STOCK PURCHASE AGREEMENT

 

Exhibit 10.4

    ________________________________________________________
    ________________________________________________________

                    STOCK PURCHASE AGREEMENT

                    DATED AS OF MAY 15, 1995

                              AMONG

                     WES ACQUISITION CORP.,

               PACIFIC DIVERSIFIED CAPITAL COMPANY

                AND WEXFORD CAPITAL CORPORATION, 

                          AS INDEMNITOR

    ________________________________________________________
    ________________________________________________________

                        TABLE OF CONTENTS

                                                             Page

     ARTICLE I                                                  1
               TRANSACTIONS AT THE CLOSING                      1
                      1.1   Shares and Purchased Loans          1
                      1.2   Closing                             1
                      1.3   Purchase Price                      1
                      1.4   Contribution to Capital             2

     ARTICLE II                                                 2
               REPRESENTATIONS AND WARRANTIES                   2
                      2.1   Representations and Warranties 
                            of the Seller                       2
                      2.2   Representations and Warranties 
                            of the Buyer                        3

     ARTICLE III                                                5
               CERTAIN COVENANTS AND AGREEMENTS                 5
                      3.1   Consents                            5
                      3.2   Efforts to Consummate               5
                      3.3   Confidential Information            5
                      3.4   Negotiation With Others             6
                      3.5   H-S-R Act Filings                   6

     ARTICLE IV                                                 6
               TAXES                                            6
                      4.1   Tax Indemnification                 6
                      4.2   Procedures Relating to 
                            Indemnification of Tax Claims       7
                      4.3   Section 338(h)(10) Election.        8
                      4.4   Survival of Tax Provisions          8
                      4.5   Real Property Taxes                 9
                      4.6   Tax Return Filings                  9
                      4.7   Termination of Tax Sharing
                            Agreements                          9

     ARTICLE V                                                 10
               CONDITIONS OF                                   10
                      5.1   Conditions of Obligations of the
                            Buyer                              10
                      5.2   Conditions to Obligations of the
                            Seller                             11

     ARTICLE VI                                                12
               INDEMNIFICATION                                 12
                      6.1   Indemnification by the Seller      12
                      6.2   Indemnification by the Indemnitor  12

                                i

                      6.3   Defense of Claims                  13
                      6.4   Heller Claims                      14
                      6.5   Remedies Cumulative                14

     ARTICLE VII                                               14
               SURVIVAL OF REPRESENTATION AND WARRANTIES;
                    AMENDMENT, MODIFICATION AND WAIVER         14
                      7.1   Survival of Representations and 
                            Warranties, Etc.                   14
                      7.2   Amendment, Modification and Waiver 15

     ARTICLE VIII                                              15
               TERMINATION                                     15
                      8.1   Right of Termination               15
                      8.2   Effect of Termination              15

     ARTICLE IX                                                16
               MISCELLANEOUS                                   16
                      9.1   Expenses                           16
                      9.2   Entire Agreement                   16
                      9.3   Publicity                          16
                      9.4   Descriptive Headings               16
                      9.5   Notices                            16
                      9.6   Counterparts                       17
                      9.7   Governing Law                      17
                      9.8   Benefits of Agreement              17

                              ii

               STOCK PURCHASE AGREEMENT dated as of May 15, 1995,
among WES Acquisition Corp., a Delaware corporation (the
"Buyer"), Pacific Diversified Capital Company, a California
corporation (the "Seller"), and Wexford Capital Corporation, a
Delaware corporation, as indemnitor hereunder (the "Indemnitor").

               The Seller owns an aggregate of 14,260,000 shares (the
"Shares") of common stock, par value $.01 (the "Common Stock"),
of Wahlco Environmental Systems, Inc., a Delaware  corporation
(the "Company") and has outstanding $24,428,831.89 aggregate
principal amount in loans (the "Loans") to the Company.  The
Seller desires to sell to the Buyer, and the Buyer desires to
purchase from the Seller the Shares, and $4,900,000 principal
amount of the Loans (the "Purchased Loans"), all upon the terms
and subject to the conditions set forth in this Agreement.

               NOW, THEREFORE, in consideration of the mutual benefits
to be derived from this Agreement and of the representations,
warranties, conditions and promises hereinafter contained, the
Buyer, the Seller and the Indemnitor hereby agree as follows:

                            ARTICLE I

                   TRANSACTIONS AT THE CLOSING

         1.1  Shares and Purchased Loans.  Upon the terms and
subject to the conditions hereinafter set forth, at the Closing
(as hereinafter defined) the Seller agrees to sell and deliver to
the Buyer, and the Buyer agrees to purchase from the Seller, all
right, title and interest in and to the Shares and the Purchased
Loans, in each case, except as set forth on Schedule 1 hereto,
free and clear of all of the following (hereinafter collectively
referred to as "Claims"): security interests, liens, pledges,
claims, charges, escrows, encumbrances, options, rights of set-
off, rights of first refusal, mortgages, indentures, security
agreements or other agreements, arrangements, contracts,
commitments, understandings or obligations, of any nature
whatsoever, whether written or oral and whether or not relating
in any way to credit or the borrowing of money.

         1.2  Closing.  The closing (the "Closing") of the
transactions contemplated by this Agreement shall take place at
the offices of O'Melveny & Myers, 610 Newport Center Drive, Suite
1700, Newport Beach, California 92660-6429 on a business day
which shall be no later than May 15, 1995 (the "Closing Date").

         1.3  Purchase Price.  The purchase price to be paid to
the Buyer for the Shares and the Purchased Loans shall be an
amount equal to $5,000,000 (the "Purchase Price"), of which
$4,900,000 shall be allocated to the Purchased Loans and $100,000
shall be allocated to the Shares.  At the Closing, (i) against
delivery to the Buyer of evidence of the Purchased Loans, the
Buyer shall pay 

to the Seller by wire transfer the amount of $4,900,000 and (ii)
against delivery to the Escrow Agent (as hereinafter defined) of
one or more stock certificates, endorsed by the Seller in blank
for transfer to the Buyer, representing the Shares, the Buyer
shall deliver to the Escrow Agent by wire transfer the amount of
$100,000 ("Stock Purchase Price").  At the Closing, the Buyer and
the Seller shall enter into a mutually acceptable escrow
agreement (the "Escrow Agreement") with a mutually acceptable
bank having capital and surplus of at least $100,000,000 (the
"Escrow Agent").  The Escrow Agreement shall provide that upon
the expiration of the applicable waiting period, including any
extension thereof, under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the "H-S-R Act"), the Escrow Agent
shall transfer (a) certificates representing the Shares endorsed
by the Seller in blank for transfer to the Buyer, and (b) the
Stock Purchase Price to the Seller by delivery of a certified
check or by wire transfer ("Stock Acquisition").  The parties
hereto intend to treat the Company and its Subsidiaries as part
of the Selling Consolidated Group for all periods up to and
including the date of the Stock Acquisition and shall file all
Federal income tax returns in accordance with such intention.

         1.4  Contribution to Capital.  Concurrently with the
Closing, Seller shall contribute to the capital of the Company
all Loans, together with any accrued but unpaid interest, fees or
other charges payable by the Company to Seller in connection with
the Loans (collectively, the "Contributed Loans") except for the
Purchased Loans.  The documentation evidencing the foregoing
contribution to capital shall be satisfactory to Buyer.

                           ARTICLE II

                 REPRESENTATIONS AND WARRANTIES

         2.1  Representations and Warranties of the Seller.  The
Seller represents and warrants to the Buyer as follows:

              (a)  Seller's Title to the Shares. Except as set
forth on Schedule 1 attached hereto, the Seller is the lawful
owner, of record and beneficially, of the Shares and the
Purchased Loans and has, and will transfer to the Buyer as
provided hereunder, good and marketable title to the Shares and
the Purchased Loans, free and clear of any Claims, and the Seller
has the absolute right and power to sell, assign, convey and
transfer the Shares and the Purchased Loans and all rights and
benefits incident to the ownership thereof.  Delivery of the
Shares and the Purchased Loans to the Buyer as provided hereunder
will (i) pass good and marketable title to the Shares and the
Purchased Loans to the Buyer, free and clear of any Claims and
(ii) convey, free and clear of any Claims, any and all rights and
benefits incident to the ownership of the Shares or the Purchased
Loans.  There are no 

outstanding options, warrants or rights to purchase or otherwise
acquire any of the Shares or the Purchased Loans, and there are
no agreements, arrangements or undertakings between the Seller
and any other person or entity with respect to the voting, sale
or disposition of any of the Shares or the Purchased Loans or any
other matters relating to or affecting the Shares or the
Purchased Loans.  The Seller acquired the Shares in transactions
exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act"), and in compliance with any
applicable state securities laws.  The sale of the Shares by the
Seller to the Buyer is exempt from registration under the
Securities Act.

              (b)  Seller's Authority.  The execution, delivery
and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action by the Seller.  This
Agreement is the legal, valid and binding obligation of the
Seller, enforceable in accordance with its own terms.  Neither
the execution, delivery and performance of this Agreement, nor
compliance by the Seller with any of the provisions hereof will
except as set forth on Schedule 1 hereto, (i) conflict with or
result in a breach of the certificate of incorporation or the by-
laws of the Seller, (ii) conflict with or result in a default (or
give rise to any right of termination, cancellation or
acceleration) under any of the terms, conditions or provisions of
any note, bond, lease, mortgage, indenture, license, agreement or
other instrument or obligation to which is a party, or by which
the Seller or any of its properties or assets may be bound or
affected, (iii) violate any law, statute, rule or regulation or
order, writ, injunction or decree applicable to the Seller any of
its properties or assets.  Except as set forth on Schedule 1
attached hereto, no consent or approval by, or any notification
of or filing with, any person (governmental or private) is
required in connection with the execution, delivery and
performance by the Seller, or the consummation of the
transactions contemplated hereby.

              (c)  The principal amount of Loans outstanding
recited in the second paragraph of this Agreement constitutes the
entire principal amount of outstanding loans made by Seller to
the Company.

         2.2  Representations and Warranties of the Buyer.  The
Buyer represents and warrants to the Seller as follows:

              (a)  Organization, Standing and Power.  The Buyer
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all
requisite corporate power and authority to  enter into this
Agreement and to perform its obligations hereunder and to
consummate the transactions contemplated hereby.  The Buyer
qualifies to make the Section 338(h)(10) election referred to in
Section 4.3 hereof.  The Buyer has delivered to the Seller true,
complete and correct copies 

of the certificate of incorporation and By-laws of the Buyer, in
each case as amended to the date hereof.

              (b)  Authority.  The execution, delivery and
performance of this Agreement and the consummation of the
transactions contemplated hereby, have been duly and validly
authorized by all necessary corporate action by the Buyer.  This
agreement is the legal, valid and binding obligation of the
Buyer, enforceable in accordance with its terms.  Neither the
execution, delivery and performance of this Agreement, nor
compliance by the Buyer with any of the provisions hereof or
thereof, will (i) conflict with or result in a breach of its
certificate of incorporation or by-laws, in each case amended to
the date hereof, or cause a default (or give rise to any right of
termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any note, bond, lease,
mortgage, indenture, license, or other agreement to which the
Buyer is a party, or by which it or any of its properties or
assets may be bound, or (ii) violate any law, statute, rule or
regulation or order, writ, injunction or decree applicable to the
Buyer any of its properties or assets.  Except for a notification
filing under the H-S-R Act and the expiration of the applicable
waiting period, including any extension thereof, thereunder, no
consent or approval by, or any notification of or filing with,
any person (governmental or private) is required in connection
with the execution, delivery and performance by the Buyer of this
Agreement or the consummation by the Buyer of the transactions
contemplated hereby, or if required, the same as been obtained or
effected on or prior to the Closing.

              (c)  Brokers.  No agent, broker, investment
banker, person or firm acting on behalf of the Buyer or under the
authority of the Buyer is or will be entitled to any broker's or
finder's fee or any other commission or similar fee directly or
indirectly from any of the parties hereto in connection with any
of the transactions contemplated hereby.

              (d)  Acquisition for Investment Purposes.  The
Buyer is acquiring the Shares and the Purchased Loans (without
conceding that the Purchased Loans are securities) for its own
account, for investment and not with a view to distribution
thereof within the meaning of applicable Federal and state
securities laws.  The Buyer understands that the Shares and the
Purchased Loans have not been registered under the Securities
Act, by reason of their issuance and sale in transactions exempt
from the registration requirements of the Securities Act or the
securities or blue sky laws of any state and that they must be
held indefinitely unless a subsequent disposition thereof is
registered under the Securities Act or applicable state
securities or blue sky laws or are exempt from the registration
requirements thereof.

                           ARTICLE III

                CERTAIN COVENANTS AND AGREEMENTS

         3.1  Consents.  Prior to the Stock Acquisition, the
Seller will cause the Company to effect the notification filing
required under the H-S-R Act in order to permit the consummation
by of the transactions contemplated hereby.

         3.2  Efforts to Consummate.  Subject to the terms and
conditions of this Agreement, the parties hereto shall take or
cause to be taken all action and do or cause to be done all
things necessary or advisable, under applicable laws, regulations
and ordinances, in order to consummate and make effective, as
soon as practicable, the transactions contemplated hereby,
including the obtaining of all permits, authorizations, consents
and approvals of any third party (private or governmental) which
are required in connection with the consummation of the
transactions contemplated hereby; provided, however, that this
Section 3.2 shall not require any party to waive any condition to
its benefit under this Agreement, or to make any payment to a
third party or incur any undue burden in connection with the
obtaining of any third party consent.

         3.3  Confidential Information.  The Buyer will keep
confidential or proprietary information (as defined below)
previously furnished to it by the Company and in the Exhibits and
Schedules to this Agreement.  If the Stock Acquisition does not
occur, the Buyer will return to the Company all documents,
instruments, work papers and other materials submitted to it or
any of its agents or representatives.  The Buyer agrees that
prior to the Stock Acquisition it shall not directly or
indirectly use or disclose (except as provided for in this
Agreement) any confidential or proprietary information relating
to the Company to any person, firm, corporation, association or
other entity, nor shall the Buyer prior to the Stock Acquisition,
and thereafter if the Stock Acquisition shall not occur, make use
of any such confidential or proprietary information (except as
provided for in this Agreement) for its own purpose or for the
benefit of any person, firm, corporation or other entity.  For
the purposes of this Section 3.3, the term "confidential or
proprietary information" shall mean all information disclosed to
the Buyer by the Company or the Seller or their respective
affiliates or to employees, consultants or others in a
confidential relationship with the Buyer, relating to specific
matters such as trade secrets, research and development
activities, books and records, customer lists, suppliers,
distribution channels, pricing information, private processes,
formulae, functional specifications, blueprints, know-how, data,
improvements, discoveries, designs, inventions, techniques,
marketing plans, strategies, forecasts, new products and
financial statements as they may exist from time to time except
for confidential or proprietary information which (i) becomes

generally available to the public, (ii) was known to the Buyer
prior to its disclosure by the Company or the Seller, (iii) was
heretofore available to the Buyer on a nonconfidential basis from
a source (other than the Company or the Seller) which was
entitled to disclose the same or (iv) is required by law,
governmental order or decree to be disclosed by the Buyer.

         3.4  Negotiation With Others.  From and after the date
hereof until the Stock Acquisition shall have occurred or this
Agreement shall have been terminated in accordance with Section
8.1 hereof, the Seller will not, directly or indirectly, (a)
solicit or initiate discussions or engage in negotiations with
any person relating to the possible acquisition of the Company
(whether by way of merger, purchase of capital stock, purchase of
assets or otherwise) or any portion of the Company (whether such
negotiations are initiated by the Seller or the Company or
otherwise), other than the Buyer or its designees, (b) provide
information with respect to the Company to any person, other than
the Buyer and its designees, relating to the possible acquisition
of the Company (whether by way of merger, purchase of capital
stock, purchase of assets or otherwise) or any portion of the
Company or (c) enter into a transaction with any person, other
than the Buyer or its designees concerning the possible
acquisition of the Company (whether by way of merger, purchase of
capital stock, purchase of assets or otherwise) or any portion of
the Company.

         3.5  H-S-R Act Filings.  The Seller and the Buyer will
cooperate with one another in the preparation and filing of all
notices and reports required pursuant to the H-S-R Act and will
comply with the requirements for providing information made
pursuant thereto.

                           ARTICLE IV

                              TAXES

         4.1  Tax Indemnification.  

              For purposes of this Agreement, each reference to:

              (A)  "Affiliate" shall mean, with respect to any
         person, any entity or person that directly, or indirectly,
         through one or more intermediaries, controls or is controlled by,
         or is under common control with such person.

              (B)  "Code" shall mean the Internal Revenue Code of
         1986, as amended;

              (C)  "Tax Return" shall mean any return, report,
         information return, or other document (including elections, 

         declarations, disclosures, schedules, estimates, and other
         returns or supporting documents) with respect to taxes;

              (D)  "Selling Consolidated Group" shall mean the
         "affiliated group" (within the meaning of section 1504 of Code)
         of which San Diego Gas & Electric Company ("SDG&E") is the common
         parent filing U.S. consolidated federal income tax returns, which
         include the Seller as an includible member.

              (E)  "Subsidiaries" shall mean, solely for purposes of
         this Article IV, any direct or indirect subsidiary corporation of
         Company.

              Notwithstanding anything in this Agreement to the
contrary, Seller shall indemnify Buyer and any Affiliate of
Buyer, including the Company and its Subsidiaries and hold them
harmless for, from and against (a) all liability for all U.S.
Federal income taxes of Company and its Subsidiaries for all
taxable periods ending on or before the earlier of (i) the date
of the Stock Acquisition and (ii) the date the Shares are treated
as acquired by Buyer for U.S. Federal income tax purposes ("Pre-
Stock Acquisition Period"), including, without limitation, any
liability for U.S. Federal income taxes imposed upon Company and
its Subsidiaries pursuant to United States Treasury Regulation
1.1502-6 as a result of being a member of the Selling
Consolidated Group and (b) all liability for U.S. Federal income
taxes accruing on or before the end of the Pre-Stock Acquisition
Period which result from the Election (as defined in Section 4.3
of this Agreement).

         4.2  Procedures Relating to Indemnification of Tax
Claims.  If a claim for Taxes shall be made by any Tax authority
in writing, which, if successful, might result in an indemnity
payment to Buyer pursuant to Section 4.1 hereof, Buyer shall
promptly notify the Seller in writing of such claim (a "Tax
Claim").

         With respect to any Tax Claim which might result in an
indemnity payment to Buyer pursuant to Section 4.1 hereof, Seller
shall be entitled to control all proceedings taken in connection
with such Tax Claim (including, without limitation, selection of
counsel) and, without limiting the foregoing, may at its sole
expense and, subject to the prior written consent of Buyers
pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with any Tax authority with respect
thereto, and, subject to the prior written consent of Buyer,
either settle the Tax Claim, pay the Tax claimed and sue for a
refund where applicable law permits such refund suits, or contest
such Tax Claim in any permissible manner.

         4.3  Section 338(h)(10) Election.

              (a)  With respect to the acquisition of the Shares
hereunder (A) Seller and Buyer shall, and Seller shall use its
best efforts to cause the Selling Consolidated Group to, jointly
make a valid, timely and effective election under Section
338(h)(10) of the Code for the Company and all of its domestic
Subsidiaries (the "Election"), (ii) the Selling Consolidated
Group and the Buyer shall, as promptly as practicable following
the Stock Acquisition, cooperate with each other to take all
actions necessary and appropriate (including filing such forms,
returns, elections, schedules and other documents as may be re-
quired) to effect and preserve a timely Election in accordance
with the provisions of Treasury Regulation  1.338(h)(10)-l or
any successor provisions and (iii) Selling Consolidated Group and
the Buyer shall report the sale of the Shares pursuant to this
Agreement consistent with the Election and shall take no position
to the contrary thereto in any Tax Return or any proceeding
before any taxing authority; provided, however, the Election (or
the equivalent thereof) shall not be made by the parties under
the laws of any state or local jurisdiction, unless such election
(or its equivalent) is under such state or local jurisdiction
mandatory as a consequence of the Election having been made for
U.S. Federal income tax purposes.

              (b)  In connection with the Election, Buyer and
Seller and the Selling Consolidated Group will cooperate in good
faith to establish the Adjusted grossed-up basis and the modified
Aggregate Deemed Sales Price (each as defined under applicable
U.S. Treasury Regulations), and, the allocation of the modified
Aggregate Deemed Sales Price among the assets of Company.  The
allocations of the Adjusted grossed-up basis and the modified
Aggregate Deemed Sales Price shall be made in accordance with
Section 338 of the Code and any applicable U.S. Treasury
Regulations.  The Selling Consolidated Group and the Buyer (A)
shall be bound by such allocations for purposes of determining
any U.S. Federal Taxes; (B) shall prepare and file all U.S.
Federal Tax Returns to be filed with any taxing authority in a
manner consistent with such allocations; and (C) shall take no
position inconsistent with such allocations in any U.S. Federal
Tax Return, or any proceeding before any taxing authorities
except as described in 4.3(a) above.  In the event that such
allocations are disputed by any taxing authorities, the party
receiving notice of such dispute shall promptly notify and
consult with the other party hereto concerning resolution of such
dispute.

         4.4  Survival of Tax Provisions.  Any claim to be made
pursuant to Sections 4.1 through 4.3 hereof must be made no later
than sixty (60) days after the expiration (with valid extensions)
of the applicable statute of limitations, if any, relating to the
U.S. Federal income taxes at issue.

         4.5  Real Property Taxes.  Real property Taxes, if any,
of Company and its Subsidiaries shall be treated as imposed on
the Company or the Subsidiary as the case may be.

         4.6  Tax Return Filings.

              (a)  Seller and SDG&E, as the case may be (the
"Seller Filing Parties"), shall prepare or cause to be prepared
and file or cause to be filed on a timely basis (in each case, at
its own cost and expense and in a manner consistent with past
practice) all U.S. Federal income Tax Returns with respect to
Company and its Subsidiaries for taxable periods ending on or
prior to the close of the Pre-Stock Acquisition Period.  Seller
and SDG&E shall pay all U.S. Federal income taxes shown on all
such U.S. Federal income Tax Returns.

              (b)  Buyer shall prepare or cause to be prepared
and shall file or cause to be filed on a timely basis all other
Tax Returns with respect to Company and its Subsidiaries.  

              (c)  The parties hereto shall reasonably coop-
erate, and shall cause their respective Affiliates, officers, em-
ployees, agents, auditors and representatives reasonably to
cooperate, in preparing and filing all Tax Returns (including
amended returns and claims for refund), including maintaining and
making available to each other all records necessary in
connection with taxes and in resolving all disputes and audits
with respect to all taxable periods relating to taxes.  The
parties hereto recognize that Seller and its Affiliates may need
access, from time to time, after the close of the Pre-Stock
Acquisition Period, to certain accounting and tax records and
information held by Company to the extent such records and infor-
mation pertain to events occurring prior to the close of the Pre-
Stock Acquisition Period; therefore, Buyer agrees that from and
after the close of the Pre-Stock Acquisition Period until the
expiration of the applicable statute of limitations, Buyer shall,
and shall cause Company to (A) properly retain and maintain such
records and (B) allow Seller  to inspect, review and make copies
of such records as Seller may reasonably deem necessary or appro-
priate from time to time, such activities to be conducted during
normal business hours and at the expense of the requesting party.

         4.7  Termination of Tax Sharing Agreements.  The
parties  hereby agree and covenant that, upon the Stock
Acquisition, all rights and obligations of each of Company and
its Subsidiaries and Seller pursuant to any tax sharing agreement
or similar arrangements shall be terminated as of the close of
business on December 31, 1994, and no payments pursuant to any
such tax sharing agreement or arrangements shall be made after
such termination.

                            ARTICLE V

                      CONDITIONS OF CLOSING

         5.1  Conditions of Obligations of the Buyer.  The
obligations of the Buyer to close this Agreement are subject to
the satisfaction of each of the following conditions, unless any
such condition is (to the extent that the same can be) waived by
the Buyer:

              (a)  Representations and Warranties.  The
representations and warranties of the Seller set forth in Section
2.1 shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date, except as otherwise contemplated
by this Agreement; and the Buyer shall have received a
certificate to that effect signed by the Seller.
              (b)  Performance of Obligations.  The Seller shall
have performed in all material respects the obligations required
to be performed by it under this Agreement prior to and at the
Closing, including without limitation, the Seller's delivery to
the Escrow Agent in accordance with the Escrow Agreement of one
or more stock certificates representing the Shares, duly endorsed
in blank by the Seller; and the Buyer shall have received
certificates to that effect signed by the Seller.

              (c)  Authorization.  All corporate action
necessary to authorize the execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the
Seller, and the Seller shall have all necessary corporate power
and authority to consummate the transactions contemplated hereby.

              (d)  Absence of Changes.  There shall not have
occurred any material adverse change in the business, operations,
financial condition, results of operations, assets or liabilities
of the Company after the date hereof.

              (e)  Covenants and Approvals.  The Buyer shall
have received duly executed copies of all consents and approvals
contemplated by Section 2.1(b) hereof (and Schedule 1 attached
hereto), in form and substance reasonably satisfactory to the
Buyer and Messrs. Berlack, Israels & Liberman, counsel to the
Buyer.

              (f)  Government Consents, Authorizations, Etc. 
All consents, authorizations, orders or approvals of, and filings
or registrations with, any Federal, state, local or foreign
governmental commission, board or other regulatory body which are
required for or in connection with the execution, delivery and
performance by the Seller, as applicable, of this Agreement, of
the transactions contemplated hereby shall have been obtained or
made, 

except for a notification filing under the H-S-R Act and the
expiration of the applicable waiting period, including any
extension thereof, thereunder.

              (g)  Escrow Agreement.  The Seller and the Escrow
Agent shall have executed and delivered the Escrow Agreement.

              (h)  Opinions of Counsel.  The Buyer shall have
received an opinion dated the Closing Date of Messrs. Gibson,
Dunn & Crutcher, counsel to the Seller, and an opinion of
O'Melveny & Myers, counsel to the Company, in each case
satisfactory in scope and substance to the Buyer and Messrs.
Berlack, Israels & Liberman, counsel to the Buyer, to the same
effect as Exhibits A and B, attached hereto, respectively.

              (i)  Representation Letter.  The Company shall
have delivered to the Buyer a letter setting forth certain
representations and warranties of the Company, such letter to be
satisfactory in scope and substance to the Buyer.

              (j)  Commitment Letter.  The Buyer and the Company
shall have entered into a commitment letter ("Commitment Letter")
setting forth the terms upon which the parties agree that the
Buyer shall commit to provide the Company with a secured term
loan in a principal amount not to exceed $2,000,000.

              (k)  Lender Consents.  The Bank of America and
Sanwa Bank shall each have delivered its written consent, in form
satisfactory to the Buyer, to the transactions contemplated
hereby and by the Commitment Letter including the Stock
Acquisition and the creation of any liens on collateral required
by the transactions contemplated by the Commitment Letter, in
form satisfactory to the Buyer.

              (l)  Non-Foreign Status.  At or prior to Closing,
Seller will furnish Buyer with an affidavit prepared in
accordance with section 1445(b) of the Code and applicable U.S.
Treasury Regulations stating, under penalties of perjury, that
Seller is not a foreign person and setting forth Seller's U.S.
taxpayer identification number.

         5.2  Conditions to Obligations of the Seller.  The
obligations of the Seller to close this Agreement are subject to
the satisfaction of each of the following conditions unless
waived by the Seller:

              (a)  Representations and Warranties.  The
representations and warranties of the Buyer set forth in Section
2.2 shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date, except as otherwise contemplated
by 

this Agreement; and the Seller shall have received certificates
to that effect signed by the Buyer.

              (b)  Performance of Obligations.  The Buyer shall
have performed in all material respects the obligations required
to be performed by it under this Agreement prior to and at the
Closing, including without limitation, payment of the Purchase
Price, and the Seller shall have received a certificate to that
effect signed by the corporate secretary of the Buyer.

              (c)  Authorization.  All corporate action
necessary to authorize the execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated hereby shall have been duly and validly taken by the
Board of Directors of the Buyer, and the Buyer shall have full
power to consummate the transactions contemplated hereby and
thereby.

              (d)  Opinion of Counsel to the Buyer.  The Seller
shall have received an opinion dated the Closing Date of Messrs.
Berlack, Israels & Liberman, counsel to the Buyer, satisfactory
in scope and substance to the Seller and Messrs. Gibson, Dunn &
Crutcher, counsel to the Seller, to the same effect as Exhibit C
attached hereto.

                           ARTICLE VI

                         INDEMNIFICATION

         6.1  Indemnification by the Seller.  Except for Heller
Claims (as hereinafter defined) and Tax Claims, the Seller shall
indemnify and hold the Buyer harmless, from, against, for and in
respect of any and all damages, losses, obligations, liabilities,
claims, actions or causes of action (including, without
limitation, reasonable attorneys' fees and expenses) sustained or
suffered by the Buyer arising from the untruth, inaccuracy or
breach of any representation, warranty, covenant or agreement of
the Seller contained in or made pursuant to this Agreement or in
any certificate, instrument or agreement delivered by the Seller
pursuant hereto or in connection with the transactions
contemplated hereby, or any facts or circumstances constituting
such breach.  No claim, demand, suit or cause of action shall be
brought against the Seller under or pursuant to this Section 6.1
unless the Buyer at any time prior to the Survival Date, as
defined below, gives the Seller written notice, with reasonable
specificity, of the existence of any such claim, demand, suit or
cause of action.  Upon the giving of such written notice as
aforesaid, the Buyer shall have the right to commence legal
proceedings within 60 days thereafter for the enforcement of its
rights under this Agreement.

         6.2  Indemnification by the Indemnitor.  Except for
Heller Claims, from and after the date of the Stock Acquisition, 

the Indemnitor shall indemnify and hold the Seller harmless,
from, against, for and in respect of any and all damages, losses,
obligations, liabilities, claims, actions or causes of action
(including, without limitation, reasonable attorneys' fees and
expenses) sustained or suffered by the Seller arising from the
untruth, inaccuracy or breach of any representation, warranty,
covenant or agreement of the Buyer contained in or made pursuant
to this Agreement or in any certificate, instrument or agreement
delivered by the Buyer pursuant hereto or in connection with the
transactions contemplated hereby, or any facts or circumstances
constituting such breach.  No claim, demand, suit or cause of
action shall be brought against the Indemnitor under or pursuant
to this Section 6.2 unless the Seller, at any time prior to the
Survival Date, as defined below, gives the Buyer written notice,
with reasonable specificity, of the existence of any such claim,
demand, suit or cause of action.  Upon the giving of such written
notice as aforesaid, the Seller shall have the right to commence
legal proceedings within 60 days thereafter for the enforcement
of its rights under this Agreement.

         6.3  Defense of Claims.  The obligations and
liabilities of the Seller to indemnify the Buyer and the
Indemnitor to indemnify the Seller under this Article VI with
respect to claims relating to third parties shall be subject to
the following terms and conditions:

              (a)  The party or parties to be indemnified
(whether one or more, the "Indemnified Party") will give the
Indemnitor or the Seller, as the case may be (the "Indemnifying
Party") prompt written notice of any such claim, and the
Indemnifying Party will undertake the defense thereof by
representatives chosen by it.  Failure to give such notice shall
not affect the Indemnifying Party's duty or obligations under
this Article VI, except to the extent the Indemnifying Party is
prejudiced thereby.  So long as the Indemnifying Party is
defending any such claim actively and in good faith, the
Indemnified Party shall not settle such claim.  The Indemnified
Party shall make available to the Indemnifying Party or its
representatives all records and other materials required by them
and in the possession or under the control of the Indemnified
Party, for the use of the Indemnifying Party and its
representatives in defending any such claim, and shall in other
respects give reasonable cooperation in such defense.

              (b)  If the Indemnifying Party, within a
reasonable time after notice of any such claim, fails to defend
such claim actively and in good faith, the Indemnified Party will
(upon further notice) have the right to undertake the defense,
compromise or settlement of such claim or consent to the entry of
a judgment with respect to such claim, on behalf of and for the
account and risk of the Indemnifying Party, and the Indemnifying
Party shall thereafter have no right to challenge the Indemnified
Party's defense, compromise, settlement or consent to judgment
therein, 

provided, however, that no such failure to defend shall be deemed
an admission that such claim is subject to indemnification
hereunder.

              (c)  Anything in this Section 6.3 to the contrary
notwithstanding, (i) if there is a reasonable probability that a
claim may materially and adversely affect the Indemnified Party
other than as a result of money damages or other money payments,
the Indemnified Party shall have the right to defend, compromise
or settle such claim, and (ii) the Indemnifying Party shall not,
without the written consent of the Indemnified Party, settle or
compromise any claim or consent to the entry of any judgment
which does not include as an unconditional term thereof the
giving by the claimant or the plaintiff to the Indemnified Party
of a release from all liability in respect of such claim;

         6.4  Heller Claims.  Any claims made by Heller
Financial, Inc. or its affiliates ("Heller") arising from or
relating to prior negotiations among Heller, the Seller and the
Company shall be split between the Seller and the Company as
follows: (i) the first $135,000 of such claims shall be paid
solely by the Seller; (ii) the next $500,000 of such claims shall
be split 50% each between the Seller and the Company; and (iii)
all claims in excess of (i) and (ii) above (the "Excess Claims")
(i.e., in excess of the first $635,000 in claims) shall be paid
solely by the Seller, and the Seller hereby agrees to indemnify
Indemnitor, the Buyer, WES and their affiliates against all such
excess claims.  Upon the Stock Acquisition, Indemnitor shall
indemnify the Seller and its affiliates from claims of Heller
that the Company has agreed to pay as set forth in clause (ii) of
the preceding sentence.  The Seller and the Company hereby agree
to reasonably cooperate in deciding upon, and agreeing with
respect to, (i) what claims of Heller, if any, should be paid by
the Seller and the Company, (ii) the amount to be paid in
settlement of such claims, and (iii) the conduct and defense of
such claims.

         6.5  Remedies Cumulative.  The remedies provided for in
this Article VI shall be cumulative and shall not preclude
assertion by the Buyer or the Seller of any other rights or the
seeking of any other remedies against the Seller or the Buyer
respectively.

                           ARTICLE VII

           SURVIVAL OF REPRESENTATION AND WARRANTIES;
               AMENDMENT, MODIFICATION AND WAIVER

         7.1  Survival of Representations and Warranties, Etc. 
The representations and warranties of the Seller and the Buyer
contained in this Agreement shall under all circumstances survive
the Closing for a period of 24 months.  The agreements of the 

Seller, Buyer and Indemnitor contained in this Agreement shall in
each case survive the Closing until they are otherwise
terminated, whether by their terms or as a matter of applicable
law.  The respective dates upon which the representations and
warranties and agreements contained in this Agreement shall
expire, shall be referred to herein as the "Survival Date".

         7.2  Amendment, Modification and Waiver.  This
Agreement shall not be altered or otherwise amended except
pursuant to an instrument in writing signed by the parties
hereto, except that any party to this Agreement may waive any
obligation owed to it by another party under this Agreement.  The
waiver by any party hereto of a breach of any provision of this
Agreement shall not operate or be construed as a waiver of any
subsequent breach.

                          ARTICLE VIII

                           TERMINATION

         8.1  Right of Termination.  This Agreement may be
terminated at any time prior to the Closing by:

              (a)  The mutual written consent of the Buyer and
the Seller; or

              (b)  The Buyer, by delivery of a written notice
specifying the reasons for such termination, if the conditions
set forth in Section 5.1 hereof shall not have been met (or shall
not, in the reasonable judgment of the Buyer, be capable of being
met); or

              (c)  The Seller, by delivery of a written notice
specifying the reasons for such termination, if the conditions
set forth in Section 5.2 hereof shall not have been met (or shall
not, in the reasonable judgment of the Seller, be capable of
being met.

         8.2  Effect of Termination.  If this Agreement shall be
terminated by the mutual consent of the Buyer and the Seller
pursuant to Section 8.1(a), then neither party shall have any
claim or right of action against the other party for breach of
this Agreement.  If this Agreement shall be terminated by the
Buyer pursuant to Section 8.1(b), then the Buyer may bring a suit
or proceeding against the Seller only for a breach of the
obligations of the Seller contained in this Agreement or a breach
by the Seller of the representations, warranties or covenants of
the Seller contained in this Agreement which occurred prior to
the date of such termination.  If this Agreement shall be
terminated by the Seller pursuant to Section 8.1(c), then the
Seller may bring a suit or proceeding against the Buyer for the
Buyer's breach of the obligations of the Buyer contained in this
Agreement or a breach by 

the Buyer of the representations, warranties or covenants of the
Buyer contained in this Agreement which occurred prior to the
date of such termination.

                           ARTICLE IX

                          MISCELLANEOUS

         9.1  Expenses.  Each party shall bear its own expenses
in connection with this transaction, except that the Buyer may
have its expenses reimbursed by the Company after the Stock
Acquisition.

         9.2  Entire Agreement.  This Agreement and the Exhibits
and Schedules attached hereto contain the entire agreement among
the parties hereto with respect to the transactions contemplated
hereby and supersede all prior agreements or understandings among
the parties with respect thereto.

         9.3  Publicity.  The parties hereto agree that, except
as otherwise required by law, they will advise and confer with
each other prior to the issuance of any public reports,
statements or releases pertaining to this Agreement or the
transactions contemplated hereby.

         9.4  Descriptive Headings.  Descriptive headings are
for convenience only and shall not control or affect the meaning
or construction of any provision of this Agreement.

         9.5  Notices.  all notices or other communications
which are required or permitted hereunder shall be in writing and
sufficient if delivered personally or sent by registered or
certified mail, postage prepaid, return receipt requested,
addressed as follows:

         If to the Buyer or the Indemnitor, to:

               Wexford Capital Corporation
               411 West Putnam Avenue
               Greenwich, Connecticut  06830
               Attention:  Robert M. Davies

         with copies to:

               Berlack, Israels & Liberman
               120 West 45th Street
               New York, New York  10036
               Attention:  Stephen B. Selbst, Esq.

         If to the Seller, to:

               Pacific Diversified Capital Company
               101 Ash Street
               San Diego, California  92101
               Attention: Stephen L. Baum, President

         with a copy to:

               Gibson, Dunn & Crutcher
               333 South Grand Street
               Los Angeles, California  90071
               Attention:  Richard Strong, Esq.

         If to the Company:

               Wahlco Environmental Systems, Inc.
               3600 West Segerstrom Avenue
               Santa Ana, California  92704-6495
               Attention:  Henry N. Huta

         with a copy to:

               O'Melveny & Myers
               610 Newport Center Drive
               Suite 1700
               Newport Beach, California  92660
               Attention:  David Krinsky, Esq.

or to such other address as the party to whom notice is to be
given may have furnished to the other party in writing in
accordance herewith.  any such communication shall be deemed to
have been given, in the case of personal delivery, on the date of
delivery and in the case of mailing, on the third business day
following that on which the piece of mail containing such
communication is posted.

         9.6  Counterparts.  This Agreement may be executed in
any number of counterparts, and each such counterpart hereof
shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.

         9.7  Governing Law.  This Agreement shall be governed
by and construed in accordance with the laws of the State of New
York.

         9.8  Benefits of Agreement.  All the terms and
provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors
and assigns.  Anything contained herein to the contrary
notwithstanding, this Agreement shall not be assignable by the
Seller without the consent of the Buyer.  The Buyer may assign
this Agreement without the 

consent of the Seller, provided that such assignment shall not
release the Buyer from its obligations under this Agreement.

         IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be executed on the day and year first above written.

                               WES ACQUISITION CORP.

                               By: ________________________________
                                   Name:
                                   Title:

                               PACIFIC DIVERSIFIED CAPITAL COMPANY

                               By: ________________________________
                                   Name:
                                   Title:

                               WEXFORD CAPITAL CORPORATION, 
                                  as Indemnitor

                               By: ________________________________
                                   Name:
                                   Title:

 

Basic Info X:

Name: STOCK PURCHASE AGREEMENT
Type: Stock Purchase Agreement
Date: Aug. 7, 1995
Company: SAN DIEGO GAS & ELECTRIC CO
State: California

Other info:

Date:

  • May 15 , 1995
  • December 31 , 1994

Organization:

  • Defense of Claims 13 6.4 Heller Claims
  • WES Acquisition Corp.
  • Company to Seller
  • the State of Delaware
  • Acquisition for Investment Purposes
  • Negotiation With Others
  • San Diego Gas & Electric Company
  • United States Treasury Regulation
  • Procedures Relating to Indemnification of Tax Claims
  • Aggregate Deemed Sales Price
  • Selling Consolidated Group
  • Tax Return Filings
  • SDG & E
  • Pre-Stock Acquisition Period
  • Tax Sharing Agreements
  • Closing Date of Messrs. Gibson , Dunn & Crutcher
  • j Commitment Letter
  • Bank of America
  • b Performance of Obligations
  • Board of Directors
  • Closing Date of Messrs. Berlack , Israels & Liberman
  • Heller Financial , Inc.
  • Wexford Capital Corporation
  • Pacific Diversified Capital Company
  • Wahlco Environmental Systems , Inc.
  • Segerstrom Avenue Santa Ana
  • O'Melveny & Myers 610 Newport Center Drive Suite 1700 Newport Beach

Location:

  • Delaware
  • Newport Beach
  • U.S.
  • Etc
  • West Putnam Avenue Greenwich
  • Connecticut
  • San Diego
  • South Grand Street Los Angeles
  • California
  • Esq
  • New York
  • WEXFORD

Money:

  • $ .01
  • $ 24,428,831.89
  • $ 5,000,000
  • $ 4,900,000
  • $ 100,000,000
  • $ 2,000,000
  • $ 135,000
  • $ 500,000
  • $ 635,000

Person:

  • Heller
  • Robert M. Davies
  • Berlack
  • Stephen B. Selbst
  • Stephen L. Baum
  • Gibson
  • Henry N. Huta
  • David Krinsky

Percent:

  • 50 %