and maintenance of the
Building, including, without limitation, porters, janitors, handymen,
watchmen, persons engaged in patrolling and protection the Building,
carpenters, engineers, mechanics, electricians, plumbers, building manager,
clerical and administrative personnel, contractors, subcontractors (It is
understood that Owner is under no obligation to have employed any or all of
such above-referred to employees.); (iv) the total charges of any independent
contractors employed in the repair, care, operation, maintenance and cleaning
of the Building; (v) the cost of replacements for tools and equipment used in
the operation and maintenance of the Building, including without limitation
electric light bulbs, tubes and ballasts used in connection with Building
Common Areas and parking lots; (vi) the cost of telephone service, postage,
office supplies, maintenance and repair of office equipment and similar costs
related to operation of the Building and manager's office (whether in the
Building or not); (vii) the cost of licenses, permits and similar fees and
charges related to the operation, repair, maintenance of the Building (viii)
the cost of maintenance of parking areas and driveways, including, but not
limited to cleaning, snow removal, repaving, relining and repainting; (ix)
cleaning cost for the Building, including the windows, sidewalks, all snow
removal (including separate contracts therefore) and the cost of all labor,
supplies, equipment and materials incidental thereto; (x) the cost of premiums
and other charges incurred by Owner with respect to all insurance relating to
the Building and the operation and maintenance thereof, including without
limitation, fire and extended coverage insurance, including windstorm, hail,
explosion, riot, rioting attending a strike, civil commotion, aircraft, vehicle
and smoke insurance, public liability, elevator, workman's compensation, boiler
and machinery, rent, use and occupancy, and health, accident and group life
insurance of all employees; (xi) the cost of sales and excise taxes and the
like upon any of the expenses enumerated herein; (xii) the cost of decorating,
repainting or otherwise maintaining the exterior of the Building; (xiii) the
cost of auditing fees necessarily incurred in connection with the maintenance
and operation of the Building and accounting fees incurred in connection with
the preparation and certification of the real estate tax escalation and the
operating expense escalation statements pursuant to this Rider; (xiv) fees for
legal, inspection, accounting and consulting services; (xv) all costs incurred
by Owner to retrofit any portion or all of the Building to comply with change in
existing legislation or introduction of new legislation, whether federal, state
or municipal, state, county or municipal (including any agency or arm of said
governmental unit; (xvi) the cost of repairs, replacements and improvements
which are appropriate for the continued operation of the Building; (xvii) all
expenses associated with the installation of any energy, cost or labor saving
devices; (xviii) costs of all landscaping; (xix) costs of any security guards
or security; (xx) any and all other expenditures of Owner in connection with
the operation, repair or maintenance of a Building which are properly expensed
in accordance with generally accepted accounting principles consistently
applied with respect to the operation and repair and maintenance of comparable
buildings in the southern Metro Denver Area. The above enumeration of any
Operating Cost shall not create any obligation (express or implied) on the part
of Owner to furnish such service.
If Owner shall purchase any item of capital equipment or make
any capital expenditure as described in (xv), (xvi), or (xvii) above, then the
cost for the same shall be included in operating expenses in the year of
installation and in subsequent years amortized in accordance with generally
accepted accounting principles. If Owner shall lease such item of capital
equipment, then the rentals or other operating costs paid
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pursuant to such leasing shall be included in operating expenses for each year
in which they are incurred.
In addition, Operating Cost shall also include all Real
Estate Taxes. The term Real Estate Taxes includes, without limitation, general
and special taxes, assessments, duties and levies, charged and levied upon or
assessed against the Building, the land upon which it is located, and
improvements situated on the real property, any leasehold improvements,
fixtures, installations, additions and equipment used in the maintenance or
operation of the Building, whether owned by Owner or Tenant and not paid
directly by Tenant, including, without limitation, real estate taxes, personal
property taxes, general or special assessments, any duties or levies charged or
levied upon or assessed against the building and the property and personal
property transfer taxes, all costs and expenses (including legal fees and court
costs) charged for the protest or reduction of property taxes or assessments in
connection with the property and the Building, or any tax or excise on rent or
any other tax (however described) on account of rental received for use and
occupancy of any or all of the Building and the property, whether any such
taxes are imposed by the United States, the State of Colorado, the County in
which the Building is located, or any local governmental municipality,
authority or agency or any political subdivision of any thereof. Real Estate
Taxes shall not include franchise, gift, estate or inheritance taxes. Further,
if at any time during the Term the method of taxation of real estate prevailing
at the time of execution hereof shall be, or has been, altered so as to cause
the whole or any part of the taxes now or hereafter levied, assessed or imposed
on real estate to be levied assessed or imposed upon Owner, wholly or partially
as a capital levy or otherwise, or on or measured by the rents received, then
such new or altered taxes attributable to the Demised Premises shall be deemed
to be included within the term Real Estate Taxes for purposes of this
paragraph, save and except that such shall not be deemed to include any
increase in said tax not attributable to the Building. Furthermore, if at any
time during the term hereof a tax or excise on rents or income or other tax
however described (herein called Rent Tax) is levied or assessed by the State
of Colorado, or any political subdivision thereof, on account of the rents
hereunder of the interest of Owner under this Lease, such Rent Tax shall
constitute Real Estate Taxes, provided, further, in no event shall Tenant be
obligated to (i) pay for any year any greater amount by any of such Rent Tax
than would have been payable by Tenant had the rentals paid to the Owner under
all Building leases (being the rentals upon which such Rent Tax is imposed)
been the sole taxable income of Owner for the year in question or (ii) to pay
or to reimburse Owner for any tax of any kind assessed against Owner on account
of any such Rent Tax having been reimbursed.
Operating costs shall not include (1) leasing commissions,
advertising expenses and other costs incurred in leasing or procuring new
Tenant; (2) the cost of any capital addition made to the Building, including
the cost to prepare space for occupancy by a new Tenant; (3) depreciation and
amortization of the Building, other than (a) capital expenditures which under
generally applied real estate practices are expensed or regarded as deferred
expenses; (b) capital expenditures appropriate to a building comparable to this
in the southern Metro Denver Area or required by law as described in (xv) and
(xvi) above; and (c) capital expenditures designed to result in savings or
reductions in operating expenses as described in (xvii) above; (4) interest and
principal payments on mortgages and other debt costs; (5) Any cost or
expenditure (or portion thereof) for which Owner is reimbursed, whether by
insurance proceeds or otherwise (Base Rent adjustments under any provision of
this Rider and under similar provisions and other Tenant leases are not
reimbursements); and (6) cost of any service furnished to any other occupant
of the Building which Owner does not provide to Tenant hereunder.
In the event during all or any portion of any calendar year
the Building is not fully rented and occupied, Owner may elect to make an
appropriate adjustment of Operating Costs for such year, employing sound
accounting and management principles, to determine the Operating Cost that
would have been paid or incurred by Owner had the Building been fully rented
and occupied and the amount so determined shall be deemed to have been the
Operating Costs for such year. If Owner selects an accrual accounting basis
rather than a cash accounting basis for operating expenses purposes, operating
expenses shall be deemed to have been paid when such expenses have accrued.
All references to "Building" in this Rider shall include all
other Buildings in the Project (as defined in Basic Lease Provisions) and all
related facilities, including without limitation, corridors, lobbies,
sidewalks, grounds, parking spaces, driveway areas, elevators and other common
or public areas contained in or around the real estate as well as landscaping,
exterior walkways, and improvements or facility utilized in common by the
Building (and other Buildings of the projects upon or adjacent to the real
property). It is the express intent of the parties that all Operating Costs be
determined on the Project level, rather than at an individual Building level.
(i) First Operating Cost Year is as defined in Basic
Lease Provisions.
(ii) Subsequent Operating Cost Year means each twelve
month calendar period following the First Operating Cost Year, the whole or any
part of which full period is included within the Term.
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<PAGE> 26
(iii) The Amount of Operating Costs for any period shall be
the amount as determined by the Owner in accordance with generally accepted
accounting principles.
C. If only part of the Term is included within any Operating Cost
Year, then such amount payable by Tenant for such Operating Cost Year shall be
estimated by Owner acting reasonably and reduced proportionately on a per diem
basis and shall be payable according to the terms and conditions in subparagraph
D. below.
D. Any additional Rent payable by Tenant under this Rider shall be
payable as follows, unless otherwise provided:
During the Term, Tenant shall pay to owner monthly in advance and
every month during the Term, one-twelfth (1/12th) of the amount
of such Additional Rent as estimated by Owner, from time to time,
in advance, acting reasonably, to be due from Tenant. Within a
reasonable time after the close of each calendar year, Owner
shall give Tenant a statement of the year's Operating Costs and
the total amount of the Additional Rent, if any. If such year's
Operating Cost is different than the estimated amount paid by
Tenant, Tenant shall pay Owner or Owner shall credit Tenant, as
applicable, within 30 days of the date of the Statement, Tenant's
proportionate share which has either (i) not be paid by Tenant or
(ii) overpaid by Tenant pursuant to an estimate. One-twelfth of
the amount of Additional Rent, as reasonably estimated by Owner,
for the First Operating Cost Year, to be paid by Tenant with each
month's Base Rent as Additional Rent shall be as stated in Basic
Lease Provisions as "Initial Monthly Estimated Additional Rent".
This amount shall be paid monthly until such time as Owner, in
writing, reasonably adjusts the estimated Additional Rent
pursuant to the first sentence of this paragraph.
For purposes of calculating Additional Rent, Tenant's
proportionate share of the total shall be deemed to be as set
forth in paragraph F. below.
E. For the protection of Tenant, Owner shall maintain books of account
which shall be open to Tenant and its representatives for thirty days after
billing for Additional Rent, at all reasonable times so that Tenant can
determine that such Additional Rent costs have, in fact, been paid or incurred.
Tenant shall have the right to contest or question the amount and the
appropriateness of the Operating Cost and Additional Rent for a period of thirty
(30) days after the billing for Additional Rent. If Tenant does not so contest
or question within said thirty (30) day period, then all the determinations by
Owner shall be conclusive.
F. Tenant's Project Proportionate Share is as defined in Basic Lease
Provisions.
G. Except as otherwise expressly provided in the Lease, the parties
agree that Owner shall have no obligation of any kind to make any expenditures
upon or with respect to the Premises. It is intended that Tenant shall
throughout the term, at its sole expense, maintain in good condition, repair and
order all of the Premises and all parts thereof and shall pay to Owner
Additional Rent as stated in this Rider
3
<PAGE> 27
RIDER II
This Rider to Lease is attached to and forms a part of that
certain lease between Sky Harbor Associates Limited Partnership ("Owner") and
CET Environmental Services, Inc. ("Tenant") dated as of the 1st day March,
1999, (the "Lease"), and sets forth additional Terms and provisions to be
Incorporated into the Lease.
Building Services and Utilities
(a) Subject to the limitation herein set forth, Owner will
furnish Tenant while occupying the Premises and while Tenant is not in default
under this Lease:
(i) water to the wall stub of the Premises;
(ii) snow removal and snow plowing of all common areas of the
Building and Project;
(iii) cleaning and maintenance of driveways and parking areas
of the Project;
(iv) trash and refuse removal;
(v) maintenance and repair of all building standard
air-conditioning and heating apparatus.
In addition, Owner will maintain the public and common areas
of the Building and Project, such as walkways, stairs, and landscaping, if any,
in reasonable good order and condition, except for damage occasioned by Tenant
or Tenant's parties.
(b) Utilities, Owner shall have the option to have: (i) Tenant
pay promptly all charges for heating, natural gas and electrical service used
on the Premises directly to the appropriate public utility company. If Tenant
shall fail to pay any utilities as required above, Owner shall have the right,
at his option, but without any obligation to do so, to pay such utilities
(without affecting any other remedy available to Owner) on account of Tenant
and the same shall constitute Additional Rent hereunder and shall be repaid by
Tenant to Owner forthwith; or (ii) Tenant pay all charges for heating, natural
gas and electrical service used on the Premises as Additional Rent pursuant to
Rider I. Owner shall make an election pursuant to this paragraph from time to
time, by 30 day notice to Tenant. Owner may elect to have certain utilities
paid pursuant to (i) above and to have other utilities paid pursuant to (ii)
above. If Owner makes no written election, then all utilities that are
separately metered shall be paid pursuant to (i) above and all items that are
not separately metered shall be paid pursuant to (ii) above.
Notwithstanding the above, Tenant covenants and agrees that
at all times its use of electric current shall never exceed the capacity of the
existing feeders to the Building or the risers or wiring installations. Any
risers or wiring to meet Tenant's excess electrical requirements will be
installed by Owner at the sole cost and expense of Tenant (if, in Owner's
sole judgment, the same are necessary and will not cause permanent damage or
injury to the Building or the Premises or cause or create a dangerous or
hazardous condition or entail excessive or unreasonable alterations, repairs
or expense or interfere with or disturb other tenants or occupants).
If initially Tenant is paying all or any public utilities
pursuant to (ii) above, Owner may at its option, upon not less than 30 days
prior written notice to Tenant discontinue the availability of such utility
service. If Owner gives any such notice of discontinuance, Owner shall make
all necessary arrangements with the public utility supplying the utilities to
the area in which the Building is located with respect to obtaining such utility
service to the Premises, but Tenant will contract directly with such public
utility for the supplying of such utility service to the Premises. In the event
Owner deems it appropriate to make available separately metered service to the
Premises, Owner may require that separate submeters be installed in or for the
Premises, at Owner's expense, and Tenant will be billed monthly from such
sub-meter in a manner provided hereinbefore, provided that no such sub-metering
shall relieve Tenant from its obligation to pay Tenant's share of other utility
charges under this paragraph.
Owner shall not in any way be liable or responsible to Tenant
for any loss or damage or expense which Tenant may sustain or incur if either
the quantity or character of any utility service is changed or no longer
available or is no longer suitable for Tenant's requirements.
(c) Failure to any extent to make available, or any slow-down,
stoppage or interruption of, these defined services resulting from any cause
(including, but not limited to, Owner's compliance with (i) any voluntary or
similar governmental or business guideline now or hereafter published or (ii)
any requirements now or hereafter established by any governmental agency, board
or bureau having jurisdiction over the
1
<PAGE> 28
operation and maintenance of the Building) shall not render Owner liable in any
respect for damages to either person, property or business, nor be construed as
an eviction of Tenant or work an abatement of rent, nor relieve Tenant from
fulfillment of any covenant or agreement hereof. Should any equipment or
machinery which Owner is obligated to maintain and repair pursuant to this Lease
break down or for any reason cease to function properly, Owner shall use
reasonable diligence to repair same promptly, but Tenant shall have no claim for
abatement of rent or damages on account of any interruptions in service
occasioned thereby or resulting therefrom.
(d) Notwithstanding any termination of this Lease prior to the
Ending Date of Term, Tenant's obligations to pay any and all Rent pursuant to
this Rider shall continue and shall cover all periods up to the actual
expiration date of the Term; provided, however, if Owner terminates this Lease
without waiving Owner's right to seek damages against Tenant, Tenant's
obligation to pay any and all Rent pursuant to this Rider shall not terminate
as a result thereof.
(e) Trash and Refuse Removal. If Owner determines, in its sole
discretion, that Owner provides Tenant with more than normal and ordinary Trash
and Refuse Removal ("Excess Removal"), then Owner shall have the option to i)
charge Tenant, as Additional Rent, an amount for such Excess Removal (Owner's
determination of such amount shall be binding on the parties), or ii) cease
providing Tenant with Trash and Refuse Removal.
2
<PAGE> 29
ADDENDUM NO. 1
TO
LEASE AGREEMENT
BY AND BETWEEN SKY HARBOR ASSOCIATES LIMITED PARTNERSHIP
AS OWNER
AND
CET ENVIRONMENTAL SERVICES, INC.
AS TENANT
This Addendum No. 1 to one certain Lease Agreement dated March 1, 1999
by and between Sky Harbor Associates Limited Partnership as Owner and CET
Environmental Services, Inc., as Tenant, is entered into this 1st day of March,
1999 by and between Sky Harbor Associates Limited Partnership as Owner and CET
Environmental Services, Inc., as Tenant. For and in consideration of the mutual
covenants herein contained and contained in the Lease Agreement, the parties do
hereby agree as follows:
1. Base Rent: Monthly Base Rental for years one through five is as
follows:
<TABLE>
<CAPTION>
YEAR BASE RENT INSTALLMENT ANNUAL PSF COST
---- ----------- ----------- ---------------
<S> <C> <C> <C> <C>
1 $ 87,195.75 $ 7,266.31 $ 7.25/SF NNN
2 $ 90,202.50 $ 7,516.87 $ 7.50/SF NNN
3 $ 93,209.25 $ 7,767.44 $ 7.75/SF NNN
4 $ 96,216.00 $ 8,018.00 $ 8.00/SF NNN
5 $ 99,222.75 $ 8,268.56 $ 8.25/SF NNN
</TABLE>
2. Commencement Date: Notwithstanding anything in the Lease to the
contrary, the Commencement Date of the Lease shall be the date upon which Tenant
takes occupancy of the Premises, which is estimated to be May 1, 1999.
3. Owner's Tenant Finish: Owner shall construct the tenant improvements
in accordance with Exhibit A-3 and Exhibit C0.
4. Environmental Compliance:
(a) All operations and activities to be conducted by Tenant at the
Premises are described in Basic Lease Provision of the Lease. Tenant agrees that
Tenant will not conduct any operations or activities not specifically described
in Basic Lease Provisions at the Premises without the prior specific written
consent of Owner.
(b) All operations and activities of Tenant on the Premises will
comply with all applicable federal, state and local environmental laws and
regulations and shall be conducted in a manner which will not give rise to any
environmental hazard or claim. Operations and activities of Tenant involving the
handling, storage, disposal or transportation to and from the Premises of
hazardous materials, substances and/or waste (hereinafter "hazardous materials")
shall be conducted in accordance with all applicable laws and regulations and in
a manner so as to prevent any releases of hazardous materials.
(c) As used herein, "Environmental Cleanup Liability" shall mean any
liability, loss, cost, expense, fine or penalty of any nature incurred or
imposed by any authority as a result of the necessity to contain, dispose,
remove, treat, remedy or abate any air, soil, groundwater or other contamination
on or off the Premises and on or off the property of which the Premises are a
part, only to the extent arising from Tenant's acts or omissions in the storage,
disposal or transportation of chemicals or other products of Tenant on or to the
Premises including but not limited to; (a) costs or expenses for investigation,
study, assessment, legal representation, cost recovery by government agency, or
monitoring of such contamination; and (b) cost, expense, loss or damage incurred
as a result of actions or measures necessary to implement or effectuate any
containment, removal, disposal, treatment, remediation, cleanup or abatement of
such contamination.
(d) Tenant agrees to protect, defend, indemnify and hold Owner
harmless from any Environmental Cleanup Liability to the extent that such
liability arises from the operations, acts or omissions of Tenant on the
Premises including but not limited to Tenant's disposal from the Premises or
transportation of hazardous materials to or from the Premises. This agreement of
Tenant to protect, defend, indemnify and hold Owner harmless shall extend to
all acts or omissions of Tenant and shall not be limited to negligent or
wrongful acts or omissions of Tenant.
(e) The obligations of this Section 5 shall survive the termination
of this lease.
1
<PAGE> 30
5 Change in Regulations: Tenant and Owner acknowledge and agree that if
at any time during the term of the Lease the rules and regulations of the
Uniform Building Code or the Uniform Fire Code pertaining to hazardous materials
change so as to require an additional investment in fire protection equipment in
the Premises then such additional investment shall be the obligation of Tenant,
provided however that such additional investment shall not be required as a
result of any action of Owner with respect to the Premises, the Building or the
Project.
6. Tenant shall have the obligation to conduct an inspection of the
Premises with Owner and its representatives within fourteen (14) days after
substantial completion of the Tenant Finish and to give Owner, within said
fourteen day period, a punch list of all items to be completed and/or corrected.
Any items not on such punch list shall be deemed accepted by Tenant, except for
latent defects which exception shall be effective for one (1) year following the
Commencement Date (unless such defect or subsequent damage was caused by Tenant
or its agents, employees, invitees, contractors or suppliers). Owner shall
correct any punch list items after receipt of said punch list.
7. Owner's Default: Notwithstanding any other provisions of this Lease,
if default shall be made by Owner in the performance of the agreements,
conditions or covenants of this Lease to be performed by Owner, and said default
shall have continued for thirty (30) days after written notice thereof to Owner
or if such default cannot be cured within such thirty (30) day period if Owner
shall have failed to commence and diligently pursue such cure, then Tenant in
addition to all other remedies now or hereafter provided by law, may at its
election, perform such covenant or agreement for or on behalf of Owner, or make
good any such default, and any amount or amounts which Tenant shall advance
pursuant thereto shall be repaid by Owner to Tenant on demand.
8. Utilities Interruption: Owner agrees to use reasonable efforts to
remedy any situation (other than caused by default by Tenant) which gives rise
to interruption or failure to furnish any utility services. Additionally, if the
Premises are rendered untenantable or Inaccessible due to interruption of
service attributable solely to Owner's fault, rent shall be abated for the
period of such untenantability.
9. Save and except the foregoing provisions, all other paragraphs and
covenants of the Lease Agreement, Riders and Exhibits shall remain in full force
and effect as therein stated. In the event of a conflict between the provisions
of this Addendum No. 1 and the Lease Agreement or its Riders and/or Exhibits,
then the provisions of this Addendum No. 1 shall prevail.
10. The Lease Agreement, Riders, Exhibits and this Addendum No. 1 may
only be modified in a writing executed by both parties.
11. Additional Provisions:
Early Termination: Tenant will be given the right to terminate the
lease after the initial three (3) years of the terms provided the
following: a) Tenant agrees to give Landlord six (6) months prior
notice of its intent to terminate; b) Tenant agrees to pay Landlord
a penalty at termination equal to the remaining unamortized Tenant
improvements, commissions and three (3) months base rent equal to
the current base rent in year three of the lease. In the event that
Tenant is in the process of negotiating a new government contract,
Landlord will grant Tenant a thirty (30) to forty-five (45) day
reduction of the six (6) month provision, however, Tenant must keep
Landlord informed of the contract negotiation pursuant to provision
(a). Dated as of the 1st day of March, 1999.
OWNER: TENANT:
SKY HARBOR ASSOCIATES, CET ENVIRONMENTAL SERVICES,
INC.
a Michigan limited partnership a California corporation
By: Pomeroy Investment Corporation By: /s/ STEPHEN H. DAVIS
---------------------------
General Partner Stephen H. Davis
Its: President
By: /s/ HOWARD LESHMAN
-----------------------------
Howard Leshman
Its: Vice President
2
<PAGE> 31
EXHIBIT A-1
DESCRIPTION OF LAND
Building B, Block 1, Linpro Arapahoe Land Limited, County of Arapahoe, Colorado
1
<PAGE> 32
EXHIBIT A-3
[FLOOR PLAN]
2/16/98 Proposal 1 for CET Environmental Services, 7032 South Revere Parkway
<PAGE> 33
EXHIBIT A-2
[FLOOR PLAN]
SKY HARBOR
At Centennial Airport Center
7002-7042 South Revere Parkway
Englewood, Colorado
<PAGE> 34
EXHIBIT B
RULES AND REGULATIONS
1. SIGNS
A. No Sign, advertisement, notice, placard, picture, name or other
lettering shall be exhibited, inscribed, printed displayed or affixed on or to
any part of the inside or outside of the Demised Premises of the Building
without the prior written consent of Owner. Owner shall have the right to remove
any such sign, advertisement, notice, placard, picture, logo, name or other
lettering without notice and at the expense of Tenant.
B. All approved signs or lettering on doors shall be printed, painted,
affixed or inscribed at the expense of Tenant by a person selected by Owner.
2. SIDEWALKS, OBSTRUCTIONS. The sidewalks, halls, entrances, exits,
passages, stairways and elevators of the Building shall not be obstructed by
Tenant, its agents or employees, nor shall they be used for any purpose other
than ingress and egress to and from the Premises. The halls, passages,
entrances, exits, stairways, elevators, balconies and roof are not for the use
of the general public, and Owner shall in all cases retain the right to control
and prevent access thereto by all persons whose presence in the judgment of
Owner might be prejudicial to the safety, reputation and interests of the
Building and its tenants, provided that nothing herein contained shall be
construed to prevent such access to persons with whom Tenant normally deals in
the ordinary course of Tenant's business, unless such persons are engaged in
illegal activities. No tenant and no employees or invitees of any tenant shall
go upon the roof of the Building.
3. LOCKS. Tenant shall not alter any lock or install any new or place
additional locks or any bolts or mail slots on any door, wall or window of the
Premises without the prior written consent of Owner.
4. KEYS. All keys to the Building, Premises, rooms and toilet rooms shall
be and remain the property of Owner and shall be obtained from Owner's Building
Management Office, and Tenant shall not from any other source duplicate, obtain
keys or have keys made. Tenant, upon termination of the tenancy, shall deliver
to Owner all keys to the Building, Premises, rooms and toilet rooms that have
been furnished or shall pay the Owner the cost of replacing same or of changing
the lock or locks opened by such lost key(s) if Owner deems it necessary to make
such change.
5. WATER FIXTURES. The toilet rooms, urinals, wash bowls, drinking
fountains and other apparatus shall not be used for any purposes other than that
for which they were constructed, and no foreign substance of any kind whatsoever
shall be thrown therein. The expense of any breakage, stoppage or damage
resulting from the violation of this rule shall be borne by the Tenant who, or
whose employees or invitees, shall have caused it. No person shall waste water
by leaving faucets open or in any other manner.
6. FLOOR LOADING. Tenant shall not overload the floor of the Premises.
Owner shall prescribe, after consultation with the appropriate architects and
engineers, the floor loading permissible.
7. ALTERATIONS. In addition to the provisions of the Lease, Tenant shall
not mark, paint, drill into, drive nails or screw into or in any way deface or
change any part of the Premises or the Building. Owner will direct electricians
as to where electric and telephone wires are to be introduced. No boring,
cutting or stringing of wires will be allowed except as approved and directed by
Owner. The locations of telephones, call boxes and other office equipment
affixed to the Premises shall be subject to the approval of Owner. Owner shall
permit reasonable numbers of picture hangers and other reasonable attachments to
be made to walls, floors and ceilings.
8. FLOOR COVERINGS. The only floor coverings shall be the building standard
carpet, or such other covering(s) as Owner may approve in writing. The expense
of repairing any damage resulting from Tenant's violation of this rule or from
removal of any floor covering shall be borne by the Tenant by whom, or by whose
contractors, employees or invitees, the damage shall have been caused.
9. DISTURBANCES AND USE.
A. Tenant shall not use, keep or permit to be used or kept any food
(other than that to be kept in reasonable amounts for the consumption by its own
employees and all of that to be kept in tightly sealed containers and/or in a
refrigerator) or noxious gas or substance in the Premises, or permit or suffer
the Premises to be occupied or used in a manner offensive or objectionable to
Owner or to other occupants of the Building by reason of noise, odors and/or
vibrations, or interfere in any way with other tenants or those having business
therein.
1
<PAGE> 35
B. Only incidental cooking for the use of Tenant may be done on the
Premises, and that only using equipment and in a place within the Premises
specifically authorized in writing by Owner, and in a way so that no odors of
food are observed by other occupants of the Building.
C. No vending or machines of any description may be installed,
maintained or operated in the Premises without the written consent of Owner.
D. No animals or birds may be brought in or kept in or about the
Premises or the Building.
E. No tenant, employee or invitee of any tenant shall make or permit to
be made any unseemly or disturbing noises or disturb or interfere with occupants
of this or neighboring buildings or Premises or those having business with them
whether by use of any musical instrument, radio, phonograph, unusual noise, or
in any other way.
F. No tenant, employee or invitee of any tenant shall throw anything
out of doors or down any passageway, any stairway, elevator shaft or ventilating
duct or shaft of the Building.
G. Tenant shall not disturb, solicit, peddle or canvass any occupancy
of the Building and shall cooperate to prevent same.
H. Tenant shall be responsible for keeping any children visiting or
accompanying anyone visiting the Premises under control and quiet so that they
do not disturb other occupants of the Building.
I. Tenant shall not use the Premises for any purpose other than that
described in the Lease, for manufacturing, for the storage of merchandise,
except as such storage may be incidental to the use of the Premises for the
purpose(s) described in the Lease, for washing clothes, for lodging or for
illegal, improper, immoral or objectionable purpose.
J. Tenant shall not advertise for laborers giving an address at the
Building or Premises.
10. FIRE AND OTHER GOVERNMENTAL REGULATIONS. Tenant shall not do or permit
anything to be done in the Premises, or bring or keep anything therein, which
will in any way increase the fire insurance rates on the building or on the
property kept therein; or obstruct or interfere with the rights of other
tenants, or in any way injure or annoy them or conflict with the laws relating
to fire, or with any regulations of the fire department, or with any insurance
policy upon the Building or any part thereof or conflict with any of the rules
or ordinances of the governmental jurisdictions in which the Building lies.
A. Tenant agrees that it will comply with all fire and security
regulations that may be issued from time to time by Owner, and Tenant also shall
provide Owner with the name of a designated employee responsible to represent
Tenant in all matters pertaining to such fire or security regulations.
B. Tenant shall not use or keep in the Premises any gasoline, kerosene
or inflammable, combustible, or explosive fluid or material, other than nominal
amounts of ordinary office fluids to be used for duplicating or photocopying
machines or other, similar office equipment.
C. Tenant shall not use any method of heating or air conditioning other
than that supplied by Owner.
D. Tenant shall install and properly maintain, at Tenant's sole cost
and expense, an adequate, visibly marked and at all times properly operational
fire extinguisher next to any duplicating or photocopying machine or any cooking
device or any similar heat-producing equipment which may or may not contain
combustible material in the Premises.
11. LEAVING THE PREMISES. Tenant shall see that the doors of the Premises
are closed and securely locked before leaving the Building and must observe
strict care and caution that all water faucets or other water apparatus in the
Premises are entirely shut off before Tenant leaves the Building, and that all
unnecessary electricity shall likewise be carefully shut off so as to prevent
waste or damage. For any default or carelessness, Tenant shall make good all
injuries sustained by Tenant, by other tenants or occupants of the Building.
All doors opening to public corridors shall be kept closed except for
normal ingress and egress from the Premises.
2
<PAGE> 36
12. OBJECTIONABLE BUILDING OCCUPANTS. Owner reserves the right to exclude
or expel from the Building any person who, in the judgement of Owner, appears
intoxicated or under the influence of alcohol or drugs, or who shall in any
manner do any act in violation of any of the rules and regulations of the
Building.
13. PAINTING AND DECORATING. All painting and decorating in the Premises
must be agreed to in writing and in advance by Owner. Any such work as may be
agreed to be done by and at the expense of Owner shall be done during regular
working hours. Should Tenant desire such work to be done outside of regular
working hours, Tenant shall pay the extra cost thereof.
14. WINDOW COVERINGS. No curtains, blinds, shades, draperies, screens or
other materials shall be attached to, hung in or used in connection with any
window or sidelight of the Premises other than those supplied by or otherwise
agreed to by Owner.
A. The sashes, sash doors, skylights, windows and sidelights that
reflect or admit light or air into the halls, passageways or other public places
in the Building shall not be covered or obstructed by Tenant.
B. Tenant shall not place anything or allow anything to be placed near
the glass of any window, skylights, door, partition or wall which may, in the
sole opinion of Owner, appear unsightly from outside the Premises.
15. LIGHT FIXTURES. No electrical fixtures shall be hung or otherwise
installed in the Premises other than those supplied by or otherwise agreed to by
Owner.
16. SHOW CASES. No show case or other articles shall be put in front of or
affixed to any part of the exterior of the Building, nor placed in public
portions thereof.
17. INFESTATION. If the Premises is or becomes infested with vermin as a
result of the use or any misuse or neglect of Premises by Tenant, Owner shall
forthwith at Tenant's sole cost and expense cause the same to be exterminated
from time to time to the satisfaction of Owner.
18. TENANT'S CONTRACTORS. Tenant's contractor(s) (any of which shall be
subject to the prior written approval of Owner) shall, while in the Building or
elsewhere on the Property, be subject to and under the control and direction of
Owner or Owner's agent(s) but said contractor(s) shall not be the agent or
servant of Owner or Owner's agent(s).
19. TENANT'S NEEDS. The requirements of Tenant will be attended to only
upon application at the office of the Building. Owner's employees shall not
perform any work or do anything outside of their regular duties unless under
special instructions from Owner.
20. ADVERTISING. Without the prior written consent of Owner, Tenant shall
not use the name of the Building nor any picture of the Building in connection
with or in promoting or advertising the business of Tenant, or on its stationery
or in any other manner except as Tenant's address.
21. BUILDING NAME. Owner shall have the right, exercisable without notice
and without liability to Tenant, to change the name and the street address of
the Building.
22. GOVERNMENT REGULATIONS. If, as a result of any governmental rule or
regulation, Owner imposes a curtailment of services or equipment in Premises or
the Building, Tenant shall comply therewith and shall be liable to Owner for any
surcharge imposed for any violation by Tenant.
23. OUTSIDE SERVICES. No tenant shall obtain for use in the Premises towel
or other similar service or accept barbering, boot-blacking or other similar
services on the Premises, except from persons authorized by the Owner and at the
hours and under regulations fixed by the Owner.
24. BUILDING OPERATION. Owner shall have the right to control and operate
the public portions and the public facilities of the Building and the heating
and air conditioning, as well as facilities furnished for the common use of the
tenants, in such manner as it deems best for the benefit of the tenants
generally.
25. PARKING.
A. Tenant shall not park any vehicles in any driveways, service
entrances or areas posted either as "No Parking" or as "Visitor Parking".
3
<PAGE> 37
B. Tenant shall not park any vehicles in any parking space designated
for handicapped parking unless such vehicle bears a current handicapped license
plate or windshield placard.
C. Tenant shall not park in such a manner as to occupy more than one
parking space per vehicle, except in such case where a delivery vehicle too
large for one space is parked for the purpose of making a specific delivery to
or pickup from the Premises.
26. DEFINITIONS. For the purposes of the Rules and Regulations, in every
case where the word "Tenant" is used, it shall be deemed to mean the Tenant, its
employees, agents, servants, contractors, licensees, visitors, delivery people
and invitees.
27. RULE WAIVER. Owner reserves the right by written notice to Tenant to
rescind, alter, waiver or add any rule or regulations prescribed for the
Building at any time when, in Owner's sole judgment, it is necessary, desirable
or proper for the best interest of the Building and its tenants.
4
<PAGE> 38
EXHIBIT C
WORK LETTER
March 1, 1999
Re: Tenant: CET Environmental Services, Inc.
Building: 7022 S. Revere Parkway, Englewood, CO
-------------------------------------
Suite: 100
---
Address: 7022 S. Revere Parkway, Englewood, CO
-------------------------------------
Gentlemen:
Concurrently herewith, you, as Tenant, and the undersigned, as Owner, have
executed a Lease covering the above captioned suite (the Premises, as defined in
the Lease). The provisions of said Lease are hereby incorporated by reference as
if fully set forth herein. In consideration of the execution of said Lease,
Owner and Tenant mutually agree as follows:
Landlord agrees to complete standard improvements to the premises per
mutually agreeable space plan and shall contribute up to $5.00 PSF to the
cost of completion thereof which cost includes engineering, construction
coordination and all other associated costs of construction. Any additional
improvements exceeding this allowance shall be paid for by Tenant prior to
occupancy.
Any unused Tenant finish shall be given to Tenant to be designated a
"moving allowance". Tenant agrees that the final space plan will include
new carpet, paint and other improvements substantially similar to those on
the attached space plan dated February 16, 1999.
ACCEPTED AND APPROVED THIS 1ST DAY OF MARCH, 1999.
OWNER: TENANT:
SKY HARBOR ASSOCIATES CET ENVIRONMENTAL SERVICES, INC.
a Michigan Limited Partnership a California corporation
By: Pomeroy Investment By: /s/ STEPHEN H. DAVIS
Corporation, General Partner --------------------
Stephen H. Davis
Its: President
By: /s/ HOWARD LESHMAN
------------------
Howard Leshman
Its: Vice President
1
<PAGE> 39
EXHIBIT D
LEASE COMMENCEMENT DATE MEMORANDUM
LANDLORD: Sky Harbor Associates Limited Partnership
TENANT: CET Environmental Services, Inc.
LEASE DATE: March 1, 1999
PREMISES: 7032 South Revere Parkway
Englewood, Colorado 80112
Square Feet of Premises 12,027
Square Feet of Project 108,021
Pursuant to the above referenced Lease, Landlord and Tenant agree and certify
the Lease commencement date is May 27, 1999, and the expiration date is
May 31, 2004.
Rent shall commence under the following rates:
Base Rent: $ (per Addendum No. 1 of the Lease Agreement)
Operating Expenses: $ (per Addendum No. 1 of the Lease Agreement)
Commencement Date for Base Rent: May 27, 1999
------------
Commencement Date for Additional Rent: May 27, 1999
------------
LANDLORD: TENANT:
Sky Harbor Associates CET Environmental Services,
Inc., a California corporation
By: Pomeroy Investment
Corporation By: /s/ STEPHEN H. DAVIS
----------------------
Stephen H. Davis
By: /s/ HOWARD LESHMAN Date: May 28, 1999
-------------------- -------------
Howard Leshman
Vice President
Date: 6/15/99
------------------
<PAGE> 1
EXHIBIT 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Name State of Incorporation Other Names Used in Business
- ---------------------------- ---------------------- ----------------------------
<S> <C> <C>
Cleanwater Contracting, Inc. California None.
</TABLE>
<PAGE> 1
EXHIBIT 23
[GRANT THORNTON LETTERHEAD]
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
We have issued our reports dated March 1, 2000, accompanying the consolidated
financial statements incorporated by reference or included in the Annual Report
of CET Environmental Services, Inc. (the Company) on Form 10-K for the year
ended December 31, 1999. We consent to the incorporation by reference in the
Company's Registration Statement on Form S-8 of the aforementioned reports.
/s/ GRANT THORNTON LLP
GRANT THORNTON LLP
Denver, Colorado
March 28, 2000
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
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<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 505
<SECURITIES> 0
<RECEIVABLES> 10,371
<ALLOWANCES> 479
<INVENTORY> 74
<CURRENT-ASSETS> 11,132
<PP&E> 4,899
<DEPRECIATION> 2,263
<TOTAL-ASSETS> 13,805
<CURRENT-LIABILITIES> 7,617
<BONDS> 179
0
0
<COMMON> 8,671
<OTHER-SE> (2,664)
<TOTAL-LIABILITY-AND-EQUITY> 13,805
<SALES> 43,189
<TOTAL-REVENUES> 43,189
<CGS> 40,130
<TOTAL-COSTS> 45,920
<OTHER-EXPENSES> 446
<LOSS-PROVISION> 51
<INTEREST-EXPENSE> 483
<INCOME-PRETAX> (3,177)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,177)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,177)
<EPS-BASIC> (.51)
<EPS-DILUTED> (.51)
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