Daniel L. and Ingrid N. Carroll - Page 5




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               The sales of the recyclers from PI to ECI were financed with           
          nonrecourse notes.  Approximately 7 percent of the sales price of           
          the recyclers sold by PI to ECI was paid in cash, with the                  
          remainder financed through a 12-year nonrecourse note requiring             
          equal monthly installments of $100,917, including annual interest           
          at 19.8 percent with the first payment due 7 months after                   
          closing.  ECI’s purchase was subject to Clearwater’s leasing                
          agreement and FMEC’s licensing agreement as set out below.                  
               In the second part of the transaction, ECI resold the                  
          recyclers to F&G Corporation (F&G) for $1,162,667 each, of which            
          less than about 7 percent was paid in cash.  The balance  was               
          paid by a 12-year partial recourse note requiring equal monthly             
          installments of $100,917, including annual interest at 15.4                 
          percent.  These notes provided that 10 percent of the notes were            
          recourse but that the recourse portion of the notes was due only            
          after the nonrecourse portion, 90 percent, was paid in full.  The           
          first payment on the note was due 7 months after the closing.               
               F&G’s purchase was subject to Clearwater’s agreement to                
          enter into a lease with F&G and was subject to FMEC’s agreement             
          to enter into the license as set out below.                                 
               In the third part of the transaction, F&G leased the                   
          recyclers to Clearwater for 12 years, a lease term equal to 150             
          percent of the class life of the assets.  Under the lease, the              
          monthly rental payment was $100,917, with an initial amount of              





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